MWC Americas Takeaway: LatAm gets ready for 5G

5G has been the main theme of the Mobile World Congress Americas held in Los Angeles this past week. The technology promises higher speeds, lower latency and a new way of consuming content and communicating.

Speaking to reporters, GSMA general director Mats Granryd said that the era of 5G would be that of the platform economy, giving way to new business models like Uber and Airbnb.

Operators will be able to slice networks and offer segments for different use cases, many of which do not yet exist.

GSMA's Latin America director Sebastián Cabello told reporters that with 14 new governments being voted in during 2017-18, the region has the opportunity to reset digital agendas and align policies with strategies to leverage the digital economy.

CHALLENGES

Mobile internet penetration varies widely between countries in the region. Argentina, Chile and Uruguay are set to see penetration levels of 60% this year, while others like Guatemala and Haiti remain below 35%, according to the GSMA's latest Global Mobile Trends report.

The report says network coverage is no longer the main access barrier. The challenge is affordable charges and developing locally relevant content.

On the billion people worldwide who are still unconnected to the internet, Granryd said the issue is not lack of coverage but lack of skills in how to access the web, affordability and lack of relevant content.

Granryd emphasized the need for public-private partnerships to address those three issues and to work together to meet the United Nations sustainable development goals that aim to reduce poverty, inequality and environmental degradation, and promote prosperity, peace and justice.

Cabello underscored the need for regional governments to address issues including the high cost of spectrum and high taxation, which drive up the costs of services and devices for end users and discourage investments from operators.

In the case of Colombia, Cabello said that a 4.7tn-peso (US$1.55bn) fine slapped on Claro and Movistar as part of an asset reversion trial, as well as asymmetrical interconnection rates imposed on dominant operator Claro, had slowed investment in the sector in recent years.

In Brazil, the country has worked well to roll out IoT but taxes remain among the highest in the world.

Chile, for many years held up as an example in the region, is seemingly reversing its beauty contest system which charges the minimum for spectrum in order to encourage investment and appears to be planning to opt for a model that maximizes income for state coffers. This resulted in taking away spectrum in the 3.5GHz band to be used for 5G.

"There are no champions in the region. All countries are doing some things well and others not so much," Cabello said. "What we need in the region is more carrot and less stick to encourage investments."

According to the GSMA, mobile revenue growth will dip in 2018 and 2019 but still remain around 2%, driven by rising 4G and smartphone adoption.

The sector is vulnerable to political instability, inflation and currency fluctuations.

Operator revenues are forecast to increase by a CAGR of 1.3% to US$82.3bn in 2025 from US$74.1bn in 2017.

In 2025, 64% of connections in the region will be 4G compared to 30% in 2017. Some 8% will be 5G. Operators are investing some US$15bn per year in networks.

5G coverage in Latin America is forecast to be much lower than in the US (49%), China (28%) and Europe (29%).

But this is not significant, according to Cabello. 4G will continue to co-exist with 5G for the considerable future. 5G will be a niche technology for specific use cases. What is important is to continue moving forward to narrow the digital divide, he said.