Improving Telecommunications Drives GDP and Productivity
The rapid growth of telecommunications in Latin America and the Caribbean presents both an opportunity and a challenge for a sector capable of significantly contributing to GDP growth and enhancing productivity. However, the sector is constantly evolving, with persistent gaps in access.
Why is mobile broadband quality so important for development?
Latin America and the Caribbean is a region of contrasts. Almost everyone has a cell phone, as evidenced by the exponential increase in mobile phone subscribers from 10% of the population in 2000 to over 70% in 2017. And, the region is home to some of the most advanced mobile internet and avid social media users in the world, led by Mexico, Argentina, and Brazil. Yet coverage varies across countries and millions of people still do not have access to reliable mobile broadband connections, particularly in rural areas. And, even for those with access, service quality is often poor, limiting their potential to take full advantage of the latest technologies and making it difficult to bridge the digital divide.
Digital highways and their similarity to transportation highways
Poor bandwidth infrastructure is like traveling on a dirt road. The technological disruption we are experiencing is something unprecedented. When we compare it to the industrial revolution and the enormous impact it has on per capita gross domestic product (GDP), we can assert with total certainty that this digital revolution is changing everything, from the corporate, to the social, and even the political order. Quite rightly we call it the industrial revolution 4.0. This explosion of technology occurs in the context of the world of data, data that can only be moved with the necessary infrastructure of digital networks. Thus, just like in any traditional highway infrastructure project, without routes to permit the movement of trucks, buses, and automobiles, we could not connect destinations, trades and people. In the world of technology, data would be the means of mobility like automobiles, and networks would be the digital highways or routes available in a country, which is directly determined by the country’s regulatory framework and capital investments in the country made by mobile or satellite telephone service operators. To put the importance of the digital highway in perspective, and using the example of Jose Maria Alvarez-Pallete, CEO of Telefónica España: “It took landline phones 75 years to reach 100 million users and it’s taken Pokémon Go 23 days. Why? Because if networks are digitized, the capacity to distribute a digital product is immense.” In order for companies like YouTube, Airbnb, Netflix and Uber —to cite a few— to offer their services and connect data, information, services and products, it is vital to build and invest in an adequate digital highway. The data coming from these digital highways no doubt have the potential to improve lives and Jose Maria Alvarez-Pallete summarizes this as follows: “Analog life will merge with digital life. Buying patterns, how cars are driven, gas, water and electricity meters, microwaves, the refrigerator, the dishwasher…everything will be connected to the Internet and transmit data.” Thus, we must have digital highways so that this exponential quantity of data can be processed. To ensure the positive effects of the 21st century’s digital economy, constructing and investing in those digital highways must be the priority for economic development and social inclusion in Latin America and the Caribbean. IDB Invest has invested and will continue to invest in the region in projects that help to expand the digital highway, because we know that 10% penetration by broadband has an average economic effect of 2% to 3% on GDP and 2.6% on productivity. Subscribe to receive more content like this! [mc4wp_form]