There has been much optimism and hype about the potential of WiMAX (and other 4G wireless broadband) technology to solve the “last mile” problem for underserved areas of the developing world such as Latin America. Just as mobile phones allowed telecom companies to bring voice and SMS (text message) service to new clients in the developing world in a cost-effective manner, proponents argue that WiMAX can deliver broadband access to areas underserved by wired infrastructure (Pratap 2006). Yet several years after the WiMAX standard was adopted, Latin America and the developing world are still yet to see a widespread rollout of the technology. Given current conditions, WiMAX will not provide enough benefit to either consumers or network providers in Latin America to justify the high costs of network rollout. In other words, building and operating a WiMAX network in Latin America today is a much less viable business model than the deployment of a 2G cellular was network seven years ago.
While it is true that building a new wireless network is more cost-effective than building new wired infrastructure, potential WiMAX operators face several barriers to recouping their investments. These barriers manifest themselves both in creating value with and capturing value from the deployment of a mobile broadband network. Specifically, a WiMAX network will not create sufficient economic value for Latin American consumers to drive rapid and widespread adoption. That is, even given access, many Latin American customers will not be compelled to purchase access to the Internet. Additionally, WiMAX providers will not be able to capture a large enough portion of the value created to recoup their investments. Because of the large proportion of low-income users, providers will face high upfront customer acquisition costs that will be difficult to recoup given the tight margins in Latin American markets.
This paper will examine these barriers using the value creation and capture framework, presented above and discuss potential solutions to these problems. In section one, the paper will discuss why it is important to study WiMAX and mobile broadband in Latin America. In section two, the paper will describe WiMAX technology, competing technologies, and the capabilities and deployment scenarios available to network providers in Latin America. Section three will explain why the business model for WiMAX in Latin America is problematic and go into detail on the barriers to value creation and capture. Section four will discuss the possible ways to overcome the aforementioned challenges and why current recommendations are insufficient.
While this paper focuses on Latin America in order to keep the scope of research more manageable, the lessons and conclusions drawn from the research should be applicable in regions throughout the developing world.
Section 1 – Why Study WiMAX in Latin America:
In the past several years governments and international organizations have given much attention to the diffusion of Information and Communication Technology (ICT). Policy-makers fear that as a new information economy takes over, a “digital divide” will reinforce patterns of inequality and poverty throughout the world both within and across nations (Baliamoune-Lutz 2003). They reason that as the world evolves to a more service-based or information economy, access to and use of ICT will become an increasingly important determinant of economic growth (Pohjola, Information Technology, Productivity, and Economic Growth 2001). As this takes place, the digital divide will reinforce itself – the wealthy, with access to technology, will be able to participate in the new economy, make more money and, in turn, gain greater access to technology; the poor, on the other hand, will become more and more isolated from the technology required to generate wealth (Baliamoune-Lutz 2003).
Luckily, there also exists an opportunity to use ICT as a tool to fight poverty and inequality. If the adoption and use of ICT stimulates economies, improving the poor’s access to ICT can help fight poverty. Bridging that digital divide, in other words, could be an effective tool to improve the economic circumstances of the poor worldwide. The internet in particular has garnered attention as an especially promising technology, “Since its inception, we have hypothesized that, while not a cure-all, the Internet could raise the quality of life in the developing world (The United Nations 2006). As Internet technology matures, greater bandwidth is needed in order to reap the full potential of the Internet. Thus, improving access to broadband Internet service is an increasingly important initiative from a development perspective.
Latin America is home to not only some of the world’s poorest developing nations, but it is also home to some of the worst inequality in the world. Nicaragua’s per capita GDP was just $954 in 2007 (Watkins 2007) compared to $41,890 in the US. Brazil’s Gini coefficient (a statistical measure of the distribution of income, 0 representing perfect equality and 100 representing perfect inequality) is 57, Bolivia’s 60.1, and Columbia’s 58.6 compared to 40.8 in the US and 28.3 in Germany (Watkins 2007). Because of the region’s endemic poverty and inequality, there exists a digital divide both between Latin America and the developed world, and within Latin American countries between the rich and the poor citizens.
WiMAX has the potential to help bridge that digital divide. In order to best understand the potential that WiMAX brings to delivering Internet services to the poor in Latin America, it is informative to understand the changes that mobile phone communications brought for telephone access in the early 2000’s. As recently as the 1990s very few low-income consumers had access to any type of telephone service. In Peru, in 1995, there were only 26 wireline telephone connections (and virtually no mobile lines) per 1000 people compared to 545 wireline connections in the United States (Watkins 2007). The costs of building wired infrastructure to each individual low-income dwelling was too great for service providers to justify (Rajat Dhawan 2001). Mobile phone technology changed all that, because it rendered last mile physical infrastructure obsolete. “At $350 to $500 per subscriber (excluding the handset), the cost of building a mobile communications network is about half that of wireline networks . . .” (Rajat Dhawan 2001). Suddenly, delivering telephone services to low-income customers in the developing world was much more economically feasible.
Still, telecoms had to overcome the reality that serving this market would significantly decrease Average Revenue Per User (ARPU). They did this primarily by introducing new pricing models. They sold access to their networks using pre-paid cards. This helped reduce operating costs from billing and bad debts. They also used a “calling party pays” arrangement under which subscribers did not have to pay for received calls. When this system was introduced in Argentina, the number of mobile subscribers doubled within three years (Rajat Dhawan 2001). In addition to the cost savings and improved pricing strategies, users – already familiar with voice telephony – rapidly adopted mobile phone use. Today, Peru has 200 mobile subscribers (along with 80 wireline subscribers) per 1000 people (Watkins 2007), translating into nearly 20% of its population with access to a mobile line. This is a vast improvement over what could have been expected using only wireline infrastructure.
Clearly, wireless phone technology was able to go a long way towards bridging the gap in voice communication technology between the developed and developing world.
Many hope that this story can be repeated for internet access using wireless broadband technology such as WiMAX. Certainly on the surface, the two technologies seem very analogous. Both have the capability to deliver wirelessly a communication service that has been traditionally handled by wireline technology. Both can deliver service to underserved populations without incurring the “last mile” costs of a physical infrastructure. And both offer social benefits and new economic opportunities for users. Unfortunately, there are several key differences between WiMAX and mobile phone technology which make the business model for WiMAX much more problematic.
Section 2: WiMAX and Competing Technologies – Deployment Scenarios
In order to fully understand the business case for WiMAX we must have (at least) a basic understanding of the technology’s capabilities, how it could be potentially used, and close substitute technologies.
WiMAX (Worldwide Interoperability for Microwave Access) as the 802.16 standard is known, “specifies the radio-frequency technology for wireless metropolitan area networks.” (Vaughan-Nichols 2004). Currently, the IEEE has two established standards for WiMAX, 802.16d (commonly referred to as “Fixed”) and 802.16e (also known as “Mobile”.) Both support “non-line-of-sight . . . fixed and nomadic applications”, but only the mobile standard allows for “portable and mobile solutions.” (Motorola, Inc. 2007). In other words, “Fixed” WiMAX could replace cable or DSL data lines carrying Internet service to a consumer’s home or business. Inside, the consumer would then connect to the network using Customer Premise Equipment (CPE – analogous to a cable or DSL modem) connected directly or via a Wi-Fi to his/her computer (Motorola and Intel 2007). This scenario serves as a near substitute for terrestrial delivery of broadband. It would offer little benefit over existing home broadband services from a consumer perspective, but would solve the “last mile” problem in extending service to areas currently unconnected via wireline infrastructure. “Mobile” WiMAX on the other hand, would allow users to access the network with complete mobility. Customers could access the internet using smartphones, laptops or desktops at home or away. As users moved within coverage areas, their internet connections would be seamlessly passed from one basestation to the next, without any interruption in service. From a bandwidth perspective, WiMAX can provide broadband speed internet access to both consumers and enterprises at fast enough rates to support demanding broadband application like streaming video and online gaming (Motorola, Inc. 2007).
The closest substitute for WiMAX is Long-Term-Evolution or LTE. LTE is a proposed wireless broadband technology similar to WiMAX, but based on the GSM standards set by the 3GPP (3rd Generation Partnership Project) rather than the 802.16 standards set by the IEEE. Both standards operate using licensed spectrum, so existing telecommunication providers are the most likely candidates to deploy WiMAX and LTE. LTE has won endorsement from several large US and international carriers including AT&T, Verizon and Vodaphone (Hamblen 2008). Though, LTE’s standards and capabilities have yet to be finalized, it has the potential to do everything that WiMAX does and to do it on a faster mobile network. Thus, LTE could be deployed and used in the exact same ways as WiMAX including as a last mile solution. Though WiMAX has a firstmover advantage, Telecoms are waiting to see if a dominant global standard will emerge. It is beyond the scope of this paper to predict which standard will become dominant. Suffice it to say, though, the potential standards war has slowed adoption of WiMAX (Seth 2008).
Additionally, Wi-Fi, based on IEEE 802.11 standards has the potential to provide many of the same benefits as LTE or WiMAX. Wi-Fi clearly does not have the same range as the mobile broadband technologies, but as it evolves it, can serve as an imperfect substitute. The latest standard for Wi-Fi, 802.11n, offers significantly increased signal range and throughput (Waring 2008). Though many factors affect the range of Wi-Fi access points and there is a bandwidth/range tradeoff (as with all wireless broadband technologies), 802.11n Wi-Fi has an effective range of around 300 ft. This represents an improvement of almost 300% over the range of the earlier 802.11g Wi-Fi standard. Wi-Fi also does not operate on licensed spectrum, making it possible for anyone to set up Local Area Network. As the range of Wi-Fi improves, it becomes a closer substitute for WiMAX or LTE. It may not currently solve the last mile problem, but it is getting closer. This phenomena is one that is known to slow the diffusion of new technologies. As incumbent technologies improve significantly over time, they can slowing the demand for new technologies (Brody July 1991). It is possible, depending on a myriad of factors, (including population density, existing infrastructure, and consumer needs) that Wi-Fi could become a more cost-effective means for providing internet access to the poor in developing nations.
Exhibit I shows several common communication technologies mapped according to their mobility and bandwidth capabilities.
Section 3: The Problematic Business Case for WiMAX in Latin America
When comparing WiMAX to the story of mobile telephones in Latin America, one may at first expect that firms would be eager to aggressively build new, robust WiMAX networks. WiMAX is the most powerful wireless broadband technology currently available. There is a compelling need for WiMAX in Latin America. And WiMAX appears to enjoy many of the same cost benefits that mobile phone technology did earlier this decade in the developing world. Yet, on closer analysis, there are several key differences for the WiMAX business compared to mobile phones.
First, WiMAX, while it may have arguably greater long-run potential, does not offer the same immediate, tangible benefits that mobile phones offered earlier this decade. Potential WiMAX networks face a problem of insufficient value creation. Simply providing access to the Internet does not guarantee that consumers will use it. In 2008, Mayor Bloomberg commissioned a team of consultants to address the digital divide in New York City and examine the potential for a municipal Wi-Fi network in the city (Committee 2008). The findings did not bode well for proponents of WiMAX in Latin America. Even though almost 98% of residents had access to broadband internet service, many low-income customers had not chosen to adopt the technology (Sarlin 2008). The committee concluded that since access was not the primary barrier to adoption, building a municipal Wi-Fi network would not bridge the city’s digital divide. Even if given access to Internet service, this is strong evidence that low-income Latin Americans will not use the service. Potential Latin American WiMAX network operators will likely want to understand why.
The answer (at least in part) is that low-income consumers do not value the benefits of broadband enough to justify the access costs. If this is the case in New York City, it is most likely more prevalent in Latin America. Low income consumers, particularly those in Latin American markets cannot currently enjoy all of broadband’s potential benefits due to three factors. First, the consumers have little access to the complementary computer hardware necessary to even get on the Internet. Secondly, the low-levels of general education make it more difficult for users to benefit from complex online applications. Lastly, Latin American consumers will be limited in the content they can access on the Web by language barriers. These challenges either did not exist or were less prevalent for the adoption of mobile phones in Latin America.
Obviously owning computer hardware (or at least a smartphone) is a prerequisite to accessing the internet no matter how it is delivered. Evidence of this can be seen in the recommendations to New York’s Broadband Advisory Board: before improving access, the committee advised the city to initiate programs to spur personal computer ownership (Committee 2008) (Sarlin 2008). In Latin America, far fewer households have access to a computer than in developed world. In Mexico just 22.1% of households had access to personal computers compared to 75.4% in the UK for 2007 ((DSTI) 2008). Bridging this gap, a first step to stimulate demand for WiMAX service, will be much more difficult than it was with mobile phones. The computer hardware necessary to access and enjoy the internet is considerably more expensive than analogous mobile phone technology. Handsets, by their very nature are much simpler than computers. This is especially true for the 2G or second generation handsets that were adopted in Latin America during the explosive growth of the region’s mobile phone industry. In 2004, the average price of a handset was about €74.00 (less than $100) (David Lewin 2005). By contrast, prices for laptops and simple computing systems will be much higher. This is important for several reasons. First, price is an important determinant in adoption of technology (Baliamoune-Lutz 2003) (Pohjola, The Adoption and Diffusion of ICT Across Countries: Patterns and Determinants 2003) so, few consumers will be able to purchase their own computer. Second, the lower price of mobile phones allowed operators to subsidize the handset cost in exchange for locking the phone to only work on the operator’s network. WiMAX operators could potentially copy this play, locking the customer’s computer’s Network Interface Card, but there are several problems with this strategy. Subsidizing expensive computer equipment would mean much higher customer acquisition costs for operators. This would translate into greater financial risk and greater working capital requirements. In addition, because computers, unlike mobile phones, have many non-network dependent uses, consumers would have greater incentives to purchase the subsidized computer and then never use the WiMAX network provided by the operator.
Even if the Latin American population is able to gain sufficient access to personal computers, demand will still be constricted by lower levels of education. Pohjola, Baliamoune-Lutz, and Hargittai all identify education as a primary factor determining the adoption of ICT (Pohjola, The Adoption and Diffusion of ICT Across Countries: Patterns and Determinants 2003) (Baliamoune-Lutz 2003) (Hargittai 1999). Once again, mobile phones avoided these problems through their simplicity. With fewer buttons and a simpler interface, mobile phones are much easier to navigate for people with lower levels of education. Indeed, literacy is not even required. Internet-users on the other hand need to be literate to send emails, navigate to web pages, and chat on IM. Average adult literacy in Latin America is 89.9% compared with 99.1% in High-Income OECD countries (Watkins 2007). While this is not a staggering difference, one must consider that these statistics imply that 10% of the population will be automatically excluded from becoming WiMAX network customers. Moreover, given the nature of many applications on the internet, advanced education beyond literacy is needed to fully realize the potential value of using some aspects of the Internet. In this measure, Latin America fares even worse. Only 68% of its population finishes secondary school compared to 92% in the High Income OECD countries (Watkins 2007). If users do not have the skills to operate a computer, they will be unlikely to use the internet. Once again, it is informative to look to the findings of the New York study. There, the commission recommended several initiatives to improve computer literacy as a key to driving Internet use (Sarlin 2008).
Lastly, WiMAX networks will face depressed demand in Latin America because there are fewer English speakers. It is clear that the English is the primary language of the World Wide Web. The ability to understand English, even a little, is an important determinant in Internet adoption (Hargittai 1999). Mobile phones did not face this barrier. The key difference here is that mobile phones are (primarily) intra-national, one-to-one communication systems where no dominant language platform need be adopted. The Internet, in contrast, is an international one-to-many system. With an international one-to-many platform, a lingua franca must emerge to allow multiple users with different native languages to communicate. On the World Wide Web, that common language is English for several reasons (English is the major international language linking people and many websites are hosted in the US and thus default to English (Hargittai 1999)). Latin America, with fewer people with English language skills, is thus marginalized in the great international conversation that is the World Wide Web. Because, so much content is in English, the Web provides less marginal benefit to typical Latin Americans than users in other countries where English is more prevalent.
In addition to the challenges WiMAX operators face in creating value for consumers in Latin America, it will also be difficult for them to capture a significant portion of the value that they do create. When Latin American operators built the mobile phone network, they used innovative pricing and distribution strategies to ensure that they captured a large enough portion of the newly created value to recoup investment costs. Many of these strategies will be difficult to duplicate with a wireless broadband network.
One pricing strategy that mobile phone carriers successfully employed was to a use pre-paid system in which, customers purchased cards with codes to “recharge” their minutes before using the network. On the cost side for operators, this reduced billing, bad debt and customer management costs (Rajat Dhawan 2001). Just as important though, this system ensured that operators were able to perfectly correlate charges with network usage (Odlyzko 2001). With traditional subscription plans, users paid a flat monthly fee and thus did not experience the true marginal cost of using additional time (up to the their allocated minutes.) Without perfect incentives, users tend to overuse a network (Jorn Altmann 2001). By charging users in advance only for the minutes each customer actually used, mobile phone network operators avoided this problem. In addition, this solution was simple communicate to consumers. Although no user likes the ticking clock when accessing a network (Jorn Altmann 2001), users could readily understand how many minutes of access they had purchased with each pre-paid card. This is because 2G networks run basically 2 types of applications (voice and SMS); users purchased a fixed number of minutes and could easily track their own usage. In summation, this pre-paid pricing strategy was successful because it brought cost benefits to suppliers with only minor costs to users.
The increased technical complexity of wireless broadband will make correlating charges to network capacity consumption difficult to duplicate. A WiMAX network would be able to run hundreds if not thousands different types of applications – each consuming network capacity at vastly different rates. Instant messaging and text email applications use much less bandwidth per minute than streaming video and interactive map applications. WiMAX operators using a prepaid system would have to choose between two unappealing options: pre-paid access on a per minute basis or access on a per bit basis. The first option would offer substantially less benefit to operators. Depending on the type of application customers used, consumption would no longer be correlated with network capacity use. For example, a user viewing streaming, high-definition video for 15 minutes would pay the same as someone using an IM session for 15 minutes even though the network capacity demands would be vastly different. This option would remove the incentives against users who overuse the network. The second option, charging users in advance for a fixed amount of data access, would correlate network capacity consumption with price, but would do so at the expense of user experience. The complexities associated with communicating these differences to consumers would be daunting and could potentially slow adoption (Odlyzko 2001). In other words, the ticking clock that may have been slightly annoying to mobile phone users but it would become unbearable were it to be a megabit meter for Internet users. Even the most advanced computer users would have a difficult time understanding how much access they had actually purchased. In addition, monitoring and administering internet capacity use would be much more costly for operators (Greenstein 2001) further cutting into operators’ bottom lines.
Another pricing strategy that mobile phone operators successfully implemented in Latin America was the Calling Party Pays (CPP) system. By eliminating the charges to users receiving calls, mobile operators drastically increased adoption of their services (Rajat Dhawan 2001). Again, this was possible because of the one-to-one nature of mobile phone communications. Internet service would have no analogous pricing scheme. Once again, this eliminates yet another tool that mobile phone operators used in bolstering the business their strategy from the toolset for WiMAX operators.
Section 4 – Solutions to the Challenges Facing the WiMAX Business Model
Despite the obstacles discussed above, WiMAX and wireless broadband still have great potential to bring economic and social benefit to Latin America. The fact remains that wireless broadband can offer last mile cost advantages over terrestrial wireline Internet service (though those advantages may not be as pronounced as with wireless vs. wired phone service). Though access isn’t the only factor suppressing demand, it must still be addressed if Latin America is to bridge the digital divide. The question then becomes how can we address the issues facing the WiMAX business model to ensure that its deployment will be a profitable endeavor for Latin American network operators? Development agencies have invested considerable time and effort into understanding and improving existing determinants of the demand for Internet service. While this effort is necessary and extremely helpful to bolster the financial prospects for WiMAX, it is insufficient. This section will review the current body of work regarding stimulating Internet demand in Latin America and close with a suggestion some new strategies that merit attention.
In order to address the problems of the digital divide and to better understand a key resource in the information age, thinkers everywhere from universities, to consulting companies, to the U.N. have tried to identify the variables that that drive ICT diffusion. Most research has focused on using statistical analysis, usually regression, to understand the variables that drive adoption of the Internet and of ICT in general.
This research has been successful in finding the following characteristics or variables that determine ICT diffusion:
1. Economy/Income - ICT diffuses faster in areas with stronger economies where people have greater income.
2. Education - ICT diffuses faster in areas where people are better educated. This includes specific technical training on using ICT and English.
3. Prices/Regulation - relative prices of ICT also determine diffusion, because so many ICTs operate in imperfect (controlled) markets.
4. Political Rights/Openness - ICT diffuses faster in areas with greater political "openness"
(The United Nations 2006) (Pohjola, The Adoption and Diffusion of ICT Across Countries: Patterns and Determinants 2003) (Baliamoune-Lutz 2003) (Hargittai 1999).
These variables all make sense from an intuitive perspective and clearly addressing them will help to bridge the digital divide. Once identified, the thinking goes, governments and development agencies can work with those drivers to increase adoption of ICT, thus stimulating economies in the developing world. Therefore, (assuming everything is already being done to improve the economy) governments should, subsidize ICT hardware to lower prices, provide computer/technical education to stimulate demand, and lower regulatory barriers that could slow ICT diffusion. (The United Nations 2006) (Pohjola, The Adoption and Diffusion of ICT Across Countries: Patterns and Determinants 2003). Indeed, this is the strategy that the New York Mayor’s office and the Broadband Advisory Board recommended (Committee 2008).
Of course these are all important initiatives that development agencies and governments need to adopt. However, these empirical studies (and resulting conclusions) are victim to an inherent limitation: they measure correlation between these characteristics and historical diffusion of ICT. They cannot, by design, account for fundamental changes in the how users may interact with the internet in the future. When regressing the diffusion of a product that requires highly educated users against a country’s education level, education will certainly be a significant determinant in the adoption of that product. But, if the product were to change so that it was more accessible to less-educated users, demand could be spurred across even uneducated populations.
Increasing the level of education is critical for developing economies, but there may be other, more cost-effective methods to stimulate demand for Internet access in Latin America. Imagine a firm trying to sell a new product to a market. If that market had some characteristics/preferences that interfered with product’s usability by the market, the firm would have two options. The first, would be try to change the market’s characteristics/preferences. This is generally very expensive. The second (and usually preferable) option would be to try to develop the product to better address the needs of the market. This same story can be applied to ICT and the Internet. If people have a hard time using Internet because of low levels of education, we can solve that problem by educating them, or . . . by designing Internet applications to be more easily used by people with less education. In other words, if people want Latin America and the developing world to adopt WiMAX and the Internet, then they need to work on improving the value proposition of those technologies.
Wireless Broadband and the Internet have not been optimized for use by low-income consumers in Latin America (and the larger developing world.) Policy makers could do much to stimulate demand by working to incentivize the development of a “killer application”. Ideally, this would be an application that would fundamentally change the value proposition of the Internet, and by extension WiMAX in the developing world. No discussion of technology diffusion would be complete without considering Geoffery A. Moore’s seminal work, Crossing the Chasm. In it he describes how, as new technologies are adopted, they face several make-or-break stages he calls cracks or chasms. In order for technologies to cross the first of these cracks, users from the next stage must find a compelling application to drive value,
“. . . the key to winning over this segment is to show that the new technology enables some strategic leap forward, something never before possible, which has an intrinsic value and appeal to the nontechnologist. This benefit is typically symbolized by a single, compelling application, the one that that best captures the power and value of the new product.” (Moore 2002).
Just as the Mosaic browser spurred the adoption of the World Wide Web in the developed world, a new killer app must be created that meets the needs of the developing world. In 86% Solution by Vijay Mahajan and Kamini Banga, the authors discuss this fact. Even though their discussion extends beyond technology to product development in general, their advice is highly applicable to Internet applications. They state that products must consider environment, culture and religion as well as being simple and easy to use – over-engineering hardware or end-user applications will be disastrous (Mahajan and Banga 2006). It will be important to understand which features of an offering for the developing world are marginally more important and which are superfluous when building consumer hardware and applications. No one has successfully done this for broadband applications in Latin America.
WiMAX suffers not only from the lack of a killer application for the developing world’s Internet in general, but also from the fact that there is no killer app for “mobile” broadband in or outside Latin America. Without such a compelling application, WiMAX offers consumers little incremental benefit when compared with terrestrial Internet service or Wi-Fi. “Mobile” WiMAX (the 802.16e standard) would allow users to access a broadband network while on the go, even in a moving vehicle (Motorola, Inc. 2007). The relevant question for consumers (in Latin America and throughout the entire world) is then, so what? Few applications require both the throughput and mobility capabilities that WiMAX currently offers. Exhibit II is a modified version of Exhibit I. It shows the capabilities of network technologies overlaid with popular applications. Other than streaming media to a portable device, there are few applications in the upper right quadrant of the diagram where both mobility and high bandwidth are required. Until this changes, WiMAX, lacking a killer app, runs the danger of falling into one of Moore’s “cracks”.
This is actually good news for bridging the digital divide. Policy makers have yet another tool at their disposal to encourage Internet diffusion and adoption. Increasing education levels in Latin America (though necessary) is expensive and will take many years of concerted effort. Improving inequality levels and the overall economic situation of an entire country or region is even more daunting. Taking steps to encourage internet application innovation is something that governments and developmental agencies can do relatively inexpensively. For example, the United Nations should continue its emphasis on improving education levels, but should also set up labs to attract software and hardware developers dedicated to building technology that can serve as the killer application for broadband in the developing world. Some work is already being done on this front (Parikh 2006), but governments need to take proactive steps to speed up this process. Another potential tool would be to take steps to increase and improve the Spanish (or Indigenous) language content available on the web. Each web page of useful Spanish information on the Web, increases the value of an internet connection for the typical Latin American.
Conclusion:
The business case for WiMAX networks in Latin America faces significant challenges. The complexity and flexibility of the Internet make the economics of WiMAX deployment much less cut and dry than deployment of mobile phone networks. At the same time, that flexibility presents an opportunity to create much more value than was created with wireless voice networks. Therefore, this topic merits further study. Most notably, equipment providers and network operators need to understand the true cost savings that mobile broadband can supply in Latin American regions suffering from the last mile problem. In addition, leaders need to think of new and creative ways to spur innovation that will drive the adoption of broadband Internet throughout the world.
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