Wireless Broadband Access for Latin America. Martha García-Murillo Juan Rendon. ICT in Latin America New York City April 14,
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1 Wireless Broadband Access for Latin America Martha García-Murillo Juan Rendon ICT in Latin America New York City April 14, Background The wired infrastructure was under resourced, poorly maintained and rarely upgraded. Because of this, after liberalization, the fastest and least expensive way of providing connectivity to the region was through cellular phones
2 Problem The current wireless network will require significant upgrades in order to support fast data delivery. If this is not done various segments of the Latin America population will likely be on the wrong side of the digital divide Objective To determine the patterns of wireless broadband adoption in Latin America Will it be done through 3G type cellular networks or through WiFi type networks?
3 Theoretical Framewok Adoption literature: Individuals that are more amenable to technology and will tend to adopt technology much sooner than those who have averse feelings toward innovations (Rogers, 2003) Technology features (Adams, 1992 Davis, 1989; Hendrickson, 1993) Patchwork Adoption (Garcia-Murillo 2003) Patchwork Adoption This framework considers socioeconomic, cultural and technological factors
4 Socioeconomic: age 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Brazil Chile Mexico Peru Population ages 0-14 (% of total) Population ages (% of total) Population ages 65 and above (% of total) Socioeconomic: population Brazil Chile Mexico Peru Urban population (% of total) Rural population (% of total population)
5 Socioeconomic: income 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Brazil 2004 Chile 2003 Mexico 2004 Peru Income share held by highest 10% Income share held by lowest 10% Income share held by lowest 20% Cultural factors School enrollment, primary (% gross) School enrollment, secondary (% gross) School enrollment, tertiary (% gross) Brazil Chile Mex ico Peru
6 Technological factors Peru Mex ico Chile Brazil Mobile phone subscribers (per 1,000 people) Telephone mainlines (per 1,000 people) Broadband: GSM/EDGE Global System for Mobile communications (GSM) is a European standard that operates in the 900 MHz band. Originally designed to offer voice, low-speed data (up to 9.6 kb/s) and short message services. The Enhanced Data for GSM Evolution (EDGE) technology is an extension of the GSM/GPRS standard aimed at providing user data rates of up to 384 Kb/s.
7 Broadband: TDMA/EV-DO The IS-136 standard (NA-TDMA) kb/s end user data rate. The IS-2000 standard (CDMA2000) The maximum user data rate is 144 kbps and is expected to reach 307 kbps in the future. CDMA2000 1xEV (Evolution) two phases: CDMA2000 1xEV-DO "Evolution, Data Only" and CDMA2000 1xEV-DV "Evolution, Data and Voice". The former supports downlink bit rates of up to 3.1 Mbps and uplink bit rates of up to 1.8 Mbps on a carrier dedicated to data traffic. WiFi/WiMax WiFi works in the 2.4GHz and 5GHz bands. The b standard offer a theoretical maximum rate of 11 Mbits/s and g standards offers 54 Mbits/s. In both cases, the range can be around meters. (WiMAX) is an IEEE can reach up to 30 miles with a throughput of 72Mbits/s for the whole cell.
8 Exploratory model For this paper we used a modeling software called ithink modeling software to help us determine the diffusion patterns of cellular based technologies such as EDGE /EV-DO and WiFi Components
9 Model components 3 G cellular adopters IF(Income >1200) and (WiFi Tech >20) THEN ( 3G Adoption rate* Total market) ELSE 0 WiFi adopters IF(Income <1200) and (WiFi Tech <20) THEN ( WiFi Adoption rate* Total market) ELSE 0 3G Technology 3G Price*.7+ 3G Quality*.3 WiFi Technology WiFi Price*.7+ WiFi Quality*.3 3G Price Model components It starts with the current price of $120 a month and declines over a 36 month period to $95 WiFi Price It starts with the current price of $25 a month a declines over a 36 month period to $22 3G quality It begins at a rate of 7 and increases to 8.7 over a 36 month period WiFi quality This is represented also through a graph that begins at a rate of 4 and increases to 7 over a 36 month period
10 Results millions months 3G Cellular E WiFi Results The more expensive cellular technology will evolve but the market will be limited given the cost of connection. The simulation predicts that WiFi will have a greater uptake mostly because of the lower price that it exhibits. Quality is less of an issue in young population markets
11 Results Companies offering 3G now target the business segment alone for this broadband connectivity. People can connect to the Internet through WiFi in restaurants and cafés either for free or at a lower rate than the cellular option. Conclusions/Implications Adoption is greatly affected by income The adoption pattern mimics the patchwork adoption framework Regulation should take into consideration those socioeconomic, cultural and educational factors in their universality objectives. Carriers should also take into consideration those factors for business offering purposes
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