Uruguay: ISPs, Prices and Opportunity

In a 1992 referendum, Uruguayans voted against the privatization of ANTEL, the state-run telecommunications monopoly, and the liberalization of the communications market, going against the general trend in Latin American countries at that time. As a result of its continued monopoly status, ANTEL, through its subsidiary Anteldata, has to this day retained the largest share of the Internet user market, easily exceeding those of competing ISPs.

Despite the end of the international telecom monopoly in 2000, fledgling ISPs have found it difficult to compete with Anteldata, which benefits immensely from the fact that its parent company is the sole owner and operator of the country’s telephone network. Moreover, ANTEL has acted very aggressively to prevent any serious competition, blocking the introduction of Cable Internet access by Cable TV companies, and forcing other ISPs to provide Internet access through more expensive and/or slower means (such as dial-up and wireless transmission, which is the only current alternative to avoid using ANTEL’s physical network).

Anteldata’s services are expensive by international standards, and not particularly fast. As of June 2007, the fastest connection available to end-users had a downstream speed of 1,5 Mbps, while Fibertel, Argentina’s leading ISP, offered 2,5 Mbps for about $30 less per month. Because of the difficulties of competing against Anteldata, smaller ISPs must charge even more for Internet services. For example, a 512 Kbps downstream connection from Dedicado, a wireless ISP, currently costs $51.32 per month, while Anteldata charges only $2 more for a 1 Mbps connection.

While Anteldata offers cheaper connections than other ISPs, its service is still considerably more expensive than those in other countries in the region, let alone those in developed countries. For instance, Fibertel charges only $33.36 per month for 1 Mbps, and a 3 Mbps connection from Verizon in the United States costs only $19.99 a month.

Given the propensity of monopolies towards stagnancy and complacency, the level of Internet penetration that ANTEL has made possible is remarkable if compared with the penetration in most other liberalized Latin American markets. Uruguay has not performed as well as it can with respect to Internet connectivity because of the existence of this monopoly, however. The country could have much to gain from the liberalization of the Internet services market, which would drive prices down and make broadband internet connections available to a greater proportion of the population.

References:

Luxner, Larry. “Mobile in Uruguay: Competition Fuels A Surge in Cellular Subscribers.” Uruguayan-American Chamber of Commerce in the USA. July 1998 <http://www.uruguaychamber.com/press_16.htm>.

“Communications in Uruguay.” Wikipedia. <http://en.wikipedia.org/wiki/Communications_in_Uruguay>.

Anteldata. <http://www.antel.com.uy/portal/hgxpp001.aspx?2,338,712,O,S,0,PAG;CONC;269;122;D;15334;1;PAG;,>.

Dedicado Telecomunicaciones. <http://www.dedicado.com.uy/cartera/hogares/banda_ancha/internet_768kbps/default.aspx>.

Fibertel. <http://www.fibertel.com.ar/Section.aspx?Id=3145>.

Verizon. <http://www22.verizon.com/content/consumerdsl/plans/all+plans/all+plans.htm>.

Uruguay: ISPs, Prices and Opportunity

Uruguay and the Internet

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