Broadband Tariffs in Latin America: Benchmarking and Analysis

26 Pages Posted: 8 May 2011 Last revised: 9 Sep 2014

See all articles by Hernan Galperin

Hernan Galperin

USC

Christian A. Ruzzier

University of San Andres (UMSA) - Department of Economics

Date Written: January 1, 2011

Abstract

We analyze tariffs for fixed broadband services in Latin America and benchmark against tariffs in the OECD. We also develop a new broadband development indicator (the Broadband Performance Index) that compares actual penetration rates with those predicted by our regression model. The results shows that broadband services in Latin America are generally expensive and of poor quality when benchmarked against OCED countries, and that Latin American countries are underperforming in broadband development after wealth, education and demographics factors are accounted for. We also provide price elasticity estimators for broadband demand in Latin America. The results reveal that an average price reduction of 10% would result in an increase of almost 19% in the penetration rate, equivalent to 4.7 million additional broadband connections. Finally we estimate the affordability of broadband services for households in a sample of countries in the region. The results reveal that sharp price reductions would be needed to achieve household penetration rates comparable to the OECD, and that public access initiatives will still be needed to provide services for the lowest-income households.

Keywords: broadband, tariffs, price elasticity, Latin America

JEL Classification: L51, L96

Suggested Citation

Galperin, Hernan and Ruzzier, Christian A., Broadband Tariffs in Latin America: Benchmarking and Analysis (January 1, 2011). Available at SSRN: https://ssrn.com/abstract=1832737 or http://dx.doi.org/10.2139/ssrn.1832737

Christian A. Ruzzier

University of San Andres (UMSA) - Department of Economics ( email )

Vito Dumas 284
B1644BID Victoria, Buenos Aires
Argentina

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