Telefonica Leads Broadband Growth in Latin America

Founded in 1924, Telefonica is a leading Multinational Telecom Operator (MTO) with headquarters in Spain. Its activities are mainly centred on fixed and mobile telephony with broadband as a key tool for the development of both. Telefonica has a presence in 25 countries and a global customer base of 280 million. Its growth strategy is focused on markets in which it already has a strong foothold: Spain, Europe, and Latin America. With distinct broadband advantages, Telefonica has long dominated the broadband market in Latin America and has become the biggest telecom player in the region.  

As broadband technologies develop rapidly and new services are introduced, people in Latin America are enjoying the convenience of fast Internet. Broadband Internet is becoming a necessity in their lives. In recent years, the number of broadband subscribers has grown by double-digits in countries such as Brazil, Argentina, Peru, Chile, and Columbia. This represents a great opportunity for telecom operators in the region. The top 3 Latin American MTOs Telefonica, AM, and TIM as well as local operators OI, UNE, TA, ETB, and ANTEL are eager to grab the maximum share of profits from the lucrative development opportunity.

Facing aggressive challenges from other MTOs and competitive pressure from local operators supported by government, Telefonica must seize the opportunity for better growth. It needs to deploy more Customer Premises Equipment (CPE) for fast service expansion, adopt more competitive broadband products and solutions to lower CAPEX and OPEX, offer more service options and higher bandwidth to attract end users, and provide greener products to meet the energy saving requirements.

In 2010, Telefonica planned to purchase 2.5 million CPE units for its branch offices in Brazil, Argentina, Columbia, Peru and Chile. Different countries have different requirements, and these products need to be customized to meet diverse needs. Complex customization, stringent equipment testing, and large scale equipment purchases over a short period was a big challenge for Telefonica.

After many technical discussions and field tests, ZTE was chosen as Telefonica’s major CPE supplier. An expert team was quickly established that was responsible for analysing broadband business models and providing prototype tests and customized versions. Telefonica stipulated tens of customization requirements for home gateways, covering software and packing material. ZTE developed CPE products based on a unified platform that featured modular functionality and easy code transplanting. These features greatly shortened the product customization cycle, reduced development cost, and ensured fast product delivery.

In laboratory testing with Telefonica, equipment suppliers had to understand Telefonica’s strict testing procedures and overcome communication barriers caused by different time zones and significant cultural differences. However, Telefonica had full confidence in ZTE for its professional and dedicated testing engineers capable of providing 24-hour remote technical support and tackling test problems fast and accurately. In cases of test failure, fault information would be fed as soon as possible to ZTE’s R&D team for troubleshooting. This ensured smooth lab testing.

To meet broadband user demands in Latin America and global broadband development trends, Telefonica has adopted a variety of custom-made CPE products supplied by ZTE. These include wired ADSL modem (ZXDSL 831), wireless ADSL modem (ZXV10 W300 and ZXV10 H108), wireless VDSL modem (ZXDSL 931), Ethernet uplink modem (ZXV10 H118N), and compact Q-type modem (ZXV10 W300S and ZXDSL 831II). The latest broadband technologies TR069, 802.11n, UPNP, and DLNA have also been used.

Benefiting from ZTE’s efficient product customization and fast delivery capability, Telefonica succeeded in quickly expanding its broadband services throughout Latin America. After commercialization, the CPE products proved their outstanding performance, high network security, and good compatibility. The complete product portfolio addresses different networking scenarios. Abundant user interfaces meet various service requirements, and highly integrated PCB and software designs are eco-friendly. Telefonica was satisfied with ZTE and chose it as one of its most important strategic partners.  

By cooperating with equipment suppliers, Telefonica fulfilled its target of deploying 2.5 million CPE units throughout Latin America. ZTE supplied 1.3 million CPE units to Telefonica, capturing more than 50% market share. Telefonica will strengthen its cooperation with ZTE. This will underpin Telefonica’s business expansion throughout Latin America and increase its profitability in the region. In partnering with ZTE, Telefonica will continue to lead broadband growth in Latin America.