Latin America Logs On

Off the coast of Venezuela, three 400-ft. ships are laying down miles of high-speed fiber-optic cable capacious enough to carry 600,000 calls simultaneously. In a high mountain town outside Cuzco, Peru, a co-op of native farmers has found a way to get more than 10 times the local price for its potato crop by selling to a New York City organic-food store it found on the Internet. In the streets of Sao Paulo, fashionable women have taken to carrying around white West Highland terriers, the mascot of a free Internet-service provider called iG that, like the pups, has skyrocketed in popularity.

These are just a few of the signs of an Internet culture blossoming in Latin America, unevenly, in patchwork fashion, but in an accelerating rush. In just two years, the region has become the Internet world's next big thing. Though its connectivity rates are still low in comparison with the U.S.'s--only about 2% of Latin America's 500 million people are online, while more than half of Americans are--telecommunications analysts say it is the fastest-growing market in the world. They predict that by 2003 the networked region will reach anywhere from 29.6 million to 43 million regular Internet users and that these users will be spending as much as $8 billion for online purchases. Those numbers have entrepreneurs and investors in such a frenzy rushing to wire the region and reap those rewards that even the recent stock market gyrations in the U.S. caused only a slight pause.

To those familiar with the power of the Internet, the information revolution it brought to the U.S. is a mere ripple next to the tsunami it could cause in Latin America, a region fractured geographically, culturally, economically and socially. Of course, the area still holds serious practical challenges to Internet growth. While 7 of every 10 Americans have a phone line, only 1 in 10 Latin Americans does, and probably waited months or even years to get it. The average monthly income in the region hovers around $350, while computers and Internet service cost the same as or more than in the U.S. Eighty percent of Web content is still in English. And any e-commerce site trying to spread across the region still faces a snarl of cross-border tariffs and delivery problems.

But the challenges pale next to the effect that the Internet rush could have on everyday life in Latin America. For companies, it could slash costs, boost efficiency and broaden markets spectacularly. For governments, it could help burn through centuries' worth of encrusted bureaucracy and cronyism as well as prove a boon to overtaxed education systems. And for ordinary people, it could offer empowerment and social mobility never seen before.

It has certainly made a difference in Marco Antonio Mamani's life. Two years ago, Mamani, 33, was a jewelry craftsman in Cuzco, "selling what I could on a plastic sheet by the central square." Then a notice for a seminar on e-commerce by the Peruvian Science Network (rcp), a nonprofit organization that has spurred the launch of more than 500 public Internet centers across the country, piqued his interest. Taking advantage of rcp's free technical assistance and low use rates, Mamani set up a site hawking his jewelry online. Today he is a cyberentrepreneur. Nearly 80% of the $800 he makes each month is earned on the Internet, and he is "concentrating on international sales." The clerks at the local post office and courier service know him on sight. "There are not too many people like me in Cuzco, sending packages to Kuala Lumpur."

In some ways Mamani is typical of Latin Internet users. Most are male. Most use a computer chiefly for business purposes. Many get online not from home but from work, school or public machines like those available at Internet cafes and at sites like RCP's. Most are relatively young.

But in a couple of important ways, Mamani is unusual. As a Peruvian, he is outside the main markets of Mexico, Argentina, Chile and Brazil, which together account for more than 75% of Latin American Web users (Brazil alone has 55% of them). And while the money he makes is enough to support his wife and three children, it does not place him anywhere near what Latin American marketers call "Class A or Class B"--the wealthy or at least upper middle class that makes up the bulk of online traffic.

Mamani aside, the Internet has a relatively restricted clientele in Latin America because it takes a lot more money to Net surf there than it does in the U.S. Internet service providers (ISPs) charge access fees as high as $50 a month, and calls on traditional phone lines, which are mostly metered rather than per use, remain expensive. Across Latin America, these costs add up. Depending on the long-distance configuration, 20 hours of Web surfing can cost a single user between $20 and $300. Throw in at least $700 for a computer with a modem, and for many the information revolution is still a dream.

It is easy to see why these figures have many governments, development agencies and human-rights organizations worrying about a growing "digital divide" in Latin America between those with money and access to information and those with neither. To span that chasm, Latin governments are embarked on a number of initiatives that will help citizens join the wired world. Among them is a project funded by the Mexican state of Aguascalientes and the Inter-American Development Bank that placed computers in all public secondary schools in the state and wired more than half of them to the World Wide Web.