La vida loca

Because of Latin America's shaky wireline infrastructure - and despite its rocky regulatory environment - broadband wireless access has the potential to breathe high-speed data life into the region.

The high-speed data story in Latin America is best characterized by what isn't happening there. While other parts of the world are playing host to scores of carriers employing a wide variety of technological approaches, Latin American countries are witnessing the broadband explosion on a decidedly smaller scale.

Broadband wireless technology could be the mechanism that changes all that. In a region that is in the early phases of deregulation (Figure 1), telecom services are defined by limited availability and low quality. Because wireline high-speed data access is difficult or impossible, broadband wireless is poised to enjoy a reign as the access method of choice in many Latin American countries. Competitive formats, such as fiber, DSL and cable modem architectures, are far behind broadband wireless, chiefly because of the limitations that come with having such an outmoded infrastructure to start with.

That said, broadband wireless is facing some potential limitations of its own in many Latin American countries, including spectrum availability, government education and responsiveness and a generally shaky economic environment. While some of those factors may keep the technology from realizing the success it is expected to reach in such areas as North America, Europe and Asia, broadband wireless backers still rank Latin America among the regions with the highest potential for broadband wireless success (Figure 2).

Pursuing the last mile

The group of network operators pondering broadband wireless in Latin America mirrors those pursuing similar opportunities in North America and other regions. For the most part, they are competitive upstarts, although in Latin America, many of them have larger carrier entities providing background support.

Formus Communications is one of the U.S.-based companies quickly becoming synonymous with international broadband wireless. The company originally was formed to bid on local multipoint distribution service licenses in the U.S., but when the auction process was delayed early on, Formus decided to direct its attention to opportunities in European and Latin American markets.

"We found that the business case was significantly improved in those markets because of the competitive nature and because there is little existing infrastructure - specifically, fiber - in those markets," says Doyle Gallegos, vice president of business for Latin America at Formus, which currently is licensed and in the process of deploying networks in Argentina, Peru, Colombia and Ecuador. "Our objective is to participate in every major market in Europe and Latin America."

Many factors make Latin America a draw for entrepreneurs. For one, most countries in the region are in the early stages of being freed from monopoly situations that have left businesses and residents without decent facilities for voice communications, let alone high-speed data.

"You have a market in Latin America that is only now becoming deregulated, and you have a teledensity that is much lower to begin with than the U.S.," says John Holmblad, executive vice president and chief technology officer at Diginet Americas, another U.S.-based entity that currently is building in Argentina, Brazil, Colombia and Peru. "Just as there is an opportunity to provide last-kilometer access to the Internet, there is an opportunity to provide voice."

Other potential competition is emerging from within the countries themselves, particularly from existing carriers that have put in some fiber base and other facilities and are looking for ways to expand their networks quickly and economically. "It's mostly carriers that already have some infrastructure," says Alex Carvallo, systems engineer for sales at Netro, a manufacturer of broadband wireless equipment. "They see broadband wireless as a way to expand their opportunity and protect their existing investment."

Some broadband wireless pursuers in Latin America are fronts for multinational telecom conglomerates that have tagged the region as an investment opportunity. For those entities, having an access technology method that doesn't rely on existing, outdated facilities is crucial, says one observer.

"As these big telecom operators reach out, they understand they don't have plant to leverage, so they're going to wireless," says John Skoro, marketing director for broadband wireless access in the carrier packet solutions unit of Nortel Networks. "The big operators need something that's going to give them voice and data convergence, as well as speed to market."

The ability to bypass the access plant that's already in the ground is especially important because of the shape it's in, Skoro notes. "The existing copper plant down there is poor at best," he says. "The incumbents never poured money back into their plant because they didn't have to."

In a region where fiber is often stolen or destroyed as quickly as it's deployed, over-the-air technology can be a much more secure option for backbone and backhaul links and access, says Mark Sanders, Latin American sales manager for Spike Technologies, a developer of infrastructure primarily for the multichannel multipoint distribution service spectrum ranges. Broadband wireless is not only a safe bet, but in many cases, the only logical one.

"These carriers have the distinct advantage of coming from the stone age of telecom and being able to trash everything and go with the best," Sanders says.

Ripe for the picking

Businesses in Latin American countries have a growing need for the communications capabilities that a technology such as broadband wireless can supply.

Although the region may be several years behind North America and Europe in terms of demand for Internet access and other high-speed data connectivity, the need clearly is growing beyond what existing networks can meet (Figure 3). Several observers estimate that in many Latin American countries, it can take six months for a business or a residence to even get a standard copper line, let alone an E-1 connection.

"There's a recognition that there's this thing of business value called the Internet, and they want access to it," says Holmblad of Diginet. "Once an alternative becomes available that gives them always-on access, they get interested." Diginet and Formus plan to focus their efforts at the same small and medium-sized business markets that are popularizing broadband wireless connectivity in North America. Likewise, any residential play will be based on trickle-down availability to urban-dwelling tenants.

"We will focus initially on corporate customers and migrate eventually to residential - most likely those in multiple-dwelling units," says Gallegos of Formus.

The demographics of the urban centers of most Latin American countries offer the best fit for the technology, says one equipment developer.

"Latin America has very large cities and large concentrations of people, and a lot of the rest of the region is sparsely populated," says Shaun McFall, vice president of product marketing for the broadband division of Digital Microwave Corp. "Very high frequency solutions are short range and suited to an urban environment. If you don't have concentrated areas, it's difficult to use the higher frequencies."

One of the major advantages of the broadband wireless architecture is its portability, McFall says.

"People move their operations, so some carriers like to be able to move their equipment around," he says. "Fiber stays in the ground, and you have to hope to be able to sell it to the next tenant."

The success of broadband wireless, particularly in the U.S., has been hindered somewhat by the sheer number of competitive carriers and the many alternative access methods that are viable. However, that isn't necessarily the case in Latin America. "Competing technologies drive down the price in the U.S., so the economics are tougher," says Cynthia Hillery, vice president of marketing at Netro.

In addition to the lack of fiber deployed in the access loops of Latin American countries, other technologies are hindered by the limitations of existing infrastructure. "The issue with DSL is plant quality," says Skoro of Nortel. "You have to have clean lines, and you can't have bridge taps and things like that. I'm not sure DSL will be that pervasive." Operators offering cable modem service may be more successful, Skoro says, but the target customers likely will be much more residential than business.

The air down there

Despite all of the positive conditions for broadband wireless in Latin America, there is at least one potential stumbling block: spectrum availability.

Unlike the U.S. and other regions that have tried-and-true - however flawed - processes for spectrum allocation, most countries in Latin America are just beginning to feel their way toward a preferred method.

"Certain markets have been extremely aggressive in opening up their markets and allocating spectrum," says Jennifer Lambert, director of marketing for the broadband wireless division of Lucent Technologies.

Sources note that the methods for doling out spectrum in many Latin American countries are based less on established regulatory processes and more on "relationships" - a euphemism that connotes images of inequality and even favoritism.

"Latin America is much more relationship-oriented - you have to work within the political system to get those rights," Skoro says. "You have to work through those tangles."

Diginet, for example, declines to reveal the details of how it secured the spectrum it currently holds, although the company insists that its methods were legitimate and legal. "We use what we think is very good market intelligence, and we attempt to get in early and develop a relationship with the regulators," Holmblad says. "We try to educate the regulators so they don't have to make some of the mistakes that the FCC might have made."

For companies pursuing opportunities in several Latin American countries simultaneously, the spectral variance from country to country can prove complicated - especially in the area of equipment selection because certain vendors specialize in equipment development for certain frequency ranges.

"There's inevitably going to be some spectrum assigned that there isn't a match for, particularly from a multipoint perspective," says Lambert of Lucent.

Diginet, for example, has struck an agreement with Ericsson for network infrastructure throughout Latin America but plans to rely on other multiple vendors to supply different types of gear. "We don't always get the same quantities of spectrum or the same frequencies," Holmblad says. "That's why it's important to have a lot of suppliers."

Likewise for Formus, which is deploying networks in many countries that have split frequency blocks at different spectrum ranges.

"The challenge for us is in the regulatory aspects and how they are allocating spectrum," Gallegos says. "We can't really say we have a uniform chunk of spectrum - we kind of have a hodge-podge. Our policy is to contract with the most effective vendor for each market."

Most of the carriers and equipment suppliers focusing at least part of their efforts on Latin America are confident that time and experience will rectify the somewhat confused spectrum situation in the major countries. Because the need and demand for high-speed data services are clearly evident, the spectrum issue - combined with loosening monopoly grips and an improving financial situation - are the factors that will ultimately determine whether Latin America will continue to incubate broadband wireless technology.

"If Latin America remains stable economically, this technology will continue to make inroads," Skoro says. "If things go through another big dip, the companies deploying this will scale back."