- Today, data traffic between South American countries often follows indirect routes, adding thousands of kilometers before reaching its final destination.
- To develop, host, and export artificial intelligence solutions, South America will need to combine talent, energy, and computing capacity with fast, reliable, and resilient connections.
- In this context, the IDB’s regional South Connection program supports studies and projects aimed at developing fiber-optic corridors, submarine cables, data infrastructure, and regional coordination mechanisms.
Let’s imagine, for a moment, a fictional scenario: an entrepreneur in Lima has built a strong software design company. She began by serving Peruvian clients, but soon saw room to expand: there was demand for her services, she had a strong team, and her prices were competitive. Before long, she was signing contracts with companies in Panama City, Bogotá, and Quito.
Yet when she tried to close projects in São Paulo or Santiago, she ran into a problem that was hard to explain. Video calls dropped, files took too long to sync, and real-time demos froze. In the end, she often received a similar response: the client had chosen a provider from outside the region. It was not a matter of price or quality, they explained; it was simply that “the connection with your competitors works.” This is a fictional example, but it illustrates how crucial connectivity is to the viability of countless businesses across the region.
How Data Travels
What many users and companies do not realize is that much of the data traffic between South American countries does not travel directly from one point on the continent to another. It often goes first to the United States, only to return south.
A video call between Lima and São Paulo, for example, may travel thousands of additional kilometers, not because of geography, but because of the lack of direct routes, internet exchange points (IXPs), cross-border terrestrial links, and rules that facilitate data flows between neighboring countries.
The result is a paradox that limits the potential of the region’s digital economy: in many ways, South American countries are better connected to the rest of the world than they are to one another.
That's the type of challenge that the regional South Connection program from the Inter-American Development Bank (IDB) is seeking to address.
When Distance Is Also Measured in Milliseconds
For years, digital connectivity has occupied a secondary place on regional integration agendas, behind roads, ports, and power grids. In a short time, the expansion of artificial intelligence has made that order of priorities obsolete.
AI services require high bandwidth and are especially sensitive to latency, that is, the time it takes for information to travel to a server and back. In real-time applications, an unnecessarily long route affects the speed, quality, and reliability of the service.
The gap is considerable. Some regional connections routed through nodes located outside South America register latencies of around 150 milliseconds, compared with less than 20 milliseconds on direct routes. Meanwhile, 79% of bandwidth on external routes leaves the region, even when the data both originates and ends in South America.
In the digital economy, distance is no longer measured only in kilometers, but also in milliseconds, which depend on the route that data follows.
South America’s Digital Paradox: The Connectivity Challenge Ahead
The good news is that South America is not starting from scratch. In recent decades, its countries have made major investments to expand international connectivity: from the Humboldt cable, promoted by Chile together with Google to connect South America directly with Australia and the Asia-Pacific, to expanded connectivity in Colombia through systems such as AMX-1 and the cable linking San Andrés to the mainland, and Ecuador’s increased capacity through several submarine cables and new systems planned for 2026 and 2027.
Brazil is also central to this landscape, given the size of its market, the cables that land on its coasts, and the growth of cloud services and data centers.
Taken together, these are strategic investments, but their impact depends on regional coordination. A cable that reaches one country’s coast does not automatically benefit its neighbors: to turn it into a regional asset, South America needs cross-border terrestrial networks, exchange points that keep traffic within the region, and open, competitive, and secure access rules.
In other words, South America does not only need more gateways to the world; it needs to connect those gateways to one another.
From Consumers to Providers of Artificial Intelligence
South America’s place in the artificial intelligence economy will depend on this process of digital integration.
The region therefore stands at a crossroads: it can remain primarily a consumer of applications developed and processed thousands of kilometers away, or it can create the conditions to develop, host, and export digital services and AI solutions. This second option requires talent, energy, computing capacity, and data centers, but also fast, reliable, and resilient connections, supported by regulatory frameworks that facilitate cross-border exchange.
An integrated regional digital network would make it possible to better leverage existing infrastructure, expand the market for local providers, and attract investment in cables, data centers, and processing capacity. It would also facilitate the development of regional hubs able to serve several markets from a single location.
In short, the goal is not only to attract large investments, but to enable thousands of South American companies to sell services across and beyond the region without connectivity becoming a competitive disadvantage.
The Digital Integration of Landlocked Countries
This agenda is especially important for Bolivia and Paraguay. As landlocked countries, they depend on terrestrial networks that cross neighboring countries to access submarine cables and global connectivity.
This dependence can lead to longer routes, higher costs, fewer alternatives, and greater vulnerability to disruptions. That is why regional integration is key to improving the quality, affordability, and resilience of their connectivity.
Companies in software, animation, business services, and AI based in Asunción, Santa Cruz, or La Paz could serve global markets if they have access to competitive infrastructure.
South Connection: A Road Map for Digital Integration
This is the context in which the IDB’s regional South Connection program views digital connectivity as essential infrastructure for South America’s growth, innovation, and competitiveness.
The region faces fragmented connectivity, as well as gaps in access, quality, and resilience: fixed broadband reaches close to 45% of households, while some 225 million people remain disconnected from mobile internet. These national gaps are compounded by low regional interoperability, a shortage of alternative routes, and limited use of economies of scale.
South Connection seeks to turn these challenges into an investment road map for 2030. Its approach is pragmatic: identify projects aligned with national priorities and support them from diagnostics and pre-feasibility studies through to investment decisions.
To do so, it works on four fronts: promoting greater regulatory and institutional convergence; conducting pre-feasibility studies for fiber corridors, submarine cables, and border connections; assessing data infrastructure and artificial intelligence hubs; and coordinating efforts to move studies toward implementation.
At the same time, South Connection looks beyond backbone networks. Infrastructure should not only connect countries; it should also improve access and opportunities for communities, businesses, and underserved areas. Indeed, building infrastructure that crosses a territory but does not improve connectivity for local communities would mean leaving the job half done.
A Connection That Truly Works
Now imagine for a moment that the entrepreneur in our fictional example presents another proposal in São Paulo. This time, the video call flows, the demo works, and the files sync in seconds. The client sees a fast, reliable, and competitive service, and the project moves forward because her proposal is judged on its merits.
This small victory points to a larger opportunity: for thousands of South American companies to compete on the strength of their talent and solutions, without losing business because of the routes their data follows.
For more information on this IDB regional program, please visit the South Connection website.