News Release

Lower-Income Groups Key to Broadband Growth in Chile

Chilean Ministry of Economy and Cisco Look at Ways to Increase Productivity, Competitiveness and Social Inclusion Through Large-Scale Broadband Deployment
Sep 04, 2008

SANTIAGO, Chile - September 4, 2008 - In an official study presented to the government of Chile, Cisco today indicated that the country's broadband use is likely to grow exponentially if low- and medium-income groups can gain access to affordable high-speed connections. The paper also noted that competition among Internet service providers, greater access to computers, and an improvement in the average download speed to 4 megabits per second (Mbps) are critical to meeting the government's digital-development goals. The paper was commissioned within a framework of cooperation between the Chilean Ministry of Economy and Cisco.

Chile's deputy secretary of the economy, Jean-Jacques Duhart, underscored the recommendations made by Cisco, which are currently under assessment for inclusion in the Estrategia Digital (digital strategy) of the government of Chile. The key objectives of the Estrategia Digital are to double the number of broadband connections in the next three years, reduce the cost of access to the Internet, and provide coverage to 90 percent of the rural population, alongside other initiatives in cooperation with the private sector.

Duhart said: "Approximately 25 percent of Chilean homes are currently connected to the Internet, while in Korea this figure has already touched 90 percent. Clearly, there is tremendous gain to be had in the development of a country and its competitiveness in the market, particularly in terms of higher-quality service, better prices and widespread coverage. We are convinced that the Internet contributes hugely to economic progress, since it provides a better quality of life and increases business productivity, especially for small and medium-sized enterprises. Reaching all social and business segments with connectivity is no doubt the challenge we face, and we will address it."

Guillermo Moya, the general manager for Cisco in Chile, said: "For Chile to increase its competitiveness, inclusion and economic growth, broadband must became part of the country's essential infrastructure. And the responsibility for this rests jointly with the public and private sectors."

Cisco's recommendation paper analyzes the best practices of Korea, Finland, Holland, Australia and other countries that are considered models for technology penetration. It highlights the strong position of Chile in terms of connectivity when compared with the rest of Latin America, but it also affirms that the levels are still low versus those in developed nations. The paper also recommends increasing the availability of low-priced computers, promoting use of the Internet, and creating local content to generate more applications.

Chile's network capacity increased threefold earlier this year, and the average download speed is expected to rise in the next few months to 2 Mbps from the current level of 0.7 Mbps. The higher speed is similar to the levels in Mexico and Brazil, but it is still far from being optimum for the development of Web 2.0 networks, which depend on user collaboration in YouTube, Facebook and other social media applications.

Raúl Ciudad, former president of the Chilean Association of IT Companies (ACTI), commented: "The goals of this document are fully achievable, since the elements required to create policies and actions already exist. We should benefit from the country's network readiness and take the ultimate leap."

Raúl Rivera, president of Foro Proinnovación (Pro-Innovation Forum), said: "As Chile embarks on the path for growth, creating wealth is not only the task for a few. If we all want reap the fruits of development, we must all share the responsibility. A key element for Internet-enabled growth is quick and easy access to IT talent, which does not exist today. Digital inclusion has become a barrier that Chile must urgently address."

The paper, developed by the Internet Business Solutions Group (IBSG), a consulting entity created by Cisco to assist companies and states to fulfill their business objectives using the network, is part of a cooperation agreement signed in October 2007 by Cisco and the government of Chile. Cisco pledged to work for the digital development of Chile, with two main objectives: accelerating broadband penetration and promoting the technological development of small and medium-sized enterprises.