Internet Access in Argentina: Obstacles

1
Internet Access in Argentina Obstacles
Opportunities

• Mid-Quarter Status Report LAS194/CS377C
• THE INFORMATION REVOLUTION IN LATIN AMERICA

By M. Beem P. Chiaraviglio
2
Assumptions

• Internet usage will continue to grow due to
  Positive Feedback phenomenon
• Relative to LA, Argentina has high per capita GDP
  and education levels. This makes it an Internet
  prone market
• Given 1 2 above, broadband access demand will
  grow

3
Methodology

• Look into the drivers affecting Argentina II
  Projects assumptons
• Demographic and Social Indicators
• Economic Indicators
• Government Regulations
• State of Infrastructure and Technology
• Case Studies
• Velocom
• Universidad de Buenos Aires
• Business Plan

4
Demographics Social

• Total Population 37 Million (47 M by 2025)
• Growth rate 1.16/year (lowest in LA)
• Major Cities Greater Buenos Aires (12 M),
  Cordoba (1.1 M), Rosario (1.1 M)
• Male/Female ratio 0.98
• Life Expectancy Male 72 yrs, Female 75 yrs
• Age Distribution 0-14yrs 27, 15-64yrs 63,
  over 65 10
• Literacy 96.2
• Schooling Rates 6-12yrs 98, 13-17yrs 70,
  18-22yrs 28
• Urban Population 89

5
Demographics Social

• Demography of Internet Usage 2.5 Million (7.5 M
  2003)
• Growth rate 75/year
• 2/3 are male, but growth in female pop. is
  greater
• 2/3 are new users (2 yrs or less)
• 71 have attended university
• 76 access the Internet from home
• 26 of users have bought over the Internet
• In spite of economic recesion, Internet usage and
  related business has been on the rise

6
Economic

• Breif History
• 1810 - 1930 Independence, founding of Republic,
  economic prosperity fueled by agro exports to
  Europe, large European immigration
• 1930-1990 State directed industrial autarky,
  welfare state (Peronism) alternating with
  military dictatorships, all contributing to
  economic deterioration and extreme hyperinflation
  (5000)
• 1990-Present Privatization, de-regulation, trade
  liberalization and integration (Mercosur),
  Convertibility Plan

7
Economic

• Current Situation
• GDP in 2000 300 billion ( 367 in PPP terms)
• GDP per capita in 2000 8000 ( 10,000 in
  PPP)-- the largest in Latin America
• Growth Rate -3 in 1999, projected 0 in 2000,
  but recovery expected in 2001 2.5 - 3.5 growth
  prediction
• Interest Rates Currently (Feb 2001), 8
• Inflation -0.5
• Services 61, Industrial/Mfg 32, Agricultural
  6
• Largest trading partner Brazil
• Largest Foreign Investors Spain, closely
  followed by the US

8
Government Regulations

• History Telecommunications Act of 2000
• 1988 Secr. de Comunicaciones grants a cellular
  license (Movicom)
• 1989 ENTel breaks up into North (Telecom) South
  (Telefonica)
• 1990-1999 Ratio of lines/100 inhabitants goes
  from 11 to 20
• 1993 Two new license granted for cellular
  telephony (Miniphone CTI)
• 1999 Long distance carrier choice given to
  customer
• November 2000 the Telcommunications Act is
  enstated with wider repercussions for customers
  and competitors

9
Government Regulations

• Repercussions of the Telecommunications Act of
  2000
• Full de-regulation of local, domestic and
  international long distance
• 26 new operating licenses granted
• Level playing field for new companies
• Open Network interconnection policy
• Drop in Interconnection rates 2.15 cents to 1.1
  cents
• Universal Service contribution maintained at 1
• Dramatic drop in domestic and international long
  distance tariffs (from 0.50 to 0.20/min)
• Increased use of the internet
• New broadband technologies being offered

10
Government Regulations

• The Internet, Government Policy and Statistics
• The Internet is a Matter of National Interest
• SECOM must develop/promote usage through the
  argentin_at_internet.todos program
• Incorporate into defitinion of Universal Service
• Incorporate a price architecture to facilitate
  Internet usage
• 50 price reduction of Intl connections to ISPs
  (1997)
• 0610 Dedicated number, end user saves up to 50
  dial-up costs
• Liberal possition in Internet Content and Access
  by users
• Based on US Supreme Court decision of Reno v.
  ACLU
• The Internet 2 Argentina Project
• Inspired on US Internet 2 high speed data network
• Objectives are educational, telemedicine and
  scientific tech. research

11
Access Technologies in the Argentine Context

• Hybrid Fiber Coax (FiberTel, Multicanal)
• Digital Subscriber Line (Telefonica, Telecom)
• Fixed Wireless (Velocom, Milicom)
• Fiber to the Curb, Fiber to the Home (Not offered
  yet)
• Other (Satellite Impsat)

12
Access Technologies in the Argentine Context

• Hybrid Fiber Coax ( 99 - 50, speeds 512-128 Kbps)

13
Access Technologies in the Argentine Context

• Fixed Wireless (390-59 speeds 960 Kbps - 64
  Kbps)

14
Future Agenda

• Continue to collect data for the different
  drivers
• Finish case studies
• Formulate business plan or recommendations for
  broadband access in Argentina