The telecommunications market was privatized in 1997, and in 2003 it was de-regulated. Although many of the changes that were brought about as a result of these two processes have not been entirely positive, many of changes have been beneficial to both individuals and businesses.
Since the opening of the fixed telephony market in Panama, the number of service lines in the country has increased 70% while international long distance call costs have dropped by about 50%. There are 10 companies providing local telephone services, 15 for long distance national calls and 16 for long distance international calls. Cable & Wireless Panama is the dominant operator with 90% of fixed lines in the country.
The telecommunications infrastructure has greatly improved. As a result telecommunication companies are installing Network Operation Centers in Panama, taking advantage of the geographical location and the abundant supply of submarine fiber optic communications circuit on both coasts which makes possible interconnection to north and Latin America, Asia, Europe, Africa and the world, over redundant routes.
These submarine networks give Panama four international connections via high-bandwidth, fiber-optical trunk routes. In addition, these new cables incorporate New Wave Division Multiplexing Technology that will allow extraordinary ultra high-speed bandwidth applications, such as multimedia and digital video. This in turn is already enabling fast and reliable connections for B2B, banking, e-commerce and other businesses as well as additional high-speed consumer activity units.
The MAYA-1 ring features relays in Florida, Mexico, Guatemala, Costa Rica, Panama, Colombia, Puerto Rico, Jamaica and Grand Cayman Island and, in addition to its own communications structure, provides a restoration path for the Pan-American cable. The ARCOS-1 trunk spans Florida, Mexico, Belize, Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Aruba, Puerto Rico, the Dominican Republic and the Bahamas. The GLOBAL CROSSING project connects Asia, the US, goes through the Panama Canal, the Caribbean countries, and Europe. The MAYA and ARCOS ring systems link the continental Americas and the Caribbean Basin.
Total investment for the two fiber-optic trunk systems was targeted at US$217 million, divided between a mainly 14-member consortium, including world-class carriers such as AT&T, CTC Mundo, France Telecom, MCI, SPRINT, Star Telecom, Swisscom, TelMex WorldExchange and Cable & Wireless.
Since the telecommunications market was opened in 2003, the Ente Regulador de los Servicios Publicos has granted more than 1,422 licenses to 182 operators. The primary objective for most of the new players is international long distance and the use of services such as VOIP and VON.
In January, 2004, the National Assembly approved Law No 98 to eliminate a US$1.00 tax on every International Call and replace it by a 12% tax on all International Calls using any technology. Demand for licenses for Call Centers increased following the elimination of the US$1 tax on international calls.
Total cellular phone users reached 6.735 million by 2011 with good chances for continued growth in the future, especially in pre-paid services.
In 2003, Cable & Wireless launched an aggressive campaign to penetrate the Internet market with ADSL technology. The Kilobyte price for dedicated Internet access dropped significantly, as the main providers such as Cable & Wireless, Telecarrier and Cable Onda lowered their rates. The new pricing structure benefited both residential and corporate markets, reaching a level of US$39 per month for a dedicated 128K connection. Internet access, hosting and first tier IP services represented an approximated US$27 million market, showing an increase of 18 % over the prior year.
Panama has already three world class internet data centers. The first one is Altec1, the only independent organization, and the other two are from Cable & Wireless and TeleCarrier. They all provide basically the same quality of services including redundant access to several submarine fiber optic networks, security, fire detection and fire suppression system, access control, CCTV, electrical generator and UPS, co-location space, rack, cabinet and private suite, scalability, reliability and convenience for companies looking to reduce their IT cost in 24 x 7 secure facilities.
To see an article by Pardini and Associates describing the prospects for Panamian e-commerce called The Panama Canal Silicon Valley, click here