Digital divisions

Can Latin America close the digital divide that is holding back the rural population?

COVID-19 has shone a light on the digital divide across Latin America and the disparity is likely to hinder the region’s economic recovery efforts. The public and private sectors must work together to address this issue as a matter of urgency.

Millions of children have missed out on remote learning during the pandemic due to inadequate access to high-quality internet connections. According to a study by the Inter-American Institute for Cooperation and Agriculture, the Inter-American Development Bank and Microsoft, less than 50% of the population in Latin America have fixed broadband, and at least 77 million rural inhabitants have no access to high-quality internet services.

The private sector bemoans the cost of servicing rural areas with dispersed populations but governments are reluctant to step in. The CEO of a telecommunications company in Colombia didn’t see this as a reason to give up, “Colombia is a great connectivity success story. The Ministry of Telecommunications has worked hard to democratise internet access and has installed millions of access points. This has enabled free internet for people in certain meeting points in rural areas. The private sector then has to educate the users about the benefits of internet access and get companies to incorporate internet usage in their businesses. This will encourage further investment.”

“Colombia is a great connectivity success story. The Ministry of Telecommunications has worked hard to democratise internet access and has installed millions of access points.”

CEO, telecommunications company, Colombia

Digital access boosts social and financial inclusion and reduces the social gap in education and healthcare terms. Only 9.9% of the population in Latin America has access to high-quality fibre connectivity at home while 87% of the population lives within the range of 4G signal. In rural areas, 40% of the population have connectivity options compared to 71% in urban areas.

Mobile broadband is one potential solution but there are barriers, as an executive of telecommunications company in Peru points out, “The issue for mobile deployment is that the antenna is expensive, like USD 100,000, this means that in rural towns with low population density, there is no commercial return for private investors. People forget that, after Australia, Latin America has the lowest population density in the world.”

The Peruvian executive continued by explaining the challenges of rural deployment seemed insurmountable, in the short term, “I believe we are more likely to see urbanisation before large-scale broadband deployment in Latin America. Take Peru as an example, there are 8 million homes, 6 million in urban settings and 2 million in rural areas. There are 500,000 towns of 5,000 people or less, it’s very hard to deploy profitably in these areas. The government would have to provide some strong incentives for us to even consider it.”

“I believe we are more likely to see urbanisation before large-scale broadband deployment in Latin America. The government would have to provide some strong incentives for us to even consider it.”

Executive, telecommunications company, Peru

Due to the reluctance of the private sector to operate in remote communities, governments should step in to finance rural public access solutions and stimulate demand for broadband services. According to our sources, countries should focus on regulatory reforms promoting infrastructure sharing among network operators; the provision of fiscal incentives subsidising internet cost for the poorest, offering tax incentives to operators and promoting the digitalisation of the economy through digital skills training.

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