Amid increasing gridlock at the national level across much of the Western Hemisphere, due in many cases to political polarization, policies generated at the local level are more important than ever. Communities are turning to their mayors and other subnational leaders for critical action in response to today’s most pressing issues. In response to this, the Inter-American Dialogue launched its Cities Initiative—a crosscutting project that draws on the expertise of the Dialogue’s core programs, including education, migration, the rule of law, climate, and our analysis of Asia’s engagement with the region to explore local responses to national and transnational challenges. The program recognizes the critical impact local policy has on daily lives, as well as the important role that subnational innovations can play as a catalyst for national policy change.

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photo of CAF Conference - Fireside Chat with Rebecca Bill Chavez and Nina Hachigian

An Inside Look at the Cities Summit of the Americas

The 26th Annual CAF Conference kicked off with a fireside chat between Dr. Rebecca Bill Chavez, President & CEO, Inter-American Dialogue and Ambassador Nina Hachigian, US Special Representative for City and State Diplomacy, to discuss the inaugural Cities Summit of the Americas, which was held in Denver, Colorado, in April.

Photo of Sports Inclusion Panel in the Cities Summit of the Americas

Urban Transformation and Inclusion Through the Power of Sports

At the inaugural Cities Summit of the Americas in Denver, Colorado, on April 26, 2023, the Inter-American Dialogue and CAF-Development Bank of Latin America and the Caribbean (CAF) convened experts to discuss the legacy of mega-sporting events for creating more inclusive cities, with a special focus on the positive impact for individuals with disabilities. 

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Existing scholarship on Latin America’s digital economy has primarily focused on the delivery of 5G, e-commerce, fintech, and more recently, AI-based technologies. But media, researchers, and policymakers have devoted less attention to the so-called Internet of Things (IoT), or solutions based on machine-to-machine communication, and their relation to other information technology developments (e.g., hardware, software, services). The following provides background information on IoT for Latin American policymakers and researchers, highlighting trends in its evolution, and considering the extent to which IoT can be an engine of sustainable growth for the region in the coming years.

What is IoT?

IoT relies on interconnectivity between network devices, such as smart watches or connected vehicles, and the transfer of real-time information between these devices or “things,” to offer new, dynamic solutions. As part of the process, data can also also be used to improve a device's intelligence and capabilities. As noted in the authors' recent Santander X-ESADE report on the topic, IoT is also evolving to establish links between the digital and physical worlds, to predict and automate certain business processes, and enable a smart society. Beyond the direct economic and societal benefits, the interconnection of basic city infrastructures (roads, traffic lights, bridges) with cars, buses, and even personal wearables—augmented with massive amounts of data—can be used to improve Latin America and Caribbean (LAC) communities and enable data-driven public policymaking, including on issues such as traffic management and resource allocation.

An Overview of the Existing IoT Market

The global IoT market is currently valued at US$300-700 billion, and is growing steadily. It is expected to double in size by 2030, becoming a US$1-3 trillion market. Furthermore, the Statista consulting firm estimates that industrial IoT [or machine-to-machine (M2M) technologies], or the use of smart machines and real-time analysis to optimize industrial capacity, could add up to US$12.5 trillion of economic value to the global economy by 2030. Additionally, the number of IoT related devices is expected to increase by almost 16 billion over a ten-year period, with a 150 percent increase between 2020 and 2023. The application of IoT technology is far less prominent in Latin America and the Caribbean (LAC) than in other parts of the world, but the number of IoT connections in Latin America is nevertheless expected to reach 1.3 billion by 2025 (versus around 800 million today).

At present, the global IoT market is dominated by China, the United States, South Korea, Australia, and Germany, when measured by IoT-related patents, but some LAC companies have also made notable progress in this market. For instance, Chile's Vigalab, has employed a Mine Watch System, also operating in Mexico and Peru, that applies monitoring technology for equipment in underground mines, leveraging a network of IoT sensor technologies. In Colombia, Genial.IO is a startup dedicated to improving the operational efficiency of companies in the industrial sector. It uses IoT, data, and analytics to enable real-time information capture, automate decision-making, and boost productivity by up to 25 percent (Disclaimer: Co-author Victor Munoz is the founder and a shareholder of Genial.IO).

IoT Applications in LAC

Beyond the progress achieved by certain LAC-based companies, IoT technologies have the potential to further transform daily life across the region. Decision-makers can leverage the opportunities enabled by IoT to address key policy challenges, such as improving urban planning and developing smart cities, strengthening healthcare systems, or improving industrial productivity via automation.

Latin America is one of the most urbanized regions in the world, with more than 80 percent of Latin American citizens living in urban cities. There are numerous opportunities for IoT solutions to be applied in support of city sustainability, connectivity, public safety, and delivery of citizen services. IoT technologies can help to enhance urban mobility, business productivity, and transportation, as well as improve energy and environmental management across the region to make cities more livable, environmentally sustainable, and efficient. IoT devices can also importantly be utilized to reduce traffic congestion and pollution, or to advance "circular economy" principles by improving energy efficiency and waste management with sensors that measure real-time weights, temperatures, and flows of people and vehicles. In many high-income economies, IoT-based solutions— e.g., geolocation of gas station prices and collective monitoring of transportation times in Valencia; real-time parking information in San Francisco; electric bicycles in London; and smart waste collection in Seoul—are markedly improving city efficiency.

The Covid-19 pandemic highlighted numerous vulnerabilities in the LAC region’s social protection systems, including insufficient medical outreach and patient monitoring. IoT devices have and can continue to address these issues by facilitating remote patient monitoring. In Brazil, the Clinical Telemonitoring Center successfully used digital health services to assist in the monitoring of Covid-19 transmission. Data generated from IoT devices can also reduce costs and errors, enhance patient experience, minimize hospital admissions and re-admissions, improve drug and equipment management, and facilitate faster disease diagnoses. Amid the pandemic, high-tech devices, real-time data analytics, and remote access to health experts enabled and sustained healthcare services, particularly for non-communicable chronic diseases and certain mental health conditions. Amid the pandemic, Colombia conducted 55 million tele-consultations within a span of 16 months. In Latin America, where significant distances separate communities, IoT solutions will continue to be impactful. Remote medical consultations hold promise for improving healthcare access for populations residing far from urban centers. 

Moreover, World Economic Forum researchers found that 84 percent of IoT deployments are currently supporting or have the potential to support the UN Sustainable Development Goals (SDGs). There is tremendous opportunity for IoT devices and the data they collect to be utilized in the renewable energy sector or in support of environmental stewardship initiatives. Additionally, smart agriculture represents an enormous opportunity for Latin America through the potential use of sensors and smart devices to optimize farming and water management.

Looking Ahead

The expansion of IoT technology is not without its challenges for LAC policymakers. Although IoT can be integrated into 4G, 3G, and GPRS technology environments, which are common across much of the LAC region, many logistical roadblocks persist, including a lack of sufficient digital infrastructure (e.g., evolutionary technologies like 5G), human capital shortages, concerns surrounding data privacy and security, cost, and scalability challenges. Importantly, at least 230 million people across the region still do not have access to mobile internet, which is partially driven by problems of affordability. Moreover, IoT is inherently capital-intensive and requires relatively high initial investment in infrastructure and devices. This poses a challenge for many countries in the region.

Concerns about cybersecurity, data privacy, and sufficient regulation of this emerging industry, and the communications networks supporting it, are being actively discussed internationally and within industry-led standards bodies. LAC policymakers have looked to the European Union as a model on data-related policymaking, striving to strike a balance between private innovation, citizen privacy and security, and environmental sustainability. Finding the right approaches to these challenges will be critical to ensuring maximum economic and social benefit for LAC and other users. 

For LAC companies operating in this industry, supply chain limitations are an additional frustration. According to interviewed investors, one challenges is that nearly all electronics manufacturing must be done in China, due to its comparative advantage in this space.

Despite these challenges, the potential of IoT technology and its associated benefits—sustainability, enhanced healthcare services, increased investment and socioeconomic benefits, and improved business and technological productivity—would appear to outweigh the possible risks. Progress over the next several years will nevertheless be key if LAC policymakers intend to utilize IoT-based solutions in support of urban, social, and other solutions. Much will depend on whether the region can overcome a persistent digital divide, and then adopt policies to enable and monitor technologies with broad social benefit.

Fortunately, as international companies compete for space in the LAC tech sector, opportunities may very well arise for policymakers seeking to attract additional investment to grow their own countries' IoT industries and related sectors. Latin America's vast territory and population and high levels of urbanization provide an opportunity for market expansion and innovation—of the sort previously seen in the telecommunications industry.

Ángel Melguizo is a non-resident senior fellow with the Asia and Latin America Program at the Inter-American Dialogue and a senior economist consultant based in Colombia and Spain, specializing in public policies, economic growth and digital regulation. Victor Muñoz is an affiliate of the Berkman Klein Center for Internet and Society at Harvard University and a member of the advisory board of EWA Capital, TAESA, and the New Urban Mobility Alliance (NUMO).

[post_title] => The Internet of Things in Latin America and the Caribbean [post_excerpt] => Dialogue Non-Resident Senior Fellow Ángel Melguizo and Victor Muñoz distill key findings from a recent report on IoT technology and prospects for broader application in Latin America and the Caribbean. [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-internet-of-things-in-latin-america-and-the-caribbean [to_ping] => [pinged] => [post_modified] => 2023-07-24 16:54:06 [post_modified_gmt] => 2023-07-24 16:54:06 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 134817 [post_author] => 109 [post_date] => 2023-04-14 19:06:14 [post_date_gmt] => 2023-04-14 19:06:14 [post_content] =>

In June 2019, after two decades of on and off negotiations, the European Union and Mercosur, the South American customs union consisting of Brazil, Argentina, Uruguay, and Paraguay, reached an agreement to dramatically expand economic cooperation between the two blocs. This unprecedented free trade agreement would not only eliminate over 90 percent of tariffs on traded goods but would also open the door for more-extensive foreign direct investment and economic integration, as well as potentially bolster labor and environmental standards. Yet, over three years later, this agreement remains unratified. Mercosur was on the verge of finalizing its first major external free trade agreement since the bloc’s founding in 1991, but opposition from a group of EU member states placed the agreement back in limbo. Despite this setback, a change in Brazilian leadership and the Russian invasion of Ukraine have pushed the two blocs back to the negotiating table. With renewed optimism on both sides of the Atlantic following the election of Lula da Silva, a finalized free trade agreement (FTA) once again looks to be within reach and could even be ratified by July of this year. However, a handful of disagreements remain, and the way in which negotiators from both blocs address these points of friction will determine whether an agreement is finally reached, as well as who the greatest beneficiaries of such a deal would be.

Despite finally reaching an agreement in 2019, it immediately became clear that ratification of the FTA would be unlikely, driven by a combination of agricultural protectionism and environmental worries on the part of a handful of EU capitals. Ireland, France, and Austria were among the first countries to announce their opposition to the FTA, and about half a dozen other EU capitals followed suit in promising not to ratify the 2019 version of the agreement. European farmers, especially in France, staunchly opposed the agreement, citing their inability to compete with South American agribusiness, especially in the areas of meat, sugar, and ethanol production.

Under normal circumstances, such naked protectionism would have had a harder time generating the political capital needed to completely paralyze the ratification process. However, given then-Brazilian President Jair Bolsonaro’s implicit endorsement of Amazon deforestation and reckless disregard for the environment, it became difficult to disentangle legitimate environmentalist critiques from protectionist impulses. Environmental critics, such as the European Greens, proclaimed that a free trade deal with Mercosur was incompatible with the EU’s climate goals, contending that it would not only endorse Bolsonaro’s destructive behavior, but may also lead to greater deforestation and environmental degradation as a result of an expansion in Mercosur’s agricultural and mining sectors. As Detlef Nolte of the German Council on Foreign Relations argues, Bolsonaro’s election was a “stroke of luck” for trade protectionists, as his anti-environmental antics “enabled agricultural lobbyists to hide their protectionist objectives behind an environmental mask.” Though Brazilian officials lambasted these countries’ environmental concerns as thinly veiled protectionism, these objections made the FTA politically untenable in Europe under a Bolsonaro presidency.

Though progress toward ratifying the agreement remained stagnant up until 2022, the events of the past year have made a finalized EU-Mercosur agreement a tangible possibility once again. No factor has played a greater role in this than Brazil’s recent change in leadership, with progress towards a new agreement picking up steam since leftist president Lula da Silva returned to office in January. In stark contrast with his predecessor, Lula has gone to great lengths to assure the world of his commitment to curbing deforestation and combatting climate change. On his first day in office, he signed seven environment-focused executive orders, including one reactivating the country’s Amazon Fund, a mechanism aimed at funneling global capital into rainforest protection with assets exceeding US$1 billion.

Moreover, Lula’s Partido Trabalhadores (PT) administration has not only signaled that it is willing to work with the EU to finalize an agreement but has made the trade deal a primary issue of concern. Lula has expressed his support for the deal, stating that it is “urgent” that Mercosur finalize its FTA with the EU before advancing other trade deals. He has also spoken in favor of making changes to the agreement passed in 2019, specifically in the area of government procurement. Additionally, Minister of Environment Marina Silva, an esteemed activist from the Amazonian state of Acre, has stated that her top priority will be “fixing issues” preventing the FTA from being ratified.

Though it is unlikely that any progress would have been made under a second Bolsonaro term, the EU announced its intent to return to the negotiating table even before Brazil’s presidential election, in large part due to the fallout from the Russian invasion of Ukraine. The painful swell in commodities prices, and especially in the cost of natural gas, caused European leadership to recognize the dangers of a non-diversified supply chain and economic dependence on authoritarian powers. Much of the EU’s recent effort to push through a plethora of trade deals, not only with Mercosur, but with Mexico, Chile, and others, has been driven by the recognition that its national security is best served by reducing its reliance on “single suppliers.”

As a result of these developments, optimism for a finalized FTA has grown significantly on both sides of the Atlantic over the past year and only accelerated through the first months of 2023. Chancellor of Germany Olaf Scholz’s recent tour of South America included stops in both Brasilia and Buenos Aires with the EU-Mercosur deal at the top of the agenda. Plus, a growing number of European countries, including Greece and Spain, have thrown their weight behind the negotiations, with one Spanish Member of European Parliament (MEP) calling the present moment a “window of opportunity.” With this newfound support for the deal, European Commission Vice-President Frans Timmermans has announced that the EU hopes to ratify the agreement prior to the bloc’s next Latin America summit in July.

Despite these high hopes, the deal has failed to garner universal support and still faces opposition from a variety of critics. The largest barrier to a finalized FTA is the European capital that has most frustrated negotiations over the past two decades: Paris. France’s junior trade minister, Olivier Becht, has stated that,

"On Mercosur, our position hasn’t changed. It’s not Lula’s election that suddenly makes the Mercosur [deal] acceptable."

- Olivier Becht, Minister of Foreign Trade, France

French MEP Marie-Pierre Vedrenne has called for binding environmental provisions before any FTA is ratified. Though Paris has mainly voiced concern over environmental issues, there is little doubt that agricultural protectionism has driven most of France’s opposition to the agreement, especially since Lula took office.

While French protectionism is the largest hurdle left to clear, it is hardly the only one. In Europe, France is not the only country calling for binding environmental provisions and such a measure may be necessary to satisfy European environmentalists. On the other side of the Atlantic, there are hangups as well. Most importantly, binding environmental protections have proven to be a non-starter for the PT administration up to this point, plus it may be impossible to pass such provisions through a more conservative Brazilian congress. Additionally, Brazil and Argentina are still interested in modifying the existing agreement to carve out limited protections for their manufacturing sectors and adjust the limitations on government procurement, which could complicate negotiations. Lastly, for all the support that the EU-Mercosur deal has garnered among Mercosur’s elected officials, many of the bloc’s civil society organizations have expressed unease about the effects of the trade deal. In February, members of the Brazilian Front Against the Mercosur-EU FTA, representing over 200 Brazilian NGOs, convened in Brasilia to meet with government deputies from both EU and Mercosur countries to voice their worries regarding the agreement. The front presented 10 primary concerns, among them that the FTA would benefit international capital at the expense of small and medium-size Brazilian businesses and could also cause further environmental degradation.

Ratifying the EU-Mercosur trade deal by the July target date will require a combination of compromise and creativity. The success of the upcoming negotiations will largely hinge on Brussels’ and Brasilia’s ability to secure French support for the agreement. Brazil and Argentina will likely have to assuage the French agricultural sector’s concerns, for example by accepting smaller quota expansions for some key products and perhaps even ceding ground on protections for their own manufacturing industries to propel the deal past the finish line. Foreseeing the potential for deadlock, the European Commission has floated the possibility of a “split” deal, dividing the agreement into two parts. The Council of the EU and European Parliament could pass a central agreement covering solely trade issues, while an expanded agreement containing the non-trade provisions of the deal would require approval from all EU member governments and would be ratified later if it eventually receives universal support. However, several EU members, including France, have voiced their dissatisfaction with this proposal, asking for the FTA to be presented as a “mixed” agreement, tying the two pieces together in a single arrangement. 

Even though much of the FTA’s potential lies outside of the standard commercial gains from free trade, a split deal may be acceptable to Brussels. European manufacturers would profit from greater access to the Brazilian and Argentine markets and European consumers would benefit from cheaper commodities and food, but the FTA is most alluring to the EU because of its strategic and geopolitical implications. Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy, has argued that,

"The EU-Mercosur agreement is much more than a trade deal. It is a deeply political instrument that, by advancing dialogue and cooperation, would seal a strategic alliance between two regions that are among the world’s most closely aligned in terms of interests and values, sharing a similar vision of the kind of societies we want."

- Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy

Though Borrell is correct in his assessment of the agreement’s potential, the EU’s primary strategic goal of securing its commodities supply chains would be accomplished even with a split deal. While the FTA would decrease European dependence on Russia and China, it is doubtful that even a mixed deal would meaningfully reduce the Mercosur bloc’s dependence on these same illiberal states for their own development, at least in the short term.

While a split deal may be enough for the EU, it would amount to a hollow victory for Mercosur. This is not to say that the commercial benefits of a bare bones FTA with the EU would be insignificant. Consumer prices would drop throughout the bloc, likely by 1.5-2.1 percent in Brazil according to an estimate by the London School of Economics. Plus, the increase in commodities exports would provide a much-needed boost to the Brazilian and Argentine economies. However, the most beneficial aspects of the trade deal for Mercosur lie in its provisions on investment and intellectual property, which could pave the road for structural economic transformation in the South American bloc.

While there is a consensus among Brazilian economists that the country’s long-term development will require a reduction in reliance on commodities exports, there is still significant disagreement regarding the potential effects of the EU-Mercosur FTA. Some economists, such as Edmar Bacha, one of the architects of the Plano Cruzeiro and Plano Real, contend that the FTA is vital for inserting Brazil into the global economic order of the 21st century. Similarly, Fernando Vieira of the Federal University of Rio de Janeiro asserts that,

"In order to transition away from commodity-centered economic models, and their associated vulnerabilities, the Mercosur countries are increasingly seeking to reform their regulatory spheres, absorb new technologies, and attract new foreign investment; the free trade agreement with the EU constitutes a major step in this direction."

- Fernando Vieira, Federal University of Rio de Janeiro

Yet, others, such as the University of São Paulo’s Laura Carvalho, claim that the agreement will accelerate deindustrialization and decimate Brazil’s high-value-added manufacturing sector, damaging the country’s economy in the long run. In any case, if a split deal is passed, it is unlikely that the accompanying provisions on technology transfer and investment would be ratified any time soon, so it is vital that Mercosur secures a mixed deal if it hopes to fully benefit from this agreement.

Between the back-to-back Swedish and Spanish presidencies of the EU in 2023, the election of Lula da Silva, and the Russian invasion of Ukraine, the conditions for a finalized FTA between the two blocs are as optimal as they have ever been. Yet, multiple barriers to a finalized agreement remain, chief among them French opposition. The premise of a split deal may be tantalizing to beleaguered officials desperate to finalize an agreement more than two decades in the making. Yet, this move would result in a deal that fails to meet some of the two blocs’ most important objectives and would be especially disappointing for Mercosur. The clock is ticking for representatives to compromise on an agreement that is acceptable to all actors involved, as it seems unlikely that policymakers will be willing to continue dedicating time and effort to a dialogue that has continually failed to bear fruit, even under the most favorable of circumstances. Plus, with Uruguay shifting its attention to the Pacific, failure to deliver once again could even spell the beginning of the end for Mercosur. However, if the EU and Mercosur manage to reach a settlement on a mixed deal, it could mark the beginning of a much deeper trans-Atlantic partnership and a new era in Mercosur’s engagement with the rest of the world.

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A vibrant independent wireless tower industry is a potential pillar for a Latin America 4.0, in order to make the region more productive, more inclusive and more sustainable, socially and environmentally.

Tower deployment, a key part of the basic connectivity infrastructure that sustains the digital economy, has been growing steadily. As of 2022, in the 12 largest Latin American countries, the number of wireless towers, the ‘steel and grass’ of the telecommunication ecosystem, surpassed 191,000.

In parallel with the growth in the installed base of towers, the sector has been evolving toward an increased share of independent players and mobile network operator (MNO)-owned companies. When compared to other regions, Latin America is a fairly developed independent tower company market, only behind South Asia. Going country by county, these companies display higher shares in Guatemala and Brazil, lower shares in Colombia and Argentina, and balanced representation in Ecuador, El Salvador and Nicaragua.

MNOs’ gradual divestiture of most of their tower infrastructure and the combined development of MNO-owned and independent tower companies in Latin America raise the question of the impact of tower ownership on future industry development: is the share of independent tower “specialists” associated with better telecommunication industry performance, as measured by capital efficiency, network deployment, service adoption and quality?

The rationale for infrastructure sharing is quite straightforward. As Strusani and Houngbonon (2020) put it, sharing telecom infrastructure can accelerate digital connectivity by reducing costs and operating expenses, while it also favors consumers by increasing competition, lowering prices and raising service quality. GSMA (2012)  has added there is a regulatory interest in infrastructure sharing based on environmental aspects. Empirically, as shown in Osmotherly (2019), the average tenancy ratio of an MNO-owned tower is almost 1 worldwide. By contrast, the average tenancy ratio of towerco owned and operated towers worldwide is almost exactly 2.0. Additionally, evidence from Europe (EY-Parthenon and European Wireless Infrastructure Association EWIA, 2022) shows that a typical location of a wireless network operator (also point of presence) managed by a towerco is about 40 percent more efficient than one managed by an MNO, resulting in economic savings. This consensus contrasts with quite thin academic literature on the actual impact of these industry developments on the wireless market. The only paper we are aware of that specifically addresses the impact of independent tower deployments on connectivity is Houngbonon et al (2021), from the World Bank’s International Finance Corporation (IFC), who analysed 56 towerco markets, checking the correlation between the market success of the towerco business and the development of mobile connectivity markets. In those markets where the penetration of the towerco business model is deeper (namely a market share over 50 percent versus countries with a market share lower than 5 percent), 4G population coverage is 10 percentage points higher; median download speed is 2.2 Mbps higher; the price of mobile internet, in percentage of monthly income, is 1 percentage point lower; and markets are 13 percent less concentrated.

In a recent Telecom Advisory Services paper commissioned by SBA, we confirm the positive role of independent towercos for the digital economy for the 12 main Latin American markets (Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama and Peru) from 2000 to 2022, using a unique TowerXchange database, as well as usual economic data from the World Bank and International Monetary Fund.

Our research shows that Latin American countries with a larger independent tower industry—Brazil, Chile, Costa Rica and Panama—measured by its market share and its tower deployment exhibit better wireless performance metrics than the rest (even better than those obtained by the IFC paper). From a correlational standpoint, Latin American countries with a larger independent tower industry (measured by its market share and its tower deployment over population) are associated with:

  • Higher 4G coverage than the rest of countries: 7 percent of the population vs. 90 percent
  • Wireless broadband is 12 percent faster than the rest: 33 Mbps vs. 29 Mbps
  • Capital spending is 31 percent higher in country leaders: US$21 per capita vs. US$16 per capita
  • More affordable wireless broadband services: represent one-third of the costs in terms of per capita income in country leaders relative to the rest of the countries
  • Higher broadband adoption than in the rest of the region: 65 percent vs. 58 percent
  • More intense competition: wireless broadband of HHI= 2,440 vs. 4,135

We went a step further and tested how econometrically solid these positive correlations are. Our research confirms the causality between independent tower companies and better wireless industry development for the aforementioned 12 Latin American countries between 2010 and 2022 in all its relevant dimensions: coverage, adoption, speed, affordability and competition.

An increase in the number of independent towers by 10 percent in a Latin American country leads to, at least, an increase in 4G coverage levels of 1 percent. It is also causally linked to an increase in wireless broadband adoption levels of 0.5 percent, an increase in service quality levels (measured as mobile broadband download speed) of 2 percent; higher mobile market competition (measured as a decrease in the Herfindahl Hirschman Index that measures industry concentration-a lower index depicts more intense competition) of 0.5 percent; improvement in the level of mobile affordability (measured as a decrease in service price relative to the monthly GDP per capita) of 3 percent. This more intense competition drives down prices, which in turn increases affordability.

Given this robust evidence, it would be important for Latin American countries—governments and regulators—to support the development of the independent tower industry, considering at the same time its close interdependence with the wireless market.

Our paper identifies global good practices in the United States, United Kingdom and South Korea which suggest some policy recommendations and principles: stability, predictability and harmonized rules (to support long term investment); flexible (no licenses) deployment regulation; sharing, minimum distance and quality requirements (avoiding over deployment, which is bad for economic sustainability and for the environment); specific 5G and internet-of-things plans; and rural-specific initiatives to close the digital divide.

While some Latin American countries have already adopted most of these prescriptions, some currently lag. Chile shows many good practices, such as national/local harmonization of regulations, clear rules (parameters and tables) for fees and light regulation. Peru and Panama join Chile on light regulatory processes for deployment and operation of passive infrastructure. Costa Rica joins Chile on transparency and institutionalization of fees, and with Brazil and Colombia on plans focused on the development of passive infrastructure for new technologies such as 5G. In addition, Peru and Panama have already defined regulations for the deployment of microcells (low power stations) or urban attachments.

The sector itself must also go beyond its traditional ‘grass and steel’ model by going both green and digital. In doing so, it can play a relevant role toward a more environmentally sustainable Latin America, investing in data-driven services in the 5G era, fostering internet-of-things applications and building smart cities.

In summary, the development of an economically vibrant, environmentally sustainable independent tower industry is critical for  improving Latin American wireless telecommunications. Regulators, policymakers and the industry should work together and materialize this opportunity.

About the authors

Raul Katz is President of Telecom Advisory Services and Director of Business Strategy Research at the

Columbia Institute for Tele-Information at Columbia Business School (New York) and Visiting Professor at the Telecommunications Management Graduate Program at the University of San Andres (Argentina)

Angel Melguizo is Non-Resident Senior Fellow with the Inter-American Dialogue, principal economist at Telecom Advisory Services, and founding partner at Argia green, tech and economics consulting

The opinions expressed in this post are those of the authors. They do not purport to reflect the opinions or views of the Inter-American Dialogue or the Latin America Advisor publications.

Latin America Advisor logo.The Latin America Advisor features comments from global leaders in politics, economics and finance every business day. It is available to members of the Dialogue’s Corporate Program and others by subscription.

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