Latin America, Great Potential for Cellular Backhaul
As is known in the sector, terrestrial mobile networks by themselves cannot cope with the growing demand of today’s market, and it is undeniable that the best complement is satellite technology.
Satellite connectivity not only allows mobile operators to provide the coverage and capacity required by their users and by government entities throughout the territory of a country, but also allows operators to add value to terrestrial networks. How? For example, when a terrestrial mobile network site is saturated, on-demand satellite contingent capacity can add incremental traffic in an almost undetectable way for the user, thanks to the flexibility of the technology that allows operators to manage both the network and the resources required efficiently. This greatly impacts the user’s service experience, who today are more connected than ever and who have become more demanding in terms of speeds and capabilities. Any delay can be critical and negatively impact their experience.
Within this analysis, I have identified three relevant advantages of the use of satellite cellular backhaul as the best option to connect remote areas:
1. Market Potential in Remote Areas
Remote areas with few inhabitants are not only the ideal opportunity to expand coverage and generate new business by increasing the number of users, but also some of these are desired tourist destinations in Latin America that require connectivity for their visitors.
Destinations such as Leticia in Colombia, with a population of 42,000 citizens and an internet penetration of only 15 percent in 2016, is now an important growth opportunity with new schemes for the provision of services and products that oblige the operators to adjust to the requirements of the market and the environment. An example of this is the recent alliance between the largest mobile telephony operator in Colombia and one of the most important satellite service providers in Latin America to strengthen the 3G voice and data service in the area.
The city of Iquitos, the sixth most populous in Peru with 437,400 inhabitants, known as the Star City of the Amazon, with non-existent terrestrial connectivity, is among the five most visited in Peru with more than 100,000 tourists a year and a growing industry. This city also supports its connectivity needs with a cellular backhaul service via satellite.
The Galapagos Islands in Ecuador that receives more than 200,000 tourists a year with high connectivity requirements also has a satellite cellular backhaul network that covers its 25,000 inhabitants and also tourists’ demand with free wireless zones and roaming agreements. The Galapagos has become the province of Ecuador with the highest internet penetration with 38 percent coverage and most of that traffic is cellular backhaul via satellite.
Additionally, thanks to the various government programs and state policies, total coverage of the territory is a requirement to keep the cellular operator’s licenses active with the general objectives of providing connectivity to all citizens. Such regulation has driven an interesting demand model for the entire value chain of the telecommunications sector.
2. Operational Efficiency
The costs of cellular backhaul have fallen dramatically in recent years. Rapid technological evolution has expanded the available satellite offering and is helping satisfy the increasing demand for capacity by end users. Today, economic conditions are ideal to operate under cost-efficient and flexible models, allowing operators to grow their network in accessible ways in areas of difficult access with low population density.
Before satellite was a last resource alternative used by cellular operators to meet regulatory requirements; today, satellite is used more and more by the same operators to expand their networks in profitable manner.
3. Exponential Growth in the Demand of Mobile Data and High User Experience Demands
Currently, according to a report on the behavior of the mobile economy in Latin America and the Caribbean in 2017 by the Organization of Mobile Operators (GSMA), 9 out of 10 internet users connect from a mobile device, mostly smartphones, through which they surf for more than 90 minutes a day, doubling the time they spend on fixed devices. The region has 300 million mobile internet users and, by 2020, an increase of 50 percent is expected, reaching 450 million. This makes Latin America the second fastest growing region in the world.
According to the Cisco Visual Networking Index for 2021, the data consumed by more than 5,500 million mobile phones will be multiplied by six, representing 20 percent of the world’s data traffic. Likewise, mobile network speeds will increase three times, from 6.8 Mbps to 20.4 Mbps.
The use of the mobile network as the main source of connectivity in the region represents socio-economic challenges and infrastructure challenges. Its rapid growth has stimulated digital economies. In fact, according to the aforementioned GSMA report, “between 2009 and 2013, investments in mobile infrastructure equivalent to $48 billion were made in Latin America and, with the deployment of LTE in full swing, an estimated $64 billion of investment in the next four years as we enter the 5G era.”
This behavior of both the region and consumers requires new alliances between different players in the telecommunications sector and a dynamic that evolves into new products that leverage a cost-efficient response for both service providers and users in order to conquer the available market opportunity. Satellite has and will continue to play an important role in such dynamics.
Pablo Hoyos is the vice president of product and operations at Axesat. He has more than 15 years of experience in the technology and telecommunications sector. Hoyos has led the development and the portfolio of the company, always having as an axis of work the innovation which has allowed Axesat to position itself as a leading company in the region and for five consecutive years has been recognized by the WTA as one of the operators of the most important teleports in the world.