The government in Paraguay announced that it will start preparing a draft of new regulations seeking to liberalize the Internet market. The move aims to improve Internet penetration in the country, which currently sits among the lowest in Latin America, at 2.90% of total population at the close of 2008. The core changes in regulation will allow private competition, which may trigger the much needed infrastructure investments and tariff reductions. Currently, the state-owned company Compañía Paraguaya de Telecomunicaciones (Copaco) has made public its opposition to fully opening the market, claiming that the company has already invested in the deployment of fiber-optic networks and suggesting that the liberalization should be gradual and that the company should be granted a monopoly in the VoIP market and secure, stable revenue.
We believe that liberalization of the market is a critical step toward improving the connectivity prospects in Paraguay. Pyramid Research indicators show that in the current state-owned environment, Internet penetration is low given Paraguay’s GDP per capita and PC penetration and that the figures are also unimpressive when compared with those of liberalized markets in the region. Similarly, DSL tariffs in Paraguay are abnormally high compared with those of other markets in Latin America, making the service unaffordable for most of the population. We believe that a move to liberalize the telecom market in Paraguay will bolster adoption of both wired and wireless broadband Internet as well as services such as VoIP and IPTV.
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