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US EPA's plan to revisit mercury rule analysis moves forward, but impact unclear

Energy

Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Banking

Street Talk Episode 37 - Keep 'Marge' Happy — How To Win The Battle For Deposits

2019 Outlook For Latin American Multichannel Broadband Market

Latin American Multichannel Broadband Market 2018 Recap


US EPA's plan to revisit mercury rule analysis moves forward, but impact unclear

The Trump administration has advanced its plan to reconsider the cost-benefit analysis used by the Obama administration to justify its rule restricting mercury and other toxic pollutants. While some industry advocates are saying the change may have little practical impact, clean air advocacy groups and environmental attorneys are warning the move could spark new attempts to completely overturn the rule.

Announced in December 2011, the U.S. Environmental Protection Agency's Mercury and Air Toxics Standards, or MATS, required coal- and oil-fired power plant operators to install new pollution control equipment or retire non-compliant older generators. Mercury, a powerful neurotoxin, can stunt cognitive thinking and adversely affect the nervous systems of children and adults.

A coalition of states and industry groups challenged the regulation after it was published in the Federal Register February 2012 and the matter was litigated all the way to the U.S. Supreme Court. The high court in June 2015 remanded the rule to the EPA, finding that the agency did not consider the cost of compliance early enough in the rulemaking process. But the rule still went into effect, and utilities spent billions to bring the U.S. coal generation fleet into compliance.

In response to the Supreme Court's remand, the EPA issued a supplemental finding in April 2016 that regulating mercury and certain other pollutants from the nation's power plants was, in fact, "appropriate and necessary" after considering the monetary costs of implementation. Moreover, the EPA has estimated that the MATS each year avoids between 4,200 and 11,000 premature deaths, 4,700 heart attacks, 130,000 asthma attacks, and 5,700 hospital and emergency room visits.

The EPA's supplemental finding was challenged in the U.S. Court of Appeals for the District of Columbia Circuit, but the court in April 2017 put the litigation on hold while the new Trump administration reviewed the supplemental cost finding.

A February 2018 analysis by the White House's Office of Management and Budget appeared to bolster the EPA's supplemental cost finding. OMB analysis of 26 air and radiation regulations issued by the EPA from 2006 to 2016 concluded that the MATS rule was the most expensive of those rules but also provided the most benefits. OMB estimated that the roughly $9.6 billion annualized cost of the MATS rule is more than offset by the annualized benefits ranging from $33 billion to $90 billion.

Nevertheless, the EPA in May announced that it planned to issue a new rulemaking addressing the agency's risk and technology review for the MATS rule. According to The Washington Post, the EPA on Sept. 28 sent that new rulemaking to the White House's Office of Management and Budget, kicking off a roughly 60 to 90 day interagency review process. Once that process is complete the proposal will be published in the Federal Register for public comment.

Co-benefits and costs

Industry and labor groups urged the EPA in July not to modify the basic tenets of the MATS, noting power generators have already spent $18 billion (including operation and maintenance expenses) to comply with the standards. Those investments and the associated impact on electricity rates mean regulatory certainty "is critical," according to a letter signed by the Edison Electric Institute, American Public Power Association and National Rural Electric Cooperative Association power trade associations, as well as groups of electric generating companies and labor unions.

But EPA spokesman John Konkus said in an Oct. 1 email that while the agency recognizes the utility sector has made substantial investments and reduced mercury emission by 90%, the MATS rule is "an egregious example of the Obama administration's indifference" to conducting an appropriate cost-benefit analysis.

Konkus recalled that the Supreme Court criticized the EPA for imposing $9 billion in regulatory costs while the agency's rule impact analysis said the regulation would only produce $4 million in annual benefits directly related to lower mercury emissions. The rest of the estimated benefits are the "co-benefits" associated with a reduction in fine particles that the MATS equipment also helps eliminate, according to the Obama EPA's supplemental finding.

Joseph Goffman, senior legal counsel in the EPA's Office of Air and Radiation under Obama, said in a Sept. 28 email that the Trump EPA previewed the potential issues in play as part of an advanced notice of proposed rulemaking targeting how the agency calculates costs and benefits in the rulemaking process. He recalled that the advanced proposed rule specifically cited the MATS as an example of past actions where the agency justified the stringency of a standard based on the estimated ancillary or co-benefits of cutting pollutants not directly regulated by the action.

Goffman, now executive director of Harvard Law School's environmental and energy law program, predicted that the EPA's new approach to calculating a rule's potential costs and benefits reflects the arguments made in a lawsuit brought by Murray Energy and the Utility Air Regulatory Group in 2016 challenging the Obama EPA's supplemental finding.

There, the plaintiffs argued that benefits related to the MATS rule must be limited to a list of hazardous pollutants detailed in Section 112 of the Clean Air Act that does not include fine particulate matter. They further argued that the EPA must consider "all costs and disadvantages, including the impacts on coal companies, communities and workers, as well as localized impacts" in evaluating the cost of compliance.

Cody Nett, assistant general counsel for Murray, said in a recent email that the EPA's proposal to revisit the "outsized" role that "co-benefits" play in the cost-benefit analyses used to justify costly regulations targeting pollutants such as mercury "is appropriate and long overdue."

Nett asserted that the Clean Air Act already requires the EPA to regulate the impact of fine particulates through enforcement of the applicable National Ambient Air Quality Standards. Thus, their inclusion in the MATS analysis is double-counting, Nett said. "Conversely, to the extent the co-benefits only arise by reducing emissions lower than necessary to achieve the NAAQS, they represent an inappropriate end-run around that standard and the process under which it was set," he added.

But Janet McCabe, the former acting assistant administrator for the EPA's Office of Air and Radiation in the Obama administration, said in a recent interview that the office worked diligently with OMB to avoid such double-counting. "Each time we did a rule we were very careful to not count as benefits things that had been counted in previous rulemakings," she said.

Even if the EPA adopts a new method for calculating the costs and benefits of the MATS, Jeff Holmstead, a former Republican EPA assistant administrator, said in an email that doing so does not mean that the agency will also eliminate the MATS rule.

"EPA would have to go through another separate rulemaking process to eliminate the MATS rule, and I don't think that anyone is talking about doing that," he said. "It would serve no purpose because the power sector has already spent billions of dollars to bring all their plants into compliance."

Conrad Schneider, advocacy director of the Clean Air Task Force, said even if the EPA does not vacate the rule Murray could try to do so through litigation. "The battle is over who's going to have the blood on their hands," he said in an interview. "Is it going to be EPA who repeals the rule, or is it going to be Murray who goes into court and says the underpinning for the rule is gone so get rid of the rule? That's the only intrigue that's left here."

Schneider said his organization would view any attempt to vacate the rule as illegal, recalling that the D.C. Circuit in 2008 overturned the George W. Bush administration's attempt to "delist" utilities from required mercury pollution controls under Section 112 of the Clean Air Act. "The argument is fairly simple," Schneider said. "This industry is listed, and it can't really be delisted under the Clean Air Act."

Annual costs

As environmental groups and the Trump EPA prepare to battle over co-benefits, the cost to run the MATS equipment that has already been installed appears to be lower than anticipated.

A Department of Energy grid study in August 2017 cited an earlier EIA analysis that found that by the end of 2012, 64% of U.S. coal generating capacity already had the appropriate environmental control equipment to comply with the MATS rule and operate past 2016.

As for the rest, about 20 GW of coal capacity retired while another 87 GW of coal-fired capacity installed mostly activated carbon injection systems to comply with MATS. DOE said the cost of those controls "averaged a relatively modest $5.8 million per generator from 2015 to 2016." But EIA also estimated that "operators invested at least $6.1 billion from 2014 to 2016 to comply with MATS or other environmental regulations."

MATS pollution control equipment at the 2,250 MW coal-fired Navajo Generating Station near Page, Ariz., costs about $7 million annually to run, according to Scott Harelson, a spokesman with the Salt River Project electric utility. At the 762-MW coal-fired Coronado Generating Station, which the utility also operates, annual operation and maintenance costs are approximately $1.7 million, Harelson said. "SRP is evaluating the proposed reconsideration to determine its possible impact on our operations," he said in an email.

A spokeswoman for the WEC Energy Group Inc., which serves four states in the Upper Midwest, said the utility is tracking the rulemaking as it proceeds with a string of coal-fired power plant retirements.

"It is difficult to pin down a reliable number specific to (operation and maintenance) costs for compliance as we have retired or are in the midst of retirement plans for many of our coal units," WEC spokeswoman Amy Jahns said. "With those retirements comes less emissions and lower operating costs including costs to comply with environmental regulations."


Watch: Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

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Listen: Street Talk Episode 37 - Keep 'Marge' Happy — How To Win The Battle For Deposits

Jan. 14 2019 — The competition for deposits is quite fierce and banks might even feel the greatest pressure when vying for large commercial customers. In the episode, Kelly Brown, CEO of American Deposit Management, a financial services firm that helps connect depositors with banks, talks about the competitive landscape and pricing in the market, while offering strategies to win new business.

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Technology, Media & Telecom
2019 Outlook For Latin American Multichannel Broadband Market

Highlights

Pay TV and broadband growth trend strengthens in 2019.

Broadband net adds projected to be almost double those of multichannel in 2019.

IPTV gets a boost from new Telefónica strategy.

Jan. 14 2019 — The Latin America multichannel and broadband industry is heading into 2019 with positive headwinds. Demand for convergent services and economic recovery in larger markets should drive industry growth in 2019. The big caveat is the economy, with external shocks threatening to decelerate economic growth. Amid this environment, we expect the M&A market to remain active, with transactions in Mexico and Central America highly likely. New virtual multichannel, satellite broadband and IPTV services should also gain a foothold in the region.

Pay TV and broadband growth trend strengthens in 2019

Kagan estimates Latin America's multichannel and broadband subscriber bases should expand during 2019, with broadband net adds projected to be almost double those of multichannel. The trend toward convergent services is expected to help cable regain strength in the multichannel market, accounting for the majority of net additions. Multichannel revenues are forecast to grow, with Argentina, Brazil and Mexico expected to be the biggest contributors to multichannel revenue growth. The importance of fiber technologies is rising, concentrating the highest share of fixed broadband net additions during 2019.

Already a client? Refer to the regional profile linked here for additional details.

Economy: Outlook for 2019

The World Bank projects Latin American and Caribbean GDP will expand 2.3% during 2019. However, deteriorating external conditions and local challenges might hinder economic growth. Recovering private consumption and investments should drive GDP growth in the region for 2019, although foreign exchange volatility and rising financing costs could weaken this trend. Prospects for fiscal consolidation in Argentina and Brazil remain challenging due to political opposition, especially in Argentina, where general elections are to be held in October. Venezuela's economic prospects remain dire, worsened by the recent drop in oil prices.

M&A: Mexico and Central America to remain active

The possibility of Telefónica SA divesting its Mexican and Central American operations, along with Millicom International Cellular SA's and Liberty Latin America Ltd.'s continued competition for acquisition targets in Central America to strengthen their positions in the region, raises the prospects for active Latin American M&A in 2019. Investment funds and Latin American telecommunication groups seem to be competing for Telefónica's assets in Mexico and Central America. Liberty Latin America is actively looking for acquisition opportunities in Latin America through its Chilean subsidiary VTR and is cited as a potential buyer for Telefónica assets, along with competitors Millicom, Entel Chile and AT&T Inc., although the latter may be barred in Mexico due to the mobile market concentration that would result.

AT&T Inc.'s acquisition of Time Warner Inc. may also lead to changes in its Latin American operations. After the failed IPO of DIRECTV Latin America LLC (now named Vrio) in 2018, the company may still need to divest some assets in Brazil due to local regulations preventing pay TV operations from owning content producers.

Brazilian regulator Anatel also raised spectrum caps at the end of 2018, opening up the country's mobile market for consolidation. Embattled former iDEN carrier Nextel Telecomunicações SA has been looking for a buyer for years, and Telecom Italia SpA's TIM Participações SA has already announced it has made an initial offer. Regional telco Sercomtel Telecom may also choose to sell its spectrum assets — which may be allowed if a telecom reform bill currently under discussion in the Senate is passed — or even the whole company.

In Argentina, regulatory conditions for the approval of Telecom Argentina's merger with Cablevisión Argentina may lead the company to divest many assets in 2019. The operator must sell off its fixed broadband business in 28 areas of the country where the merger could affect competition, as well as excess wireless spectrum above the regulatory cap.

Already a client? Please click here for our annual global mobile spectrum roundup, and here for an overview of upcoming global spectrum auctions.

A final ruling by the Court of Cundinamarca put to rest the Bogotá municipality's proposal to sell Empresa de Telecomunicaciones de Bogotá SA ESP, or ETB. The court cited irregularities in the approval of the proposal as its basis to nullify the decision. Nevertheless, the court said the ruling does not prohibit the sale of ETB, but that the municipality will have to initiate a new approval process to achieve it.

Effects of election results

The election of Jair Bolsonaro in Brazil and Andrés Manuel López Obrador in Mexico introduced some uncertainty into the Latin American political picture. Both presidents are in the opposite side of the political spectrum, Bolsonaro on the right and AMLO on the left. Nevertheless, both candidates ran on a populist agenda, with ambitious campaign promises that pose a risk to fiscal discipline. Ivan Duque, Colombia's new president, is likely to maintain his predecessor's market-friendly policies, while Argentina's Mauricio Macri's inability to implement fiscal reform may cost him the presidency in general elections in October 2019.

In the telecommunications sector, AMLO pledged to promote market efficiency and close the gap in access to telecommunications, whereas Bolsonaro's program remains vague on issues related to media and telecommunications.

Already a client? Please click here for additional insights about AMLO election, and here for insights on Bolsonaro election.

LatAm countries with upcoming 2019 elections

Argentina
Bolivia
Dominican Republic
El Salvador
Guatemala
Panama
Uruguay

Virtual multichannel

DIRECTV Latin America launched Latin America's first virtual multichannel services in November in Colombia and Chile. The company is expected to expand the offer, DIRECTV Go, to Argentina and other Latin American markets during 2019. Telecom Argentina executives have also hinted that the company's video-on-demand/TV Everywhere service, Cablevisión Flow, which offers over 200 linear channels to pay TV subscribers, may soon be launched as a virtual multichannel service for nonsubscribers.

Telefónica has also been quietly rolling out access to its TV Everywhere platform, which includes several linear channels, to nonpay TV subscribers in some Latin American markets, such as Central America and Chile. The Movistar Play Full offer is available as a value-added service to Telefónica’s mobile and fixed broadband, and to voice subscribers for an extra fee.

Satellite broadband

Penetration of residential satellite broadband is set to increase as more Ka-band satellites become available in the region and new operators enter the market. Hughes Communications Inc. continued to expand its HughesNet service, launched in Brazil in 2016 and Colombia in 2017, to Peru and Ecuador during 2018. Competitors Al Yah Satellite Communication Co. PJSC and ViaSat Inc. also began operating in the Brazilian market during 2018, while satellite operator Hispasat SA launched a white-label service in the region.

Dish México announced it would partner with Hispasat SA and Gilat Satellite Networks Ltd. to launch satellite broadband service in Mexico. Dish México will leverage Amazonas 5, Hispasat's high-throughput satellite, to reach underserved markets. Amazonas 5 has the potential to reach 77% of Mexico's population. The broadband service will use Gilat's SkyEdge II-c platform to provide high-value services to Mexican consumers and small and medium-sized enterprises.

Already a client? Please click here and here to learn more about satellite broadband service offers currently available in Latin America.

Argentina quad-play

Following new regulations allowing telcos to offer multichannel services, Claro Argentina and Telefónica de Argentina SA launched IPTV offers during 2018, but coverage remains limited, as convergent services were initially only permitted in the major cities of Buenos Aires, Rosário and Córdoba, in order to protect small operators in other regions. In 2019, this will be expanded to cities with populations below 600,000. Delays in passing a telecoms reform bill allowing telcos to offer DTH may lead the two companies to abandon plans for a national satellite pay TV offer, choosing to focus on high-end convergent services based on their growing fiber networks.

Meanwhile, Argentina's largest player, Telecom Argentina, will be allowed to offer convergent services only in 2019, as part of antitrust regulators' restrictions for approval of its merger with Cablevisión Argentina.

IPTV gets a boost from new Telefónica strategy

Telefónica made a strategic decision during 2017 to prioritize investments in fiber deployments to power ultrafast broadband and IPTV services, as well as expanding its VOD portfolio for fiber-based subscribers with STB-embedded over-the-top services such as Netflix and Amazon Prime. Based on this, as well as the continued entry of new players and migration of many existing telco and cable networks to fiber, we revised our IPTV forecast up for 2019.

Regulatory outlook

In Brazil and Argentina, "mini-reform" bills for the telecommunications industry remain stalled in Congress but are expected to finally be approved in 2019. Argentina's "Ley Corta," as it became known for being a reduced version of the government's originally proposed telecoms reforms, allows telcos to offer direct-to-home services in major cities starting in 2020, with gradual expansion to smaller towns up to 2022. Although passed by the Senate in July 2018, the bill, which also bans exclusive network agreements in order to encourage network sharing, among other measures, still awaits voting in the Chamber of Deputies.

Meanwhile, the Brazilian Senate is expected to resume discussions on the PLC 79 bill, which have been frozen since 2016. The reform would require telcos Telefônica Brasil and Oi SA to migrate their public fixed telephony concession contracts to a private service authorization contract, as is the case with their mobile and broadband businesses. In exchange, the companies would have to invest in broadband expansion the value of the public fixed telephony infrastructure they would be incorporating. The value of these "reversionary assets" and where these investments should be made are to be defined by the regulator Anatel and may take a year to implement. The PLC 79 bill also tackles several other measures favored by the industry, including a reduction in tariffs for satellite broadband services, which is expected to encourage more competitive prices, allowing telcos to sell spectrum assets and exempting broadcasters from regulatory tariffs.

The Mexican Congress reduced the annual budget for the telecommunications regulator, Instituto Federal de Telecomunicaciones, or IFT, by 25% compared to 2018. The budget cut would weaken the IFT amid regulatory battles with América Móvil SAB de CV's Teléfonos de México SA de CVand other important Mexican players.

Already a client? Click here to access the full article.

Global Multichannel is a service of Kagan, a group within S&P Global Market Intelligence's TMT offering.

This piece was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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Technology, Media & Telecom
Latin American Multichannel Broadband Market 2018 Recap

Highlights

M&A activity drives consolidation in Central America

DIRECTV launched region’s first virtual multichannel service

Brazil multichannel continues losing DTH subscribers

Jan. 11 2019 — Latin America and the Caribbean are starting to show signs of economic recovery, which has helped the region's multichannel market return to growth despite continued direct-to-home losses in Brazil. Meanwhile, some telecommunications groups are acquiring operators in Central America to strengthen their competitive position and gain convergent capabilities. DIRECTV Latin America LLC for its part is honoring its traditions of innovation by introducing the region's first virtual multichannel service and 4K linear TV channel. In Colombia, Empresa de Telecomunicaciones de Bogotá SA ESP's, or ETB's, cost-cutting plan's early results are showing progress.

Economy

The Latin America and Caribbean economic environment seems to be stabilizing, with GDP expected to expand 1.7% in 2018, according to the World Bank. Recovering private consumption, investments and commodity exports should be primary drivers of economic stabilization. Consumer price inflation was 2.6% during 2017, according to World Bank data. However, unemployment remained at 8.3%, a high for the past 10 years, based on World Bank data.

Intense fluctuations in exchange rates in several Latin American markets during 2018, especially in Argentina and Venezuela, are expected to cause multichannel revenues expressed in dollars to drop by 6.1%. The year was also marked by political uncertainty, with elections in seven countries, including the region's largest markets, Brazil and Mexico.

Already a client? Please refer to the economy and multichannel affordability section of Latin America profile for more information. For in-depth analyses of the perspectives following presidential elections in Mexico and Brazil, refer to the articles linked here and here.

Regional

Following a slight drop in subscribers in 2017, mainly due to direct-to-home losses in Brazil, the Latin American multichannel market returned to growth in 2018, while fixed broadband continued to grow steadily, with broadband households expected to overtake multichannel households in the region by year-end 2018. IPTV adoption accelerated in 2018, boosted by Telefónica SA's, or TLF's, decision to upgrade its last mile to fiber, mainly in Brazil and Chile.

Already a client? Please refer to the cable, DTH and IPTV sections of Kagan's Latin America profile for more information, and the article linked here for an analysis of Latin America's top multichannel groups.

Latin America and the Caribbean has one of the lowest levels of fixed-broadband penetration among the global regions included in our analysis, ahead of only the Middle East and Africa estimated at 44.0% in 2018. Cable overtook DSL in 2018 to become the largest broadband technology platform in the region, while FTTP continues to gain market share rapidly.

Already a client? Please refer to the broadband section of Latin America profile for more information, and to the articles linked here for an analysis of Latin America's top broadband groups and here for an analysis of broadband speeds in the region's largest countries.

AT&T Inc. subsidiary DIRECTV, América Móvil SAB de CV, or AMX, and Grupo Televisa SAB were the top three multichannel providers in the region ranked by pay television revenue during 2017. The top three fixed-broadband providers in the region ranked by revenues were América Móvil, Telefónica and Oi SA.

Click here to find out more about our Latin America Multichannel & Broadband Market Overview report, which provides an in-depth group-specific analysis on the multichannel, broadband and telephony market in Latin America.

M&A

M&A activity slowed during 2018 in terms of values compared to 2017, when the merger of Telecom Argentina and Cablevisión Argentina was announced. The deal ranks as the Latin American multichannel market's second most important M&A transaction in the past four years, with an implied value of $11.08 billion. 2018's largest transaction, meanwhile, was Millicom International Cellular SA's acquisition of an 80% share in Panama's largest MSO, Cable Onda SA, at an implied value of $1.46 billion.

Consolidation was intense in Central America, with several acquisitions registered during the year, mostly by Millicom, which is already the leading operator in most markets in the region. In 2017, Liberty Global PLC announced it would divest its Latin American operations and in 2018, Liberty Latin America Ltd. became an independent company, launching an inorganic growth strategy with its largest operation, Chile's Vtr.Com Spa, in charge of seeking acquisition opportunities in the region, also with a focus on Central America. The company led M&A activity in the year with its announcement in February that it had acquired Costa Rica cable operator Cabletica SA, but was outmaneuvered by Millicom, which throughout the year bought several other key Central American assets that Liberty had an eye on.

TV Everywhere and virtual multichannel

In November 2018, DIRECTV launched Latin America's first virtual multichannel service, DIRECTV Go, in Chile and Colombia. The platform gives non-pay TV subscribers online access to over 80 live linear channels, as well as VOD content, through mobile apps or browsers for 19,990 Chilean pesos (13,490 Chilean pesos promotionally) or 80,000 Colombian pesos. Traditional multichannel subscribers to the operator's top premium packages are also given free access to the service. In Chile, online-only subscribers also have the option of acquiring premium programming as an add-on, whereas in Colombia the service is offered in a single package. The company is expected to expand DIRECTV Go to Argentina and other Latin American markets over the coming months.

The company was also the first to launch a permanent linear 4K channel in the region, with a commercial offer in six of its Latin American markets (Argentina, Chile, Colombia, Ecuador, Peru and Uruguay) ahead of the 2018 FIFA World Cup in Russia. The channel will broadcast, in Ultra HD, live sports content from several international leagues as well as original programming and series and documentaries from third-party content providers.

Already a client? Please refer to the report tagged here for more information about global UHD deployments.

Cablevisión has also suggested that it may offer its TV Everywhere platform, Flow, to non-pay TV subscribers as a virtual multichannel service in the near future.

During 2018, content providers such as Fox Networks Group Inc., HBO Latin America Group (SM),Turner Broadcasting System Inc., Viacom Inc. and Sony Entertainment Television continued expanding their offerings of TV Everywhere platforms to non-multichannel subscribers as stand-alone over-the-top services across the region, mainly through partnerships with mobile and broadband operators, but also through mobile app stores and third-party OTT aggregators such as Clarovideo. New OTT and VMC platforms launched across Latin America may put a strain on the pay TV market.

Already a client? Please refer to the report tagged here for more information about content partnerships with mobile carriers.

Mexico: Grupo Televisa not an agent with substantial power

The IFT, Mexico's telecommunications regulator, retracted Televisa's designation as an agent with substantial power in the pay TV market in March 2018. The IFT designated Televisa as an agent with substantial power in the pay TV market after Mexico's Supreme Court asked the regulator to review a previous ruling in 2017. However, a final ruling on this issue by Mexico's Supreme Court ordered the IFT to review the designation based on a new set of conditions. As a result of the new analysis, the IFT determined Televisa did not have substantial power in the Mexican pay TV market. The designation would have obligated Televisa to share its infrastructure, limit its growth in some markets, set pricing structures that promote competition and pay retrans fees to FTA channels.

Since overtaking Brazil in 2017, Mexico remains Latin America's largest multichannel market. In fixed broadband, the country ranks second, behind Brazil.

Already a client? Please refer to the Mexico country profile for more information on its multichannel and broadband market, and to the article here, for an in-depth analysis of the Mexican broadband market's revenues and ARPUs.

Brazil: Multichannel operators continue losing subs

For the first time since 2014, Brazil, Latin America's largest market, is projected to see subscriber growth in 2018, albeit slightly, as DTH operators continue to shed low-income subscribers as a result of the recent economic crisis. Continued political and economic instability has prompted a sharp deceleration of the multichannel market in Brazil. Brazilian pay TV operators have lost an estimated 1.4 million subscribers since 2014, with revenues expressed in dollars dropping 27.4% in the same period, also impacted by currency devaluation. The crisis does not seem to affect the broadband market, though, as the country's fixed-broadband operations added 6.4 million subscribers between 2014 and 2018.

In December 2018, Brazil also completed its planned analog switch-off and migration to digital terrestrial television in major cities, reaching an estimated 63.7% of Brazilian households. In smaller towns where carriers do not have plans to launch 4G services using the 700 MHz frequency, analog switch-off is expected to occur by 2023 but may take longer since the distribution of DTT set-top boxes will no longer be subsidized. There are also concerns among market players that local broadcasters may not be able to afford the migration to digital transmission by that date.

Brazil is Latin America's second-largest multichannel market, behind Mexico, and largest broadband market.

Click here for an in-depth analysis of the Brazilian broadband market's revenues and ARPUs.

Already a client? Please refer to the Brazil country profile for more information on its multichannel and broadband market, and to the article here for the complete article on the Brazilian broadband market's revenues and ARPUs.

Argentina: Operators begin to offer convergent services while currency crisis puts investments on hold

The Cablevisión/Telecom Argentina merger between Argentina's largest cable operator and telco was effective Jan. 1, 2018, the same date that new regulations allowing telcos to offer video services over "physical link" in Argentina also came into effect. Initially, convergent services were permitted only in the major cities of Buenos Aires, Rosário and Córdoba, in order to protect small operators in other regions. In cities with populations below 600,000, this was delayed to 2019.

The deal was approved by antitrust regulators in June 2018, but the approval came with restrictions, which include a delay for permission to offer convergent quad-play services to 2019, while competitors were allowed to do so as of 2018. The operator must also sell off its fixed-broadband business in 28 areas of the country where the merger could affect competition. Telecommunications regulator ENACOM also imposed conditions regarding spectrum caps and infrastructure sharing in regions where the two companies have a high market concentration in broadband.

The new regulations also allowed AMX's Claro Argentina and TLF's Telefónica de Argentina SA to enter the pay TV market in 2018. Both companies launched IPTV services in the country during 2018, leveraging their existing fiber-to-the-home networks, and may launch DTH satellite services in the future, pending congressional approval of a bill expanding permission to offer pay TV over wireless platforms. The law would allow these convergent DTH services in major cities starting in 2020, with gradual expansion to smaller towns up to 2022. Although passed by the Senate in July 2018, the bill still awaits voting in the Chamber of Deputies. Both América Móvil and Telefónica already provide DTH services in Latin America, and permission to do so in Argentina would significantly reduce the cost and time-to-market for their new services.

Argentina is Latin America's third-largest multichannel and broadband market.

Already a client? Please refer to the Argentina country profile for more information on its multichannel and broadband market, and to the article here for an in-depth analysis of the Argentinean broadband market's revenues and ARPUs.

Colombia: ETB cuts costs to improve its financials while sale is on hold

Empresa de Telecomunicaciones de Bogotá's sale is on hold after a Colombian judge ruled that the municipality did not follow the appropriate process to approve the privatization project. Meanwhile, ETB has been implementing an austerity plan since 2017. As part of this plan, ETB shrank its channel lineup during 2017, reducing its programming costs significantly. ETB's 2017 results show the austerity plan is starting to pay off, with programming cost as a percentage of average revenue per user dropping in 2017.

Colombia is Latin America's fourth-largest multichannel and broadband market.

Already a client? Please refer to the Colombia country profile for more information on its multichannel and broadband market, and to the article here for an in-depth analysis of the Colombian broadband market's revenues and ARPUs.

Peru: Operators cannot charge for set-top-boxes

OSIPTEL, the Peruvian telecommunications regulator, prohibited the sale or lease of set-top-boxes in March 2018. Installation expenses can be financed in a maximum of six monthly installments. As a result, operators increased installation fees. Telefónica del Perú SAA increased its installation fees to 309.5 Peruvian soles for cable, up 74.7% from 177.15 soles in 2017. Claro Perú started charging the same installation fee with the possibility of paying in six monthly installments of 51.6 soles.

Peru is Latin America's seventh-largest multichannel and broadband market.

Already a client? Please refer to the Peru country profile for more information on its multichannel and broadband market.

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Global Multichannel is a service of Kagan, a group within S&P Global Market Intelligence's TMT offering

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