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Latam digital infrastructure

Improving digital access for the Latin American and Caribbean region

Latin American and Caribbean digital access is expensive, and coverage varies strongly. Fortunately, this can be cost-effectively improved.


The global pandemic has had a marked effect on the Latin America and Caribbean region. Digitization is expected to support much-needed post-covid social, financial, educational and healthcare improvements, supporting 4G and 5G rollouts. Although affordable, these steps demand ambitious policy and regulatory changes, and significant infrastructure investments.

Relatively expensive devices and data charges combined with uneven coverage continue to affect uptake of digital services across the region. According to recent World Economic Forum figures, less than half of the Latin American and Caribbean population has fixed broadband connectivity, less than 10% have high-quality fibre at home. Seven out of ten people in urban areas have access to connectivity, but only four out of ten in rural areas. For people with lower income data plans and internet-enabled devices are prohibitively expensive.

According to the World Economic Forum, tackling this digital divide is affordable and brings vast potential benefits, but will require policy actions to reduce cost, expand access and incentivize greater private-sector and citizen participation. Three areas have been defined:

 

LAC governments should pursue inclusion through service provision and legal and regulatory reform. This may include rolling out foundational digital identification systems citizens; promoting infrastructure-sharing among network operators and access to ‘dark fibre’; increasing competition among mobile operators; attaching network build-out obligations for underserved areas to 4G and 5G spectrum licenses; and streamlining administrative and approval processes. LAC countries with clear, predictable regulations attract almost 50% more in ICT investments (and 64% more when coupled with good institutions).

Policy-makers should consider direct or indirect financial incentives for digital customers and operators. Demand-related measures could include subsidizing internet, and reducing taxes and customs duties on low-cost, internet-capable devices. On the supply side, governments can use minimum subsidy concessions or temporary investment tax incentives to induce network operators to extend service into underserved regions. Similar initiatives could encourage scaling up of other digital infrastructure, such as data centres.

Digital skills

In most LAC countries, just 5-15% of adults have medium or strong computer and problem solving skills in technology rich environments (vs. 29.7% in OECD countries). Digital capacity-building is beneficial to students and workers, as well as policy-makers and regulators seeking technical expertise in digital infrastructure and related areas (data privacy, cybersecurity, digital tax, etc.).

In a region that underinvests in public infrastructure, closing the digital infrastructure gap would be more affordable than closing gaps in transport, energy and other infrastructure sectors.

Unequal and unachieved fixed-broadband agenda, especially in fiber

On average less than half of the population (46.7%) in the Region have fixed broadband connctivity and even when they have it is of low quality (9.9% fiber to the home penetration)

Source: World Bank