Panama: ICT development
As if to endorse the adage that good things come in small packages, Panama is megabytes ahead of its much larger regional neighbours in technological development. The World Economic Forum’s “Global Competitiveness Report 2011-12” ranked Panama 40th in the category of technological readiness, well ahead of Brazil (54), Mexico (63) and Argentina (64). The mobile segment has been the driving force in the growth of the sector, largely due to increased consumer spending. The recent entry of two new telecoms operators has deepened competition within the sector, as well as expand mobile saturation, which exceeds the regional average.
The information and communications technology (ICT) market is expected to continue its expansion alongside Panama’s impressive economic growth, which has seen GDP expand at an annual average of 8.1% over the past five years, according to data from the World Bank.
Indeed, Panama’s mobile teledensity of 184.72 mobile subscriptions per 100 habitants in 2010 represents an average annual increase of 123% over the 13.88 recorded in 2000. It is also significantly higher than the global average of 78 and the average of 117.8 in the developed world, according to figures from the International Telecommunications Union (ITU).
The National Authority of Public Services (ASEP) is responsible for supervising the telecoms sector, which was privatised in 1997. Spain’s Telefónica, operating under its Movistar brand, and Cable and Wireless Panama, were previously the only telecoms operators in the market until the arrival of Caribbean-based Digicel in 2008. In May of that year, Digicel Panama paid $86m for a 20-year concession to establish wireless services at 1900 MHz. The company, which spent $400m to establish operations and an additional $100m in 2011, had successfully garnered some 750,000 subscribers as of March 2011.
In 2009, Mexico-based América Móvil entered the market through its Claro brand. América Móvil is the largest wireless operator in the region with 159m subscribers; however, it has yet to achieve similar success with its Panamanian operations, and it presently has the smallest market share among the four operators. According to data from Dichter & Neira Research, a regional consultant, Cable and Wireless Panama led the mobile market as of July 2011 with a 53.2% market share, followed by Movistar (28.5%), Digicel (16%) and Claro (2.3%).
The entrance of the two new mobile companies has increased competition, resulting in consistent price reductions. According to ASEP, some 93% of mobile users in the country use cheaper pre-paid accounts, a significant factor in keeping average revenue per user (ARPU) low. Mobile data services are expected to be the next battleground, as operators will look to increase ARPU. All operators have functioning 3G enhanced HSPA+ “4G-capable” networks.
While Panama’s mobile market has flourished, its fixed-line telephony market has stagnated in recent years, in line with a trend common in most developed telecoms markets around the world. According to figures from the ITU, fixed-line teledensity has marginally increased over the past decade, moving from 14.52 per 100 habitants in 2000 to 15.73 in 2010. At the beginning of 2011, Panama had a total of 553,122 fixed-line subscriptions.
Fixed-line internet services, however, have shown a marked improvement over the past 10 years, with subscriptions jumping from 42,982 in 2000 to 285,070 in 2010. These figures indicate fixed-line internet teledensity reached 8.11 lines per 100 habitants in 2010. More advanced broadband services are responsible for a significant portion of these, with 275,639 broadband subscriptions reported in the country in 2010, according to the ITU.
Meanwhile, the Panamanian government has set the goal of universal internet access through its “Internet for All” project, which was established in 2008 and now provides basic internet coverage to a reported 80% of the Panamanian population, though speeds are limited to 512 KBps. Free Wi-Fi hotspots have been established in hundreds of public schools, libraries and parks throughout the country.
In a saturated mobile market, telecoms operators will be forced to look to new revenue streams, such as mobile data services and the bundling of additional services. The ICT market as a whole is projected to reach $910m in 2012, according to Buddecom, an international telecoms consultancy.