Colombia’s fastest fixed-line broadband internet is some of the most expensive in the world.
Consumers in the third-largest South American telecom market pay more than $160 a month for the speediest internet access, according to an OECD analysis of connections faster than 15 megabits per second (Mbps). The dollar figure is presented in purchasing power parity terms, which reflects an attempt to adjust for the different prices experienced in different countries:
For the record, 15 Mbps is some pretty fast connectivity. In the third quarter of 2013, the US average broadband speed was 9.8 Mbps, according to Akamai’s State of the Internet report (pdf). South Korea, which boasts some of the world’s fastest internet, sees average speeds of 22.1 Mbps. In Colombia, where the average speed is 3 Mbps, internet this fast is pretty much a luxury product. And, in light of the price, almost no one uses it—only 0.7% of the country’s broadband connections were faster than 10 Mbps in 2011, according to the OECD. In the EU in 2012, about 48% of lines were faster than that.
Still, nearby developing economies like Mexico and Chile manage to provide this kind of broadband speed three times as cheaply as Colombia. Why?
Lack of competition.
For the most part, fixed-line broadband is confined largely to big Colombian cities like Bogota and Medellin, where incumbent telecommunications firms still hold a ton of market power. The country’s largest provider of fixed-line services is ETB, which is controlled by Bogota’s municipal government. It has a 24% share of fixed line services for the country as a whole, but controls more than 66% of the lines in the Bogota region.
Some might argue that legacy firms offering over-priced, fixed-line internet don’t matter as much because of the rapid growth of mobile technology, which has the potential to bring connectivity to more people that fixed lines ever could. Unfortunately, mobile internet in Colombia suffers from some of the same structural constraints—including lack of competition—as wireline does. Colombian “mobile broadband services for smartphones, tablets and laptops are also among the most expensive compared to OECD countries,” wrote OECD analysts.