Latin American Operators Join the Fiber Parade

March 22, 2023
This once relatively fiber-free area of Latam is now seeing a huge influx of fiber installations.

In my BTR column last month, I focused on how much fiber U.S. and Canadian cable operators, telcos, regional ISPs, utilities, and other broadband service providers are installing throughout their regions. As I pointed out, broadband providers deployed fiber-to-the-premises (FTTP) lines to an additional 7.9 million homes in the United States alone last year, boosting the total number of households passed by fiber to more than 68 million from coast to coast.

Yet, as I have also observed before, the fiber movement is by no means limited to just these two North American nations. In much of Europe, the Asia-Pacific region, and other parts of the world, cable operators, FTTP providers, telcos, other ISPs, utilities, and other service providers are also embracing fiber builds at unprecedented levels to meet their customers' ever-mounting bandwidth needs.

In this column, I want to take a close look at Latin America (Latam). This once relatively fiber-free area is now seeing a huge influx of fiber installations. Cable, telco, fiber, small ISP, utility and other providers from northern Mexico to the southern tip of Argentina and in the Caribbean are pouring money into new fiber infrastructure across the vast region. Due to a later start and fewer resources, they still lag behind their U.S., Canadian and Western European counterparts, but Latin American operators are quickly catching up.

Fibra hasta el hogar

“Fiber is really booming in the region,” Ari Lopes, senior research manager for Americas Markets at the Omdia research firm, declared in a recent interview. “We’re seeing fantastic growth in many, many countries.”

Indeed, in a fresh study just produced for the Fiber Broadband Association’s Latam chapter, researchers found that the number of homes passed by fiber in the region has grown four-fold over just the last five years. Even more impressively, over that same period, the number of fiber subscribers has multiplied by 10.

The new FBA study -- conducted by consultants Diego Ros Rooney, Mauricio Fernández, Samuel Beltrán, and Sebastián Cabello -- revealed that Latin America closed out 2021 with 103 million homes passed by fiber-to-the-home (FTTH) or fiber-to-the building (FTTB) lines. That’s up a resounding 29% from the 80 million homes passed by fiber lines at the end of 2020.

Even more dramatically, the number of FTTH/B subscribers across Central and South America and the Caribbean jumped to 46 million at the end of 2021, according to the new study. That’s up a whopping 47% from 31 million fiber subs at the close of 2020.

Moreover, the study found that the FTTH/B take-up rate in Latin America climbed to 44.6% at the close of 2021 as consumers flocked to the platform as soon as it was offered. That’s up a healthy 5.4 percentage points from the end of 2020.

Latin America “is still emerging from a technology standpoint,” noted Eduardo Jedruch, regulatory director for the FBA’s Latam board of directors. Still, he said, operators of all stripes are now “moving aggressively to fiber.”

Market data from other research firms back up these figures gathered by our Latam chapter. In its latest study of the region, for instance, the research firm Omdia estimates that the number of Latam fiber subscribers surged to nearly 54 million last year, up from almost 44 million in 2021 and 32 million in 2020. As a result, there are now nearly as many subscribers on FTTH lines as on all the other broadband platforms—cable, copper, wireless---combined.

Large and small

Breaking down the data from the two research studies, 5 of the 18 countries in the Latam region—namely, Brazil, Mexico, Argentina, Chile, and Ecuador – according to the experts are currently leading the move to fiber. These five nations together accounted for 90% of the region’s fiber subscribers at the close of 2021, according to the FBA Latam chapter study.

Two of them—Brazil and Mexico—rank among the 10 nations with the fastest-growing fiber penetration in the world. In fact, Brazil alone added 5.5 million fiber subscribers over the 12-month period from July 2021 through June 2002, placing it third on the Top 10 list, according to Omdia’s latest count. Mexico added another 2.7 million FTTH customers, putting it in 10th place.

Similarly, the latest market report from SNL Kagan, a unit of S&P Global Intelligence, confirms that the number of fiber subscribers exceeded the number of cable subscribers in the region by the end of 2021. In its report, Kagan noted that the migration to fiber has been accelerating as the region’s Top 11 broadband providers have increasingly shifted from cable and copper to FTTH/B networks.

Not too surprisingly, then, spending on fiber-friendly PON equipment by operators of all types is also surging throughout the region. In his latest research note on the Latam market, Jeff Heynen, vice president of broadband access and home networking for Dell’Oro Group, reported that Latam service providers invested $1.3 billion in PON equipment last year, up from $1.2 billion in 2021 and more than double the $572 million they spent in 2019.

“These revenue figures should give you some idea of how much focus there has been on overbuilding copper networks with fiber the last couple of years,” Heynen wrote in a side note. “I don’t break down the equipment spending by operator. But I can say that the spending is being done by telcos and cable operators alike.”

As we have already seen in the United States and Canada, the large incumbent telcos have carried out most of the early fiber deployments in Latin America. The roster of early fiber adoptees in the region includes such major telco players as Telefónica, America Movil, Oi, Telmex, Grupo Televisa, and Total Play Telecommunications.

But at this point, fiber is far from just a large-telco venture. Small, newer, more nimble ISPs also have been flooding the broadband market with new FTTH network builds.

“We’ve seen smaller players playing a bigger role,” said Sonia Agnese, a senior principal analyst for Latam service provider markets at Omdia, in a recent interview. She noted that countries like Brazil, Uruguay, and Chile are seeing an explosion of new, smaller fiber providers.

That’s been particularly true in Brazil, the region’s largest market with a touch more than 79 million households. Thousands of small fiber ISPs have sprung up, spurring big operators like Telefónica to spin off neutral regional fiber networks into separate entitles to serve the backbone needs of these small ISPs.

Cable operators join in

Perhaps most notably, cable operators are increasingly getting into the fiber act. Instead of plowing most of their capital funds into extending their legacy HFC plant or upgrading to next-gen DOCSIS 4.0 technology, Latam cablecos are increasingly installing fiber lines in both greenfield and brownfield locations. The roster includes such veteran large cable operators as Liberty Latin America, Millicom, Megacable, Telecom Argentina, and izzi telecom, among others.

“Cable operators, who have delayed [fiber] investment a lot, are now focusing on fiber optics,” Cabello, who is CEO of the SMC+ consulting firm, told the BNamericas publication. In fact, Latam cable companies are now investing more than the telcos in fiber optics, Jedruch noted.

Mexico offers a good case study. In that sprawling country of nearly 35 million households, traditional cablecos are scrambling to install new FTTH lines wherever they can, seeking to fend off competition from both the large incumbent telcos and the nimbler fiber ISP startups.

“It’s huge,” said Israel Madiedo, director of innovation and technology for izzi telecom, which is now part of Grupo Televisa, in Mexico City. “Every company, whether traditional cable or telco, has been growing in fiber the last three or four years.”

He noted that fiber now accounts for 81% to 82% of the 900,000 to 1 million new homes passed that izzi adds each year. As a result, the operator now passes 3 million homes with fiber, or about 17% of its total footprint.

Of course, this does not mean that Latam cable operators will, or should, just junk their HFC networks en masse. Far from it. But the shift to fiber is clearly happening.

“They’re not getting rid of cable,” Lopes noted. “But we’re seeing some cable companies investing in fiber, at least for greenfield [builds].”

Since fiber networks offer so many benefits to operators, it’s easy to see why. Madiedo ticked off such significant advantages as lower equipment and operational costs, ease of use, the ability to create and deliver new services quickly, and the greater capabilities of fiber networks. Switching to fiber, he noted, has been “a game-changer in many ways.”

Looking ahead

Not surprisingly, then, the future looks even more fiber-intensive in Latin America.

The FBA’s Latam study predicts that over the next few years, regional providers will continue to boost their FTTH/B footprints and consolidate their adoption of fiber. Specifically, the study projects that fiber lines will pass 158 million homes by 2025, a whopping 91% of all Latam households. That would reflect a very healthy 9% compound annual growth rate, mainly driven by the adoption of fiber lines in places such as Brazil, Chile, Uruguay, Puerto Rico, and Trinidad.

Likewise, the study projects that as more cable operators and telcos migrate to full fiber networks, the number of FTTH/B subscribers in the region will slightly more than double to 94 million by 2026. If such growth occurs, that will translate to a take-up rate of 59%, more than double the penetration rate at the end of 2021.

“The next five years will see a lot of deployments of fiber projects,” said Edwar Juarez, public relations director for our Latam chapter’s board of directors. During this coming period, he predicts, “We’re going to see the big operators” step up their spending.

Similarly, the Omdia forecast calls for the number of fiber subscribers in the region to climb from nearly 54 million in 2022 to more than 91 million by the end of 2027. That translates to a compound annual growth rate of more than 11% over the six-year period of the forecast.

“We’re just starting to see growth here,” Lopes said. “We still have a great deal of growth left.”

Indeed, given the preponderance of evidence laid out in the numbers, all the Americas are well on their way to becoming a fiber-rich hemisphere.

Gary Bolton is president and CEO of the Fiber Broadband Association.

About the Author

Gary Bolton | President and CEO of the Fiber Broadband Association

Gary Bolton is president and CEO of the Fiber Broadband Association.

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