It's true. The localization of content, applications, and compute in local hubs like São Paulo, paired with submarine cable delays, network buildout logistics, and the simple fact that bandwidth demand can't keep doubling, has slowed bandwidth demand in Latin America.
But Senior Analyst Juan Velandia put the audience at Capacity LATAM at ease: bandwidth demand in the region remains strong overall. Markets just can't sustain consistently high growth rates as they mature, and global demand is cooling. (Annual growth rates have dropped from 45% in 2020 to 29% in 2024.)
Juan brought these insights and others to his presentation on the state of the market in Latin America. Beyond bandwidth demand trends, the audience got a peek at new cables on the horizon and aging systems nearing retirement, as well as an assessment of regional interconnectivity.
Presentation Highlights
Bandwidth Demand and Growth Trends
The demand for bandwidth in Latin America is experiencing significant growth, although at a slower rate compared to global trends. The region is projected to have a 30% CAGR from 2020 to 2030, with a notable increase in demand driven by local content and applications.
- Annual global bandwidth growth rates decreased from 45% in 2020 to 29% in 2024.
- Latin America’s bandwidth demand is forecasted to grow at a 30% CAGR from 2020 to 2030.
- The region saw a 34% CAGR from 2020 to 2024.
- Localization of content and applications is increasing in local hubs like Sao Paulo and Santiago.
Factors Contributing to Slower Growth
Despite the overall growth in bandwidth demand, several factors are contributing to a slowdown in growth rates in Latin America. These include delays in submarine cable projects and the natural maturation of markets.
- Submarine cable delays are impacting growth.
- The phase of network buildout influences demand.
- New market entries lead to overbuilding, which eventually stabilizes growth.
- The law of diminishing returns limits sustained high growth rates as markets mature.
Infrastructure and Connectivity Developments
The region is undergoing a refresh of its network infrastructure, with new submarine cables planned and aging systems nearing retirement. This is crucial for improving connectivity and meeting future demand.
- New cables like Firmina, TAM-1, and Carnival Sub Network are set to enhance connectivity.
- Aging systems are being phased out to make way for new infrastructure.
- Planned cables will improve connections to APAC and Africa.
Regional Hubs and Market Connectivity
A look at regional hubs reveals varying levels of infrastructure and connectivity across Latin America. The introduction of a Market Connectivity Score will help compare these hubs effectively.
- Regional hubs are assessed for their connectivity and infrastructure.
- The Market Connectivity Score will provide a comparative analysis of these hubs.
- Brazil leads in cloud regions with 9 active sites, followed by Mexico (6) and Chile (4).
Cloud Infrastructure Growth in Latin America
The cloud landscape in Latin America is expanding, with 22 active cloud regions and two planned for the near future. Brazil is the leader in cloud infrastructure, significantly outpacing other countries in the region.
- 22 active cloud regions exist, with two more planned.
- Brazil has the highest number of cloud regions at nine.
- Mexico and Chile follow with six and four regions, respectively.
- Recent launches in 2024 indicate ongoing growth in cloud infrastructure.
Data Center Deployment Trends
While Latin America is experiencing growth in data centers, the deployment rate is not as rapid as in more developed regions. This indicates potential for future expansion.
- LAC is not deploying data centers at the same rate as developed regions.
- The region has 22 active cloud regions, indicating a growing market.
- Infrastructure improvements are necessary to keep pace with demand.
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