Wireless Broadband Access for Latin

America

Martha García-Murillo

Juan Rendon

ICT in Latin America

New York City April 14, 2008202 390-0885

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

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?

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)

■ This framework considers socioeconomic,

cultural and technological factors

Patchwork Adoption

Socioeconomic: age

28 2531 32

6667

64 63

6 8 5 5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil Chile Mexico Peru

Population ages 0-14 (% of total) Population ages 15-64 (% of total) Population ages 65 and above (% of total)

Socioeconomic: population

84 8876 73

0

20

40

60

80

100

120

Brazil Chile Mexico Peru

Urban population (% of total) Rural population (% of total population)

Socioeconomic: income

1 1 2 1

3 4 4 4

41394545

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Brazil 2004 Chile 2003 Mexico 2004 Peru 2003

Income share held by highest 10% Income share held by lowest 10% Income share held by lowest 20%

Cultural factors

0

20

40

60

80

100

120

140

160

School enrollment, primary (%

gross)

School enrollment, secondary (%

gross)

School enrollment, tertiary (%

gross)

Brazil Chile Mex ico Peru

Technological factors

0 100 200 300 400 500 600

Brazil

Chile

Mex ico

Peru

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.

Broadband: TDMA/EV-DO

■The IS-136 standard (NA-TDMA) 13-16 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 802.11b standard offer a theoretical

maximum rate of 11 Mbits/s and 802.11g

standards offers 54 Mbits/s. In both cases, the

range can be around 80-100 meters.

■ (WiMAX) is an IEEE 802.16 can reach up to

30 miles with a throughput of 72Mbits/s for the

whole cell.

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

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

Model components

■ 3G Price

♦ 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

Results

-

2

4

6

8

10

12

14

16

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35

months

millions

EVDO adoption3G Cellular WiFi

202 390-0885

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

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