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Internet for the people

José Soriano is certain that at some point in the next millennium the Internet will be available to Latin Americans of all classes at a price they can afford. But he's not willing to wait that long.

In the short term, this journalist, telecommunications expert and current general manager of the Peruvian Scientific Network/Internet Peru (RCP ) is pushing a novel way to bring the Internet to low-income users in underdeveloped areas, at an acceptable cost.

Examples of his approach are up and running in 27 locations throughout Peru. Known as cabinas públicas, or public computer centers, they typically contain 20 pcs with dedicated lines to the Internet, which can be "rented" by users for as little as $1 for one hour. The cabinas also provide training, personal e-mail accounts, World Wide Web page development, and other services.

The cabinas have proved enormously popular with people who don't have a phone line at home or who can't afford to own a computer--a consumer category that still makes up more than 95 percent of all Peruvians, according to Soriano.

Perhaps more remarkably, the cabinas are profitable. Founded in 1991 by Soriano and a few friends, the RCP was organized around the conviction that "the Internet was going to revolutionize access to information," Soriano said in a recent interview. However, "we wanted to make sure that universities, ngos and ordinary citizens could be a part of the revolution," he added.

Soriano and his associates created the RCP by carefully blending idealism and smart business sense. They knew it would be expensive to provide access to the Internet, so they adopted a fee structure that covers costs and allows for expansion while remaining affordable. Today RCP functions as a self-sustaining not-for-profit company that has become the dominant provider of Internet access in Peru.

RCP is co-owned by 11,500 associate entities who pay an average of $18 per month for various levels of network access; an additional 80,000 individual registered users pay even smaller fees. The company has 60 full-time employees who manage $2.8 million worth of computers, servers, routers and other networking equipment. Revenue from user fees in 1997 is forecast to top $4 million.

The RCP cabinas are operated as franchises. For an initial investment of as little as $2,500, RCP will provide a qualified franchisee with $60,000 worth of computers, peripherals and network equipment. Franchises, which are typically run by commercial bank branch offices, chambers of commerce or individual entrepreneurs, then take full financial responsibility for the venture, counting on user fees to repay RCP and generate a respectable profit on the side.

Outside investors are starting to show interest. At the IDB's September Informatics 2000 conference, the Bank's Private Sector Department and Worldtel, Ltd., an investment company that structures and funds telecommunications projects in emerging markets, announced plans to provide RCP with debt and equity finance for a $125 million project to build 1,000 new cabinas throughout Peru. According to the idb's Warren Buhler, conference coordinator, disbursements could begin early next year, and the Bank is considering funding a similar project in Argentina.

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