# Speedtest® Market Report

### Central America

#### Published October 11, 2016

The rapid evolution of telecommunications we are seeing elsewhere in the Western Hemisphere has been lagging in Central America. With that said, the data definitely shows mobile phones are the primary way to access the internet in the region. Speedtest data shows that of all the Central American countries, Nicaragua has the fastest mobile internet download speeds but ranks only 60th in the world. Panama has the fastest average fixed broadband download speeds in the region but ranks a distant 98th in the world. In many regions around the world, the telecom industry is a cornerstone that supports and drives economic growth. Unfortunately, the growth of Central America’s telecom industry has been stymied by issues including low incomes, high poverty, lack of governance and lack of competition in some markets.

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### Central America Fixed Broadband Speeds

### Central America Mobile Speeds

Just 25 years ago, internet services were primarily available through dial-up. Today, broadband and mobile speeds are as important to consumers as smartphone design, camera quality and the plethora of available apps. The growth of innovative online services such as Netflix, Clarovideo and Movistar Play and live-streaming from smartphones has resulted in greater need for improved broadband access and performance. Most of the seven countries that comprise Central America struggle to keep up in the race for faster broadband. Internet and mobile access is hindered by wide-ranging economic and social issues as much as infrastructural challenges driven by decades of unstable governments; all of which contribute to lower speeds. Many of these countries are trying to improve their situations. A few are even trying to implement public-private partnerships in order to improve infrastructure and employment opportunities, however, this hasn’t turned into a trend across the region yet.

When reviewing the performance of Central American countries, we find that none has fixed broadband speeds ranked among the best in Latin America. Average fixed broadband download speeds in the seven Central American countries ranged on the high end from 10.70 Mbps (in Panama) down to 4.37 Mbps in Nicaragua. Average upload speeds were fairly consistent across the region, yet still not great compared to other countries, ranging from 3.34 Mbps (in Belize) down to 2.44 Mbps (in Nicaragua). For comparison, high-performing Latin American countries Brazil and Mexico showed average fixed broadband download speeds of 16.32 Mbps and 18.19 Mbps and average upload speeds 5.75 Mbps and 9.12 Mbps, respectively. Instead, Central American countries have speeds comparable with lower-performing Latin American countries like Argentina where the average download and upload speeds are 8.36 Mbps and 2.13 Mbps.

## Central America Fastest ISPs

According to data from the World Bank, the Central American country with the most fixed broadband subscribers per 100 people is Costa Rica with 10.52, which is about the same as Mexico at 10.48. Honduras, on the other end of the scale, has about 1.39 subscribers per 100 people which comes in last place in Latin America behind Bolivia at 1.59. For context, the global average is 10.56 with countries like the US, Canada and the UK averaging 31.06, 35.38 and 37.38, respectively. In comparison, Iran has 9.46 fixed broadband subscribers per 100 people and India has 1.24.

There are correlations between income and poverty levels and fixed broadband penetration in Central America, as is the case across the globe. Panama and Costa Rica have lower poverty levels and higher GDP per capita compared to the other countries in Central America, and their fixed broadband penetration rates are much higher. In the rest of Central America, we see lower GDP per capita reflected in lower fixed broadband penetration, with Honduras having the lowest of both in Central America. This makes sense considering that purchasing a computer or laptop is a higher expense, along with the ongoing expense of fixed broadband contracts. From a business perspective, the cost and time to build out infrastructure are more difficult to justify in countries with a smaller subscriber base.

While fixed broadband has a small user base, even in the poorest and most far flung regions in Central America people are getting their internet via wireless networks and using smartphones. Looking at Speedtest data we can see that while Nicaragua ranked lowest in fixed broadband in the region with a 4.37 Mbps average download speed and 2.44 Mbps average upload, their mobile speeds are significantly better with an average download speed of 14.56 Mbps and an average upload speed of 8.13 Mbps. In fact, in all countries but two, Panama and Costa Rica, average download speeds for mobile internet outpace fixed broadband speeds by substantial amounts. See the map below for country-specific statistics.

## Central America Fastest Mobile

International mobile companies have deep footholds in the market, as is the case with Claro (a Mexican carrier) in El Salvador and Honduras, and Movistar (Spain-based Telefónica’s mobile brand) in Guatemala, Costa Rica, Nicaragua and Panama. Also, the entire population of Central America (nearly 40 million people) is less than the total number of mobile internet users in Mexico (42 million) which makes Central America a much smaller market. Costa Rica leads the region with the most mobile internet users at 2.5 million, followed by Guatemala (2.2 million), Honduras (1.8 million), Nicaragua (1.8 million), El Salvador (1.6 million), and Panama (1.2 million); Belize was not included in the report.

According to the GSMA, an organization representing mobile operators worldwide, mobile internet has significant growth potential in Central America, because large numbers of people have mobile internet coverage but don’t use it. The largest disparity is in Guatemala which has a market penetration rate of 51%. Panama, in turn, has a penetration rate of 81%. For comparison, the rate in the US is 88%. The main barriers to market expansion in Central America are lack of local content, poor digital literacy, affordability, and the challenges of expanding infrastructure to more remote and poorer regions.

#### HOW SPEEDTEST MEASURES FIXED BROADBAND

ISPs offering fixed broadband services are ranked based on top speed performance, which is determined using the 90th percentile of the download and upload speeds, or Top 10%, of each ISP’s Speedtest results. While many ISPs offer various service tiers, our aim is to determine who is fastest by showing the performance achieved by each residential ISP’s top tier. These speeds represent customers who subscribe to faster service tiers and provide an accurate view of the top-end performance of a given ISP. It is important to note that customers subscribing to higher tiers will generally pay more for their service than the average subscriber. For purposes of this report, only Top Providers in a given location were included in the analysis. Each ISP that accounts for at least 3% of the total sample size in the geographic area are included as a Top Provider. When analyzing the Central American countries overall, we use the average speed, as it represents the experience of a typical consumer in those countries. When comparing ISPs individually, we use top speed performance, as it represents the performance a consumer could reasonably expect to receive if they subscribe to one of the ISP’s higher tiers of service.

#### HOW SPEEDTEST MEASURES MOBILE CARRIERS

The top mobile carriers in Central America are ranked using the average download speed of “Modern Devices” - those devices that are capable of connecting to the fastest, broadly-available wireless networks. In Central America, this means devices capable of 4G LTE. This ensures we provide an accurate view of the typical performance a user can achieve using a modern smartphone or tablet on a given mobile network. Top carriers are those that each account for at least 3% of the sample size in the geographic area. When analyzing the country as a whole, we use the mean value of all cellular results to account for the typical user. However, when analyzing individual carriers, we look at “Modern Devices” to account for top speeds available in Central America.

## Country Specifics

## Market Summary

Speeds in Central America are far behind when compared to the performance in other Latin American countries, but many mobile internet users already have good connectivity compared to fixed broadband.

Companies and regulatory bodies in the seven countries continue to work to improve connectivity in the region, and mobile is likely to continue to be the best way to bring high performance connectivity to Central America moving forward. The World Economic Forum on Latin America issued a report this year calling for attention in five areas to boost broadband appeal in the region as a whole: creating an open dialogue between regulators and the private sector; implementing strong policies to ensure economic growth, improved infrastructure and reduced costs; prioritizing affordability and access; promoting competition and investment; and ensuring the integrity of data.

The advice, if heeded, would benefit Central America as well by establishing better regulations and creating balanced policies that improve infrastructure development and economic growth in the telecommunications sector.

This report was written by Natalia Muñoz.

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