At the 2018 TowerXchange Meetup Americas, different telecom experts and industry, different telecom experts and industry stakeholders with operations in Central America sat down together to analyse the main challenges that both towercos and operators are facing when developing their network and infrastructure in the region. Carlos Santiago Rodriguez Medina, one of the leading managers of Telefónica, led a conversation that dissected different scenarios in each Central American market and explored solutions and collaborative approaches to boost infrastructure development.
Exploring different scenarios
The discussion started at the very top of the Central American geography. The roundtable moderator initially addressed Guatemala, which faces a very common issue across all regional markets: “Infrastructure developers in Guatemala are facing one of the most frequent challenges in Latin America: regulation and permitting barriers.” As stated by various participants, the decision-making process in the country is decentralised and often, the state permits are not enough to move forward with new deployments. Instead, one would need to obtain local permits too and even when all the paperwork has been done, some local landowners might delay or stop the construction of the towers. “Telefónica has more than 2,500 sites in the country and many are on hold due to local opposition,” said Carlos.
In Salvador, the regulation is not as tricky but towercos and operators have their own issues. The moderator noted that: “There we have more flexibility as the regulation allows the construction of multiple sites in the same area, which drives competition among towercos. However, rent prices for the land tend to be higher than other neighbouring countries and local taxes are notably high, which hits our budget and economic plans.”
Meanwhile, Nicaragua has experienced a dramatic shift. Earlier this year, the country was living a very prosper and stable period. The government was facilitating all the permits and Telefónica has been able to develop a solid, extensive infrastructure network in the last few years. However, the situation dramatically changed in April, when social protest erupted. The economy has fallen and this is certainly affecting the telecoms industry, not just nationally. “The country is now blocked; you can’t transport any equipment or materials through Nicaragua at the moment and that is impacting other regional markets that have tight relationship with the country. The situation is toughening regional logistics,” stated one of the roundtable participants whose company has been affected by the Nicaraguan crisis.
In frontier Costa Rica, the central government sets up all the regulation. “Telefónica,” commented Carlos, “had a lot of issues when we first landed in the country back in 2012, but we have been able to develop a modern network thanks to the combined efforts of the towercos and our team there.”
Panama was finally highlighted as one of the best and most flexible markets from a regulatory perspective. “Regulators are proactive, flexible and approachable.” The regulatory framework is well defined and rules are clear, which helps operators when developing their business plans. The country has seen a massive boost and increase in both data and capacity lately and is one of the most developed countries in the region.
On top of all the regulation barriers, energy security and grid access are big challenges for operators and towercos across CALA and every country have their particular power supply difficulties.
Beyond towers
Panama is not just a good regulatory example, but also one of the most advanced countries in the region in terms of indoor solutions. DAS have massively evolved in the country and they are bringing a huge business opportunity for infrastructure developers. Huawei, one of the market leaders in Panama, has developed an underground network to provide services on the Panama metro.
However, expanding beyond towers present a huge challenge for the industry, not just in Central America. In Brazil, some real estate developers and promoters are already including DAS in their new buildings and malls, but both operators and towercos complained about their high prices during the conversation. A participant from Brazil stressed that “The regulator forces MNOs to provide indoor signal and they will set up a penalty if they fail to do so. However, nobody regulates the fees that the building owner charges.”
A cooperative approach to business
As highlighted in other roundtables during the TowerXchange Meetup Americas, investing and working closely with local communities is one of the best alternatives for operators and towercos to boost social acceptance and facilitate permits.
“In both Nicaragua and Salvador, you need to get through the local authorities and they have a tight relationship with the local communities. If you include social initiatives in your project, you will be making a positive impact and smoothing the regulators,” commented one Nicaragua-based infrastructure developer.
One of the participants from Dominican Republic shared an interesting example. Some operators developed a very forward-thinking agreement and decided to share the Opex between them. A few local operators started coordinating diesel deliveries so they could share the transportation cost. The towers were close to each other so it was quite a straight-forward task from a logistic point of view, and finally they decided to use a common diesel generator. Moreover, they agreed to work with local contractors aiming to create a positive economic impact on the community and make them part of the projects.
Operators demand an end-to-end solution. “Infrastructure providers should offer a full, integrated service that includes the towers, the energy and the fibre optic access.” As we listened throughout the two days of the TowerXchange Meetup Americas, towercos need to be proactive and expand their offer. “Towercos in LatAm should follow the European and American examples and integrate more and more services, especially fibre,” one of the participants stated.
On the other hand, towercos demand higher fees: “We are willing to improve our offer, but that is obviously going to increase the rates.”
Risk sharing was one of the alternatives discussed. Towercos could get more involved from the beginning and share risks and revenues with MNOs. Ideally, operators aim for a joint approach, where towercos and MNOs can developed an integrated, collaborative business model. “Risk, Opex and revenues would be shared in a win-win solution.”
Dialogue and education will be crucial
Central America is way behind in terms of fibre development, grid access and regulatory frameworks. Additionally, operators are struggling to find a profitable business model for 5G development, and they have to find the best way to monetise the increasing use of free apps such as WhatsApp as well as the upcoming presence of free Wi-Fi in public areas. However, the market holds amazing opportunities and there is a long way to go in terms of network deployment and VAS.
Connectivity and modern networks will be crucial to drive economic and social development, especially in less mature markets across the region. The industry needs to play a didactic, informative role and educate both communities and regulators on the social and cultural benefits of telecom infrastructure, which is often perceived as a purely lucrative mean for operators and developers rather than a crucial component of economic growth.
