Assessing the impact of market structure on innovation and quality

May 4, 2018

Central America is lagging behind in mobile broadband adoption and deployment. Closing this gap requires the promotion of market structures that boost competition in investment and innovation, and public policies that take the entire digital ecosystem into account.

Over the last 15 years, mobile broadband adoption and deployment in Central America have lagged behind the rest of Latin America. The delay first became apparent with 3G and has spilled over to 4G deployment, where it has become even more pronounced. On average, 4G connections in South American countries account for 30% of all connections, and population coverage is about 70%. In Central America, these figures are only 5% and 35%, respectively. This is problematic as new technology cycles bring new and better services at lower prices.

To close this gap, authorities should aim to create an environment that promotes investment and innovation. Market structures must give operators the ability and incentives to invest as a way to intensify competition, which will also be stimulated by the offers of other convergent players. This requires operators to have sufficient scale, margins and expected return on investment, and efficiency in the use of spectrum. Recent studies have detected a trade-off between the number of operators and levels of investment and innovation.

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