A Model of Wireless Broadband Diffusion in Latin America

Abstract

Countries in Latin America have lagged behind much of the world in telephone lines, but they have made up this gap through cellular networks. The limited wired infrastructure means that broadband access will more likely be achieved through wireless technology. In this paper, we argue that Latin America will experience a patchwork pattern of adoption where segments of society will have state of the art broadband access while many segments will be left behind without connectivity. We test this hypothesis through a simulation developed using iThink and show how 3G cellular and WiFi access could evolve in Latin America. Data cellular networks will have a slower take-up rate because of the high costs of the handset (as well as access fees); while WiFi, although imperfect will experience faster growth. The patchwork adoption framework argues that socioeconomic indicators affect the way technologies are diffused. We present data on these indicators for four countries: Brazil, Chile, Mexico, and Peru.

Keywords: Patchwork adoption, WiFi, 3G, Latin America, Simulation

JEL Classification: L86, L96, 010, 014, 054