Panama's economy continues to reflect a growing trend in the development of their economic activities, where the telecommunications sector is playing an important role as a multiplier of the necessary infrastructure to promote growth and economic development. The telecommunications sector grew average 12.6% during the last three years and has not stopped its pace. It is one of the most dynamic areas of the country that is kept in expansion due to the low price of the service, the competition and the massive use. For example, there are 185.4 cellular phones by every 100 Panamanians.
The technology applied by means of telecommunications in economic activities, showed significant increases in each of its forms.
If in 2009 highlighted the increased cellular telephony, in 2010 the pay TV services. The tax is levied for this service increased 72.4%, according to Department of Revenue. This is attributed to competition, due to the entry of new operators, through various schemes, have made this service available to more homes. According to the Census of Population and Housing 2010, 25.6% of households already had this service and the results of last year, surely increased
The 2010 Census also found that 83.9% of households in the Republic had at least one cell phone, while in 2000 this proportion was 22%.
For its part, the Internet service is the power of various economic activities, through websites offering products and services. According to the Network Information Center of the Technological University of Panama, web domain name registration in Panama in 2010 increased 13.5% over the previous year. In these domains, 90.6% were for business.
Panama is at the vanguard in Latin America in matters regarding telecommunications. The country is well equipped with an infrastructure made up of technical state of the art installations, being one of the first to introduce the 3G technology as well as launching the Blackberry and iPhone devices. These new advances create adequate conditions for the establishment of new multinational headquarters shopping around to invest in the sector.
At the level of Latin America and the Caribbean, Panama is in the list of developing countries that have achieved greater penetration of 100%, exceeding in this case the penetration of Canada and the United States. Although some experts recommend that this figure is reviewed and an analysis of the inclusion of indicators related to mobile telephony, as the number of households with mobile phones and the number of individuals using a mobile phone, but the penetration in our country is growing with a projection for 2010 of 10% more than the 2009.
Mobile telephony is increasingly providing access to technology, connecting people, providing access to information and providing public services. Studies in the region of Central America and the Caribbean is a strong presence of international mobile operators, which have been key to the success of mobile telephony.
The fixed line penetration has remained around 15% compared with the mobile network is growing, it decreases. For 2009 we have a percentage change of -9.6% in the total installed lines. Of the 536 000 lines operated, 72.2% correspond to lines residencial.
Comparing the incremental variation of customers or subscribers of the residential versus commercial set in the year 2009 compared to 2008 is inferred that a higher incidence of growth for this service was in demand in the commercial sector, an increase of 7.3% while in the residential sector demand growth in the fixed network service was 0.6%. Making a comparison of growth of telephone numbers in service in mobile cellular networks against the existing fixed networks, leads to the conclusion that for every telephone line from the fixed network, there are eleven (11) numbers assigned to service mobile cellular networks.
The Internet service market in 2009, grew by 17.4%. According to figures provided by operators of this service, we have 95.7% of customers have access to the Internet via broadband, while the switched access represent 4.3%, this is due largely to transition that are taking towards broadband.
Of total customers with dedicated access, in 2009, shows that the ADSL technology represented 60% of Cable Modem 34.8% and 7.2% of other technology. Internet users increased from 2007 to 2008 by 25.7% from 2008 to 2009 by 17.4%. Internet penetration increased by approximately 5% compared to the previous year, from 27.6 to 31.8 per 100 inhabitants.
Another aspect been contemplated by the government of Panama, in coordination with the Authority of Public Services (ASEP) is the modernization of communications by introduction of cables beneath the surface (creating an underground network) that currently are distributed by aerial power lines. The first to propose a plan is Union Fenosa, attempting to initiate changes in several areas including Via España, Federico Boyd Avenue, 50th Street (Calle 50) and Via Brazil. The cost could amount 16,480,000, during the four years until termination of works, which would positively impact both visual and service quality.
Panama competitive advantage
Availability of several Neutral Data Centers, built with world class quality and fully redundant
Panama is the landing point for several fiber optic sub-marine cable systems on their way to Latin America and the rest of the world including:
Maya 1 connecting to Honduras, Mexico and Miami
Pan American connecting USA, Colombia, Ecuador, Peru, Chile,
Global Crossing PAC network link Mexico and California and South America
Global Crossing SAC network link All South American Cities
Arcos 1 links all the Caribbean Islands and Central America territories.
Tax Free Environment: No Tax in the City of Knowledge and Howard.
The U.S. dollar is used as legal tender in Panama.
Banking institutions in Panama have strong ties to both Latin American and G7 countries. There are more than 120 banks in Panama City, making it a serious player in the international financial stage.
Panamanian law firms are amongst the world most international, and have substantial exposure to Latin American clients.
Panama as a distribution center for the world: Panama has long been the physical and cultural gateway to Latin America.
It is the main distribution center for commercial goods and merchandise to Central and South America. The Colon Free Zone is one of the world's largest redistribution points, and as the economy of Latin America continues to expand, this trading role of Panama will grow in importance. The demand for trade financing will escalate accordingly. In the cultural sense Panama is the transition point from the industrialized world to Latin America. It is one of few countries that are equally capable in common law as in civil law; in English as in Spanish.
Security
No severe Earthquakes
No Hurricanes
No active Volcanoes
Quality of life
No pollution
Nice weather all year round
Natural environment
Fully Bilingual
Market Overview
Panama’s population is estimated at 3.4 million. Approximately 15% of Panamanian households have a telephone line. Local calls represent 73 % of total traffic, and the mobile market is growing very fast with more than 2,300,000 customers.
The telecommunications sectors have great potential to contribute to the economic development of Panama via direct investment in technology and infrastructure. Other sectors with growth potential are depending in technology as tourism and transportation, through the multi-modal transport infrastructure including the Panama Canal, ports, highways, railroad and telecommunication.
The telecommunication market was open since January 2003, and a legion of companies with and without experience, received a license from the “Ente Regulador de los Servicios Publicos”, the local FCC that 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 (voice over Internet) and VON (voice over the net). During 2003, the price of international call gets down to less US$0.10 a minute and will go down to 0.05 when new operators start operations, especially using VOIP.
According to the largest local telephone company, the amount of traffic generated by VON or VOIP represents a market of approximately US$30 million. Cable & Wireless, the main telephone company of Panama, has in the market some additional 500 thousand cellular telephone numbers, a figure that is equal to one fourth of the users that exist in all the country.
In 2005, Telefónica acquired the operation rights of BellSouth in Latin America in a transaction which surpassed $600 million. Today Telefonica Movistar has more than 1,000,000 cellular phone users.
By the end of 2008, Digicel Caribbean from Jamaica began operations, positioning itself in the market of cellular communications by opening 300 stores throughout the country, offering their products and services and winning the bidding to acquire the concession to operate one of the two cell phone frequencies offered by the Panamanian Government throughout the country. The other companies that participating in 2007 at the bidding the consortiums Orange from France, Megafon from Russia, Milicom International Cellular (MIC) from Luxembourg, Mexico America Movil (AMX), as well as the Panamanian companies Telecarrier and Cable Onda. The concession is of type A, consisting of services that due to technical and economic considerations are given within a regime of temporary exclusivity or of competitiveness. If you are interested in more information to participate in this kind of bid, please be sure to contact the BusinessPanama Group.
With an investment of 150 million dollars, Claro started introducing new products, such as blackberry on prepaid service, the company has coverage in 80% of major cities and highways.
The year 2009 began with the introduction of two new companies providing cellular mobile services (Digicel Panama and Claro), to total there are four mobile phone companies in the Panamanian market.
With the availability of new providers of these services, the mobile cellular market has become more competitive, positive impact for users and / or customers, having a perceived reduction in the price minutes of their phone calls or substantial improvement of the various offerings in this market.
The entry of two new mobile phone service providers, contributed to an increase of 2.2 million subscribers and / or clients, thus representing the growth in subscriber numbers grew in 2009 at 54.9% compared to that recorded in 2008.
After the opening of the fixed telephony market in Panama, the number of service lines in the country has increased 70%. The service rates for services like telephony and international long distance calls has dropped 50% and prices are as competitive as in the U.S. and Europe. Now there are 10 companies providing local telephone service, 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.
Companies like Telecarrier, Clarocom and Advanced Communication represent a strong competition with cutting edge technology and products to provide fixed telephony services, internet, pay per view TV, or all together. Telecarrier, a 100% Panamanian owned company, currently has about 35 thousand customers.
Fixed telephony service is currently offered in Panama by the traditional copper pair and fiber optics system. Concessionaries are investing have access to a more competitive wireless and internet infrastructure. The goal is to provide a full line of different products with a more efficient and strong platform. In recent years, Cable & Wireless has installed over 8581 public and 2720 semi-public telephones throughout the country.
Call Centers
21 licenses have been issued for Call Centers since the government of Panama agreed to eliminate a U.S. $1.00 tax on international calls in order to make call centers competitive with those in the rest of the world. The main participants are DELL, Health Link Networks, Language Line, Sitel, Spherion, creating already 5900 jobs. Fiscal advantages that eliminate taxation of international calls, among other tax laws, have allowed their development in the country. This industry employed approximately 14,000 people. Companies like Star Contact Dell and Panama have approximately 2 thousand workers.
The activity of call centers is regulated by Law 54 of 2001. One of the greatest tax benefits is that there exists no tax over the calls abroad. Also, according to the law, call centers have the benefits and incentives of Law 25 of 1992 for call centers engaged in international calls only. The most important benefits are:
o 100% exemption of income tax.
o Exemption from all types of direct and indirect taxes, including those of patents and licenses.
o Exemption from taxes, charges, and importation rights for machinery, furniture, vehicles, and materials necessary for the business.
o Exemption regarding the transfer of real estate and of recording fees for real estate transactions.
Law 25 of 1992 and Law 3 of 1997 also grant call centers enjoy certain special incentives in the employment field, making more flexible some of the provisions of the Labor Code:
o The extra hours worked by employees of call centers will pay a sole surcharge of 25%.
o The fluctuations in the exportation markets, that involve the considerable loss in the volume of sales, are justified causes to end the work relationship.
o It is permitted to establish payment systems through the participation of the utilities, production bonuses, incentives for rendering, bonuses, gratifications, donations or others, being it understood that such incentive forms or any others, may not exceed 50% of the basic salary and will be exempt from Education Insurance Tax and from the accounting of the Social Security.
o The work on a weekly rest day will be compensated with a surcharge of 50%, without losing the right to enjoy another rest day.
o May previously indicate the time when the worker will begin the enjoyment of his vacations.
The activities of the call centers may not be detained by strikes.
Foreign companies that invest more than US$250,000 in the establishment of a call center may apply for the permanent resident visa as an investor. Expats hired as key employees, executives, and experts and/or technological of call centers have the right to request a temporary resident visa, which will be valid for the term of his contract.
Foreigners that make investments in call centres established or in process of establishment, may request a visa under the condition as resident businessman, which is valid for one year.
When obtaining this type of visas, it is included the permit for exit and re-entry, multiple, valid for the term of the visa. These will be extensive in the same conditions to the spouse and dependent children of the main petitioner.
Online Gambling
Panama has passed its fully regulated Internet Gaming laws. This makes it the only regulated jurisdiction in the world issuing licenses now to those operators wishing to stay on the good side of US law. Panama’s laws are of the same high standards as the Isle of Man, large casino-resorts’ place of choice for iGaming. Until now a very few companies have applied for the license, mainly due to the huge paper work and the cost of the license. Costa Rica is still the success story with more 6,000 casinos online and gambling sites.
The expectation is of a large exodus of companies from other Central American like countries Costa Rica and several Caribbean islands were the situation is unregulated, unclear and the price of bandwidth is astronomical compare to Panama. It has not been a success yet, Panama must review the business model and the cost of the license in order to actively participate in this market.
Mobile Communications
The Total cellular phone users reached $ 6,496,155 in 2010 with good chances for continued growth in the future, especially pre-paid services. Approximately 95% of the estimated total market for wireless services comes from Pre-Paid Services. The remaining 5% comes from Post Paid services, oriented primarily to corporate and personal high consumption users. Cable & Wireless is the largest cellular operator, accounts for 40% of the market, 27% is controlled by Telefonica Movistar and Claro with 15% and Digicel with rest 18%.
By 2009, Telefonica Movistar launched the operation of the new 3.5 G network that will facilitate internet browsing through greater speed. Cover the whole metropolitan area, the area of the beaches, Columbus, and David will continue to expand the interior of the Republic. The aim is that the cell phone becomes a virtual office. This type of network is an existing GSM evolution.
For 2011 Movistar will continue with the plan of network expansion nationwide 3.5G, as well as an upgrade to HSPA + (3.8g), which is an enhancement of current technology and will get UMTS speeds to 21.0 Mbps data download (downlink).
As part of the strategy to reach users, Claro will continue to develop throughout the country, the Centres of Expertise course, will increase its network of dealers nationwide and further develop the service business solutions to the implementation of mobile IP network / MPLS allows for greater connectivity through fiber optic connections.
While Digicel expects to maintain and expand the customer base through postpaid and prepaid promotions, as well as providing integrated telecommunications solutions to corporate customers and further expand its presence in the country.
Cable & Wiriless the 2011 will be a competitive year, as have the past two years, so Mobile particular emphasis will make life easier for mobile phone users with direct access to invoices (Fixed + Mobile Internet + Digital TV) and their payment, without leaving your office or home, among other things.
The cellular market is not only based on usual and common services, but in provision of total innovation. BAC is the first banking institution that ventures into the mobile banking field, a new concept in the world of finance. It has been adapted for usage in coordination with the service offered by mobile companies such as Mas Movil (Cable & Wireless), Movistar, Claro and Digicel. The cellular phone has become an important tool for banks, due to its penetration into the population’s preference reaching a 68% in Latin America and 98% in Panama. Activation of this service, which is free, is done through a call in order to register the number. Afterwards the client receives a key to send a message containing the code of transaction to be conducted. It can be used abroad, through roaming. The issue of security is key element to this type of service.
Voice Services
Voice Services include local, domestic, international long distance and public pay phones. Since the privatization of the government-owned operator (INTEL), Cable & Wireless has been offering basic services on a five year exclusive concession. This market condition granted by law ended on January 2, 2003, when the market was opened to competition. With 380,224 lines installed (around 12.2 lines for each 100 inhabitants), and 365,000 customers on a digital platform installed by ALCATEL and Ericsson, Panama offers first class service compared to most of the Latin American countries. The total voice market in Panama is estimated at US$500 million. Local services, including domestic long distance, represent about 80% of the total.
Clarocom, a co-owned (U.S. and Panamanian capital) company has focused on providing telephony services via VoIP, which the user can use by means of an Internet connection to make calls. This service enables greater convergence in the communications systems, -voice and data-, which are handled under the same environment, and communications between branch offices located in different provinces are not considered as domestic long distance calls.
Local Services
The Panamanian market has successfully combined services of fixed and mobile telephony. The telephone service-density reaches 90 out of 100 people. After the opening of the fixed telephony market in Panama, the number of service lines in the country has increased 70%. The service rates for services like telephony and international long distance calls has dropped 50% and prices are as competitive as in the U.S. and Europe. Now there are 10 companies providing local telephone service, 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.
Companies like Telecarrier, Clarocom and Advanced Communication represent a strong competition with cutting edge technology and products to provide fixed telephony services, internet, pay per view TV, or all together.
Since June, 2004 over 21 new operators have applied for Basic Service Concession. Operators such as Cable & Wireless, Telefonica Movistar, Telecarrier, Cable Onda, ClaroCom, One World Communication, Advanced Communications and VOIP are already in operation and their continuous war on prices and rates helps the customers to get a choice by comparing services and costs. Most of those concessions are targeting the most populated areas of the country, mainly in Panama City and Colon, but plans include connecting the interior of the Republic. This situation outside the main cities is due to the fact that it requires a strong investment not only to provide service but also comply with standards set by the local telecommunications authority. The provider holding the best position to this moment is Cable Onda which is already offering cable TV and Internet and has begun offering local, long distance and International telecommunication services.
Domestic Long Distance Services
There are many areas of the country that are difficult to access, where none of the current operators are giving the long distance call service. As a result of that, there are business opportunities.
The fixed wireless service enables access to remote areas without the need of wiring installations, as long as there is energy. Obviously, it has some limitations. Nevertheless, this kind of services could open the pace for the future, considering it as a high potential sector yet to be developed in the Republic of Panama given the growth of urban areas and new infrastructure projects in the coastal areas of the country.
International Long Distance (Ild)
After opening of the telecommunications market, long distance calls to the United States cost around 20 times less, among other offers flooding the market in Panama at this moment. Although the country has a population smaller in comparison to other countries in the region, it maintains a rapidly growing sector with a competitive diversification of products, services and prices for domestic and international calls.
Executive Decree No. 17 of 20 February 2004, regulates Law 6 of 21 January 2004 that creates a burden ad valorem over the long distance international calls of public use, invoiced in Panama.
58 licenses have been issued to new operators of ILD. This use to be the most profitable market segment, requiring lower infrastructure investment. Most of the new players are relying on third party network infrastructure as Altec Carrier Hotel and Telco Virtual and local loop provider to transport voice traffic. Interconnection agreements, service level agreements and local loop availability are the most important issues being faced by new entrants in this segment, and the dominant operator is still trying very hard to block the entry of new carriers who will be waiting on line for the next two years.
On June 16, the Regulatory Authority took a serious look of the situation and organize a public hearing session to find out more information regarding the difficulties to negotiate agreements with Cable & Wireless who was the center of the attack, almost all the companies complained for the delay and the unfair condition of the interconnection practice and a total monopoly of the network and pay phone.
The three countries where it is most given international telephone traffic in minutes is: United States (30,674,804), Colombia (17,985,432) and Venezuela (6, 569.217). Outgoing international traffic has been declining from 2008 to 2009 in a -16.0%.
Pay Phones
18 operators have obtained (licenses to offer services representing a $50 million market mostly in the largest cities, leaving the largest part of the country without telecommunication services due to the high cost of installation and operation, Cable & Wireless already asking a fair treatment from the Regulatory Authority for universal access.
Fixed phone service operators at the moment are Cable & Wireless covering the entire territory and Telecarrier, especially in specific places like big shopping malls. Prepaid cards from other operators have already been approved, especially for international calls and long distance national calls to the provinces.
Private Voice Circuits
13 operators have been granted licenses to offer private voice circuits since January 2003. Data Services
With the technological development of solutions aimed at data connection between geographically distant points, Panama offers access to the best solution in the local market for their integration needs and implementing data networks point-to-point or point-multipoint. These services will allow easy construction of virtual private network infrastructure to link its parent and associate each of its branches, outlets or business partners with high efficiency and performance.
At least 47 companies have licenses to offer data transmission services using dedicated access solutions the widespread use of wireless technologies such as Spread Spectrum and LMDS solutions, fiber optic and ADSL targeted to corporate and private users has been evolving since 2002. The main player is Cable & Wireless, Tele Carrier and another incumbent player is Optynex Telecom who uses existing fiber optic cable from UFINET, ACP and Global Crossing. Other smaller players are GBnet, Sky On Line (Diveo & Teleglobe) and Commnet. Data services, account for a market size of US$75 million, with approximately 9500 point-to-point private circuits in operation.
Internet Services
Of total customers with dedicated access, in 2009, shows that the ADSL technology represented 60% of Cable Modem 34.8% and 7.2% of other technology. Internet users increased from 2007 to 2008 by 25.7% from 2008 to 2009 by 17.4%. Internet penetration increased by approximately 5% compared to the previous year, from 27.6 to 31.8 per 100 inhabitants.
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 less than $30 per month. Internet access, hosting and first tier IP services represented approximated a US$32 million market, showing an increase of 16.5 % over the prior year.
Digicel Panama is focusing on expanding its services to 4G Wimax technology (wireless broadband), which has already been installed in the markets such as the Cayman Islands, Jamaica obtaining a license to Honduras also.
The mobile phone plays a role in the expansion of communications in Panama, with steady growth that leads to six in 10 people to have two teams, officials said. According to the Ministry of Economy and Finance, this market segment aims to maintain the growth trend, based on the introduction of advanced technology and new models of equipment.
Data from the National Authority of Public Services (ASEP) account in 2009 reported 5.6 million cell phone subscribers. There are currently over 450,000 registered customers active contracts of the four companies established in Panama and to perform the service.
Internet Data Center and Carrier Hotel
Panama is a point of convergence for the Americas Region Caribbean Ring System (ARCOS-1), the MAYA-1 and the PAN-AM submarine cable system, which all together provide connectivity to the United States and the Caribbean, Central and South American region. The isthmus is connected to satellite stations Intelsat (Atlantic Ocean) and the Central American microwave system. Data traffic, especially the Internet, has seen a significant increase for both companies operating the five fiber optic cables that pass through Panama.
The country continues to serve as a bridge to Pan-American submarine cables, MAYA 1 and ARCOS-1 (operated by Cable & Wireless), PAC (Pan American Crossing) and SAC (South America Cables), which is operated by Global Crossing. Pan-American and MAYA-1, doubled their use through mid-November 2008, due to various internet projects. 80% of data traffic through the MAYA and the Pan-American come from Internet, while the remaining 20% is from telephony. Global Crossing recorded a significant increase in its use of PAC and SAC cables.
Panama has already 3 world class internet data centers, the first one is Altec1, the only neutral organization and the other two are from Cable & Wireless and TeleCarrier; every one provide basically the same quality of services including redundant access to several submarine fiber optic network, security, fire detection and fire suppression system, access control, CCTV, Electrical generator and UPS. Collocation space, rack, cabinet and private suite, scalability, reliability and convenience for companies looking to reduce their IT cost in a 24 x 7 secure facilities.
Many foreign companies are already taking advantage of Panama completive advantage, including the US dollar economy, access to 5 submarines Fiber Optics Networks, availability of bilingual certified engineers, ecommerce and gaming laws, lower wages and lower operation costs.
The Best Opportunities Are:
IDC (Internet Data Center) and carrier Hotel, disaster recovery center, Collocation, Hosting, Data transmission and data switching, Internet access, internet Kiosk, value added mobile services and HUB for International call. From many years ago, Panama, has being use as a country for traffic and hosting of information. 0For many years, Panama has served as a hub for information with all the required safety standards. Another great advantage is that it is free from major natural disasters such as earthquakes and hurricanes. Panama is blessed by nature, unlike the rest of her Central American neighbors, with no hurricanes - amazingly it’s in a special climate area that is totally hurricane-proof. Â Over 90% of international voice exchange in addition to the 90% of the data links and 100% of internet traffic in the region run through these cables.
The City of Knowledge TecnoPark is the first choice for companies interested in doing business in Panama; the large FT Clayton former US military base has a lot of advantages including a tax free environment. Today several companies are already processing credit card clearing centre, ecommerce, ASP and telecommunications activities.
The most growth potential is Voice over IP (VOIP). Recently VOIP has been considered an (almost) legal activity by the telecommunications regulatory office, more than 40 company are doing the paperwork required to get a license paying the 12% value added tax, the market leader is NET2PHONE who have more than 6000 customers and 90% of the Colon Free zone customer who use to be the largest international long distance customer segment. On the positive side, VOIP is a reality and the new law may facilitate the use of the internet to make cheap phone calls, several official carrier are using the VOIP Technology.
In Panama, it is very easy and inexpensive to apply for a license from the Regulatory Entity (Ente Regulador) at this date more than 1,474 licenses as been issued and is no limit of the quantity of new operators. However, the market tends to be highly concentrated, as 8 operators are active controlling 80% of the market and the red tape impose by cable & Wireless cause already several casualties within the new Carriers.
The remainder are small companies operating long distance switch, trunking radio services, paging, Internet services, data transmission, fax store & forward, teletex, and many” paper company” without money or real intention to participate actively, are just trying to make money selling the licenses to new investors. Telecom Hub for:
Interconnection of North/South traffic
Voice and data transmission
Call centers
Regional data centers
Internet & Ecommerce Hub for :
Internet Service Providers
E-Commerce Providers
Applications Outsourcing ASP
Broadband Content Providers
New Media Content Providers
Exchange Traffic
Logistics and delivery centers using the Colon Free Zone for physical warehousing
HOME
CONTACT
US 
SITEMAP
