Internet Connectivity Prices Fall by 22% in the LAC Region

14/10/2021

The number of Internet exchange points has doubled in Latin America and the Caribbean over the past five years, while prices have fallen by approximately 22% in the last three years. These numbers were shared by Anahí Rebatta, research analyst at TeleGeography, during her presentation at LACNOG 2021. She also confirmed that “prices will maintain their downward trend” in the future.

Anahí Rebatta specializes in international Internet traffic, network infrastructure and voice traffic analyses, with a focus on Latin American markets. During her presentation, she pointed out that 71 submarine cables are currently in service and providing connectivity in Latin America and the Caribbean.

According to the chart presented by Rebatta, 1.2 billion dollars were invested in submarine cables in Latin America between 2018 and 2020, and a further 0.8 billion is expected to be invested during 2021-2023.

Ten new projects are on the way (see image below) and will add to the 71 submarine cables that are already in service and connecting the countries of the region.

Another important element for the region is the presence of 102 Internet exchange points. Here, Argentina and Brazil top the list of countries with the highest number of IXs.

Pricing trends. Rebatta also analyzed transport pricing trends for six routes over the last three years and concluded that, on average, during this period prices fell by 22%. “Based on a small sample comprised of six routes, we can say that prices in the region are converging. Most transactions are in this range, which should be used as a reference,” she added.

According to her analyses, prices in key markets declined on average 25% between 2018 and 2021. Prices in the same key markets declined even faster: between 2020 and 2021, they fell an average of 33%.

Rebatta also analyzed several markets individually, and presented the case of São Paulo, which she chose as an example because it has the highest international connectivity. “(San Pablo) ranked number one in terms of international Internet bandwidth, with 13.6 terabits per second in 2021, a number that grew 25% between 2017 and 2021,” Rebatta observed.

Buenos Aires took the second place in terms of international Internet bandwidth, with 13.3 Tbps and several datacenters. “Submarine cables do not land in Buenos Aires but in neighboring cities were landing facilities are already in service,” she explained. 

Rebatta concluded by sharing that telecommunications market prices typically follow the same trend. “Sometimes, we wonder how these companies manage to grow. The answer, however, is volume. Prices may go down, but volumes go up. The trend in Latin America is the same as in North America, Europe and Asia. We don’t know how fast prices will go down, as this depends on the competition and existing structures and infrastructure, but prices will maintain their downward trend in the future.”