Broadband Overview: Latin America

Latin America is still a developing broadband region with approximately half the population penetration compared with the World average. Being one of the richest countries in the region, Chile is the most developed broadband country, but even so it only had a broadband penetration of 6% of the population as of December 2006, which is comparable to Greece, the least developed Western European country by some margin.\

The biggest issues (as in other developing regions/countries) for greater broadband take-up are affordability of broadband services and of course the PC equipment required to use them. For the main countries highlighted in this report, GNI per capita is less than $10,000 in all four cases, lower than countries in other 'developing' regions such as Czech Republic and Hungary, and over four times lower than the US. The average wage in Brazil is just over $500 per month in urban areas, and according to the World Bank, 8% of the population earn less than $1 per day. Across all four countries, on average, 60% of the national income is earned by the top 20% of the population. In our opinion, if either the economic situation doesn't rapidly improve, or if hardware and broadband services are not further subsidised, broadband saturation in the consumer market could happen as low as 40% of households. This would create huge broadband divides at both a regional and country level. The Brazilian Government recently announced fresh initiatives around making both PCs and broadband services more affordable to a greater proportion of the country, and such initiatives, assuming done properly, should be applauded.

Competition in the region is largely limited to incumbent operators versus cable TV companies. However, other than in Chile, the competition has largely focused on wealthier metropolitan areas, leaving little to no competition for large sections of the population. To their credit, incumbent operators have deployed broadband networks in large proportions of their regions, but it is obvious from developed markets that the most successful broadband countries are those with healthy competitive markets. Regulators should therefore try to encourage greater competition in the DSL markets, which will become the dominating broadband technology throughout the region.