Telecommunications in Puerto Rico

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Telecommunications in Puerto Rico

by Faulkner Staff

Docid: 00017968

Publication Date: 2102

Report Type: MARKET


The Puerto Rican telecommunications market is an intersection between
the United States and Latin America. On one hand, it mirrors the US
sector in many ways: It is regulated by the FCC, and major companies like
AT&T and T-Mobile have operations there. At the same time, the
market shares some of the trends facing other countries in Central
America: It has a very strong incumbent service provider that has
historically not invested in its infrastructure. This has hampered
growth in the landline market, but has allowed wireless
services to thrive. The market also still faces the task of regaining much of the infrastructure that was damaged or
destroyed during the 2017 hurricane season. This report discusses the major players in this unique
telecommunications market and analyzes some of the major recent
developments that will shape it moving forward. 

Report Contents:

Executive Summary

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in the Caribbean basin, Puerto Rico acts as a gateway between the
United States

Latin America

in many ways. In a literal sense, several submarine cable networks connect the
island to the

mainland, other islands in the Caribbean, and the nations of
South America
. In a more figurative sense, US companies like
AT&T and T-Mobile have set up operations there, while companies that
focus on Spanish-speaking customers like America Movil
have also established themselves.


Faulkner Reports
in Central America and Caribbean Market

of this competition is confined to the wireless sector that continues
to experience healthy growth. The fixed-line market is technically open
to competition, but Claro – the former monopoly
carrier – is still the dominant provider of local and long distance
services, having been in operation for almost a century.

All of that said, the island is still fighting the remainder of the battle
to replace or repair much of its terrestrial and cellular telecom
infrastructure, which was damaged during the 2017 hurricane season – a
process that has been reshaping the island’s telecom infrastructure in
major ways, shifting it further and further towards wireless
communications as damaged terrestrial infrastructure continues to be
replaced with more disaster-resilient telecom wireless equipment.

Market Dynamics

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Puerto Rico is an unincorporated commonwealth of the United States. Located
in the northeastern Caribbean, it covers 3,515 square miles and is home to about
3.19 million people, a figure was has consistently been on the decline in recent
years. Puerto Rico operates semi-autonomously: it has its own democratically
elected legislature but the US federal government has jurisdiction over national
issues like currency, aviation, highways, defense, the postal system, and
telecommunications policies. Ultimately, the President of the United States is
the chief executive, but the island's own executive branch is led by a governor
– currently Pedro Pierluisi – who is elected to a
four-year term by a popular vote.

Figure 1 shows a map of Puerto Rico.

Figure 1. Puerto Rico

Figure 1. Puerto Rico

Source: CIA World Fact Book

Table 1. Snapshot of Puerto Rico



Country Statistics


3,515 square miles


3.194 million

Per Capita GDP



Landline density


Mobile density


4G service

5G service Yes

Broadband density


% of population online


State of Competition

Competitive landscape

Open in all

Regulatory agency

Federal Communications Commission

Incumbent landline carrier


Mobile carriers

AT&T, Claro,
Open Mobile, T-Mobile

History of the
Telecommunications Market

the early 1900s, Puerto Rico was largely serviced by two regional
telephone companies: the San Juan Telephone Company which provided
service in and around

San Juan
, and the South Porto Rico Telephone Company which provided service
along the western part of the island. In 1914, two brothers named
Sosthenes and Herband Behn merged these two companies to form the Puerto
Rico Telephone Company (PRTC), the main provider of basic telephone

1920, the Behn brothers created another company called International
Telephone and Telegraph Corporation (ITT). ITT eventually acquired PRTC
and became one of the largest telecommunications companies in the world
at the time, expanding across

and helping create the company that eventually became Telefonica.

Over the next 40 years, PRTC developed a notorious reputation for delivering poor service. By 1973, there were more than 32,000 people waiting
for basic telephone service and some of those people had been waiting
more than two years to be connected to the network. The Puerto Rican
government finally intervened by creating the Puerto Rico
Telephone Authority (PRTA) to oversee the telecommunications
market. The PRTA acquired PRTC from ITT. ITT retailed a concession to
provide international long distance, so in 1984 the government created
Telefonica de Large Distincia (LTLD) as a subsidiary of PRTC to compete
with ITT for international calling customers.

and ITT went head-to-head for a couple of years, but competition really
started to take off in the late 1980s. AT&T acquired ITT in 1986,
and Sprint and MCI received permission to enter the market in 1989. In
1990, the government expressed interest in privatizing PRTC, but more
than 150,000 people – including 3,800 PRTC employees who went on
strike – marched on the Puerto Rican capitol in protest, so the deal was

government’s privatization plans were dead, but there were still some
major moves in the works for PRTC. In 1990, LTLD, PRTC’s international
long distance subsidiary, was sold to Telefonica, the incumbent telecom
provider of Spain. In 1994, PRTC merged with Puerto Rico Communications Corporation, making PRTC the only local service provider on the island. PRTC
then became 43 percent owned by the government, 40 percent owned by GTE
(now Verizon Communications), 10 percent owned by Banco Popular de
Puerto Rico, and seven percent owned by employees. In 2006, America Movil, a
major telecommunications company based in Mexico, acquired 100 percent
of the company. It now operates in Puerto Rico under the Claro brand

In 2017, Puerto Rico was struck by two
major hurricanes within weeks of each other. The devastation caused by
these storms left most of the island without power and nearly all of it
without access to landline or mobile telecommunications. Even months
after the restoration process began, the FCC estimated that 5.6 percent
of all cell sites within the country remained down, while a "fairly
large percentage" of landline customers remained without service.
Restoration processes have continued. Nearly four years later, the
changes to the island’s overall telecom infrastructure are staggering.
The hard-won access to landlines that took decades to achieve is now
gone in many places, with residents instead now forcibly required to
rely on wireless communications instead. While telecom companies and
regulators claim that these hardened wireless services are better suited
to the island’s unpredictable weather and earthquake threats, many local
residents remain skeptical of the level of service they will receive
going forward.

State of the Marketplace

In 1952, the US Congress gave Puerto Rico free-associated-state
status. This allowed Puerto Rico’s local government its own
constitution while remaining within US federal law, which covers many
areas, including telecommunications. Therefore, the Federal
Communications Commission (FCC) has authority over Puerto Rico’s
telecom, radio, and TV markets. Puerto Rico’s telecom history
mirrors that of the US, and the market was opened to competition through
the Telecom Act of 1996. 

In addition to the FCC, the Telecommunications Regulatory Board of
Puerto Rico (La Junta de Reglamentadora de Telecomunicaciones de Puerto
Rico) is a quasi-authority body that tries to oversee the market. It is
made up of five members, including a president. Some of its goals

  • Ensuring availability of universal telecommunications
    services at affordable rates for all citizens.
  • Overseeing the availability of telephone service and
    cable TV.
  • Promoting competition.
  • Guaranteeing Puerto Ricans the same communications
    services that are available to US citizens.

Fixed-Line Services.
Although Puerto Rico is a US territory, the fixed-line market has a much
lower penetration rate than the mainland. According to the most recent
information published by the International Telecommunications Union, the
fixed-line penetration rate is just 17 percent. Puerto Rico has historically had a poorer
infrastructure because of the island’s economic conditions and the fact
that the market has been dominated for years by Puerto Rico Telephone

the local loop, Puerto Rico is connected to the rest of the world through
the following submarine cable networks:

  • Americas II – Connects to
    Brazil, Curaco, French Guiana, Martinique, Trinidad and Tobago,
    the United States, the US Virgin Islands, and Venezuela.
  • AMX 1 – Connects to Colombia, Dominican
    Republic, Guatemala, Mexico, and the United States
  • Antillas 1 – Connects to the
    Dominican Republic.
  • ARCOS 1- Connects to Bahamas,
    Belize, Colombia, Costa Rica, Dominican Republic,
    Honduras, Guatemala, Mexico, Netherlands Antilles, Nicaragua, Panama, Turks and
    Caicos, United States, and Venezuela.
  • Boriken Submarine Cable System- Connects to
    the USVI and the Dominican Republic.
  • Global Caribbean Network (GCN) –
    Connects to Guadeloupe, St. Martin, and St. Croix.
  • Saint Maarten Puerto Rico Network 1
    (SMPR-1) –
    Connects to Saint Maarten.
  • South America-1 (SAM-1) – Connects
    to Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala, and
  • TAINO-CARIB – Connects to US Virgin
    Islands and the British Virgin Islands.

technologies have helped bring basic telephone service to the people of
Puerto Rico
, bridging the gap created by the PRTC monopoly and its service
deficiencies. While the number of fixed lines has recently slipped, the
number of mobile customers has experienced healthy growth. At the end of
2018 (still the most recent measurement), there were 3.33 million wireless customers in
Puerto Rico
, which puts the penetration rate at 108.2 percent,
even with the notable drop off seen following the disastrous 2017 hurricane
season. This shows how deeply the island has invested and continues to invest in
wireless telecom services. The following chart shows
how the number of mobile customers has grown over the last 10 years for
which information was available.

Figure 2. Number of Mobile Subscribers in Puerto Rico,
(In Thousands)

Figure 2. Number of Mobile Subscribers in Puerto Rico, 2007-2018 (In Thousands)


Source: Statista

Fourth-generation services are widely available in Puerto Rico from all
five of the island's service providers. AT&T Mobility was the first
carrier to introduce LTE service when it launched coverage in San Juan
in November 2011. Claro followed in the same month, followed by Open
Mobile in April 2012, Sprint (now part of T-Mobile's holdings) in December 2012, and T-Mobile in July
2013. Since then, the carriers have been gradually increasing the
coverage and capacity of their networks.

In late 2019, T-Mobile announced the first major deployment of 5G
technology on the island, with service areas going live in small
portions of nearly every major population center on the island. However,
like 5G installations in the US, it will take some time for the coverage
areas and available devices to catch up to the 4G LTE networks that
continue to dominate the telecom infrastructure.

Puerto Rico trails the mainland United States when it comes to Internet
subscriptions, but the government is working hard to grow this part of the
market. According
to the most recently available information from the ITU, 86 percent of the
population uses the Internet.

As of the end of 2019, 77 percent of the population had access
to cable Internet service and 48 percent had access to DSL. FTTH service that
provides 1G bps of service is also available in select neighborhoods in San Juan.

In 2012, the US Department of Commerce funded the development of
a broadband strategic plan for Puerto Rico. The plan laid out several
performance goals for the broadband sector. In February 2015, the government of
Puerto Rico announced an initiative called Gigabit Island that aims to bring
connections of at least 10Mbps to 99 percent of the population and 1G bps
service to 70 percent. This project is an upgrade to the aforementioned broadband
plan from 2012.

It was originally the intention of the FCC that, by 2020, at least 85
percent of all broadband customers should have access to connections that
provide at least 100M bps of bandwidth. In addition, the regulator wanted all
schools, universities, and healthcare institutions to have access to 1G bps
connections. However, due to the damage caused by the hurricanes which impacted
the island in 2017, it remains unknown how many additional years it will take to
reach this goal.

What is known is that Puerto Rico was targeted by the FCC for a
$954 million restoration plan that also included the US Virgin Islands,
which saw equal devastation during the 2017 hurricane season. Puerto
Rico was slated to receive the lion’s share of the budget, with $750
million expected to be spent on restoration efforts. This included $64
million that  had already been disbursed for short-term restoration
efforts, as well as a portion of $631 million in long-term funding
geared towards the restoration and expansion of fixed broadband
infrastructure, and part of $259 million in medium-term funding for 4G LTE expansion.

In 2020, the FCC announced a second round of support for
the two islands with a budget of $237.9 million being put into the newly
created "Uniendo a Puerto Rico Fund" and the "Connect USVI Fund." The
money will be disbursed to "certain providers" to fund efforts to
"expand, improve, and harden mobile broadband networks in Puerto Rico
and U.S. Virgin Islands." The new disbursement also includes funds
specifically targeted at encouraging 5G proliferation.

Market Leaders

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The following companies are the leading players in the
Puerto Rican telecommunications market.

Fixed-Line Services

Claro. Puerto Rico Telephone, the incumbent fixed-line provider of
Puerto Rico, provides service under the brand name Claro. The company owns the entire
copper infrastructure on the island and operates more than one million
local access lines which it uses to provide service to approximately 800,000 consumers and
250,000 business customers. Like many fixed-line carriers, Claro is focusing more
on mobile services and broadband Internet access in order to offset declining
revenues from its core local and long distance business. The company is
owned by America Movil, a Mexican telecom carrier that has a very strong brand
name among Spanish-speaking regions of the Caribbean, South America, and Latin

In June 2016, the company was fined $1 million by the FCC because
America Movil's owner, Carlos Slim, exceeded the government's limits on
foreign ownership three times over a five-year period. This was the
largest fine of this type ever issued by the FCC Enforcement Bureau at
that time.

AT&T entered the fixed-line market when it
acquired Centennial
Communications, a full-service telecommunications company that offers both
mobile and fixed-line services in Puerto Rico. The company is the second largest
local telephone carrier on the island, but it focuses mostly on corporate
customers which it services through its own fiber-optic network. It also
uses its fiber-optic network to offer television content.


mobile sector is by far the most competitive part of
Puerto Rico

's telecommunications industry. There are five companies operating on the
island, including three of the four major US telecom carriers.

  • AT&T
    AT&T Mobility is the largest carrier in Puerto Rico. It
    operates a GSM network as well as a CDMA network that it acquired when it
    purchased Centennial Communications in 2009. The company also offers 3G
    services over a UMTS network and 4G services over an LTE network.
  • Claro.
    Claro is now the second largest mobile carrier in Puerto Rico. It operates
    CDMA and GSM networks that cover the entire island. The company also offers
    3G service over a UMTS network and its LTE network reaches 93 percent of the
    population. It also offers faster LTE-A service across the island, thanks to
    a 2017 expansion.

  • T-Mobile.
    entered the market when it acquired SunCom Wireless in 2008. The company
    trailed the rest of the market in rolling out 3G and 4G services. Its LTE
    network was activated in July 2013, a year and a half after AT&T and Claro.
    In September 2016, the company doubled the speed of its 4G network. In 2019,
    T-Mobile became the first carrier on the island to launch wide-scale 5G
    services via a scattered rollout in major population centers.
  • Open
    Mobile / T-Mobile.
    In February 2017, Sprint and Open Mobile agreed to
    combine their operations in Puerto Rico into a joint venture. The
    transaction was completed in December of that year. Sprint eventually owned 68 percent of the company and 55 percent of the voting rights,
    while Open Mobile retaining the remaining economic and voting interest. This
    venture combined the two smallest carriers in the Puerto Rican mobile market
    and allowed them to compete more effectively against the other larger

    Mobile was created in 2007 when Movistar, the telecommunications division of
    Telefonica, exited the Puerto Rican market and sold its operations to a pair
    of investment firms: MC Venture Partners and Columbia Capital. The company
    invested nearly $40 million in upgrading its CDMA network to 1xEV-DO
    technology, which it leverages to offer prepaid services, and it is now
    expanding its 4G service. Its network covers
    95 percent of the population.

    Now that T-Mobile has acquired Sprint and all of its
    assets, it is now Open Mobile's partner in this venture.

The following table shows the network
technologies used by Puerto Rican telecom carriers. 

Table 2. Puerto Rico Wireless Networks
Carrier Network
T-Mobile / Open Mobile CdmaOne, CDMA2000 1xRTT, GSM, GPRS, EVDO Rev 0, Rev A, LTE

Source: Carrier Data


The broadband market is competitive; 58 percent of the population has access
to at least three high-speed Internet providers. According to information
gathered and published by the FCC, there are 15 broadband providers licensed to
serve Puerto Rico. The two leading broadband providers are Claro (DSL) and
Liberty Puerto Rico (cable).

In June 2015, Liberty Puerto Rico (the largest cable company on the
island) acquired Choice Cable TV, its only competitor. The company is
still in the process of investing in bringing Gigabit Internet service to businesses and
schools in rural parts of the island. Claro is also investing $370
million into its infrastructure, including fiber-optic broadband.

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Rico is an attractive market for a number of reasons. First of all, the island
more or less operates as a semi-autonomous extension of the United States, so
companies who already have a presence on the mainland look to it as an untapped
market. In the 1980s, AT&T, Sprint, and MCI all rushed into the market
within two years of each other and GTE entered the market in the mid-1990s.

the island has a large Hispanic population so it has been a target market for
several carriers who focus on servicing Spanish-speaking people. Claro, for
example, is a well-known brand across Latin America. Both
of these trends continued in 2008 when two of the biggest wireless carriers in
the United States made the jump across the Caribbean basin and entered the
market: T-Mobile acquired SunCom Wireless and AT&T Mobility agreed to
purchase Centennial Wireless. Both companies made these acquisitions to
strengthen their presence on the mainland, but the deals also gave them a strong
presence in Puerto Rico.

acquisition of Centennial had a major affect on the overall telecom market in
Puerto Rico. First of all, it created the largest wireless carrier in Puerto
Rico. Secondly, the acquisition had an impact on the fixed-line market. PRT
still owns the last mile, but AT&T continues efforts to combine its extensive wireless
network with Centennial’s broadband infrastructure to compete with PRT more
effectively. AT&T is also focusing on international companies (based in the
United States or elsewhere) who have a presence in Puerto Rico.

Rico also continues to be an attractive to companies targeting Spanish-speaking
markets. America Movil became the latest such company to enter Puerto Rico when
it acquired PRT from Verizon Communications in 2006. Acquisitions like this have
helped the company grow into the largest company in Latin America and the fourth
largest wireless carrier in the world.

Mobile telephone service has experienced strong growth since it was first
introduced and became a way for thousands of people to get around the poor
service offered by PRT. Wireless telephones first outnumbered landline
connections in 2002 – two years before the same thing happened in the United
States – and today they have reached saturation levels of more than one per
citizen. As the mobile market has matured, it is poised for consolidation among
the large number of players. In February 2017, Open Mobile and Sprint agreed to
combine their operations into a joint venture so they can compete against Claro,
AT&T, and T-Mobile. Since then, T-Mobile and Sprint have merged, including
their respective Puerto Rican operations. It remains unknown if DISH
Network, a company with a regulatory mandate to replace Sprint as a fourth
"nationwide" carrier in the interests of competition, will launch services on
the island. It should be noted that the company does already have a business
presence on the island, as seen below.

As the broadband market within Puerto Rico continues to grow, customers are becoming more keen
on service bundles that combine high-speed Internet, telephone service, and
television. There are two main groups competing for bundled customers. The first
is Claro and DISH Network, who have a partnership to combine the satellite
company's television service with DSL Internet and telephone service from Claro.
The other is Liberty Cablevision, who is offering service bundles on its own
since it acquired a smaller telephone company named OneLink Communications.
Claro and Dish are temporarily at an advantage because they offer quadruple play
bundles that also include mobile service, while Liberty does not.

The devastation caused by the 2017 hurricane season on the island of
Puerto Rico has, for the most part, been repaired. However, the time and
manpower required to accomplish this task has had a major impact on the
advancement of telecom networks on the island. While some networks have
actually improved since their pre-hurricane state, thanks to the
installation of upgraded technology, others were repaired using the
same, often dated infrastructure that had been destroyed. This means
that resources were spent on stagnant technologies, taking away from the
possibilities of imminent upgrades. That said, the island's
infrastructure as a whole is now somewhat more hardened to natural
disasters, as the companies operating within its borders have, by and
large, replaced installations that were destroyed with technologies and
structures that can withstand greater punishment from mother nature.

Planning Implications

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is a
strangely mixed market. The telecom sector, under the regulation of the
FCC, has gone through the adjustments and crises that have faced
continental vendors although its situation is somewhat different in that
the strong legacy phone company, PRT, which operates like an RBOC, has
less competition than its mainland equivalents. The mobile market,
however, is just as competitive as it is in the
United States

Rico suffers from many of the ills of Latin America, particularly poverty and a poor distribution of wealth, leading to
reduced opportunities for advanced services. PRT has a long history of
failing to connect new customers quickly. Even today, it continues to
struggle with universal service goals.

is offset by its

associations, federal aid programs, and other central government
offerings. The positive side of this unique arrangement is that it has
been easy for major

telecommunications companies to set up business, while language and
proximity make it an ideal location to move into Central American
markets. US ISPs and data services companies have invested in the
infrastructure of Puerto Rico to make it into a significant network access
point for traffic to and from the

to the remainder of the Southern Hemisphere.

potential investors in this market, key issues are the special
relationship with the
, PRT’s market dominance, proximity to Latin markets,
ongoing infusions of FCC rebuild funds, and language. The
risks of doing business here are significantly below those of operations
in other parts of
Latin America
. Movement of corporations and capital here is
encouraged in numerous ways by both the local and the US federal
governments, as is investment. Barriers to market entry are few,
particularly for US firms. However, newcomers can expect to face heady
competition both from major players such as PRT and from a large number
of small niche operators. Knowledge of the market, location, and
language are critical.

Overall, investors may wish to wait for one or more years before even
considering an entry into the Puerto Rican telecom market. The alterations made
by storm restoration efforts will likely continue to have a huge impact on the nature and
structure of the island's telecom. Meanwhile the economic recovery needed to
repair the damage done to the island's finances is still not 100 percent
complete, and the majority of the funds set aside to regrow the islands damaged
infrastructure will take several more years to be fully disbursed.
These factors create a state of significant flux for any new entrants into the
market. That said, this may be a time for the boldest of investors to take
advantage of the gaps in communications and transmission that the hurricanes
have left. This is not to say that any business should consider the exploitation
of the citizens or Puerto Rico, but rather that significant opportunities may
soon arise for building hardened telecom networks, sturdier infrastructure, and
replacement networking components.

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