Bogotá — The race for 5G is accelerating globally, but in Latin America, spectrum allocations are progressing at a moderate pace, and only a few countries are showing tangible progress, which could have implications for the competitiveness of the telecommunications sector in the region. How is such sluggishness in bidding processes and low government prioritization hindering the rollout of 5G across the region?
It is estimated that by the end of 2022, the world reached its first billion 5G connections, but progress has been uneven, and Latin America has lagged behind in spectrum allocation, even if the subject has entered agenda of governments and regulators.
Jorge Negrete, an ICT specialist and President of DPL Group (Digital Policy & Law Group), explained in an interview with Bloomberg Línea that “the slowness of regional bidding processes has to do with political questions and the priority that governments give to the issue.” “Some governments either don’t fully understand 5G or face local economic or political conditions that haven’t allowed them to be so agile. On the other hand, other countries that have understood the urgency of the matter, which want to bring their economies to a different level, have made the necessary regulatory changes and political negotiations to conduct auctions,” he said.
Lucas Gallitto, the Director for Latin America at the global mobile operators association GSMA, told Bloomberg Línea that the region “has historically been a follower in terms of adopting new technologies, and 5G is no exception. However, it is also true that with each mobile generation, we have witnessed an acceleration in the implementation time compared to the previous generation.”
GSMA’s analysis reveals that the region is highly heterogeneous, and the pace of 5G spectrum allocation has reflected this. “We have countries like Brazil, a global reference case with one of the most significant multi-band auctions in the history of telecommunications, and countries that, for various reasons, have not yet initiated the process,” GSMA states.
First Steps in Colombia and Costa Rica with 5G
Colombia, despite delaying the process for months, has taken its first steps towards 5G, and the government has already published the first draft of the resolution that will enable participation in the 5G auction. According to the Ministry of Information Technologies and Communications (MinTIC), this process will grant national spectrum usage permits for the 700 MHz, 1900 MHz, extended AWS, 2500 MHz, and 3500 MHz bands.
As per the Andean country’s schedule, permits for regional and local spectrum usage in the 3500 MHz band will be allocated in 2024 for those who do not have spectrum usage permits in bands designated for International Mobile Telecommunications (IMT).
Costa Rica has also put the draft terms for its 5G auction up for public consultation.
The 5G Journey in Latin America
Chile is a pioneer in 5G adoption in Latin America, becoming the first country in the region to conduct the auction, awarding the licenses to Entel, Movistar, and WOM in February 2021. Negrete highlights that Chile has had the lowest radio spectrum prices in Latin America for 14 years, “which explains why it has the best 4G network in the region,” with coverage above 96%.
In October 2021, the Dominican Republic awarded 5G licenses to Claro and Altice with a commitment to raise approximately $73.7 million.
In November of the same year, Brazil concluded its 5G auction with investments announced for a total of R$46.7 billion (approximately $9.589 billion today). Major operators Telefónica Brasil (Vivo), Claro, and TIM Brasil won the bids. “Brazil, undoubtedly, has had the best auction of all. They lowered spectrum prices by 80%. They modified the telecommunications law, eliminated many institutions. They also extended the duration of communications concessions and provided incentives for investment,” pointed out Negrete.
He further explained that “to surpass 4G, 5G needs wide, medium, and low-frequency bands, ten times more spectrum, and radio bases. It requires massive amounts of spectrum, and if it’s expensive, no one will buy it.”
Uruguay, Mexico and Guatemala
Uruguay completed its auction of a 100 Megahertz spectrum block for $56.1 million to América Móvil and Movistar last May. In June, the Uruguayan state-owned telecommunications company Antel launched 5G services for users with compatible devices.
Meanwhile, Mexico has allocated 5G spectrum through the secondary market and frequency reassignment (not through a formal 5G auction), according to GSMA’s information to Bloomberg Línea. In December of last year, Movistar became the third company to launch its 5G networks in Mexico, following AT&T, which announced a three-year gradual deployment plan in 2021, and Telcel, the sector’s largest company owned by businessman Carlos Slim, which also started its commercialization plans.
Tigo and Claro have launched their versions of 5G technology in Guatemala, but some experts believe it is more of an “enhanced 4G,” as it uses the existing infrastructure and still requires significant investments for widespread adoption.
Latin American Countries Making Moderate Progress
In Argentina, the auction was postponed this year amid disputes over spectrum prices, although the government will make a new attempt to approve the terms for a potential auction at a board meeting to be held by the National Communications Entity (Enacom).
In Ecuador, 5G plans remain on hold amid obstacles in the negotiation between the Ecuadorian government and mobile operators for the renewal of spectrum contracts. GSMA states that “the interruption of this process, for reasons not attributable to the operators, so close to the end of the concessions (in August and November of this year) and without having chosen the legal mechanisms that allow for the continuation of the negotiation within an extended period, causes uncertainty and instability for the sector.”
In Venezuela, the National Telecommunications Commission (Conatel) has stated its intention to hold a public 5G auction next year. And in July, Bolivia announced an auction for the implementation of the National Integrated Radioelectric Spectrum System (Siner), which will allow for the identification of frequencies ahead of a potential 5G auction.
A Pivotal Year for 5G
GSMA says that 2023 could be a pivotal year for 5G auctions in Latin America, with Uruguay having recently completed its spectrum allocation, Colombia officially starting its 5G journey, and other countries showing potential interest.
Jorge Negrete warns that Latin America continues to face high spectrum prices, especially in Mexico and Colombia - which have the highest prices in the region - as well as distorted markets, low Average Revenue Per User (ARPU), and an ecosystem with many public and private operators.
On the other hand, some countries are taking the lead, so the laggards need to advance their digital agendas and receive the necessary guidance from governments to attract investments and generate new business models to achieve successful 5G implementation.
Last year, Latin America completed 450 million 4G connections, and the adoption of this technology reached 65% of the total connections. In contrast, 5G is still in its emerging stage in the region, with the current adoption rate standing at only 2%, according to GSMA.