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Broadband Access
Regulation hampers growth of IPTV in Latin America
Service will reach 5 percent of pay-TV subscribers by 2012
by Tony Danby, Latin American Correspondent
IPTV has been hampered in Latin America primarily as a result of regulatory barriers, but the technology should begin to secure a foothold by 2012, according to a Pyramid Research report.
Pyramid says that although Latin America’s telcos in the last few years have been attracted to IPTV as an alternative revenue stream to falling fixed-line voice sales, the technology has failed to take-off in the region.
“IPTV is still spluttering in its launch pad, but it has potential for the future,” says Derek Medlin, analyst at Pyramid and author of the study entitled IPTV in Latin America: Not So Fast.
The annual percentage growth rate of subscribers for IPTV will be fast, but from a small base. It won’t break out of its niche until around 2012, Medlin predicts.
IPTV should then reach around five percent of an estimated 50 million pay-TV subscribers by 2012 in Latin America compared to almost zero. “IPTV will be a ‘valid alternative’ only by this point (2012),” he says.
Pay TV realities
While 2012 may seem like an optimistic timeframe for IPTV to start making an impact in Latin America's pay-TV market, it will have to take a backseat to other technologies. Pyramid estimates that 22 percent of the region’s households have some form of a pay-TV subscription. Of this total, cable accounts for over two-thirds of users ahead of rivals such as Direct to Home (DTH) services.
Medlin says that outdated regulations create the main hurdle to the development of IPTV in the region’s three main markets Argentina, Brazil, and Mexico.
In Argentina fixed line telecom operators are viewed like utilities and they can’t offer TV or radio for 99 years from securing their concession contracts, while Brazilian telcos also face outdated rules that restrict the introduction of IPTV broadcast.
Meanwhile, in Mexico IPTV is permitted, but the incumbent telecom giant, Telmex, owned by one of the world’s richest men, Carlos Slim, is largely restricted from offering IPTV.
The second major hurdle is investment. The hefty investment needed to develop the legacy infrastructure is harder to justify during the ongoing economic global financial crisis, says Medlin.
Multi-pronged approach
Still, Medlin recalls that telecoms service providers have pursued a plethora of strategies. Despite the hurdles Latin American operators face in rolling out IPTV, many fixed line operators are taking a flexible, multi-pronged approaches to addressing the market.
Take Brazil’s largest fixed line telecom operator Oi. Formerly known as Telemar, Oi has already snared partners such as satellite operator SKY TV. The operator also plans to roll out a DTH service — using DTH C-Band capacity for its pay-TV system — to target eight million subscribers over the next five years, according to local media.
Spain’s Telefónica is likely to tap their early experience of IPTV in their home market. While the Spanish operator has also offered DTH and cable in countries such as Peru and intends to move forward with IPTV in Chile, Medlin says.
Mexico’s Telmex and América Móvil are also trying varied approaches. Telmex acquired local satellite TV operator ZAP in Chile, and quickly picked up market users, while Claro TV appears focused on the mass market, mid-level customers, according to Medlin.
Indeed, the IPTV drive won’t get easier. Even if the regulatory barriers start to crumble, the operators may struggle to woo households to IPTV from their existing pay-TV and cable packages.
Moreover, households unaccustomed to paying for pay-TV may be unable or unwilling to pay for IPTV services, he says.
“They’re all trying to get their skin in the game,” Medlin says.
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