Less than 50% of Latin America has fixed broadband. Here are 3 ways to boost the region’s digital access

(Credit: Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Franz Drees-Gross, Director of Infrastructure, Latin America and Caribbean Region, World Bank & Pepe Zhang, Associate Director, Atlantic Council’s Adrienne Arsht Latin America Center


• Latin America and the Caribbean have uneven and costly digital access.

• Promoting digitization would increase social, financial, educational and healthcare inclusion in the COVID recovery period.

• Improving this infrastructure is relatively cheap.

The COVID-19 crisis has hit the Latin America and Caribbean (LAC) region harder than any other region in the world and brought the need for a resilient and inclusive recovery into sharp focus. Greater digital access – in support of distance learning, digital cash transfers, telemedicine and online public services – is the cornerstone of this drive and requires both an ambitious policy and regulatory agenda, as well as increased infrastructure investments. This is particularly important as the region gears up for 5G auctions and continues its 4G expansion.

The case for digital access is clear. Digitization boosts social and financial inclusion as well as learning and health outcomes. Almost half of LAC’s adult population is currently unbanked. Around 170 million students across the region were affected by school closures during the pandemic. And 71% of countries experienced disruptions to the delivery of care for non-communicable diseases during the first months of the COVID crisis.

But the challenges are substantial: Poor and uneven coverage, coupled with high data and device costs, continues to hamper digital access. Today, less than 50% of LAC’s population has fixed broadband connectivity, and only 9.9% has high-quality fibre connectivity at home. While 87% of the population lives within range of a 4G signal, actual usage and penetration remains low (37%). And only four out of 10 rural Latin Americans have connectivity options, compared with 71% of the population in urban areas.

Broadband penetration is lagging in the LAC region
Broadband penetration is lagging in the LAC region Image: World Bank

Data plans and internet-enabled devices are not affordable for the region’s poor. On average, a measly 1 GB data plan costs 2.7% of monthly household income in LAC (or 8-10% for the bottom quintile in some countries), well above the International Telecommunication Union’s 2% affordability threshold. In addition, the cheapest basic smartphone available costs between 4-12% of average household income in much of the region, and as much as 31-34% for people in Guatemala and Nicaragua, or even 84% for people in Haiti.

With these cost burdens weighing disproportionately on vulnerable populations, uneven digital access could give rise to new forms of inequality in what is already the world’s most unequal region.

Addressing the digital divide

Tackling the digital divide is imperative and will require policy actions to reduce cost, expand access and incentivize greater private-sector and citizen participation, especially in three areas:

1. Government regulation

LAC governments should pursue inclusion through service provision and legal and regulatory reform. This may include rolling out foundational digital identification systems for all citizens to allow secure and trusted access to public and private platforms; promoting infrastructure-sharing among network operators and access to “dark fibre” owned by governments, utilities, and others; increasing competition in a highly concentrated market of mobile operators to stimulate innovation and investments by promoting open access, technology neutrality and greater security options; attaching network build-out obligations for underserved areas to 4G and 5G spectrum licenses; and streamlining administrative and approval processes. On average, LAC countries with clear, predictable regulations attract almost 50% more investment in information communications technology (and 64% more when coupled with good institutions).

2. Fiscal incentives

Policy-makers should consider direct or indirect financial incentives for both digital customers and operators as appropriate. On the demand side, subsidizing internet costs for the poorest, and reducing taxes and customs duties on low-cost, internet-capable devices can help bring down prices that exclude the poor. On the supply side, governments can use minimum subsidy concessions or temporary investment tax incentives to induce network operators to extend service into underserved regions. Similar initiatives could also encourage private firms and investors to scale up other digital infrastructure, such as local data centres. LAC is currently home to only about 4% of the world’s data centres, and total capacity in the region is estimated to be smaller than in northern Virginia.

3. Digital skills

Digital expansion should not operate in a connectivity silo. Complementary measures, such as digital skills training, need to be accelerated. Only 5-15% of adults in most LAC countries have medium or strong computer and problem‑solving skills in technology‑rich environments (vs. 29.7% in OECD countries). Digital capacity-building is beneficial to students and workers, as well as policy-makers and regulators seeking technical expertise in digital infrastructure and related areas (data privacy, cybersecurity, digital tax, etc.).

Digital transformation holds tremendous promise for LAC – but carries a relatively modest price tag. Over the next decade, universalizing broadband access in the region is estimated to cost 0.12% of the region’s annual GDP; deploying 5G in first- and second-tier metropolitan centers, 0.17%; and achieving OECD levels of connectivity, 0.62%. In a region that underinvests in public infrastructure, the digital infrastructure gap is cheaper to close than gaps in transport, energy and other infrastructure sectors.

What is the World Economic Forum doing about ensuring access to the internet for all?

In 2018, internet connectivity finally reached over half the world’s population. Yet some 3.4 billion people – about 50% of the world’s population – are still not online.

Although much progress has been made in closing this digital divide, the challenge remains overwhelming, complex and multidimensional. It requires a collaborative, multistakeholder approach to overcome four key barriers to internet inclusion: infrastructure; affordability; skills, awareness and cultural acceptance; and relevant content.

The World Economic Forum launched Internet for All in 2016 to provide a platform where leaders from government, private-sector, international organizations, non-profit organizations, academia and civil society could come together and develop models of public-private collaboration for internet inclusion globally.Achieving Internet for All

Since its launch, Internet for All has achieved significant on-the-ground results globally – including launching four operational country programmes in Rwanda, South Africa, Argentina and Jordan.

Read more about our results, and ongoing efforts to ensure access to the internet for all in our impact story.

Contact us to partner with the Forum and shape the future of our digital economy.

Still, unlocking these benefits will require a concerted effort. Multilateral institutions can help. The World Bank, for instance, is helping provide some 1,300 public institutions with broadband connectivity in Haiti and assisting the Colombian government with policy and regulatory improvements for expanded broadband access. While most LAC countries will continue to focus on the pandemic response in the near future, now is the time to seize the digital opportunities that will enable to region to unlock a greener, more resilient and more inclusive future.


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