Growing Net use in LatAm leads to new services

A steady and strong growth in residential Internet use in Latin America over the coming years will make it increasingly feasible for providers to offer users a variety of online services, an analyst predicted recently.

Those services include using the Internet to conduct government transactions, to engage in distance learning and to buy goods and services, said Grant Smith, a Yankee Group analyst who follows Latin America’s Internet market.

The growth in residential Internet use “clearly opens up new and interesting possibilities for those participating in the e-government initiatives that have sprung up across the region,” Smith said during a teleconference titled “Latin America Internet Subscriber Forecast 2001-2006” held on March 22.

By the end of 2006, almost 25 per cent of Latin American households will have an Internet subscription, up from close to 10 per cent in 2001, he said.

“It is also a boon for the online distance education market … and finally for online advertising and consumer e-commerce, which have not represented the astounding markets that some analysts thought they would in the region,” he said.

Some transactions that governments worldwide are letting users perform online include the filing of tax returns, the submission of permit applications and the renewal of drivers’ licenses. Meanwhile, providers of distance education services offer courses via the Internet, an attractive option for people who don’t live near a university or who need a flexible schedule.

The falling prices of PCs and of Internet access are helping to increase residential Internet use in Latin America, particularly among low-income people, Smith said. By the end of 2001, Latin America had about 10 million residential Internet subscribers. That figure is expected to climb at a 21.6 per cent compound annual growth rate to about 30 million by the end of 2006, Smith said.

Most subscribers will use traditional dial-up connections, but broadband subscriptions will grow rapidly between now and 2006 at a 49 per cent compound annual growth rate, he said. Broadband technologies let users access the Internet at a much faster speed than is possible with dial-up connections. The most popular broadband service in Latin America will be Digital Subscriber Line, followed by cable modem connections, said Smith, who works in the Miami office of the Boston-based market research firm.