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AQ Feature

Ask the Experts: Technology in Latin America

What challenges does Latin America face in regulating telecommunications technology?

João Rezende answers:

The biggest challenge of regulation—not only in Brazil, but in all countries that require huge investments in telecommunications—is to establish clear, conceivable, consistent, and transparent rules to promote a healthy, competitive environment between the various players operating in the market. These values are necessary for the widespread distribution of quality services at fair prices to consumers.

Thanks to advances in technology, we now have access to telecommunications services on various platforms. In the past, a phone was just a phone and a TV was just a TV. Now, a device can perform several tasks. This increasing technological convergence toward multiservice platforms is an inevitable process that will likely accelerate with corresponding advances in technology, and it will create new challenges for traditional service providers. At the same time, it represents an excellent opportunity for the proliferation of ideas and innovative business, which will benefit society as a whole. 

Agustín Díaz-Pinés answers:

Broadband services—and more generally, telecommunications networks and information and communications technologies—are critical tools to promote development in the Americas. These technologies can improve lives in many ways, offering increased productivity, new services in areas such as telemedicine, improved educational opportunities, and more efficient access to public services. However, the challenges for these technologies to be fully utilized remain substantial. There are several important areas where further work is needed.

Leadership: The first step is having political will and leadership, with a clear vision that promoting broadband development will benefit the economy and people’s lives. This means not only having advanced, innovative and affordable communication services, but also ensuring that all sectors in the economy adopt these technologies.

Institutions: Tele-communications is a regulated sector and competition needs to be promoted—sometimes against the opposition of established players. To encourage competition, the region needs stronger, more independent institutions—especially sector regulators and competition authorities, which are government agencies that enforce competition laws.

Affordability: In the region with the world’s largest income inequality, technology comes at the risk of widening the digital divide. Telecommunications and broadband need to become more affordable through stronger competition and programs to expand networks to remote rural areas and low-income populations. If expanded successfully, telecommunications networks can close other divides, such as the lack of access to financial services via mobile telephones for people without a bank account. Industry-specific taxes on telecommunication services and devices are also a barrier to adoption.

The OECD, in partnership with the Inter-American Development Bank, is working with the region to promote broadband policies and good practices to make the most of broadband technology. The goal of this collaboration is to develop a broadband policy toolkit for the Latin American and Caribbean region for policymakers and regulators to have the right set of tools and expertise to address these challenges. 

Janet Hernández answers:

Despite Latin America’s tremendous growth in rolling out broadband, many segments of the population are still unable to obtain basic Internet service due to lack of access, high cost or not having the necessary skills.

The challenge for telecommunications regulators is determining how to extend networks to areas of the country that are hard-to-reach and/or low-income.

Regulating bodies in countries such as Colombia and Brazil are responding to these challenges by implementing initiatives with operators to improve coverage areas and decrease prices by reducing taxes on products and services. They are also engaging their counterparts in government and the private sector to promote digital skills, innovation and entrepreneurship in order to foster economic development and inclusion.

A key to the success of the new digital economy is generating consumer trust so that people are willing to shift more of their lives online.

This raises consumer protection challenges, such as establishing frameworks to address online data protection and privacy—particularly when it comes to crossborder data flows—as well as cybersecurity issues, such as protection against hacking. Also, policymakers should consider the need to ensure that consumers have access to high-quality broadband Internet services.

To this end, in various countries in the region, such as Brazil, Chile and Ecuador, regulators are introducing legislation and regulations to address net neutrality, quality of service, data retention, and privacy. 

However, regulators should tread with caution to avoid overreaching and inadvertently stifling some of the proconsumer and innovative practices they wish to promote. 

Carlos López Blanco answers:

In the past 15 years, favorable macroeconomic trends and sensible public policies have attracted investments and propelled social improvements. Between 2000 and 2012, 56.2 million citizens moved out of poverty1 and the middle class grew from 100 million to nearly 150 million individuals.2 Hundreds of billions of dollars poured into the region to deploy fiber optics and to create Latin America’s best infrastructure: its mobile network. The challenge the region faces now is to maintain growth. The deceleration of the Chinese economy, the decrease in commodities prices and changes in U.S. monetary policy are challenging governments to develop new approaches to secure continued social improvements. Technology, and especially telecommunications, is of utmost relevance in this context: according to the World Bank, an increase of 10 points in broadband penetration could increase GDP growth by more than one point in low- and middle-income countries.3

With regards to telecom regulation, the best path is to maintain the light approach that has been prevalent since the 1990s. Unfortunately, regulatory trends are not following this path. Countries like Brazil, Colombia, Guatemala, and Ecuador have created new taxes affecting the industry. In some cases, spectrum—the different pathways of data transmission—is prohibitively expensive and strictly regulated. New regulatory guidelines are being developed under the assumption that operators are to blame for issues (such as handset theft and signal blocking in prisons) that, in fact, can only be resolved with the cooperation of governments and other stakeholders. The new regulations adversely affect cost structures and may lead to reduced profit margins and less investment. To secure Latin America’s access to the digital world, we need to strengthen telecommunications operators by fostering consolidation in our markets, promoting public–private cooperation to increase network coverage and developing frameworks that grant the same legal treatment to all market players. 

Endnotes

Raul Katz answers:

Latin America has made enormous progress in developing information and communications technology (ICT) in the past 20 years. According to recent studies, over 50 percent of the population is already using the Internet.1

However, the region has a wide development gap. The primary challenge is how to continue development while recognizing the importance of addressing the so-called demand gap.2 Focused regulation and inclusive policies can help to narrow this divide.

Regulators and policymakers, in collaboration with the private sector, need to take on three efforts: 1) increase affordability of broadband access, particularly at the base of the economic pyramid; 2) promote digital literacy in education curricula and offer workforce training; and 3) develop Internet content that is suited and attractive to the local population.

Since mobile broadband is going to be instrumental in addressing this gap, governments must provide the necessary frequency spectrum to improve coverage and capacity. 

Endnotes

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Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Technology, Innovation, Latin America

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