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News Releases

May 30, 2012

Report: how to make broadband more accessible and affordable in Latin America and the Caribbean

Companies, academic institutions and international agencies propose paths to narrow the digital divide

Broadband is expanding rapidly in Latin America and the Caribbean, but the region still lags behind the world’s most advanced nations in terms of coverage, access and adoption of information and communication technology services delivered through fast networks, according to a new report released by the Inter-American Development Bank (IDB).

The report, “Bridging Gaps, Building Opportunities: Broadband as a Catalyst for Economic Growth and Social Progress in Latin America and the Caribbean,” is the product of discussions between the IDB and a wide array of stakeholders, including technology companies, multinational and national telecommunications operators, academic institutions and international agencies.

Bridging Gaps, Building Opportunities includes a common position statement with recommendations on how to accelerate the deployment and use of fixed and mobile broadband services in Latin America and the Caribbean. It cites an IDB study that found that a 10 percentage point increase in broadband penetration in the region could boost gross domestic product by an average 3.2 percent and raise productivity by 2.6 percent.

By improving broadband connectivity and making services more widely available and affordable, countries could help businesses—particularly small and medium-sized ones—become more competitive as well as provide their citizens access to more efficient government services, educational opportunities and healthcare, especially for people in remote areas or in underserved segments of the population.

At present, however, broadband is less accessible, more expensive and less used in most Latin American and Caribbean countries than the average for countries in the Organization for Economic Cooperation and Development (OECD). In terms of fixed broadband penetration, European nations have an average of 30 installed lines per 100 people, nearly triple the average in this region.

Regarding mobile broadband, countries such as Korea, Sweden and Japan have about one line per person. The average penetration for Latin America and the Caribbean is about 15 lines per 100 people.

The digital divide is even starker among and within countries of this region, particularly when comparing coverage in urban and rural areas. In some countries, broadband penetration rates in major cities are more than 10 times higher than in the countryside.

Although prices have been falling in recent years, cost is another major hurdle: broadband users in Latin America and the Caribbean pay far more for slower service than consumers in OECD countries, where households have more disposable income. In some cases, high trade tariffs make imported computers, smartphones and wireless devices more expensive for businesses and individuals, limiting the expansion of broadband usage.

Bridging Gaps, Building Opportunities offers a range of policy recommendations to overcome obstacles to expanding broadband in Latin America and the Caribbean. Besides suggestions on how to build the necessary infrastructure and improve the legal and regulatory framework for these services, the report also addresses issues such as digital literacy.

Among the solutions countries could pursue to enable more citizens and businesses to take full advantage of broadband services are expanding current efforts to wire schools, train teachers in IT and provide computers to students. Some countries have successfully used e-government portals as gateways to digital literacy services. Others encourage small businesses to adopt broadband and train their employees in ICTs.

Although wholesale data transit prices dropped by half in Latin America and the Caribbean over the past three years, the regional average is still nearly six times more expensive than in countries with more robust infrastructures. This translates into higher retail costs for broadband services.

Governments could adopt policies to foster investment in broadband “backbone” infrastructure within and between countries in the region. They could also adopt regulations to help reduce the cost of civil works needed to expand broadband networks, such as “dig once” policies that require public utilities and companies building roads, railroads or pipelines to include ducts capable of carrying optic fiber.

The concentration of demand for broadband services from businesses and better-off households in major cities has led to strong competition among telecommunications and cable companies. In order to improve coverage in sparsely populated rural areas, governments can establish universal service funds. Korea carried out long-term programs of this nature that turned it into a global leader in mobile broadband.

Latin American and Caribbean countries also need to modernize their IT legislations, ranging from protection of personal data to licensing of service providers and regulatory frameworks that treat telecommunications and broadcasting as unrelated industries.

In its conclusions, the report states: “The challenges of developing broadband are so formidable that the private sector will not be able to face them alone. Indeed, there is a need for governments to join with the private sector and to provide leadership in initiatives to reduce not only the digital divide but also to use digital means to narrow the social divide.”

For its part, the IDB is committed to helping its member countries in Latin America and the Caribbean in the challenge of developing this critical technological infrastructure, from supporting the design of national broadband plans to nurturing public-private partnerships necessary to expand broadband coverage.

About the IDB

The Inter-American Development Bank is the leading source of long-term multilateral financing for Latin America and the Caribbean. Its Competitiveness, Technology and Innovation Division promotes the creation and growth of dynamic businesses in the region. Its Office of Outreach and Partnerships builds alliances and establishes dialogues with partners that share the Bank’s development goals.

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