?Interview | Digital transformation in the Caribbean and Latin America is urgent: CANTO
In this interview, the chairman of the Caribbean Association of National Telecommunication Organizations (CANTO), David Cox, talks with DPL News about the state of connectivity in the Caribbean after the Covid-19 pandemic, the best regulatory, spectrum and fiscal policies for national authorities, the next 5G deployment and the main challenges of the digital transformation in the region.
DPL News: What is the state of connectivity in the Caribbean region after the Covid-19 pandemic?
David Cox: “Generally speaking, for all of the English speaking Caribbean, we have very good connectivity for most of the countries and we have penetration rates for mobile services in excess of 100%, so we have high penetration for mobile and many providers are providing 4G LTE mobile broadband services. So, there is a high level of penetration when it comes to high speed mobile connectivity .
Penetration rates for fixed services, however, remains a challenge, it is not as high, we don’t have near as much penetration for fixed broadband, fixed Internet services in many of these countries, and the pandemic made everyone realize that have a connectivity for fixed services was super important, because mobile services are priced and mitered in a different way than fixed connectivity. With a fixed connection you have a certain speed, but you are basically unlimited with how much data you send back and forth to the network.
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Obviously, in a mobile platform, the way data is charged is different: you pay based on the amount of data you consume. And that has proven to be a real challenge. We are doing our best as operators to increase our penetration rates across all of these countries and we are looking very hard. That requires more investment and partner with governments to try to achieve this”.
Despite some barriers, such as languages and the ocean, since the Caribbean is a group of islands where other languages such as English and French are spoken, apart from the Spanish that prevails in continental Latin America, for David Cox both regions are linked and have a shared opportunity.
“I think the Caribbean shares a lot in common with Latin America in this area”, says Cox. “In both, there are pockets of populations that are spread over large geographies, which are located in remote or rural areas and there is not a sufficient density of population to make the investment in the networks that is necessary to reach those areas, economical. In other words, it is very expensive to extend the networks into certain parts of Latin America, because perhaps, there are pockets of population, but the number of people who live there are just not enough to support the cost of extending the network into those areas. And typically it is the areas or communities which need connectivity the most, because there are areas where they are high numbers of poor or rural communities who are unconnected and they need the connectivity, particularly for schools at a range of states”.
What are the best public and regulatory policies to overcome those gaps?
“There are a number of things that governments and operators need to do to try to overcome some of these challenges: the first thing is that good policies on spectrum from the regulatory side can really make a difference. Where it’s difficult to build a fixed network, for example, into a remote community, maybe it is possible to give an operator or a number of operators spectrum discounted or reduced rated to allow these operators to use that spectrum to provide wireless broadband services. That can often be a way to provide broadband speeds to communities that are unconnected in a way that is economical for the operators and also for the community, and arrangements can be made, agreements can be reached on the cost and how operators are allowed to charge the services on those communities, but the idea would be, even is very expensive for the operators to run the network themselves to provide a fix service, providing spectrum that can be repurposed or utilised by high speed mobile broadband services who can fill the gaps. That’s one thing regulatory policies can help, and, in the age of 5G, but even in 4G LTE, you can reach the sort of speed necessary to allow communities that previously didn’t have any connectivity to get good enough connectivity than they can really join the Internet and have a good experience, and access information without a great deal of difficulty.
I think there is also a very good model where regulatory authorities and governments subsidise the extension of networks only to areas where that problem exists. In other words, is a remote community, we have a small population, the unconnected have no connectivity and the cost to the operator for extending the network is so high, that in those limited circumstances, governments can say: ‘We can subsidise part of the cost to the operator of extending the network there, we know that in this particular area or these country, there are enough potential subscribers there, that they would take some service if the service was available, so, you can get customers that you didn’t have before, and we will provide some of the cost to you the operator to get your network there, and governments can do that in a couple of ways: one is that they can provide a subsidy through a universal service fund, if it exists, and remember what are we talking about is not that government funds all of the cost of the network, but just provides a portion of it. If it costs a million US dollars to extend the network from the city center into a remote community, government can provide an universal service subsidy that takes care of part of that cost, wether is 35 or 50%, and then the operators puts in the rest of the cost, but the fact that is getting that subsidy makes the cost acceptable to the operator to put in that network, and then over time, even if takes a lonely time to recoup some of that investment, it will get it back eventually, because there are customers that are ready to be accessed and to be reached.
And what can governments and operators do?
And governments can also do this and regulatory authorities can play a strong role in doing this by providing tax concessions or some taxes incentives to the operators, again, not for services in the city centers where is profitable, but merely to help the operator expend the money to get into those areas where there is no connectivity at a rate that they wouldn’t be able to do it without the help. So, if governments can give them a reduction on the license fees, so they can repurpose some of this money, some of these funds, into investing in networks.
Governments can also give them, instead of a reduction of the licenses fees, reduce some taxation in proportion to the amount that they intend to invest, and that can often be a good way to spur on some of the investment.
There is one other policy that I think is very useful in the discussion about getting people connected during the pandemic. I’m sure this is true for Latin America, but it is also true for the Caribbean. We have found that, even where the network is available, there are people who can not afford it and people who don’t want it, even do is available. Now, the people can’t afford it, they may not be able to afford the end devices, the smartphones or the laptops that are necessary, or they may not be able to afford the price of the connection, because it would be out of reach for that household, and, again, I think that operators have a duty to try to come up with new propositions, new products, that are targeted to those kinds of households.
So, you know, not everyone needs a high bandwidth connection, not everyone needs 25 Mbps or 100 Mbps. Some people, you know, for students, who are at home, or maybe just want to join a class, they may be able to get by on a 10 Mbps connection, and you know, 2 Mbps for upload and 5 Mbps for download, whatever is appropriate for that particular market, until operators can develop Internet services packages that are low price, that offers minimum speeds of connectivity that reduce the price at which we sell the normal package, and sometimes, and we have seen this in the Caribbean, many operators are in discussion with governments in the region, which sometimes can say: “We will provide a subsidy to pay for a section of that cost, to connect, if you will connect a certain category or a certain number of households of people in a particular community. Maybe households which do not burn above a certain threshold, where there is a child at home, where they have some income, but not a lot of income, not a lot of disposable income. And governments can say: ‘These categories of customers are the most vulnerable for us, we need to make sure these people have connectivity, these students, for example, have connectivity, and so we will pay some section of the cost if you provide it with a low cost Internet connection’. And I think that is a very good strategy for both operators and for governments to adopt, in order to get as many people connected as quickly as possible, because that is the key thing. We want to get young people, who are home because of the pandemic, communities that have been stranded because of the pandemic, we want to get them connected at prices that are possible for them, and operators have the responsibility to work with those communities to try to meet those needs.
There is this other category of customer, who, even do there is the connectivity, doesn’t want the service. Sometimes you may find there are people who say, ‘I don’t want a smartphone, I have no need for the Internet, I don’t see the purpose of having an Internet connection. And there the challenge is much more difficult, because perhaps those customers would take the service if they got the service, if they knew the value that is brought to them. And that really is a demand issue, how you educate the customers so they can recognize the value of an Internet connection. You and I, we assume everybody knows why it is important to have an Internet connection, but we know that that’s just not the case. We know that some people don’t understand that. So, there is some work to be done to educate people in why having an Internet connection is valuable, particularly during the pandemic.
How to attack the awareness and affordability issues?
Those two factors: affordability and, what I call demand, desirability of having the connectivity, I think that governments could help to catalyze the demand for digital services if people knew that more government services were available online. So, for example, let’s say that you have a rural community in a country in Latin America where people have to travel hours to get into the city, to get basic documents, like a birth certificate, or their passport, or their drivers license, or they want to pay their taxes and they need to take a long train ride or a long drive, or whatever transportation is available in order to physically go to these institutions, to get the things they need. Most people need a passport, if they’re travelling, or most people need a drivers license, for example.
Now, even if it was possible, for those people to be able to apply for their drivers license online, from where they are. They never have to take a bus, they never have to drive into a mayor city, they never have to take a train, to spend three hours, whatever they need to do previously, they might start then to recognize that: ‘Perhaps, maybe I should have a smartphone and also maybe I should have a good connection at my home. Also the pandemic has helped people recognize why it is important to have an Internet connection. Before the pandemic, there were some people who think they could get by without a connection. Now, because of the pandemic, more and more people are beginning to recognize that it is crucial to have a connection at home, to know what is happening, to get information, to be able to access services, and a range of things. So, the pandemic is doing some of the work, but I also think that governments working harder to make services online will help to increase demand for those people who don’t recognize the desirability”
And on the affordability issue, I think that all of the operators in Latin America and in the Caribbean have now recognized that affordability is, we have always known that affordability is a key issue, everytime we speak with governments we understand affordability is a mayor problem, but all of our members have recognized a great urgency with trying to solve this issue, so, all of us are working harder to create new packages to provide new connection and provide new services to customers that target this issue of affordability.
And CANTO is trying to play a major role in this area, by being, first of all, a forum for discussing the policies that we are discussing today, to help educate policymakers, governments, ministers of education, prime ministers, presidents, on some of the strategies that are required in order to reach the digital divide and that conversation is helpful, because not everyone has the best policies in place to promote broadband penetration. And then, CANTO is also at the heart of lobbying governments from all across the region on some of the specific things they can do in their own countries to try to improve penetration rates, and provide wider access, and the last is that it brings together all of the best minds from the industry to discuss these issues and to figure out what are some of the things that industry can do in order to address these challenges.
What’s the state of the Caribbean on 5G?
We are already working on 5G deployment. I think that the Caribbean, and probably Latin America, are located in a part of the world that is behind. We are always trying to catch up. And I think that actually, all of our operators are interested in trying to deploy 5G as quickly as we possibly can, because we recognize that 5G is transformational for us, but also for the countries: 5G will actually help some of the technological problems, filling some of the gaps. Latin American governments are concerned about it. We recognize that 5G will help the countries to keep up and leap frog where they are in their technological journey.
And here is the problem. The problem for us in the Caribbean is that a number of regulatory agencies are way behind. We are behind. So, many operators are saying: ‘We are prepared to make the investment on 5G. To bring 5G to your countries. You need the spectrum in order to do so, and what we are finding is that spectrum policies in the region on 5G are way behind. So the regulatory authorities just have not set the framework, and this is really hurting the region’s technological development. It is keeping us back. Other parts of the world are leaving ahead. We do have some success, of course, in Suriname, where we had the first launch of 5G in the Caribbean and in many countries. There have been some modest successes, but, we need to get the 5G rolled out across the Caribbean region, and this is being retarded by regulation. Our regulatory agencies are just not quick enough at releasing spectrum. So, this is a major problem for all of us.
What do Caribbean regulators need to do to boost 5G rollout?
They need to make spectrum available. They need to identify spectrum that is dedicated to the use of 5G and where there is any spectrum that is appropriate for 5G that perhaps may be used in some other area wether is for digital broadcast or some other activity. They need to prioritize reforming that spectrum, changing the use, so that spectrum can be awarded for operators to roll out 5G. And they need to do this very quickly, beginning by reexamining their national spectrum policies, and national spectrum plans. They need to consult with industry, so that industry can give them an idea or what their needs are, and then they need to make a decision to make the changes to the national spectrum policy, identify the spectrum that they won’t prioritize and they need to start releasing the spectrum. This is the key issue: getting regulatory agencies in the Caribbean to understand the urgency of releasing spectrum is very difficult. There are some operators in the Caribbean who are still fighting with regulators over 4G spectrum. This is how bad it is in a few markets. Unless the Caribbean understands why spectrum policy needs to be reformed, why 5G rollout needs to be prioritized, the development of the Caribbean will be retarded in terms of its digital transformation journey. I think that Latin America may have the opportunity to leap frog if the countries are more efficient at releasing 5G spectrum, but from our major concern here as operators is that getting adequate spectrum in order to launch 5G services is proving to be a challenge across most of the Caribbean”
What’s the future of the Caribbean and Latin America in terms of digital transformation?
“In the Caribbean I think we have a great deal of solidarity with Latin America, in terms of the ambition of our people, our governments and our operators to transform our societies into true digital economies. We are in solidarity in terms of the ambition that we have. It is a shared aspiration between Latin America and the Caribbean to transform our societies using these technologies. We recognize their incredible potential. And of course, the other very important point is that the transformation for the Caribbean and Latin America is even more urgent now. ¿Why I’m saying that? Because the analysis of the World Bank shows that those who will suffer the greatest increases in poverty, in economic and social dislocation will be in the Caribbean and Latin America. We are the ones who will have the greatest struggles. We are going to be impacted in a disproportionate manner than rich metropolitan countries, and so the need for us to fix this problem, for us to leverage technology to help us is very urgent. There was some research done, by Unicef I believe, which last year, suggested that children in the region as a result of the pandemic have missed almost a year in school. Our societies run a risk of being left behind because of this pandemic. And so, the need for technological transformation, digitalization, for leveraging that technology is greater now in the Caribbean and Latin America than it has ever been before. So, we in the in the Caribbean are experiencing the same pain that our neighbors in Latin America are experiencing, we are going through the same suffering and I also believe that the solutions for both are very similar, and so, we need to cooperate, our governments need to cooperate, we need to cooperate on some of the policies, particularly on spectrum, and that could have a huge impact, but also in policies around taxes and pricing and we need to learn from each other, what are the best practices, if there is a strategy that has worked in the Dominican Republic, or in Chile, or in Colombia, that is relevant to the rest of us that has worked, then we need to learn about that strategy and use it, to see if we can have the same impact in the Caribbean and our markets. So we need to share that information. My final message is that we have a shared challenge, but, also, perhaps a shared opportunity to try to drive the right outcomes”.