1. Hernan Galperin François Bar Diversifying Network Development: Microtelcos in Latin America and the Caribbean Hernan Galperin François Bar Annenberg School for Communication University of Southern California Wireless and Development Workshop Marina del Rey, 8 October 2005

2. Hernan Galperin François Bar The Problem Reforms during the 1990s resulted in access gains across the board But, persistent (many cases increasing) gaps within countries Fixed Teledensity in Argentina (1991-1998) TerritoryLines p/100Difference w/Bs. As. GDP per capita 19911998199119982000 (U$) Buenos Aires1626006.161 Catamarca4912174636 Corrientes4911173107 Salta3812183458 Chaco3713193265 Misiones4812193631 Jujuy2613203557 Sgo. Estero2613202828 Formosa2414222835 Source: SECOM (1998) R 2 =0.82

3. Hernan Galperin François Bar The Traditional Answer Public subsidies and incentives to large private operators Problems with USFs (among others): Difficult to design and administer Weak regulatory capacity in LA&C Limited funds Political risk Sustainability

4. Hernan Galperin François Bar The Microtelco Alternative Variety of small-scale providers already service high-cost and low-income areas Most of them do not rely on public subsidies, but rather on Local entrepreneurship Mobilization of local inputs (labor, rights of way) Hybrid arrangements Innovation (business models, low-cost technology, etc.)

5. Hernan Galperin François Bar Research Questions Importance and trends? Types of microtelcos? Business models? Quality/price and performance? Policy environment? Development impact? Is this just hype? (or really an alternative way to build and operate ICT network)

6. Hernan Galperin François Bar The Theoretical Case Provision of ICT service involves several possible production functions (K,L) Large operators lack incentives and flexibility to find combinations better suited to service the rural poor Microtelcos have both Combination of inputs likely to be different in each case

7. Hernan Galperin François Bar Microtelcos are Growing Colombia: from 7% to 11% fixed lines Argentina: 8% fixed lines Jujuy (Argentina): 53% fixed lines Municipal and cooperative WISPs across region Micro-resellers Fixed Line Share (%) of Small Telcos in Colombia (1994-2002 ) Source: CRT (2004)

8. Hernan Galperin François Bar Growth Factors Market liberalization Strengthening of regulatory capacities New low-cost technologies: WLAN VoIP (35% of global traffic) WLL (corDECT) 3G (CDMA450) FLOSS Some financing

9. Hernan Galperin François Bar A Variety of Microtelco Models Local entrepreneurs Teleocsa (Colombia) Local government Pirai Digital (Brazil) SICOMU (La Pampa, Argentina) Cooperatives and CBOs Telephone Cooperatives (Argentina) Chancay-Huaral project (Peru)

10. Hernan Galperin François Bar Business Strategies Economies of scope and bundling Different price/quality points (e.g., VoIP) Scalable, flexible networks Build (and reveal) demand (e.g., training activities, develop local application) Federation (interest representation, learning) Co-production strategies

11. Hernan Galperin François Bar Service retail Tech expertise Access to capital Applications Training Labor Fiber backbone E-government applications Lead user The Co-production of Broadband Access in La Pampa, Argentina Private Sector Civil Society Local Government

12. Hernan Galperin François Bar Are the Poor Poorly Served? ProvinceCooperative Teledensity (A) Total Teledensity (B)(B-A) Catamarca6.59.1-2.6 Chaco6.77.2-0.5 Chubut17.319.8-2.5 Formosa10.34.55.8 Jujuy7.76.31.4 La Pampa20.619.41.2 Neuquén14.813.41.4 Río Negro10.115.9-5.8 San Luis13.113.5-0.4 Santa Cruz15.214.21.0 Santa Fe15.618.9-3.3 Total13.115.5-2.4 Fixed Teledensity in Argentina: Cooperative Territories vs. Total Teledensity (1998) Source: SECOM (1998)

13. Hernan Galperin François Bar Are the Poor Poorly Served? Quality Factor Scores in Colombia by Company Size (2001) Source: CRT (2001)

14. Hernan Galperin François Bar Policy Environment Lack of tech neutrality discourages low- cost solutions: Spectrum rules for WLAN VoIP rules Cumbersome and discriminatory licensing procedures Slow enforcement of interconnection rules Lack of access to financing

15. Hernan Galperin François Bar Development Impact Microtelcos as development engines: Community portals Free connectivity to schools and libraries Training programs Studies underway in Brazil and Paraguay

16. Hernan Galperin François Bar Conclusions Microtelcos play an important role in extending access to underserved areas Despite a less than favorable policy environment  calls for further reforms Variety of strategies (no one size fit all) that depend on local conditions (primarily institutional) Validates support for further experimentation with microtelco model