Internet in Latin America: diagnosis and prospects

28/12/2012

* By Fernando Rojas

The Internet made ​​significant progress in Latin America in 2012, most notably the continuous improvement of the affordability of service – defined as the percentage of the per capita GDP required to pay for a broadband connection – and an increase in connection speeds.

These two variables are of great importance to the region, as price is one of the main factors affecting demand and the most significant barrier against Internet access and the benefits arising from its use. Meanwhile, connection speed determines which services and applications can be accessed through the Internet and limits the service’s potential effects.

According to data from the ECLAC Regional Broadband Observatory (ORBA), between March and November the rates-to-GDP ratio decreased by 30% while data download speeds have increased by almost 33% . However, it has not yet been possible to close the external and internal divides. For instance, Internet penetration in OECD countries borders on 80% of the population, while in our region it is barely 40%. Moreover, Latin America is very diverse, with penetration levels ranging from 10% to 50%.

What is more, despite the reductions that have occurred, Latin America rates represent more than 6% of the average per capita income, while in developed countries they are less than 1%. As to speed, most connection bandwidths are under 4Mbps and 256Kbps connection speeds are still marketed as broadband services.

Within this context, through the Regional Broadband Dialogue and with the support of the ECLAC @LIS2 European Commission, ECLAC is working together with 10 different countries in the region in order to develop policy recommendations to create conditions such that will allow cost reductions and improved quality.

In this regard, two elements have been identified that would have a positive impact in the short term: attracting content hosting at local and regional level, and the implementation of Internet exchange points (IXPs). The combination of these two elements result in a more efficient national and regional interconnection, as it allows the traffic exchanged between local ISPs to remain within each country, avoiding the use of international links which increase costs and reduce quality of service and which are currently used by close to 80% of the region’s Internet traffic.

In 2013, significant progress will be made in terms of regional broadband infrastructure and interconnection, which means that the increase in quality of service and cost reductions will be greater than we have seen so far. This will result in greater inclusion of low-income segments and a better and more beneficial user experience.

* Head of the Innovation and ICT Unit, Economic Commission for Latin America.