WOM wins contract to build Chile fiber network

Chile awarded local operator WOM a contract that includes an 86bn-peso (US$101mn) subsidy to build the 10,000km fiber backbone known as Fibra Óptica Nacional (FON). 

WOM beat rivals GTD and Mundo Pacífico. The backbone must go into operation before the end of 2022. The carrier will also have to make network capacity available to users from other companies.

According to regulator Subtel, WOM will be responsible for network deployment in five of six macro-zones. 

The last macro-zone, grouping the southern regions of La Araucanía, Los Ríos and Los Lagos, was not awarded because the only bidder, Mundo Pacífico, did not meet the financial requirements. A new call is expected for the coming months.

The fiber optic project was announced in May 2019 by President Piñera. Its goal is to improve connectivity to some 2.5mn residents in 186 localities from north to south.

FON is also expected to connect to Fibra Óptica Austral (FOA) – a 4,000km network of submarine and terrestrial fiber already connecting Puerto Montt and Puerto Williams in the far south.

The government said subsidies were necessary because FON encompasses zones with low population density and low commercial appeal to the private sector.

For the same reason, the regional government of Tarapacá will provide a subsidy of nearly 6.3bn pesos for the deployment and installation of fiber optics and Wi-Fi coverage in the far north of the country.

WOM won the contract partially because it asked for a smaller subsidy than its rivals. Its estimated costs per km were also cheaper than those from competitors.

According to latest numbers from Subtel, Chile ended 2019 with 3.43mn fixed broadband connections, representing annual growth of 5.5%, which gives a penetration of 17.7% per 100 inhabitants.

Cable modem accounted for 53.2% of all accesses and fiber optics for 27.9%, while 38.7% of connections were faster than 100Mb/s.

Among providers, VTR led with a 38.4% fixed internet market share, followed by Telefónica (27.6%) and Claro (13.3%).