Positive Developments For Digital Inclusion But Challenges Persist

T he Bolivian government passed the General Telecommunications Law (Law No.164) in August 2011, which established the provisions for the National Digital Inclusion Plan (PRONTIS). It contained plans to transfer 2% of the profits from telecommunications companies in order to fund an initiative aimed at reducing the 'digital divide' in Bolivia . BMI notes that the plan has been met with some important successes, but cautions that the country will not be able to catch up with the rest of the region until the launch of its satellite in 2014.

Minimal coverage and high prices of connectivity have kept the internet out of the hands of many citizens, due to t he l andlocked nature of the country. This has limited it s access to international submarine cables, and must therefore rely on purchasing bandwidth from neighbouring countries at a premium . Furthermore, the mountainous topography presents difficulties for operators building out infrastructure , resulting in Bolivia having one of the most expensive prices for fixed broadband in the region, at 14.4% of gross national income at the end of 2012, according to the ITU. This puts it at 31 st out of a possible 35 countries in the Americas, and 129 th out of 161 countries worldwide.

PRONTIS is administered by the Ministry of Pub lic Works and Housing Services in collaboration with the regulator ATT and state-owned operator Entel , which contributes to the highest amount of funds for the plan as a result of being the largest mobile operator. For example, the Bolivian government awarded Entel and Bolivia TV BOB423mn (US$59mn), with 80% going to the former and the remaining 20% to the latter. The goals of PRONTIS include:

  • Efficiency: funds allocated to projects to ensure greater coverage, lower implementation time, modern technology, quality, lower rates for the target population and lower co-financing amounts requested.

  • Impartiality: the selection of rural localities to be favoured and selection of telecom operators to be based on objective criteria that ensure equal opportunities, avoiding any kind of preferences.

  • Transparency: the co-financing resources for telecommunications projects of social interest will be administered through the applicable control mechanisms to ensure verification and audit.

PRONTIS brings Internet Growth
Number Of Fixed Internet Connections ('000)

Positive Developments For Digital Inclusion But Challenges Persist

T he Bolivian government passed the General Telecommunications Law (Law No.164) in August 2011, which established the provisions for the National Digital Inclusion Plan (PRONTIS). It contained plans to transfer 2% of the profits from telecommunications companies in order to fund an initiative aimed at reducing the 'digital divide' in Bolivia . BMI notes that the plan has been met with some important successes, but cautions that the country will not be able to catch up with the rest of the region until the launch of its satellite in 2014.

Minimal coverage and high prices of connectivity have kept the internet out of the hands of many citizens, due to t he l andlocked nature of the country. This has limited it s access to international submarine cables, and must therefore rely on purchasing bandwidth from neighbouring countries at a premium . Furthermore, the mountainous topography presents difficulties for operators building out infrastructure , resulting in Bolivia having one of the most expensive prices for fixed broadband in the region, at 14.4% of gross national income at the end of 2012, according to the ITU. This puts it at 31 st out of a possible 35 countries in the Americas, and 129 th out of 161 countries worldwide.

PRONTIS is administered by the Ministry of Pub lic Works and Housing Services in collaboration with the regulator ATT and state-owned operator Entel , which contributes to the highest amount of funds for the plan as a result of being the largest mobile operator. For example, the Bolivian government awarded Entel and Bolivia TV BOB423mn (US$59mn), with 80% going to the former and the remaining 20% to the latter. The goals of PRONTIS include:

  • Efficiency: funds allocated to projects to ensure greater coverage, lower implementation time, modern technology, quality, lower rates for the target population and lower co-financing amounts requested.

  • Impartiality: the selection of rural localities to be favoured and selection of telecom operators to be based on objective criteria that ensure equal opportunities, avoiding any kind of preferences.

  • Transparency: the co-financing resources for telecommunications projects of social interest will be administered through the applicable control mechanisms to ensure verification and audit.

PRONTIS has already had some notable achievements aimed at improving internet access in the country, growing fixed internet subscriptions by 61.3% between 2011 and 2012, to reach 1.967mn. It also includes the development of its first satellite Tupac Katari at a cost of US$300mn, through collaboration between the Bolivian Space Agency and China Great Wall Industry Corporation (CGWIC). It is due to be launched in December 2013, and will be activated from Q114, providing a lower cost way of expanding coverage to rural regions at a lower cost than wholesale deals with neighbouring countries. Additionally, the government issued a resolution to create the country's first International Exchange Point (IXP) in September 2013 and claimed that it would not be controlled by the state-owned operator E ntel. The deployment of a local IXP would reduce Bolivia's internet traffic latencies and costs by allowing traffic to be routed locally instead of depending on expensive international connections. According to ATT, the deployment of the IXP 'will reduce telecommunications costs and will improve current local connections and enable the provision of advanced services which require low latency connections'. ATT expects the cost of fixed broadband to be reduced by around 50% by September 2014, as a result of these developments.

PRONTIS brings Internet Growth
Number Of Fixed Internet Connections ('000)

The third phase of PRONTIS is the establishment of telecentres, comprised of computers with internet access, a fixed telephone line and satellite television with educational and informative content. Some will be equipped with solar panels, to ensure a continuous supply of electricity, in rural regions where power is unreliable. The aim is to build 1,000 telecentres by 2014, with the number rising to 1,500 in 2015, and will utilise capacity from the Tupac Katari satellite. In October 2013, Entel awarded a US$12mn contract to Israeli company Gilat Satellite to provide equipment for the construction of the new telecentres.

While the PRONTIS plan has resulted in positive changes in the Bolivian internet market, there are still challenges to address. The cost is still too high for most Bolivians, and this will not be expected to be lowered until the launch of the satellite. In addition to the high prices, the country also has some of the slowest speeds in the region, at approximately 0.72Mbps compared to the global average of 10.13Mbps. BMI also expects growth in wireless broadband to cannibalise some of the growth in fixed services. Between 2011 and 2012, mobile internet connections grew 59% to reach 1.6mn, around 7% penetration. ATT expected this figure to rise to 2mn by June 2013 and would therefore be in a position to overtake fixed broadband users. This trend has played out in other emerging markets in the region, and given the challenges ahead for Bolivia, we expect the country to follow.

ADSL Price Change (Bolivian Bolivianos)
2010 2011 2012
Source: Entel Bolivia
380kbps BOB326 BOB245 BOB179
512kbps BOB396 BOB326 BOB260
768kbps BOB396 BOB340
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