Cell phone use spreads faster than expected in Latin America

Common scene in Buenos Aires, Argentina, traditional cafés: Customers, such as Isabel Luini, 28, right, and Jéssica Gómez, 20, using their mobile devices to text and update their social media profiles. (Eduardo Szklarz for Infosurhoy.com)

Common scene in Buenos Aires, Argentina, traditional cafés: Customers, such as Isabel Luini, 28, right, and Jéssica Gómez, 20, using their mobile devices to text and update their social media profiles. (Eduardo Szklarz for Infosurhoy.com)

By Ligia Hougland for Infosurhoy.com—18/01/2012

WASHINGTON D.C., U.S.A. – In 1998, it was estimated it would take 176 years for mobile telephone access in Latin America and the Caribbean to reach the levels of the member countries of the Organization for Economic Cooperation and Development (OECD).

Ten years later, the estimate fell to 9 years, according to forecasts made by economists from the Inter-American Development Bank (IADB), based on data from the United Nations International Telecommunication Union (ITU).

Included among the 29 member nations of the OECD are developed countries such as Germany, Japan, Finland, Australia and the United States.

Recently released ITU figures from 2010 show the region has continued to make progress.

The growth in mobile telephone use in Argentina and Panama was so great the average number of users per 100 residents – 141.8 and 184.7, respectively – exceeded that of Germany (127) in 2010.

The 2010 cell phone density in Argentina and Panama is also greater than the current average density of industrialized countries (117.8), according to the ITU, which hasn’t released 2011 figures for Latin America and the Caribbean.

Panama, a country of 3.5 million residents, has 6.4 million cellular devices in operation – nearly two per person, according to the country’s National Ministry of Public Services (ASEP). The market includes service providers such as Cable & Wireless, Movistar, Digicel and Claro.

“Some people have more than three cell phones with different service providers in order to get the best rates,” says Edwin Rivera, sales coordinator at a Claro store in Panama City’s Plaza 5 de Mayo, which sells about 120 devices monthly.

Brazil, Argentina, Colombia, Mexico, Venezuela and Chile account for 75% of cell phones in service in Latin America, according to Eduardo Tude of Teleco, a Brazilian website specializing in telephony.

During the third quarter of 2011, the region had 619.9 million mobile telephones in use, a density of 100.6 cellular devices for every 100 residents, according to Teleco.

At the end of 2010, mobile telephone density already exceeded 100 per 100 residents in 98% of the countries in the region, while the worldwide average was 86.7%, according to the ITU.

The growing adoption of mobile devices, as well as new communication and information technologies, is proceeding at the same rate in most Latin American countries, Tude says.

“This is happening, among other reasons, because of the presence of global telephony groups in the region, such as Mexico’s América Móvil and Spain’s Telefónica,” he says. “The arrival of 3G technology, for example, essentially happened at the same time for everyone.”

Other highlights from the region include Costa Rica and Guyana. The two countries jumped from densities of 41.7% and 59.6%, respectively, in 2008, to 65.1% and 73.6% in 2010, according to the ITU.

In countries with higher levels of pre-paid customers, which is the case in Latin America, the density tends to be higher, Tude adds. “Density is not solely related to the economic development of a country,” Tude says. “People with pre-paid SIM cards tend to have more than one cell phone because it’s so convenient.”

Brazil is a good example of the increasing density of mobile telephone use resulting from the pre-paid system. Of the 236 million mobile service accounts in the country, 81.65% are pre-paid, according to November figures from the National Telecommunications Agency (ANATEL).

“Competition is very strong in Brazil, with four major players operating in each region,” says Tude, who expects growth to continue, even in high-density countries.

Access to computers still limited

In a majority of Latin American countries, the rapid expansion of infrastructure for mobile telephone access has not been accompanied by an increase in access to computers.

At the end of the 1990s, the ITU predicted Latin America and the Caribbean would need 130 years to reach OECD levels, in terms of the number of computers per 100 residents.

A decade later, the IADB’s estimate increased to 140 years.

The expansion of Internet access has also been slower than predicted by IADB economists.

In 1998, Latin American and Caribbean countries were, on average, 75 years behind the OECD countries. In 2008, the difference grew to 80 years.

“There’s a heterogeneous aspect in terms of access to technology in Latin American and Caribbean countries,” says Argentine economist Samuel Berlinsky, a senior researcher at the IADB.

Berlinsky is one of the authors of the IADB report “Development Connections: Unveiling the Impact of New Information Technologies.”

The IADB study shows each country in the region is advancing at its own pace, with disparities in the implementation of, and access to, new technologies.

In Argentina, Chile and Uruguay, for example, access to so-called Information and Communication Technologies (ICT) – computers, Internet, fixed telephony, broadband and mobile telephony – is closer to levels seen in developed countries.

On the other hand, Bolivia and Guatemala lag far behind advanced economies, mainly in terms of Internet access and the number of households that own a computer.

Only 3.9% of Bolivian households have access to the Internet and just 17% own a computer, according to the 2010 figures from the ITU. In Guatemala, 3% of homes have access to the Internet and 15.8% of households own a computer.

Only 12 out of every 100 Bolivians access the Internet and only 1 out of every 100 has Internet access at home, according to the Networks for Sustainable Development Foundation (Redes), which promotes access to technology in Bolivia.

Cost is one of the main obstacles preventing the widespread use of Internet services in Bolivia. Customers pay US$300 per Mbps, which stands for millions of bits per second and measures bandwidth, the total information flow over a specified time, compared to US$17.70 in Panama, according to the Regional Broadband Observatory of the Economic Commission for Latin America and the Caribbean (ECLAC).

The Net Index, which compares download speeds for residential users nearly everywhere in the world, features Bolivia in second-to-last place (0.58 Mbps), trailed only by Zambia (0.52 Mbps). Estonia, in first place, has an average speed of 42.6 Mbps.

In order to discuss strategies for promoting new technologies in Bolivia, the “First National Meeting to Promote Connectivity in Bolivia” will be held on Jan. 25, in La Paz.

Regional highlights

In 2010, the global average of households with computers in developed countries was 71.1%, with 66.5% of homes equipped with Internet access. Trinidad and Tobago (53.1%), Costa Rica (41.3%) and Brazil (34.9%) are the region’s standouts in terms of the percentage of households with a computer.

Chile (35%), Uruguay (33.3%) and Brazil (27.1%) led the ranking of households with Internet access in the region, according to the ITU.

Since 2008, the ITU has also published a ranking of 152 nations, based on the ICT Development Index (IDI). The countries in the region with the highest IDI rate in 2010 were Uruguay (54th), Chile (55th) and Argentina (56th).

Paraguay (99th), Bolivia (102nd) and Guatemala (108th) are the Latin American countries with the lowest IDI.

*Diego Rosso contributed from Cochabamba, Bolivia; Patricia Knebel contributed from Porto Alegre, Brazil, and Rogelio Cordóva contributed from Panama City, Panama.

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1 Comment

  • Waldo Morales | 2012-01-24

    I belong to a group of 25 distributors who worked with Claro Chile and they cheated me. Right now there is another significant number of distributors who will withdraw because they, too, have been cheated. We have asked for an auditor to come from Mexico to investigate but the Claro Chile management doesn't want them to because they know they'll find lots of irregularities. Claro Chile does not want to return our properties that we left as a guarantee nor the money they owe us. We are initiating a class action suit against Claro Chile in the courts of justice to recover our property. During this whole time we have not been able to make money rather to the contrary because Claro's policy is to have the distributor indebted to them to keep the guarantee property. New distributors watch out because in the beginning everything seems so nice and they offer you all the gold in the world but as time goes by you can't get out because you're already in debt to them.