Popularity of MPLS VPN Fuels Demand for Data Communications Services in Latin America, finds Frost & Sullivan

General Science

– SMBs to compensate for the falling demand for data communication services in the corporate segment

BUENOS AIRES, Argentina, Dec. 12, 2014 /PRNewswire/ — The increasing adoption of dedicated Internet Protocol (IP) and multiprotocol label switching virtual private network (MPLS VPN) has given a boost to the data communication services market in Latin America. The region’s positive economic outlook and prevalence of cloud computing applications will help drive both new connections and bandwidth upgrades and ultimately, data communication services.

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New analysis from Frost & Sullivan, Latin American Data Communications Services Market, finds that the market earned revenues of $6.17 billion in 2013 and estimates this to reach $8.24 billion in 2019.

If you are interested in more information on this study, please send an email to Francesca Valente, Corporate Communications, at francesca.valente@frost.com.

The cost competitiveness of MPLS VPN service makes it suited for multipoint-to-multipoint connectivity, particularly in the retail vertical, which requires a large number of sites to be connected. This bodes well for the market, as MPLS VPN and very small aperture terminal (VSAT) facilitate the broad availability of data communications services.

Bandwidth requirements have been escalating due to data center consolidations, improved general connectivity and rising reliance on high bandwidth applications. However, since bandwidth is now available at a relatively low price, selling greater bandwidths no longer generates profits.

"In this scenario, operators are looking to create additional revenue streams by monetizing the value-added services (VAS) of the data solution offering," observed Frost & Sullivan ICT Senior Consultant Ignacio Perrone. "They are likely to focus on VAS such as telepresence, managed services, unified communications, software as a service, and cloud applications to enhance profitability."

Apart from the lower prices of basic connectivity, operators also need to strategize to deal with the saturation of the corporate segment. Market participants are attempting to shore up their business by harnessing the massive potential of the small and medium businesses (SMBs), which constitute a whopping 99 percent of the market in Latin America.

Operators in countries such as Mexico and Brazil are striving to expand the SMB segment, mostly through bundling strategies and customized services. In other countries such as Venezuela and Argentina, the SMB segment is still unexplored.

"SMBs currently rely on broadband technologies such as asymmetric digital subscriber line and or cable modem for their connectivity needs," noted Perrone. "This is indicative of the vast opportunities for newer business-class services and eventually, data communication service providers."

Latin American Data Communications Services Market is part of the Telecom Services (http://www.ipcommunications.frost.com) Growth Partnership Service program. Frost & Sullivan’s related studies include: Customer Engagement in Healthcare in Europe and North America, Mexico Total Telecommunications Services Market, Analysis of the Total Telecommunications Services Market in Colombia, Latin America Pay TV Services Market, and Analysis of the Brazilian Total Telecommunications Services Market. All studies included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.

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Latin American Data Communications Services Market

Francesca Valente
Corporate Communications – Latin America
P: +54-11-4777-5300
F: +54-11-4777-5300
E: francesca.valente@frost.com


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