1. Internet Access in Argentina: Obstacles & Opportunities
Mid-Quarter Status Report: LAS194/CS377C
THE INFORMATION REVOLUTION IN LATIN AMERICA
By: M. Beem & P. Chiaraviglio
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Argentina II

2. Assumptions
Internet usage will continue to grow due to “Positive Feedback” phenomenon
Relative to LA, Argentina has high per capita GDP and education levels. This makes it an Internet “prone” market
Given 1 & 2 above, “broadband” access demand will grow
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Argentina II

3. Methodology
Look into the drivers affecting Argentina II Project’s assumptons
Demographic and Social Indicators
Economic Indicators
Government Regulations
State of Infrastructure and Technology
Case Studies
Velocom
Universidad de Buenos Aires
Business Plan
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Argentina II

4. Demographics & Social Total Population: 37 Million (47 M by 2025)
Growth rate: 1.16%/year (lowest in LA)
Major Cities: Greater Buenos Aires (12 M), Cordoba (1.1 M), Rosario (1.1 M)
Male/Female ratio: 0.98
Life Expectancy: Male: 72 yrs, Female: 75 yrs
Age Distribution: 0-14yrs: 27%, 15-64yrs: 63%, over 65: 10%
Literacy: 96.2%
Schooling Rates: 6-12yrs: 98%, 13-17yrs: 70%, 18-22yrs: 28%
Urban Population: 89%
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Argentina II

5. Demographics & Social
Demography of Internet Usage: 2.5 Million (7.5 M 2003)
Growth rate: ~75%/year
2/3 are male, but growth in female pop. is greater
2/3 are new users (2 yrs or less)
71% have attended university
76% access the Internet from home
26% of users have bought over the Internet
In spite of economic recesion, Internet usage and related business has been on the rise
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Argentina II

6. Economic Breif History
: Independence, founding of Republic, economic prosperity fueled by agro exports to Europe, large European immigration
: State directed industrial autarky, welfare state (Peronism) alternating with military dictatorships, all contributing to economic deterioration and extreme hyperinflation (5000%)
1990-Present: Privatization, de-regulation, trade liberalization and integration (Mercosur), “Convertibility” Plan
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Argentina II

7. Economic Current Situation
GDP in 2000: $ 300 billion ($ 367 in PPP terms)
GDP per capita in 2000: $ 8000 ($ 10,000 in PPP)-- the largest in Latin America
Growth Rate: -3% in 1999, projected 0% in 2000, but recovery expected in 2001: % growth prediction
Interest Rates: Currently (Feb 2001), 8%
Inflation: -0.5%
Services: 61%, Industrial/Mfg: 32%, Agricultural: 6%
Largest trading partner: Brazil
Largest Foreign Investors: Spain, closely followed by the US
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Argentina II

8. Government Regulations
History & Telecommunications Act of 2000
1988 Secr. de Comunicaciones grants a cellular license (Movicom)
1989 ENTel breaks up into North (Telecom) & South (Telefonica)
Ratio of lines/100 inhabitants goes from 11 to 20
1993 Two new license granted for cellular telephony (Miniphone & CTI)
1999 Long distance carrier “choice” given to customer
November 2000 the Telcommunications Act is enstated with wider repercussions for customers and competitors
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Argentina II

9. Government Regulations
Repercussions of the Telecommunications Act of 2000
Full de-regulation of local, domestic and international long distance
26 new operating licenses granted
“Level” playing field for new companies
Open Network interconnection policy
Drop in Interconnection rates: 2.15 cents to 1.1 cents
“Universal Service” contribution maintained at 1%
Dramatic drop in domestic and international long distance tariffs (from ~$0.50 to $0.20/min)
Increased use of the internet
New broadband technologies being offered
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Argentina II

10. Government Regulations
The Internet, Government Policy and Statistics
The Internet is a Matter of National Interest
SECOM must develop/promote usage through the program
Incorporate into defitinion of Universal Service
Incorporate a price “architecture” to facilitate Internet usage
50% price reduction of Intl connections to ISPs (1997)
0610 Dedicated number, end user saves up to 50% dial-up costs
Liberal possition in Internet Content and Access by users
Based on US Supreme Court decision of Reno v. ACLU
The Internet 2 Argentina Project
Inspired on US Internet 2 high speed data network
Objectives are educational, telemedicine and scientific & tech. research
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Argentina II

11. Access Technologies in the Argentine Context
Hybrid Fiber Coax (FiberTel, Multicanal)
Digital Subscriber Line (Telefonica, Telecom)
Fixed Wireless (Velocom, Milicom)
Fiber to the Curb, Fiber to the Home (Not offered yet)
Other (Satellite: Impsat)
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Argentina II

12. Access Technologies in the Argentine Context
Hybrid Fiber Coax ($ , speeds Kbps)
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Argentina II

13. Access Technologies in the Argentine Context
Fixed Wireless ($ speeds 960 Kbps - 64 Kbps)
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Argentina II

14. Future Agenda Continue to collect data for the different drivers
Finish case studies
Formulate business plan or recommendations for broadband access in Argentina
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Argentina II