English and español, the GSM Association (GSMA) points out that "mobile connectivity remains the main form of internet connectivity, particularly as – for many – it is the only form of connectivity. At the end of 2021, the number of mobile internet users in Latin America exceeded 380 million, equating to 60% of the population. However, another 36% live in areas covered by mobile broadband networks but do not use mobile internet services (known as the usage gap)."
The GSMA, which is a UK-based organization that represents the interests of mobile operators worldwide, also notes that "Addressing the main barriers to mobile internet adoption, including affordability, safety and security, and knowledge and digital skills, will extend the benefits of the internet and digital technology to more people in society. This requires a concerted effort by the mobile industry and its partners."
What is more, "4G is Latin America's leading mobile technology, with more than 410 million connections at the end of 2021. Take-up has more than doubled over the past five years driven by network expansion and efforts by mobile operators to transition users away from legacy networks."
The GSMA also notes that "5G is currently at a nascent stage in Latin America. By the end of June 2022, seven countries in the region had launched commercial 5G services. The current adoption rate is around 1% of total connections; this is expected to grow to 11% by 2025."
The acceleration of 5G adoption will create new opportunities for companies developing mobile software as a service platforms optimized for the Latin American market. The report says "The Covid-19 pandemic highlighted the huge opportunity for digital technology to disrupt legacy business processes. This, in turn, is driving investments in the tech start-up ecosystem." Encouragingly, "In 2021, Latin American start-ups raised a record $19.5 billion in funding – more than three times the amount raised in 2019. This resulted in 18 start-ups in the region achieving 'unicorn' status (start-ups with a market value of $1 billion before going public). Fintech remains a significant driver, but several other sectors, including education and e-commerce, are seeing a growing share of investments."
The report also explains how "the metaverse, a parallel virtual world populated with avatars, has gained significant mindshare in Latin America. As such, the region is attracting the attention of global metaverse ecosystem players, such as Meta. In addition, a growing number of local ecosystem players, including government agencies, have announced activities across the metaverse value chain."
With respect to the mobile sector making a significant contribution to the economy and wider society, the GSMA says: "In 2021, mobile technologies and services generated 7.4% of GDP in Latin America – a contribution that amounted to more than $345 billion of economic value added." Moreover, "The mobile ecosystem also supported more than 1.6 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with almost $30 billion raised through taxes on the sector. Over the period to 2025, mobile's contribution will grow by around $20 billion, as countries in the region increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services."
The report's concluding chapter focuses on how policy decisions are key to accelerating Latin America's digital future. I support the GSMA's assertion that "Unlocking the potential of mobile connectivity requires policy measures to support network investments and improve the affordability of digital services for consumers. Policy priorities should be based on a country's local context and level of digital development, which requires granular and reliable data. There is also a need to promote digital skills and education across all parts of society."
What opportunities are you seeing in the further digitalization of the Latin American mobile economy?
Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.
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