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INTERNET DIFFUSION IN LATIN AMERICA:    BROADBAND AND CYBER CAFES                     by               Victor Molina   A p...
INTRODUCTION       The present paper on ‘Internet diffusion in Latin America: Broadband and CyberCafes’ is a partial fulfi...
INTERNET DIFFUSION IN LATIN AMERICA:                        BROADBAND AND CYBER CAFES       Latin America and the Caribbea...
lower Internet diffusion countries are Suriname with 3.3%, Colombia with 2.7%, Ecuadorwith 2.5%, Bolivia with 1.4%, French...
Re-shaping Latin American Informational Landscapes         Persistent patterns of digital divide in LAC countries have bee...
In addition, within countries, business districts and affluent neighborhood are the mostadvantaged, regarding Internet ser...
fall in Prahalad’s assumption. However, local solutions – Kirkman (2001) claims - suchas cyber cafes, café Internet, Inter...
CONCLUSIONS       The conclusions from the present paper on ‘Internet diffusion in Latin America:Broadband and Cyber Cafes...
REFERENCESCastells, M. (2000). The Rise of the Network Society. (2nd ed.) Oxford: Blackwell        Publishers Ltd.Chapman,...
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Internet Diffusion in Latin America: Broadband and Cyber Cafes

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Internet Diffusion in Latin America: Broadband and Cyber Cafes

  1. 1. INTERNET DIFFUSION IN LATIN AMERICA: BROADBAND AND CYBER CAFES by Victor Molina A paper presented in partial fulfillment of the requirements for the course Forecasting and the Evolution of Technology ARIZONA STATE UNIVERSITY EAST April 2003
  2. 2. INTRODUCTION The present paper on ‘Internet diffusion in Latin America: Broadband and CyberCafes’ is a partial fulfillment of the requirements for the course Forecasting and theEvolution of Technology. The objectives of this paper are: • To understand challenges to Internet diffusion in Latin America • To review recent Internet diffusion trends in Latin America, particularly (a) broadband-enabled technologies and (b) shared technology models • To forecast Internet penetration in Latin America through (a) broadband-enabled technologies and (b) shared technology models from 2003 to 2008. The relevance of this paper lies in the fact that forecasting Internet diffusion in LatinAmerica through (a) broadband-enabled technologies and (b) shared technology modelswe will be able to understand how developing countries are adopting and adaptingInternet technologies to their particular context.BROADBAND and CYBER CAFES 2
  3. 3. INTERNET DIFFUSION IN LATIN AMERICA: BROADBAND AND CYBER CAFES Latin America and the Caribbean (LAC) have only 4% of worldwide Internetusers, far behind Canada/USA (40%), Europe (28%) and Asia Pacific (26%). Accordingto Kikman (2001), The reason for why LAC stand in this position is not one but acomplex and interlinked group of factors such as “the lack of economic resources, lowlevel of technical education, poor infrastructure, political instability, stagnant businesscommunity and poorly formulated policies.” (p. 193) Additionally, geographicfragmentation (people belong to different regions) and ethno-linguistic fragmentation(people speak different languages), both reported by La Porta et al. (1996), do also showa significant negative impact on Internet diffusion in the region. Structural reforms such as the privatization of telecommunication publiccompanies in LAC during the 1990s (UN-ECLAC, 2001), and the availability ofinformation and communication technologies more appropriate and affordable to thegeographic, demographic, and economic characteristics of the region (Kirkman, 2001) isnow changing the LAC informational landscape. Regional Digital Divide Latin America was claimed to be fastest growing Internet community in the worldby 2000. (UN-ECLAC, 2001) Holding a 136% growth in Internet host, standing overNorth America (74%), Asia (61%), Europe (30%), and Africa (18%). However, a closerlook to the LAC informational landscape will make evident some Internet diffusionanomalies in the region such as digital divide among countries and digital divide withincountries. Considering Internet users as percentage of total country population it has beenreported by UN-ECLAC (2001) a 20% in Chile, 11.9% in Uruguay, 11.5% in Peru,10.9% in Guyana, 8% in Argentina, 5.2% in Venezuela, and 4.6% in Brazil. They areclearly the Internet diffusion leading countries in South America. On the other hand, theBROADBAND and CYBER CAFES 3
  4. 4. lower Internet diffusion countries are Suriname with 3.3%, Colombia with 2.7%, Ecuadorwith 2.5%, Bolivia with 1.4%, French Guyana with 1,1%, and Paraguay with 1%. Local (Geographic and Social) Digital Divide Not only patterns of digital divide affect every country in LAC and the region as awhole but also LAC countries show local (geographic and social) digital divide. Highconcentration of Internet penetration is found in higher income population as well as inthe two major country gateways while the urban poor, medium size cities, and rural areasare still excluded from the benefits of the digital world. This fact leads to a range inbetween 80% to 99% percent of excluded population in LAC. Castells (2001) reports that, in average, 90% of Internet users in LAC belong tothe higher income population. In both, Brazil and Mexico, is shown significantpercentages of Internet penetration divide between top 15% higher income population(Brazil 81.6%, Mexico 57.1%) when compared to the Internet penetration in the overallcountry population (Brazil 12.3%, Mexico 8.6%). This pattern of digital divide due toincome is repeated – according to UN-CEPAL (2001) - in the rest of LAC countries. Therefore, the digital divide observed among world regions and among LACcountries is again observed within LAC countries. This situation does not only take place in LAC but in the rest of the developingworld. According to Kirkman (2001), “the global map of Internet connectivity shows thatwhile there may be Internet points of presence in every nation of the world, when thesub-national patterns of Internet diffusion are examined, a very different picture emerges.Particularly in the developing world, the Internet has no penetrated most rural areas, andindeed, within urban areas, can be found primarily among the wealthy and privileged” (p.192). For instance, to find how to re-shape informational divided landscapes indeveloping countries for the benefit of the poor is a critical question in today’s world.BROADBAND and CYBER CAFES 4
  5. 5. Re-shaping Latin American Informational Landscapes Persistent patterns of digital divide in LAC countries have been provoked not onlyby a lack of national policies, economic resources, and digital infrastructure but also bywrong assumptions. Some assumptions for what the poor have been excluded from the benefits of thedigital world up today in developing countries are (a) basic needs (water, shelter, andfood) is the priority of the poor, information is not; (b) it is neither technologicallypossible nor economically affordable to bring Internet to rural areas, and impoverishedurban neighborhoods where the poor are settled because the size of the market is toosmall and/or the income level is too low; and finally (c) nobody is interested in offering,to the poor and the digitally excluded, Internet access opportunities. Several scholars argue the validity of these assumptions. According to Tilak(2001) and Henstchel (2001) local awareness about the potential benefits of Internetaccess as a tool to face challenges of geography and poverty worldwide is increasing. Thepoor and the digitally excluded are understanding that digital access to information,education, and training could faster bring to the poor alternative strategies to meet theirbasic needs. Also, recent advances in ICT, renewable energy systems, and the integrationof both are offering affordable alternatives to the problem (Kirkman, 2001). Finally,recent reforms in international organizations, especially in the World Bank and the Inter-American Development Bank (IADB) are making possible access to funds frominternational co-operation oriented to small-scale projects implementation (Chapman,2002). Indeed, the three critical factors: local awareness, technology availability and co-operation opportunities are now available for most of the developing world. Forecasting Internet Development in South America: 2003-2008 Whether Internet diffusion is lead by the public or the private sector some SouthAmerican countries are performing better than others their entrée into the digital world.BROADBAND and CYBER CAFES 5
  6. 6. In addition, within countries, business districts and affluent neighborhood are the mostadvantaged, regarding Internet service, while the majority of the middle and low incomepopulation remain with poor or none service. The major metropoles are, obviously, thehot spots in the South American’s Internet map while vast rural areas remain un-served. In the next five years, however, new technologies such as broadband and newmanagerial innovations such as shared technology models are going to have a positivesignificant impact on the Internet diffusion in South America. Broadband-Enabled Infrastructure @ Top of Pyramid Market According to Flores-Roux et alt. (2001), while LAC “has almost as many housesand small enterprises as the United States has,” (p. 16) only few of them can affordbroadband access. By 2001 LAC has 300,000 broadband subscribers, which is equivalentto only one-tenth of the US market. However, looking more closely to the LAC market itis found that the percentage of higher-income households (top of pyramid) reached bybroadband infrastructure is not only high but also likely to increase in the short term. Amarket research conducted in Brazil, Mexico, Colombia, Argentina, Peru, Venezuela, andChile shows that by 2004 “there will be anything from 3.3 million to 4.3 millionbroadband subscribers in LAC. That would make for a growth rate of from 88 to 102percent in the years since 2000” (p.17). If the trend is sustained and no major economic catastrophe shakes the region itcould be expected that by the year 2008 broadband services will be commonplace inbusiness districts as well as affluent neighborhoods in Chile, Argentina, Uruguay, Brazil,Mexico, Venezuela, and Colombia while initial stages of broadband-enabledinfrastructure will be placed in the rest of the region. Shared Technology Models @ Base of Pyramid Market Prahalad (2002) claims: “fully 65% of the world’s population earns less than$2000 each per year – that’s 4 billion people. But despite the vastness of this market, itremains largely untapped by multinational companies.” Internet service in LAC does alsoBROADBAND and CYBER CAFES 6
  7. 7. fall in Prahalad’s assumption. However, local solutions – Kirkman (2001) claims - suchas cyber cafes, café Internet, Internet kiosks, Internet cabinas, community learningcenters and other similar endeavors “are making the Internet, telephones and computersmore accessible, and more affordable to communities of users (p 200). These sharedtechnology solutions, driven by small and medium enterprises, are now profitably servingthe South American base of pyramid market (lower-income households). One of the mostoutstanding examples of shared technology solutions in South America is Lima.According to Intel (2002a) “Lima, the capital of Peru, has a population of 6 million, sosome 1.9 million are considered “active” Internet users. Most important, nearly 83percent of those users access the Internet in cabinas” (p. 1). Now, the government of Peru– Intel (2002b) continues - is interested in providing eGov services, such as tax collectionand elections (2008), through Internet cabinas. If reached by Peruvian, this goal willstrength the presence of Internet shared technology model in the South Americaninformational landscape. If the trend is sustained and no major technologic disruption shakes the region itcould be expected that by the year 2008 shared technology models will be commonplacein most impoverished urban neighborhoods as well as rural areas in all South Americancountries but especially in Peru, Ecuador, Bolivia, Paraguay, Suriname, and FrenchGuyana.BROADBAND and CYBER CAFES 7
  8. 8. CONCLUSIONS The conclusions from the present paper on ‘Internet diffusion in Latin America:Broadband and Cyber Cafes’ are: • Patterns of digital divide are persistently repeated at universal, regional, and local level. • Uneven Internet diffusion within countries seems to be caused by geographic, linguistic, and social fragmentation. • Two approaches have been developed to foster Internet diffusion in Latin America. One is technology-driven (broadband) and the other is a business model (cyber cafes). • Broadband-enabled infrastructure @ top of pyramid is perceived to have a major development in the South American market, especially in business districts as well as affluent neighborhoods. • Shared technology models @ bottom of pyramid is perceived to have a major development in the South American market as well, specially impoverished urban neighborhoods as well as rural areas. The relevance of this paper lies in the fact that forecasting Internet diffusion in LatinAmerica and particularly in South America through (a) broadband-enabled technologiesand (b) shared technology models have made us understand how developing countries arecautiously adopting and creatively adapting Internet technologies to their particularcontext.BROADBAND and CYBER CAFES 8
  9. 9. REFERENCESCastells, M. (2000). The Rise of the Network Society. (2nd ed.) Oxford: Blackwell Publishers Ltd.Chapman, R. and Hamel, G. (2001, November). The World’s Bank Innovation Market. Harvard Business Review. 104-113.Christensen, C. (1997). The Innovator’s Dilemma. Boston, Harvard Business Scholl PressHentschel, J. and Waters, W. (2002). Rural Poverty in Ecuador: Assessing Local realities for the Development of Anti-poverty Programs. Word Development, 30 (1), 34- 47.Intel. (2002a). Cabinal Publicas Bring the Internet to Peru. Intel Intranet: The People and Practices Research Gro up. Carnazzo, A.Intel. (2002b). Cabinas publicas: The Second Generation: Peru’s Internet Cafes Must Expand to Stay Alive. Intel Intranet: Worldwide Employee Communications. Carnazzo A.Kirkman, G. (2001). Out of the Labs and Into the Developing World: using appropriate technologies to promote truly global Internet diffusion. Journal of Human Development, 2 (2), 191-236.Prahalad, C.K. & Hammond, A. (2002, September). Serving the World’s Poor, Profitably. Harvard Business Review. 48-57.Tilak, J. (2002). Education and Poverty: alternative approaches to development. Journal of Human Development, 3 (2), 191-207.United Nations-Economic Commission for Latin America and the Caribbean (UN- ECLAC). (2001). Latin America on its path into the digital age: where are we? Santiago, Chile: Hilbert, M.BROADBAND and CYBER CAFES 9
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