Mobile Data Boom Predicted for Latin America

Latin America, a region that trails much of the world in Internet access, will experience a wireless data boom in the coming years, according to IDC and The Strategis Group.

by Michael Pastore
Managing Editor, Cyberatlas
[December 7, 2000]

A booming cellular market in Latin America is expected to fuel the development of a mobile data market in that region, according to a report by International Data Corp. (IDC), which forecasts the Latin American wireless data market to be worth $4.2 billion by 2004.

The report, "Data on the Go: The Mobile Data Market in Latin America, Forecast and Market Analysis 2000-2004," predicts the number of cellular subscribers in the region will grow to 143 million while the number of mobile data subscribers will jump to more than 71 million users by 2004.

"While the average revenue per user earned by cellular operators continues to decrease due to increased competition, mobile data immerges as a critical revenue source given the expected traffic increases derived from wireless application protocol (WAP) and the per-message fees that will be collected from short messaging services," said Hector Hernandez, senior research analyst with IDC Latin America.

In the short term, IDC expects most of the mobile data activity in Latin America will be in the form of short messaging services. WAP-based services will have already taken off by 2001 and will be generating almost $200 million in revenues from more than 107 million minutes that Latin American users will utilize that year.

Longer messages in the long term
As the volume and scope of content and applications increase substantially, the WAP protocol comes into play as a more advanced technology for the delivery of wireless data over cellular networks because it does not face constraints regarding the length of the data that is being transferred. According to IDC, the number of WAP users is expected to soar from just over 500,000 by the end of the year 2000 to more than 19 million in 2004.

"The greater flexibility and potential of WAP-based applications will drive the WAP market with greater prevalence after 2001, once some of the main obstacles, such as limited handset availability, lack of localized content, and infrastructure limitations, are removed," Hernandez said.

Despite the obstacles to WAP implementation, and the dilemma relating to the choice of investing in short-term solutions compared to making bold moves toward deploying third-generation technologies, the number of cellular operators offering WAP services in the six largest markets in Latin America has already increased during the year 2000, from 7 in July to 23 in October.

Due to the enthusiasm of cellular players for the Latin American market, the biggest obstacles to the development of mobile data services are eroding.

WISPs in the air
According to a study by The Strategis Group, wireless Internet services are expected to grow from 1.4 million subscribers today to more than 47 million in 2007. The study, "Latin America Wireless Internet Markets," analyzes the region's six largest markets—Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela for many of the most common wireless Internet technologies.

The Strategis report highlights two preconditions from growth in the Latin American market: personalized content and a wide availability of devices.

"Operators must provide a wide array of handsets to satisfy all market needs for wireless data, from basic affordable handsets to advanced, more expensive handsets with all the bells and whistles," said Carlos Guzman, Latin American analyst with The Strategis Group.

"Operators and content providers must provide time-sensitive information, as wireless Web browsers are going to be conducting strategic searches rather than browsing, especially with the low speeds and limited applications offered by second-generation networks.

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