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Latin American countries have made immense progress in delivering telecom services to its citizens. Over the past few years, healthy economic growth, driven by high prices of mineral resources, infrastructure investments and a burgeoning middle class have driven consumption of a range of telecom services. However, there is one segment in which Latin American nations have been lagging behind their global counterparts: penetration of fixed-broadband services among its population.

Latin America, as a region, has some of the lowest fixed-broadband penetration rates globally. Despite higher income levels than Asia Pacific, fixed-broadband penetration per 100 population in Latin America was just marginally ahead of Asia Pacific as of 2015. With fixed-broadband accessibility still low, the region as a whole has not performed well in terms of the household Internet penetration. What has accentuated the disparity in broadband penetration is the low purchasing power of the rural population in Latin America even though the continent is home to a growing urban middle class.

Internet and Fixed-Broadband Penetration by Region: 2015

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Source: Euromonitor International from International Telecommunications Union (ITU), national statistics

High tariffs and income inequality

Two prominent reasons for the low fixed-broadband penetration among Latin American households are high tariffs and widespread disparity in income distribution. A number of Latin American nations have some of the costliest fixed-broadband services globally. Moreover, the persistently high income inequality across the region has affected broadband access, especially among low-income consumers. This has also meant that there is substantial intra-regional differences in fixed-broadband penetration with larger and richer nations, such as Brazil, ahead of Peru and Bolivia.

The differences in household fixed-broadband penetration across Latin America is borne out by the disparity in affordablity of services chiefly due to low income levels in specific countries. For instance, according to the International Telecommunications Union (ITU), services remain expensive in Ecuador and Peru as compared to Brazil not just in terms of absolute price of services but also as a percentrage of gross national income (GNI) per capita. Moreover, the Gini Index (a measure of income inequality where 0 denotes total equality and 100 denotes total inequality) ranges from 45.0 in Peru to 50.2 and 52.9 in Brazil and Colombia respectively.

Household broadband penetration, select markets: 2015

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Source: Euromonitor International from national statistics

National Broadband Plans show the way for better broadband coverage

Governments across the region have recognised the need to expand broadband coverage in underserved rural areas and improve digital connectivity among poorer households. This has led to major public investments in national broadband networks and expansion of fibre-optics and other technologies in remote corners of the region.

Key Broadband Plans in Latin America

CountryProjectLaunch yearImplementing AgencyKey features
BrazilPrograma Nacional de Banda Larga2010Telebras• Expand fibre network to 40.0 million households across the country

• Plan revamped in 2015 with aim to connect 70.0% of municipalities to fibre network by 2019

• Project facing funding issues due to recessionary economic condition

ColombiaNational Fibre Optic Project2011Azteca Comunicaciones• Project aimed at deploying 17,000 km of fibre-optics covering 700 municipalities by 2014

• By March 2015, network extended to 20,500 km covering 769 municipalities

PeruNational Broadband PlanPlan enacted into law in 2012Private Investment Promotion Agency (ProInversion)• Aimed at extending fibre broadband in rural areas

• A number of projects have been launched

• As of March 2015, it is estimated projects will benefit 5.1 million citizens with fibre network covering 31,716 km

EcuadorNational Broadband Plan2011Corporacion Nacional de Telecomunicaciones (CNT)• Aimed at providing broadband to 75.0% of population by 2017

• Rural communities expected to benefit from network expansion

• As of January 2015, 35,111 km of fibre network completed with an aim of 45,000 km by 2017

MexicoMexico Conectado2014Ministry of Communications and Transportation• Federal government programme aimed to provide free Internet to 250,000 public by 2018

• By May 2015, there were more than 70,000 Internet sites including schools, clinics and libraries

Source: Government websites, national statistics, trade sources

Rising broadband penetration will benefit digital commerce and other services

As a result of these government initiatives to enhance access, especially among low-income households, Euromonitor International predicts household fixed-broadband penetration will increase from 40.2% in 2015 to 61.9% in 2030 across the region. This is evident from the fibre-optics investments that are being pursued in many nations, with authorities looking to translate healthy economic growth into tangible benefits in the form of higher digital connectivity. Going forward, rising income levels and greater broadband coverage will also drive uptake of services, such as digital commerce.

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