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Paraguay - Telecoms, Mobile and Broadband
Executive summary Paraguay is a landlocked nation in the heart of South America. Its GDP per capita is one of the lowest in the region, and about a third of the population live below the poverty line. The country's telecom market has considerable potential for growth, its fixed-line and broadband indicators being among the weakest in Latin America. The state-owned incumbent, Corporación Paraguaya de Comunicaciones (Copaco), has a monopoly over all fixed-line voice services, including local, domestic long distance, and international telephony. Unlike other state monopolies in Latin America, such as Uruguay's Antel or Costa Rica's ICE, Copaco has not managed to lift Paraguay's teledensity from a level that remains abysmally low - in fact, about 68% lower than average for Latin America and the Caribbean. Even so, this matches the country's GDP per capita, also 68% below the regional average. Copaco attracts frequent accusations of incompetence and corruption, with customers suffering from extensive service failures caused by obsolete infrastructure. With no competition to encourage better service and cheaper prices, Copaco's long distance calls used to be three times more expensive than other countries in Latin America. Nevertheless, since 2008 Copaco has substantially cut its long-distance call prices to a level that compares favourably with neighbouring countries. The inadequacy of Copaco has been a bonanza for private mobile companies. Indeed, Paraguay's mobile sector is a dynamic, competitive market with four operators vying for market share. The country's mobile penetration has been slightly above the Latin American average since 2007 - a remarkable achievement, considering the country's poor socioeconomic indicators. Of the total number of estimated telephones in the country, about 6% are fixed and 94% are mobile, giving Paraguay the highest mobile ratio in Latin America. Until 2009, only Copaco was allowed to have a direct link with the international backbone, which meant that ISPs were not allowed to procure their own international capacity directly but had to purchase it from the incumbent. In March 2009, the government passed a law that opened the international gateway to all ISPs, but companies must install their own infrastructure. The March 2009 law was an important step for Paraguay. Indeed, broadband has been found to be a key driver for economic growth. According to a World Bank analysis published in 2009, a developing country's GDP grows by 1.38% for every ten percentage-points increase in broadband penetration. A solid national broadband strategy in Paraguay should include measures to ensure efficient market dynamics as well as equitable access for all the population. The opening of the international gateway had a significant effect on Paraguay's Internet development. Between March and October 2009, Copaco dropped its wholesale Internet prices by about 50%. Over the course of 2009, broadband speeds increased and retail prices fell across the board. Together with the opening of the wholesale Internet market, the government sought to liberalise VoIP. The attempt, however, came to naught, and Copaco continues to hold a monopoly over VoIP services in Paraguay. Attempts to liberalise VoIP are ongoing. For the development of Paraguay's telecom market, Copaco needs to be restructured, its main shortcomings being lack of transparency and technological obsolescence. A way to spur a more efficient fixed-line voice market would be to open long distance telephony and VoIP to competition. Key highlights: Copaco is rolling out a GSM network and is planning to launch mobile services by end-2010. Paraguay's mobile market is the country's most successful telecom sector, served by four operators: Millicom's Tigo (the market leader), Telecom Argentina's Personal, América Móvil's Claro, and Japanese KDDI's Vox. The Internet market is open to competition and there are over a dozen ISPs offering services. Technologies include ADSL, cable modem, WiMAX, and other wireless platforms. Copaco more than doubled its Internet capacity in 2009, from 2.9Gb/s at the beginning of the year to 6.7Gb/s by year-end.Paraguay - key telecom parameters - 2008 - 2009 Category20082009 (e) Fixed-line service Total number of subscribers1350,000360,000 Annual growth12%3% Teledensity15.6%5.7% Internet Internet users (million)0.891.00 Annual growth69%12% Internet users penetration14.3%15.8% Broadband Total number of subscribers89,000130,000 Annual growth71%46% Penetration rate1.4%2.1% Mobile telephony subscribers Total number of subscribers (million)5.225.57 Annual growth16%7% Mobile penetration rate83.8%87.8% (Source: BuddeComm) Note1: Estimates for both 2008 and 2009. Paraguay is a promising telecom market for prospective investors, with considerable long-term growth potential especially in the Internet and broadband sector. The report covers trends and developments in the fixed-line, mobile, Internet, broadband, and pay TV markets. Subjects include: Market and industry analyses, trends and developments; Facts, figures, and statistics; Government policies and regulatory issues; Major players (fixed, mobile and broadband); Infrastructure development; Internet and broadband market (DSL, cable modem, wireless); Mobile market (including 3G and mobile broadband).
Last Update: 10 Mar 2010 Number of Pages: 26

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