GETTING WITH THE IT CROWD

Ecuador 2013 | TELECOMS & IT | REVIEW: ICT

The number of Internet users has risen ten fold over the past six years, thanks to government initiatives and a focus on rural areas. Mobile telephony penetration rates are steadily increasing, ranking Ecuador above other countries in the region.

Following a steadily increase and strengthening in the telecommunications sector over the past six years, Ecuador is undergoing a technological revolution. According to the most recent data from the Minister of Telecommunications (MINTEL) internet consumption has increased tenfold, from 6.14% in 2006 to 55% in 2012. Computers are present in 26.4% of households, compared to 3.6% in 2008, and laptops in 13.9% of households compared to 4.9% in 2010, as a result of the country´s young population and rising purchasing power. Mobile users have doubled since 2006 to a total of 17.4 million active lines, with a 115% penetration rate in 2012, as multi-SIM usage is a widespread means of taking advantage of special offers. Although lower than those for mobile telephony and broadband, fixed telephony shows positive growth rates, in contrast with other countries in the region like Brazil, Chile, and México. Today, there are 2.3 million installed lines in Ecuador.

The creation of the Ministry of Telecommunications six years ago, and the diverse government policies boosting ICT accessibility and educating the population such as Infocentros Comunitarios, Aulas Móviles, and the National Broadband Plan have played a key role in the development of the sector. These programs have focused greatly on rural areas, spreading access to technology. In 2012, 36,136 Ecuadoreans were connected and received ICT certificates,while 503,669 benefited from the use of modern technological devices. “Aulas Móviles" in particular won the Project Prize for digital inclusion at the World Summit on the Information Society (WSIS) in Geneva in 2013.

Over the last seven years, Ecuador has invested almost $15 billion in technological infrastructure, hardware, and software for digital education across its 23 provinces. Ecuador has also increased its fiber-optic infrastructure from 1,400 to 15,200 kilometers of cable.

ON THE MOVE

According to the latest figures from the National Telecommunications Superintendence (Supertel), there was a 5% growth in mobile lines as of May 2013, compared to the previous year. There are 17,06 million mobile lines in Ecuador, with about 98% of mobile services offered by the private sector and only 2% by the public sector. The leading operator is Conecel, a unit of Mexican giant America Movil that is trading as Claro, and it has a 69% market share with 11.7 million users. This figure is followed by Movistar Ecuador, controlled by Spain´s Telefónica, with 29.2% (5 million lines). State-owned Corporación Nacional de Telecomunicaciones (CNT) has a 1.7% market share with 288,000 users. The 25-34 age group has higher mobile device accessibility, at 77.6%, followed by 72.8% for the 35-44 age group. Among men 52.6% have a mobile phone, versus 48.3% of women. Surpassing the regional average, mobile penetration stands at 115%. Yet despite this figure, there are still opportunities available for new actors. Supertel is encouraging the entry of Virtual Wireless Operators. Currently, Only 22.8% of the population has Mobile Internet access, and 81.2 % of mobile users are prepaid. This suggests room for growth in mobile data services as well as in postpaid. The sophistication of Ecuadorean consumers is increasing, and with this, the smartphone sector is also booming. There were 839,705 smartphone users in 2012, marking a 60% increase on 2011. In 2012 12.2% of those with a mobile phone had a Smartphone, up from 8.4% the previous year. These figures reveal that the deployment of infrastructure to cover 3G technology in urban areas rose from 66% to 93% between 2008 and 2012, whilst in rural areas this figure went from 18.6% to 51.3% during the same period.

Alcatel-Lucent, and Corporación Nacional de Telecomunicaciones recently announced the deployment of Ecuador's first 4G LTE high-speed mobile broadband network, covering the cities of Guayaquil, Cuenca, Machala, and Loja, as well as most of the major cities on Ecuador's Pacific Coast and the southern region. The new network will provide an increased capacity of high-speed mobile broadband to enable a range of services and applications over mobile devices at download speeds of up to 100 megabits per second and upload speeds of 40 Mbps. These speeds will enable CNT to offer enhanced fixed, mobile and convergent services, such as high definition video streaming to a range of customers in Ecuador.

FIXED TELEPHONY

Following a 4.7% increase in 2012, fixed telephony maintains positive growth rates unlike other countries in the region. According to the National Telecommunications Superintendence (Supertel) there are 2.3 million installed lines, representing 15.42% national population coverage. In addition, 42.4% of Ecuadorean households owned a fixed line in 2012, compared to 5.3% in 2008. In contrast with mobile telephony, over 90% of services are offered by the public sector. The state company CNT is the leading operator, with 87.6% of the market (2 million clients), followed by EcuadorTelecom with 3.7%, and Setel, with 2.16%. Public telephones registered the greatest growth rates, reaching a total of 20,238 lines. CNT covers 46% of these, followed by 24% each from Setel and Ecuador Telecom.

GETTING ONLINE

According to MINTEL, there are currently 8.5 million internet users nationwide, compared to 823,483 in 2006. Between 2005 and 2012 ,Ecuador saw a 48.7% increase in broadband, to 54.7% in broadband penetration and reflecting a greater growth rate than other countries in the region. These growth figures are followed by Colombia with 24.19%, Chile at 9.55%, and Argentina at 17.94%. According to MINTEL, a 10% rise in broadband penetration contributes 0.52% growth in GDP. This growth has been incentivized by government programs like the National Broadband Plan, aimed at generating a significant impact in different areas of the country's economic, social and educational spheres.

State CNT is the leading player in fixed line internet with 54.1% of the market. Ecuador is one of the countries to have lowered broadband service tariffs by more than 50% compared to 2010. Currently there are tariffs of less than 18 dollars for 1.5 Mbps. There are 941,434 connections for fixed internet and 3.5 million connections via mobile, compared to a non-existent market back in 2006.

A new undersea cable is set to increase Ecuador's internet connection capacity 2,000-fold. The Pacific Caribbean Cable System (PCCS) will be approximately 7,000km long, and will connect Ecuador with Florida. The project, which is set for completion by 3Q14, will reduce end user costs. In an interview with TBY, Fabián Jaramillo Palacios, the Superintendent of the Superintendency of Telecommunications (SUPERTEL) explained that in the past, the full potential of those new connections was not transferred to the end user, with a part of that benefit being absorbed by the operators. “We hope now that with this increase in offerings, we will produce benefits for end consumers and that prices will begin to fall," he said. Jaramillo emphasized the importance of widening broadband to allow for extra services, “I am sure that the new cable will help not only the telecoms and ICT sector, but also the health, trade, agricultural, and other sectors," he added.

IT'S ALIVE

According to the Ecuadorean Software Association, AESOFT, the software sector in Ecuador has seen a significant evolution in the past five years, with a compounded annual growth rate (CAGR) of around 22%, rising from $95 million in 2004 to $260 million in 2009. The total revenues of the hardware and computer equipment sector reached $790 million in 2009, on a CAGR of 14.6%. The software and hardware sectors in Ecuador during 2011 generated 8,000 jobs, which was a major contribution to local economic development.