Why is mobile broadband quality so important for development?
In 2017, less than 20% of the region´s population had access to 4G technology, compared to nearly 70% in more advanced economies. Instead, around 40% of mobile customers in Latin America and the Caribbean are living in a 2G world. Beyond the need for greater adoption of more powerful 4G technology, service quality is equally important. The U.S. and U.K. define broadband service as having a minimum download speed of 25 Mbps (megabytes per second) and 24 Mbps, respectively, and a speed of at least 10 Mbps is considered decent broadband. Based on these parameters, as of 2017, no country in the region offers even decent broadband to the typical user, with an average download speed of 5 Mbps regionwide. Some countries, such as Chile, Trinidad and Tobago, and Uruguay are close to meeting this threshold with average speeds of around 9 Mbps, followed by The Bahamas with 8 Mbps.
What does this slower processing power mean in practice? Assuming a download speed of 5 Mbps, users can e-mail, web browse, and use online payment applications, but can’t do video conferencing or HD video streaming, which requires five times the power. In essence, the average user in Latin America and the Caribbean has no access to some of the best web applications. And, it is no surprise that the slowest download speeds are clustered within the most vulnerable communities, including the urban poor, small rural towns, and particularly women living in rural areas, relegating these populations even further to the sidelines of the digital economy. The situation is also problematic for companies, particularly for micro and small enterprises – which are the main source of employment across the region - which cannot access online services that could help to increase their productivity and competitiveness. This lack of speed matters, as countries and companies need to accelerate adaptation to the digital revolution, not ride the brake.
While the region has made significant gains in expanding broadband coverage to the majority of the population, these efforts are not enough in a fast, dynamic industry like telecommunications. In order to foster greater social and digital inclusion within countries and bridge the digital divide between Latin America and the Caribbean and more advanced economies, past investments in infrastructure need to be complemented with ongoing investments to swiftly expand 4G coverage and increase service quality to meet increasing mobile data demand.
IDB Invest is helping to augment investments in the sector together with local mobile broadband providers. In Paraguay, for example, where mobile broadband penetration is low and average download speeds are among the slowest in the region (2Mbps), Tigo Paraguay is building a new 4G LTE network in the country’s urban centers of Asunción, Ciudad del Este, and San Lorenzo and expanding its 3G network throughout the country. In Argentina, one of the country’s largest mobile phone operators, Telecom Personal, is deploying a 4G LTE network countrywide, aiming to increase both coverage and quality of mobile broadband data services.
While mobile technology is constantly evolving, investments such as these will modernize national networks, bring more underserved people and businesses into the digital fold, and lay a more solid foundation for future adaptation to next generation technologies like the forthcoming 5G wave. In this way, mobile telecommunications can be a true vehicle for development in the region.
For a deeper dive into the dynamics of the mobile industry in the region, see the Evolution of Mobile Telecommunications in Latin America and the Caribbean, part of IDB Invest’s Development through the Private Sector Series, or a brief summarizing this study here. The study uses a novel dataset from GSMA Intelligence, identifying and comparing market penetration rates, investment trends, and technology adoption for 26 Latin American and Caribbean countries over 17 years (2000-2017).
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