Will Mobile Telephony Rule Internet Connectivity in Latin America?
Who among us hasn’t felt distressed after losing our cell phone? There’s good reason: When we lose access to our cell phone, we’re completely disconnected. How much worse would we feel if the conventional Internet were to disappear, as some experts predict? Roberto Musso, chief executive of Grupo Digevo, a Chilean developer of software for mobile devices, says that could happen because “traditional access to the Internet via the web or a browser has become archaic and static compared with the experience of connecting oneself through an intelligent telephone, which provides extremely attractive usability thanks to its touch screen and motion sensors, among other attributes.”
The way we consume content on the web is changing, notes Lioubov Dombrovskaia, professor of information technology at the Federico Santa Maria Technical University in Valparaiso, Chile. While we used to consume information through a stationary computer, she says, there are new means of accessing that data. These new channels include “mobile computers, video game consoles and, in the near future, the television itself. Cellular telephones are playing a leading role in this diversification of consumption.”
Dombrovskaia predicts that mobile telephony will eventually be the main form of access to the Internet among users in Latin America. That’s because “the penetration of cellular telephony in the region has now reached 90% of the population, while the penetration of the Internet has only reached 35%,” she says.
According to a recent study by Wireless Intelligence, a London-based consultancy, there are now 530 million mobile phone subscribers in Latin America, more than in Western Europe, which has only 430 million subscribers. That makes Latin America the second-largest cellular service market in the world, after the Asia-Pacific region. This trend has been driven by growth in Chile and Argentina, where it’s not uncommon for someone to own more than one cell phone.
Another reason cellular service is on a course to unseat conventional access to the web, Dombrovskaia says, is that mobile phone service costs less than accessing the web through a computer. “Many manufacturers have begun to subsidize smartphones for their customers in the region, so that users will have access to more advanced cellular devices that are connected to the web.”
Jorge Villalón, professor of engineering and sciences at Adolfo IbáñezUniversity, notes that the average mobile phone in Chile costs US$20, while a netbook PC costs US$300 and an iPad costs US$500. The average smartphone costs between US$50 and US$60.However, Villalón says, “It hasn’t been proven that Latin American users prefer to connect to the Internet with a mobile phone rather than via a netbook PC or iPad.” Making that assertion is lot like believing that a good story is always better when it is told in a movie than in a book, because the technology involved in filmmaking is more advanced. “When films were created, that didn’t destroy the market for books,” he says. “On the contrary, it continued to grow.”
Carlos Castro, professor of computer science at the Federico Santa Maria Technical University, agrees. He notes that connecting to the web through a computer should continue to be the best solution for working in an office and at home, because cable connections are more rapid than connecting through cellular telephones. Data traffic provided by cellular devices is still very limited, adds Samuel Varas, professor of engineering and sciences at Adolfo IbáñezUniversity. “That’s why no user today would think of downloading a movie over a cellular device.”
App Stores on the Rise
Without doubt, cellular hardware devices have weaknesses, says Alejandro Mellado, professor of computer engineering at the Catholic University of Temuco in southern Chile. They have a low processing rate, limited memory, low resolution display and unfriendly interfaces for opening and closing pages. “Nevertheless, makers of mobile phones have been able to apply their genius to overcome these functional difficulties, developing attractive applications for users that are also easy to use,” Mellado says.
The major cellular phone brands now depend on app stores to distribute both free and paid applications that can be downloaded from their mobile devices. For example, the Ovi Store, operated by Nokia, the Finnish manufacturer, has more than 18,000 applications, notes Anthony Yorston, service manager of Nokia Chile. “The Latin American users who do the most downloading from Ovi are Mexicans, Argentines, Chileans, Costa Ricans, Venezuelans, Ecuadorians, Colombians, Peruvians, Guatemalans and Paraguayans,” he says. Yorston notes that one of the most popular free applications is the eBuddy Mobile Messenger, which lets users manage their accounts on Facebook and Twitter in a single application.
Samsung is among the manufacturers that have joined the competition. Its Samsung Apps store offers 2,700 free and paid apps, notes Alex Chauriye, product and service manager of Samsung Telecom in Santiago de Chile. “In addition, the new line of smartphones comes with the Android operating system,” he says, “which enables users to access the Google Android Market, which has more than 50,000 apps that can be downloaded free.”
Meanwhile, Research in Motion has done quite well with its BlackBerry App World, which records an average of 1.5 million downloads a day worldwide, notes Matías de la Cruz, senior manager of alliances for Research in Motion in the Southern Cone countries. Among the most popular is BlackBerry Messenger, “an instant messaging tool that is used by 25 million people who have our smartphones.”
Microsoft’s Windows Marketplace and Apple’s AppStore are also part of this fierce competition, with AppStore providing more than 300,000 applications. According to IDC, the technology research firm, app stores recorded 10.9 billion downloads worldwide in 2010.
A Virtuous Circle
Clearly, app stores continue to grow, thanks to manufacturers’ bringing developers into their business model.
According to Dombrovskaia, the app store model has created a virtuous circle that involves the manufacturer, the developer and app users. That’s because “the manufacturer decentralizes development of applications, sharing the revenues with developers who, in turn, are responsible for satisfying the growing needs of users, both for training and business.” Thus, users benefit from the great availability and variety of applications, which have a low cost because of this model.
A clear example is the experience of Grupo Digevo, the Chilean developer. “We took the Apple model,” says Musso, the company’s CEO, “and in cooperation with the Federico Santa Maria University, we developed an application for iPhone called Mobile Sommelier. This app is targeted at wine fanatics.” The app, he says, provides a complete catalog of products with respective food combinations, as well as news from the world of wine, offers, and promotions.
In addition, Mobile Sommelier stores each user’s rating of the wine that he or she has recently uncorked and inserts it into his or her Facebook page, with the goal of sharing that evaluation with friends, notes Musso. “The application also has a virtual sommelier capable of recommending wines to users through their smartphones, based on their own evaluation and their taste.”
The High Cost of Service
Although the app store has become a sort of paradise for both manufacturers and users, Castro warns that the cost of Latin American cellular service plans -- both voice and data -- is high in comparison with rates in developed countries. This would be the main barrier, he says, for making cell phones the chief means of connectivity in the region.
In a 2010 study titled, “Rates and the accessibility gap in mobile telephone services in Latin America and the Caribbean,” Hernan Galperin, researcher and associate professor of technology at San Andres University, notes that the average monthly cost of cellular phone service in Latin America is $24, almost double the average cost in OECD countries ($13) and more than triple the rate in Southeast Asia ($7). According to the study, Brazil has the highest rates in the region, an average of $45, followed by Honduras at $26.50, Uruguay at $22, Mexico at $20 and Argentina at $19.20.
The study concludes that the high prices for mobile telephone in the region can be explained by high market concentration and high taxes on the service. The study notes that “in order to lower rates, it is necessary to increase competition in the sector; for example, through implementation of numerical portability.” That means offering users the chance to keep the same cell phone number even when they change their service provider.
Dombrovskaia agrees, noting that the cost of Latin American cell phone service will continue to drop to the degree that cellular technology evolves. Castro notes an additional obstacle: the quality of the communications infrastructure in the region. “Today, it isn’t hard to reach overcapacity in mobile communications usage, so investments need to be made to improve the infrastructure network.”
Cellular Telephony’s Future in the Region
Mellado recognizes that certain tasks can’t be done on a mobile phone, such as writing a blog. However, he is confident that manufacturers will continue to improve their hardware and operating systems.
Dombrovskaia is even more optimistic. She forecasts that in the near future, users in the region will have access to cheaper cellular devices that offer better screens, longer-lasting batteries, and interfaces that are easier to use when navigating the web. She believes that in the short term, the global market battle for cell phone applications will take place on two levels. On one level, it will involve which company “dominates the operating system for these phones (iPhone OS versus Google Android, BlackBerry OS, Symbian from Nokia, and Win7 Mobile from Microsoft). On a second level, it will involve the app stores battling to improve their sales.”
Another important factor, she says, is the role of the Brazilian market. “That country has a high level of unsatisfied demand for technological products, and that has led companies such as Nokia, Motorola, Sony Ericsson and LG to set up production plants there. This will mean that the Brazil market could boost the development of mobile applications in the region.”