The Internet in Argentina: Study and Analysis of Government Policy
By Thierry Chaumeil
As in the rest of the world, the Internet has found a receptive
audience in South America. The firm Nazca, in a recently released
document, says that although South America currently has only
8.5 million Internet users, usage of the Internet increased by
788 percent from 1995 to 1997.1 It also speculates that the number of Latin American Web sites
soon should reach 500,000, and the number of users, 34 million.
PricewaterhouseCoopers is calling Latin America "the next frontier
on the Internet.2
The trends are registering in Argentina, where the number of Internet
subscriptions is growing at a high rate. Recent figures provided
by the Argentine secretary of communications indicate that the
number of commercial Internet accounts grew 100 percent during
the past year.
However, behind the percentage points and forecasting is another
story of the Internet in Argentina. At the end of 1998, only 230,000
people had Internet accounts,3 of which 40-50 percent were connected through academic institutions.
Commercial subscribers, whether individual or organizational,
represented only 120,000 accounts, making for a total population
of approximately 35 million people.
It is worth mentioning that Internet subscriptions often are shared
between several users or families of users--which means the actual
number of people with access to the Internet is higher than the
number of subscribers--but the number of Argentine Internet users
remains relatively low--far from the connectivity goal of 20 percent
of the population4 put forward by professionals and well under the forecasts of
pessimistic analysts who believe the market in Argentina is at
about 900,000 subscriptions.
The Argentine government is well aware of the need for its citizens
and businesses to become part of the global information society,
and important efforts are made to reach that goal. However, the
disappointing development of the commercial Internet in Argentina
leads us to point out the reasons for such failure that, in turn,
will help us understand why the government's efforts are not yet
crowned with success.
OBSTACLES TO DEVELOPMENT OF THE INTERNET IN ARGENTINA
Development of the Internet in Argentina is impaired by two categories
of obstacles. The first set of obstacles is societal, and it is
linked to Argentina's status as an emerging economy and thus can
be remedied only in the long term. The second obstacle is the
Argentine telecom legal framework, which can be modified easily
in the short term.
With a per capita gross domestic product (GDP) of $9,071, Argentina
is the richest country in Latin America, surpassing Brazil, Chile,
and Mexico.5 However, the global wealth of Argentina remains far behind other,
more advanced countries such as those of the European Union, whose
per capita GDP reached an average of $21,873 in 1996.
Although it has been growing at an impressive rate since the early
1990s, Argentina's economy remains fragile. The rate of unemployment
is high--at about 14 percent--and the external public debt of
the country still strongly limits the government's budgetary freedom.
The status of the emerging economy of Argentina has direct and
indirect adverse effects on development of the Internet in the
The first direct obstacle is the ability of the people--either
economically or technically--to actually access the Internet.
For example, the average monthly per-capita wage in Argentina
is $500, whereas the price of the least expensive computer is
about $1,000. The ratio of telephone lines per inhabitants is
18.9 percent,6 which is low compared with more advanced countries, where it
is usually well above 50 percent.7 In addition, in spite of the telcos' efforts in the past few
years, available bandwidth remains insufficient due to underdevelopment
of the telecommunications networks.
The second direct obstacle to development of the Internet lies
in the capacity of the people to manage and take advantage of
new technological tools. People must receive proper training to
gain the minimum required skills. As a point of comparison, on
average, whereas the most developed countries already spend $115,200
per year per pupil on education and training,8 the Argentine state spends only $12,966. There exists within
the country a fear that future generations may not today be receiving
the proper training to have access to--and take advantage of--the
In order to truly understand the obstacles that are indirectly
impeding growth of the Internet in Argentina, one must take into
account both the absence of a developed Argentine capital market
and the high cost of credit, both of which limit growth of technology
If the U.S. technology-development model teaches us anything,
it is that the success of the Internet is due in large part to
the synergy between innovation and venture capital--or the ability
to finance or find adequate funding for technology start-ups.
In Argentina the dearth of financially strong technology start-ups
may be at the heart of the slow growth of the Internet.
Argentine Internet service providers (ISPs) also are important
to look at in an examination of indirect obstacles to Internet
growth. In Argentina they are divided into two categories. The
first is a group of five companies associated with the telcos
or with important multimedia groups, and it has more than two-thirds
of the ISP market. The other is a group of approximately 200 small
ISPs, which share the rest of the market. Without proper financial
backing, the small ISPs are not able to compete directly with
the main providers because they cannot mobilize enough capital
to either finance their growth or keep up with the constant technological
change in order to provide state-of-the-art access to the Internet.
The access and cost difficulties that are keeping people off the
Internet, combined with lack of proper financing for innovative
technology start-ups, may explain why the number of Web sites
featuring Argentine-specific content is low. The last available
figures indicate there are only 4,000 Argentine Web sites.9
The flourishing of local content is critical to development of
the Internet in Argentina, just as it is in any country. The absence
of local content has a negative impact on the curiosity of the
people and therefore limits their interest in the Internet as
a whole. In addition, when desired information is available only
in a different language, the value of the Internet as an information
provider becomes limited. Finally, lack of region-specific content
renders the country dependent on its international connections
for access to information.
In many instances, however, those international connections are
managed by a national telecom company, which traditionally enjoys
a monopoly situation. As a consequence, prices are well above
those market prices available in competitive systems. Thus, the
state of telecom regulation in a country becomes a relevant factor
in an analysis of growth of the Internet, and as far as Argentina
is concerned, it certainly is one of the most important reasons
for the limited development.
The Negative Impact of Telecom Regulation
Argentine telecom regulation
Until the end of the 1980s, the Argentine telecom system was in
the hands of a state-owned company called Entel. Plagued by inefficiency,
overstaffed, and unable to provide the country with telecom facilities
suitable for the needs of the citizens and businesses, the company
was privatized by the government in November 1990.
For privatization purposes, Entel was spun off into two companies,
each in charge of half of the Argentine territory: the North Company,
including the northern part of Buenos Aires, and the South Company,
integrating the southern part of Buenos Aires.
Following an international bidding process, 60 percent of the
shares of the North Company were sold to a group of investors
led by France Telecom and STET of Italy and later renamed Telecom
Argentina (Telecom). Sixty percent of the shares of the South
Company were sold to another group of investors, led by Telefónica
de España, and subsequently renamed Telefónica de Argentina (Telefónica).
In exchange for their commitment to invest in modernization of
the country's telephone system, the Argentine government granted
the telcos a monopoly over basic voice telephony in their respective
territories of activity. The government also granted a monopoly
over international inbound and outbound data and voice traffic
to a joint subsidiary of Telecom and Telefónica called Telintar.
The telcos' monopolies are scheduled to end on November 8, 1999,
when the Argentine government will award two additional licenses
for the provision of local, long-distance, and international voice
services. One year later, three other licenses will be granted
for the provision of local, long-distance, and international services.
And it is not before November 2001 that the international telephone
services will be totally liberalized.
As of today, Argentina's international connections with the rest
of the world are managed by Telintar, which is in the process
of being spun off between its two shareholders and already operates
under the names Telintar Norte and Telintar Sur--known as the
Under the privatization law, data services--including provision
of Internet services--have been under a regime of free competition
since 1990. That free-competition status is nonetheless subject
to the obtaining of a prior license from the National Communications
Commission and to the respect of Telintar's monopoly position
as gatekeeper of transborder data flows. Since January 1, 1999,
the international connections toward the countries of Mercosur10 are totally liberalized.
As a consequence, and with the exception already mentioned, until
further liberalization of the telecom services, the ISPs are not
allowed to choose international-connection providers other than
The negative consequences of a monopolistic regime
The ISPs' access to international connections is subject to the
monopolistic behavior of the Telintars. Not surprisingly, the
first consequence is the artificially high prices the Telintars
charge their clients, the ISPs, which also suffer from limited
access to international bandwidth.
Prior to the 1997/98 reforms, Telintar charged up to $32,000 a
month for a 64 kbps international link. For the same bandwidth,
the price today is approximately $2,000. However, compared with
the price of international links available in a free-market environment,
the price for an equivalent bandwidth is still six to eight times
higher in Argentina.11 The high prices prejudice not only the financial wealth of ISPs,
which are obliged to limit their profit margins to offer Internet
services at a price acceptable to the consumers, but also the
financial wealth of universities and other nonprofit entities,
which cannot afford the international bandwidth necessary for
The absence of competition at the local level is also prejudicial
to Internet development in Argentina, where the vast majority
of users are connected through dial-up systems. The Argentine
telephone system has not yet adopted a flat-fee system for local
calls, which still are being charged on a pulse basis. The price
of the pulse is 49 cents, and according to the hour of the day,
a pulse corresponds to one to four minutes.
The monopolistic regime the telcos enjoy is also the source of
various anticompetitive behaviors regularly denounced by the ISPs.
For example, the telcos are prohibited from participating in activities
other than basic telephony. However, they created subsidiaries
with adequate financing, technology, and personnel skills dedicated
to the provision of Internet services against which the smaller
ISPs are not able to compete. More generally, in their relation
with the powerful telcos, the small ISPs complain that they do
not enjoy the same treatment as that granted by each telco to
its in-house ISP company.
As mentioned earlier, the Argentine telecom legal framework was
designed in 1990 for the purpose of privatization of the state-owned
telecom monopoly. The Internet and all of its applications certainly
were not contemplated by the regulator back then. The Argentine
telecom legal regime is a rigid framework based on a contractual
guaranty granted to the telcos that their monopoly will be protected
over a certain period of time. As of today, that rigid structure
is not adapted to development of the Internet and can even be
considered as counter-productive for two reasons. First, the monopoly
of the Telintars triggers artificially high prices and unnecessary
limitation of bandwidth. Second, the monopoly over basic voice
telephony enjoyed by the telcos prohibits the growth of Internet
It is understandable that in consideration for their investment,
the telcos' privileges had to be protected, but that protection--already
considered by many experts as no longer necessary--turned out
to be an important obstacle on the way to growth of the Internet,
and it presents a threat to integration of Argentina's citizens
and businesses into the new global information society.
The obstacles mentioned earlier were among the problems brought
to light at the First National Hearing on the Internet held on
August 6, 1997, and strongly criticized again at the Second National
Hearing. In the aftermath of the First National Hearing, the Argentine
government defined more clearly the scope of its global policy
toward the Internet and took several measures designed to encourage
THE ARGENTINE GOVERNMENT'S INTERNET POLICY
The Argentine government's policy toward the Internet is based
on two declarations of principles and is organized around three
axes: constant monitoring of the Internet, enactment of specific
regulations and the implementation of programs designed to help
the growth of the Internet, and reflection over the future challenges.
Two Declarations of Principles
The first declaration is that the Internet is a matter of national
Decree 554/97, dated June 19, 1997, declares of "national interest
the access to the Internet by the Argentine people, in equitable
social and geographic conditions, with reasonable costs, and with
quality standards in accordance with modern multimedia applications."
The decree also entrusts the secretary of communications (SECOM)
with broad powers to:
- develop a strategic plan for expansion of the Internet in Argentina
that achieves several public policy objectives, such as creation
of Web sites for Argentine public libraries, promotion of access
to the Internet by the educational system, and promotion of a
national telemedicine network
- analyze incorporation of the Internet within an analysis of the
definition of universal service
- analyze and propose alternative price policies in order to stimulate
and diversify use of the Internet
- encourage use of the Internet to support activities related to
education, culture, information, entertainment, and health
The second declaration says regulation of Internet content should
be hands-off. The Argentine government took note of the 1997 U.S.
Supreme Court decision of Reno v. ACLU,12 in which the Court held that the federal statutory prohibition
of so-called indecent language on the Internet violates the freedom-of-speech
protection guaranteed by the U.S. Constitution. Thereupon the
Argentine government adopted a liberal position regarding the
content of information available on the Internet and access to
that information by users.
Presidential decree 1279/97, enacted November 25, 1997, states
that the Internet is a valuable modern medium allowing the mass
diffusion of ideas. Therefore, the government expressed its wishes
to assist and participate in development of that medium--especially
by removing the barriers prejudicing its growth. It also expressed
its refusal to interfere with the production, creation, and diffusion
of the information circulating via the Internet.
Decree 1279/97 also states that the Internet is a medium protected
by the provisions of the Constitution that have to do with the
freedom of expression--like the press, radio, and television--and,
as such, shall not be subject to prior censorship or restriction.
In consideration of decree 1279/97, resolution 1235/98 dated May
22, 1998, requires ISPs to insert the following text into invoices
sent to users: "The National State does not control or regulate
information available on the Internet. Parents are recommended
to exercise reasonable control over the content accessed by their
children. It is advisable to consult your ISP to obtain suitable
advice on programs designed to prohibit access to undesirable
Monitoring the Internet
The SECOM tries to obtain continuous feedback from the country's
Internet users as well as its Internet professionals. As part
of that effort, resolution 81/96, dated September 6, 1996, created
the Internet Commission, in charge of drafting the regulatory
framework of the Internet. The commission "takes into account"
the opinions and advice of interested professionals.
There also has been established National Internet Inquiries, which
are directed toward individual users of the Internet. The inquiry
consists of an online form, available on the secretary of communications'
Web site,13 listing approximately 50 questions that address access to and
use of the Internet by each individual. The secretary of communications
currently is conducting the Second National Inquiry.
Partial statistical results of the Second Inquiry, based on 4,384
forms submitted from May 29 to June 16, 1998, were recently made
available to the public.14
In addition, the SECOM organized two National Public Hearings
on the Internet that took place August 6, 1997, and September
24, 1998. The hearings brought together panels composed of authorized
representatives from every sector associated with the Internet,
such as the telcos, the ISPs, the universities, the government,
the provinces, and the users. The first hearing provided the government
with useful comments and information on the state of the Internet
in Argentina and served as a starting point for the wave of subsequent
reforms initiated by the SECOM.
Regulations and Programs Designed to Help the Internet Grow
Taking into account the obstacles to development of the Internet
brought to light by the First National Hearing, the SECOM enacted
several regulatory provisions and set up several public utility
proj-ects in order to facilitate access to the Internet by the
largest number of people.
The Internet Regulatory Framework
From 1997 to 1998, the SECOM approved several regulations that,
taken as a whole, constitute a comprehensive regulatory framework.
1. Reduction of costs of connecting to the Telintars
With the goal of bringing the costs of international connections
to a level closer to the standards applied in comparable or more
advanced countries, resolution 2765/97 of September 17, 1997,
imposed on Telintar a reduction of approximately 50 percent of
its prices billed to the ISPs for international connections.
2. Decrease of dial-up connection costs
Resolution 2814/97 dated September 18, 1997, established a special,
dedicated number--0610--named Call Internet, through which telephone
calls between the end user and ISPs are dialed.
By means of connection of the ISPs via that number, users may
save up to 50 percent on their dial-up cost.
The resolution also establishes a Register of International Connections
Requests to monitor strict compliance with its terms.
By means of resolution 499/98, dated February 20, 1998, the SECOM
approved the current promotional scheme of tariffs proposed by
Telecom and Telefónica for dial-up connections between Internet
users and their ISPs via the 0610 number. The prices--in force
until January 1, 2000--apply to the whole territory of Argentina.
Schools, national universities, and popular libraries benefit
from an additional discount of 50 percent.
Resolution 1617/98, dated July 13, 1998, obliges ISPs to send
to all clients an e-mail message informing them of the existence
of the 0610 number and its corresponding discount. The resolution
also creates a database register of 0610 number requests submitted
by schools, national universities, and popular libraries.
3. Contractual relations between ISPs and telcos
ISPs and the Telintars: Resolution 97/96, dated September 16,
1996, obliges Telintar to provide international Internet access
connection for every ISP requesting such service.
Resolution 194/96, dated November 7, 1996, adds that Telintar
must provide international Internet access pursuant to the technical
conditions requested by the ISP, provided they are reasonable,
technically feasible, and adequate for development of the ISP's
Resolution 194/96 also indicates that the ISP applicant is free
to ask for a transparent, exclusive, and dedicated link and that
it is not necessary to be an actual holder of a license to start
negotiating with Telintar.
ISPs and Telefónica/Telecom: The aforementioned resolution 499/98
approved a document called Access to the Internet, which is the
model contract that must be used between the telcos and the ISPs
until January 1, 2000. The two-page document defines the economic
and technical relations between the parties, such as prices of
lines, conditions of interconnection in the metropolitan area
of Buenos Aires, and the offer of migration from analog to digital
Public interest projects
In the past few months, the government has taken several initiatives
to develop the Internet in areas considered important to the country.
1. Access to Internet through nonprofit services
By resolution 1246/98, dated May 22, 1998, the government gives
the opportunity for any governmental or nongovernmental organization
to provide Internet access services when such services are provided
without intention of profit.
2. The Internet 2 Argentina project
Inspired by development of a high-speed data network in the United
States called Internet 2, resolution 999/98, dated April 6, 1998,
approved development of a similar network called Internet 2 Argentina.
Pursuant to the resolution, the new network will have educational
and scientific purposes and will be oriented toward development
and use of advanced applications for scientific and technologic
research, academic activities, telemedicine, and multimedia digital
libraries. The technology standards used will correspond to those
elected by the most advanced countries for their scientific and
This resolution also establishes the Committee for the Promotion
of the Consortium Internet 2 Argentina in charge of implementing
a pilot program.
Resolution 1550/98, dated July 13, 1998, creates the General Coordination
Board of the Committee for the Promotion of Internet 2 Argentina.
The board is in charge of several organization, promotion, and
administration tasks, including negotiations with the U.S. Internet
The General Coordination Board will be composed of various persons
appointed by the resolution itself, a representative of the minister
of culture and education, and individuals representing public
and private universities, centers for scientific research, telecom
companies, and computer companies.
3. The telemedicine project
Resolution 1357/97 creates the telemedicine area in order to drive
nationwide development of experimental applications of the Internet
in the field of telemedicine. The project consists in the connection,
through videoconference systems, of several main hospitals and
medical schools in isolated locations in the country.
The experimental network, based mainly on integrated-services-digital-network
(ISDN) technology, contemplates both educational and practical,
real-time telemedicine applications.
4. The email@example.com program
Decree 1018/98, dated September 1, 1998, sets up a program for
the development of communications. It is called firstname.lastname@example.org
and has a budget of 12 million pesos ($12 million).
The objectives of the program are:
- to promote development of the telecom infrastructure throughout
the country in order to provide universal access to that infrastructure
in equitable geographic and social conditions
- to stimulate development of national and regional telecommunications
- to promote universal access to the Internet and to information
- to promote, on a national scale, creation of community technology
The SECOM will be responsible for the planning, direction, and
evaluation of the program--in coordination with the National Communications
The SECOM also signed an agreement with the International Telecommunication
Union for the study, design, execution, and administration of
the first 500 CTCs. CTCs are technology units that are located
in areas isolated from urban centers or those that have low-income
populations. The units are designed to be public resources giving
local citizens access to such services as e-mail, fax, teleconferences,
virtual libraries, and public telephone.
At present, a handful of pilot programs already have been implemented.
For example, the Villa Angelelli Program, near the city of Córdoba,
provides a technology center with a virtual library, Internet
access, and a videoconference system for a community of 500 people
with low income, among whom 60 percent are children.
5. Internet in the educational system
Initiatives concerning connection of the educational system are,
for the most part, under the responsibility of the Ministry of
In 1994 the Ministry of Education implemented successfully the
RIU15 program linking Argentina's national universities through a dedicated
network. Through that network, it is estimated that about 100,000
members of the academic community have access to the Internet,
representing the largest group of Internet users in the country.16
Argentina's research centers also are connected together, and
a project named Intersur currently is under development with the
objective of linking the main research centers of the Mercosur
It is anticipated that the Ministry of Education will release
a project aimed at linking 44,000 Argentine schools--private and
public--through the REDES network.17 Such a network should enable users to take advantage of all of
the education services available online and will be managed at
the provincial level.18 The SECOM also is developing programs with the goal of connecting
public schools to the Internet for free.
In opposition to the rather disappointing growth of the commercial
Internet, development of the Internet in the education community
may be considered successful.
Reflection on Future Challenges
In the next few years, but to a certain extent already today,
the Argentine government will confront new regulatory challenges
concerning the Internet and, more generally, the ever-changing
world of telecommunications, although some of those obstacles
are not exclusive to the Argentine government and must be faced
also by the world community as a whole.
Issues related to convergence of technologies
The main source of difficulty during the coming years will lie
in the challenge arising from the convergence of technologies.
The digitalization of every communications activity--voice, data,
video, and audio--and the transmission of such information via
any kind of media--copper line, fiber-optic, or microwave--eventually
will blur the lines between the traditional communications businesses--phone,
data transmission, audio, and video--because any communications
operator will be able to provide a full panel of services.
As an example of that convergence, satellite digital TV recently
entered into the Argentine market, and in order to prepare Argentina
for the global transition from analog to digital TV, the SECOM
organized a Public Hearing over terrestrial digital TV,19 which took place in Buenos Aires on September 22, 1998.20 The provision of Internet services by digital TV operators is
among the critical issues concerning the new medium.
Another example of the difficulties triggered by convergence of
technologies is the issue of Internet telephony, which is now
provided by some operators in Argentina regardless of the monopoly
over basic voice and international telephony held by the telcos.
Except for the provision of article 8.1 of privatization decree
62/90 granting the above-mentioned exclusivity rights, no other
regulation has addressed the issue. There is a good case to argue
that IP telephony is not basic voice telephony and thus can be
provided freely by ISPs without infringing on the privileges of
the telcos over the traditional telephone business. Although one
still may consider that the quality of Internet telephony is not
yet good enough to compete directly with the incumbent telcos--and
later with the new licensees--that moment certainly will occur
sooner than expected.
As far as electronic commerce is concerned--and in preparation
for the Second National Hearing--a recent Communication from the
Internet Commission21 expresses an interesting opinion on how the Argentine government
should consider and regulate commercial transactions over the
First, the commission indicates that the private sector should
take the lead and suggests the government favor self-regulation
of the industry.
Second, the commission states that the government should avoid
unnecessary restrictions on electronic commerce, such as burdensome
regulations, administrative paperwork, taxes, and tariffs.
Third, the commission declares that intervention by the government,
when necessary, should be directed toward the drafting and enforcement
of a simple, constant, and foreseeable legal framework.
Fourth, the government should recognize the unique features of
the Internet, such as its decentralized nature and its bottom-up
Finally, the commission indicates that electronic commerce on
the Internet is based on a worldwide market and that no discrimination
should be made pursuant to the location of the seller or of the
For discussion purposes, the Internet Commission qualifies as
an "important project" in terms of the model law on electronic
commerce drafted in 1996 by the United National Commission on
International Trade Law.
Regulation of competition in the telecom sector
The regulation of competition in the telecommunication sectors
is another issue faced by most of the countries in the world,
especially in the period of transition between the monopoly regime
and the free and full competition between several operators of
In Argentina the telecom sector traditionally is rooted into a
monopoly regime and regulations always were directed at protecting
it. From the 50-year monopoly of Entel until the period of exclusivity
enjoyed by the telcos, the telephone system never has been the
subject of competition. On the contrary, data have been subject
to competitive status since 1990.
Another characteristic feature of Argentine legal framework is
the absence of a developed antitrust law. In order to remedy that
absence, resolution 1460/98, dated July 3, 1998, issued a consultation
document on restrictive commercial practices with a view toward
designing a regulatory framework of competition in the telecommunications
The definition and the financing of universal service raise a
number of issues in various countries and in Argentina as well,
where problems are more acute than in the most advanced countries
because the relative number of Argentine people who don't access
to telecom services is substantially higher.
Resolution 1250/98, dated May 22, 1998, issued a consultation
document on universal service, but as of this writing, the Argentine
authorities have not made a decision on the question.
ANALYSIS OF GOVERNMENT'S ACTION
The Second National Hearing on the Internet held in September
1998 provided the government with some interesting feedback on
reforms introduced in the previous months.
As far as the 0610 number is concerned, on one hand, several speakers
were of the opinion that that measure favored mainly the telecom
operators because it expanded the average duration of navigation
time on the Web, but did not result in a substantial increase
in new users. On the other hand, figures show that in the past
months, not only did the number of users grow substantially, but
so did the number of ISPs willing to enter the market. As of July
1998, 25 percent of current users had started to use the Internet
in the previous six months22 and 98 new licenses had been issued for the provision of value-added
services after creation of the 0610 number, and 26 applications
Other critics were to address the scheme adopted by the telcos
to operate the 0610 number. The method implemented consists of
dividing Internet utilization time in alternative sequences of
15 or 18 minutes each. The first sequence is billed at full telephone
local price to the user, and the next is free. The scheme was
designed to develop the average navigation time of users. However,
an important number of Internet users are victims of frequent
communications cuts that oblige them to redial to get access to
their provider and to start another sequence billed at full price.
The general reduction and uniformization of costs throughout most
of the territory also facilitated a geographic rebalancing of
Internet access in favor of those living outside the city of Buenos
Aires.24 However, those living outside the major cities do not yet have
access to the 0610 discount and can be connected to the Internet
only through expensive, long-distance telephone calls.
As already mentioned, ISP representatives vigorously criticized
the behavior of the telco monopolies toward them as well as the
frequent distortions of competition. They also complained about
the high price of the rather scarce bandwidth and international
The forthcoming liberalization of the telecom system, starting
November 1999, will allow the entry of two new operators able
to provide national and international services, thereby ending
the incumbent two telcos' and Telintars' monopolies. Such competition
should trigger (1) an increase in the percentage of lines per
inhabitants, (2) an increase of available bandwidth at both the
national and international levels, and (3) a correlative reduction
in price for end users.
As far as network infrastructure is concerned, it is worth mentioning
that Argentina possesses one the most developed cable TV networks
in the world, and several alternatives to dial-up connections
already are available to users.25 It also is expected that in the short to medium term, several
international cable systems--such as Oxygen and Global Crossing--and
satellite facilities projects--such as Globalstar, Iridium, Ellipse,
and Teledesic--will be completed. Some of them are already operating
and are resulting in expanding the bandwidth available to ISPs.
As far as education is concerned, although one should praise the
efforts made to provide children with new educational tools, the
dispersion of initiatives between the Ministry of Education and
the SECOM may prejudice harmonious development of the system by
triggering certain inconsistent budgets and technology overlaps.
Such inefficient division among government services will needlessly
direct limited resources away from the Argentine public school
system, which remains plagued with basic structural deficiencies.
Regarding the community and other nonprofit programs adopted by
the government in order to provide Internet services for free,
it is necessary that they be managed with careful attention. Although
they should be encouraged because they allow people with economic
difficulties to have access to the information highway, in several
cases these government-subsidized initiatives may generate distortion
of competition to the prejudice of commercial ISPs.
The Argentine example shows that the Internet is not a communication
tool successful by reason of its own virtue. Several key condition
precedents must be met prior to witnessing Internet growth and
widespread use among the population of a country--especially if
that country lacks the technologic tools, the economic wealth,
and the financial facilities that are common in either the most
developed countries of Asia or Europe or, of course, the United
Argentina also is a case study of how an outdated telecom reg-ulation
framework may exert a negative impact on the development of a
new communication tool by maintaining artificial barriers, which
were designed for other purposes, preventing the business community
from providing the public with good services at an affordable
The Argentine government's policy also may be considered as a
model--positive or negative--for other countries. The SECOM's
action shows that an active policy toward development of use of
the Internet doesn't guarantee success--at least in the short
to medium term--because it cannot always eliminate strong economic,
legal, or cultural obstacles.
1. Cited in TelePress Latino-américa, September 1998, p. 32.
2. PWC July 1998 International Briefings: Latin America, available
3. La Nación, October 5, 1998, p. 13.
4. About 7 million people.
5. Per capita GDP 1997: Brazil, 4,881; Chile, 5,244; Mexico, 3,907.
Source: Warburg Dillon Read, Latin America Economics, December
6. Resolution SECOM 1250/98, annex 1.
7. In Sweden: 68.54 percent. Source: La Nación, August 24, 1998,
section 5, p. 23.
8. La Nación, September 28, 1998, p. 12, referring to a report
issued by UNESCO.
9. La Nación, October 5, 1998, p. 13.
10. The Mercosur is a common market established within Argentina,
Brazil, Paraguay, and Uruguay.
11. Figures issued from Abel Cattaneo's speech at the Second National
Hearing on the Internet.
12. U.S. Supreme Court, Reno v. American Civil Liberties Union
et al., June 26, 1997.
13. The form is available at www.secom.gov.ar/formularios/encuesta2.html.
14. The results of the inquiry are available at www.secom.gov.ar/encuesta/encuesta2_199807/indice.html.
15. Red de Interconexión Universitaria (University Interconnection
16. For more information, see www.riu.edu.ar.
17. .COM, August 1998, p. 48.
18. Brazil and Chile also are in the process of developing similar
programs named Proinfo and Enlaces, respectively.
19. SECOM, resolution 1945/98, dated September 4, 1998.
20. Minutes not yet available.
21. Annex to resolution 1616/98.
22. Second National Inquiry, www.secom.gov.ar/encuesta/enc-esta2_199807/indice.html.
23. Resolution 1616, Annex 1: Report from the Internet Commission.
24. Before creation of the 0610 number, 70 percent of Argentina's
ISPs were located in the city of Buenos Aires. As of July 1998,
50 percent of them were located in the rest of the country. Resolution
1616, Annex 1: Report from the Internet Commission.
25. The Second National Inquiry indicates that cable-modem companies
already hold almost 5 percent of the Internet service provider
market. See www.secom.gov.ar/encuesta/encueta2_199807/indice.html.
Thierry Chaumeil is an attorney-at-law (Paris) at the law firm
Negri, Teijeiro & Incera in Buenos Aires.