Traditional wireline communication investment has stagnated in numerous developed markets around the globe, but there's still some upside opportunity for new infrastructure deployment within the emerging markets.
Case in point: the number of fixed lines for voice and Internet services in Latin America will reach 163.8 million in 2015, that's an increase of 2.3 percent over 2014 deployments, according to the latest market study by Pyramid Research.
This represents a broadband penetration rate of just 12 percent and a voice telephony penetration rate of 17 percent of the population. Clearly, the forward-looking growth potential is still significant.
While the overall number of fixed lines will grow at a CAGR of 2.1 percent, fiber-to-the-home or business (FTTH/B) connections will increase at a CAGR of 34.9 percent over the next five years.
"Growth within fixed communications markets will be mainly driven by the increase in broadband lines," said Marcelo Kawanami, senior analyst at Pyramid Research. "By year-end 2020, Pyramid Research expects Latin America to have 181.9 million fixed broadband lines."
Pyramid Research now forecasts that fiber-optic communication connections will account for 6.9 percent of broadband lines (5.1 million lines) by year-end 2015 -- that's up from 5.1 percent in 2014.
While this indicates rapid growth, xDSL remains the broadband technology that is most widely used, representing 57.5 percent of the total Latin American broadband lines in 2014.
Telecom network operators continue to grow FTTH/B service deployment, but given the typical high-price for broadband internet access through fiber-optic technology in this market, service coverage is likely to be restricted to selected areas within major cities.
That being said, Pyramid Research expects that xDSL technology will remain the dominant wireline broadband method within Latin America during the next few years -- still maintaining over 40 percent of all broadband connections at the end of 2020.
"In all major Latin American countries, governments have developed National Broadband Plans to foster the expansion of broadband in remote locations which have not been historically served due to the high cost of network deployment and uncertain revenue potential," says Kawanami.
Over the next five years, traditional voice services carried through circuit-switched networks will decline by a CAGR of 6.3 percent in Latin America, even though the market will experience the increased adoption of VoIP services.
However, Internet service revenue is forecast to expand at a CAGR of 6 percent in the LATAM region between 2015 and 2020. Pyramid Research now expects the Latin American fixed communications service market to be worth $44.8 billion in 2015. Note, mobile communications revenue is not included in this forecast.