Net Continues Growth in Latin America

The number of Internet users in Latin America will more than double from 13.3 million by the end of 2000 to 29.6 million by the end of 2003, according to an aggressive forecast just released by IDC’s Latin America research group.

According to IDC’s forecast, the compound annual growth rate for total adjusted Internet users in Latin America has been increased from 32 percent to 41 percent from 1998 to 2003.

“Among the many factors driving this growth is the latest phenomenon of free access being promoted by large ISPs, such as Telefonica’s Terra and Brazil’s Universo Online, and other ISPs such as IFX,” said Annika Alford, program manager for IDC’s Latin America Internet research. “We believe this trend is helping to enable faster penetration in the home and small business segments, and the greatest impact will be in 2000. However, the free-access plans are leading to a build-up of two-account users, which will moderate the total increase in new Internet users.”

Brazil led the region in the numbers of Internet users for 1999 with 41 percent of the regional market. Mexico was the second-largest market in the region with 21 percent of total users, followed by Argentina with 10 percent, Chile and Colombia with 6 percent each, and Venezuela with 5 percent. The rest of Latin America made up 12 percent of Internet users in the region.

An increase in the PC clone market device base in Brazil, Argentina, Chile, Mexico, and Venezuela also led IDC to issue an aggressive forecast. Other reasons for the big numbers in Latin America include:

• A huge Internet penetration drive in Mexico caused by Telemex’s “free PC” program, kicked off in 1999, which significantly expanded accessibility to the Internet in the country by lowering the largest one-time cost barrier — that of the PC
• A more competitive and consumer-focused Brazilian market, with average access rates dropping significantly and with a great amount of dot-com entrepreneurialism driving faster than previously forecasted home Internet penetration rates
• Initiatives undertaken by Chile’s government in 1999 to cut Internet-related telephony rates and to force inter-carrier traffic agreements
• Argentina’s telecom market liberalization, which is expected to further cut telephony rates and enhance availability of dedicated connections, with the greatest impact on users expected in 2001.