Telecoms & IT

Getting Connected

Panama’s strong economic growth has translated to promising economic prospects in nearly all sectors. The country’s telecoms market has been no exception. The sector has grown solidly in recent years […]

Panama’s strong economic growth has translated to promising economic prospects in nearly all sectors. The country’s telecoms market has been no exception. The sector has grown solidly in recent years and has brought in a huge amount of investment. Telecoms revenue in the country recently surpassed the USD1-billion mark, assisted by strong growth in broadband and mobile services.

Compared to the rest of Central America, the country’s fixed-line teledensity is considerably under the regional average. Historically underutilized because of other operators using cable or wireless networks, the segment is finally making solid growth.

Among broadband, the country has long suffered from limited competition. The incumbent Cable & Wireless Panamá essentially holds a monopoly on DSL access in the country, controlling nearly 90% of the fixed-line network and having steadfastly resisted any attempts to break up its network. WiMAX and cable modems offer the only alternative cross-platform competition.

Telecommunications competitor UFINET owns a nationwide fiber optics network through which it is the only telecommunications company able to offer service in the country’s geographic extremes. Panama is a geographically complex country for telecoms operators to work, and over 10% of the country still does not have access to internet.

Panama’s mobile sector has also taken off in recent years. The popular trend of having more than one SIM card has driven mobile penetration rates well above 190%, which puts the country leaps and bounds ahead of the regional average. The sector had traditionally been limited in competition until new legislation in 2009 allowed two new mobile providers to enter the market, resulting in an instant rise in competition and subsequent and considerable drop in prices. The introduction of América Móvil’s Claro and Digicel Panamá effectively broke the historic duopoly held by Telefónica’s Movistar and Cable & Wireless Panamá.

Internet penetration has been increasing steadily thanks to a 2009 government initiative to connect the entire country to the internet. Recent surveys show that only 84% of the country has potential access to the internet. The government’s initiative aims to increase that number to 100%, as well as to boost connection speeds to 100Mbps. Following the government’s announcement, Panama in 2010 became the first country in the world to offer free wireless broadband access to everyone in the country. The Internet for All project is not meant to compete with broadband providers, as its primary focus is digital inclusion, not necessarily providing broadband.

The government, with help from the private sector, still has considerable work to do in order to get the entire country connected to the internet. Recent reports show that approximately 20% of people in rural areas do not have access to mobile services, a viable alternative to accessing internet that avoids laying cables in geographic extremes. Panama has three-fourths of its population living in urban areas, and one out of four people living outside urban areas do not have access to mobile services.

Other problems related to further extending connectivity include a lack of effort from some providers, which do not see enough demand, both fixed line and mobile, in rural areas to make the investment. The country’s mountainous and heavily forested geography have prevented the construction of a nationwide broadband infrastructure.

To get a better understanding of the newly competitive telecoms environment in Panama as well as the challenges it presents, TBY sat down with Andrey Gorsky, General Manager of Punto Pago Panama, a company providing innovative solutions for mobile top-ups. “One of the challenges was competing with companies that offer this same service in Panama,“ Gorsky said, “There were four Russian companies operating here. It was a competition issue but we won and are now the leaders. Staff management was another challenge. The people here were different, and we did not understand how to be efficient managers. Now we are better. We learned to work under all the conditions here and were able to establish a normal operation.“

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