Broadband Market Revives In Latin America.

A relatively stable economic environment in Latin America in 2004 helped the broadband marketplace get back on track.

The political and economic roller coaster that is Latin America is on the rise again after three years on a downward spiral.

“The broadband markets in Argentina, Brazil, Chile and Mexico managed to limp through the downturn and are now picking up speed,” says Ben Macklin, a senior analyst at eMarketer and the author of a new report, Latin America Broadband.

ADSL has become more widespread and affordable, and bandwidth offers are beginning to increase from a typical connection of 256Kbps in 2002/2003 to 512Kbps or more in 2005.

“The availability and adoption of broadband in Latin American is still well behind North America, Western Europe and much of the Asia-Pacific region,” says Mr. Macklin. “It is tempting to suggest that the Latin American Internet sector is now on a path of stable and continued growth. But economic and political stability remain wild cards.”

Economic volatility in the region has made forecasting difficult, Mr. Macklin says. eMarketer has therefore taken a relatively conservative approach to its forecasts and attempted to provide alternative perspectives wherever possible.

The region’s Internet sector continues to be hampered by poorly developed telecommunications infrastructure, a low per capita GDP and political and economic uncertainty.

That said, the recent economic growth in the region has provided a catalyst for increased telecommunications investment, and consumer demand has likewise picked up.

Argentina, Brazil and Mexico all recorded impressive broadband growth during the year, while Chile leads the region in broadband penetration. Latin America should return to the watch list for broadband equipment and service providers.

Chile is proving to be the guiding light for the region. It has far and away the most competitive and well-developed telecommunications sector in Latin America. Early privatization of the major telecom operator combined with economic and regulatory policies to foster competition have been the recipe for success—and its neighbors would do well to take note.

All the indicators look positive for continued broadband growth for the region – but the larger political and economic forces will continue to guide the markets.