• information infrastructure was distributed very unequally across geographic and social environments;
• the majority of small and medium-size businesses were not connected to the Internet; reasons frequently cited were high access costs, scarcity of information and value-added services useful to small firms, lack of security needed for conducting business in the digital economy, and lack of an entrepreneurial culture that makes daily use of the Internet;
• there was no plan to computerize the public sector, which delayed construction of a government information highway; and
• the quality and breadth of domestic content available over the Internet were very inadequate in general.¹

After the previous years’ slow growth, 1999 turned out to be a year of outstanding expansion. In agreement with the presidential commission's observations, access prices were indeed lowered and notable progress was made in relevant regulation and state computerization.

In May 1999 the Chilean government published a new regulation regarding tariffs on services offered by Telefónica CTC Chile (formerly Chilean Telecommunications Company, the largest local telephone company in Chile). According to the new regulation, Internet user charges were no longer based on the accepted metered local service price. Instead, a new concept was introduced, the tramo local, which means using a company's telephone network to originate calls that end in another company’s network. The price fixed for the tramo local portended a reduction of 62 percent in the cost of Internet access.

As a result of the regulatory change, the number of new Internet users exploded in the following months. It has been estimated that the number of users more than tripled from June 1998 to October 1999 to 625,000.²

Minutes of connection to the Internet increased to a larger extent during the same period—almost five times—and approached 287.5 million in October 1999. (Figures 1 and 2 illustrate the estimates of the developments.) Not only has the number of Internet users increased; average connection time has increased as well. It is expected that the number of users will reach 1 million during the first months of this year.³

New regulations aim to end the inefficiency in interconnections between access providers and to improve service quality. Right now, traffic between end points in Chile still goes in part through exchange points in the U.S. This typically is evident with small access providers.

Lack of unity and connectivity have characterized the Internet in Chile since its early days, when disputes among universities led to creation of two rival organizations: REUNA and Internet-Chile (now RdC). An important step toward unification was taken in recent years when a group of Internet providers initiated a multilateral Internet exchange, NAP Chile. The largest providers, CTC Reuna and Entel Internet, have established an interchange between themselves as well, and there are various other bilateral agreements. The problem, however, was never completely solved. A new regulation, issued at the end of October 1999, requires interconnection among the different Internet access providers. The industry was given a period of four months to fulfill the new requirement.⁴

Progress was also made on the legal front. A Supreme Decree for the public sector published in June 1999 legalized the use of electronic documents and digital signatures. Another bill passed in 1999 was the personal information protection law, which safeguards individual rights and protects citizens from the improper use of personal data. A legislative bill for electronic commerce is expected this year.

Modernization of the State

The government administration continues to modernize. A state intranet and Internet are being developed, and in 1999 the government instituted a central server that provides links to any server in the state field.⁵

The government’s new, electronic system of purchasing and outsourcing is expected to increase the information flow between government offices and private suppliers and to generate greater transparency in this market.⁶ The initiative follows the examples set by successful systems in other countries. Based on relational database and Internet technologies, the system will notify potential providers by e-mail about coming acquisitions; and any potential provider can register free of charge. In addition, information on every purchase is publicized, and the system allows the generation of historical summary reports. It is expected that the new system will result in annual savings of US $200 million.

Electronic services provided by the state in such areas as taxation and customs have been expanded, too, thereby simplifying procedures for individuals and businesses. Income tax return affidavits were already received over the Internet in 1998. In 1999 the Chilean Internal Revenue Service (SII) initiated projects for receiving Monthly VAT return forms (form 29) and income tax return forms (form 22) via the Internet. The number of declarations to the SII via the Internet has increased considerably since it was initiated in 1998.⁷ That year, 37,000 declarations were received; in 1999 the number grew to 182,000. This year it is believed that 400,000 declarations will be received over the Internet. Information flow will soon become bidirectional: the SII will offer access to a database on which it will be possible to learn what companies, banks, and insurers state about a person, and to correct such statements if necessary.⁸

Enlaces and Reuna2

Chile’s major success to date in the spread of digital information networks has been the fast and extensive diffusion of digital networks in educational institutions, such as the Enlaces (Connections) network linking primary and secondary schools and the Reuna2 high-speed network connecting the universities. ⁹
Enlaces was initiated in the early 1990s at Catholic University in Santiago as a pilot project. It involved primary and secondary schools—mainly in rural areas of the country, where educational resources are scarce. The broad goals were to enhance efficiency, quality, and equity in education. By 1995 Enlaces covered 100 primary schools and had acquired national significance.

In November 1998 CTC committed to provide free and unrestricted Internet access for all primary and secondary schools in the country. In 1999, 6,500 schools—consisting of all of Chile’s subsidized secondary schools and half of its primary schools—were to be connected to the Internet. Those schools instruct 3 million students—90 percent of the nation’s children.¹⁰ The most recent update mentions the successful connection of more than 2 million students.¹¹

As of 1999, Reuna2 was the fastest academic network in Latin America, with a trunk line speed of 155 Mbps.¹² Besides serving as a technological platform for the improvement of current Internet services, such as electronic mail, file transfer, and navigation of the World Wide Web, Reuna2 also studies new broadband services with the potential to enhance cooperative research and offer new ways of teaching and working. These services include large-scale room-to-room videoconferencing, multiple-site videoconferencing, interactive distance education, video on demand, telecommuting, and telemedicine.

Reuna2 now faces two primary challenges. The first is to ensure bandwidth availability and reliability of connections for universities and science and technology institutes across the country. The second is to participate effectively in initiatives such as the U.S. Internet2 project.¹³

References

¹ Informe Final de la Comisión Nacional de Nuevas Tecnologías de la Información y Comunicaciones, Chile, January 1999, http://www.modernizacion.cl.
² "Tras Baja de Tarifas: Fuerte Alza de Usuarios Internet en tres meses," El Mercurio Online, http://www.elmercurio.cl, 26 October 1999. The number of users is not the same as the number of clients; the given estimate assumes that for each client there are 2.5 Internet users on average, http://www.elmercurio.cl.
³ http://www.sii.cl/SIIPRENSA/2401/06.htm. Again, the number of users is not the same as the number of clients; the given estimate assumes that for each client there are 2.5 Internet users on average, http://www.elmercurio.cl.
⁴ "Tras Baja de Tarifas: Fuerte Alza de Usuarios Internet en tres meses," El Mercurio Online, http://www.elmercurio.cl, 26 October 1999; Utreras, F.I. "Diagnóstico, Evaluación, Perspectivas y Propuestas de Políticas para el Desarrollo de Redes de Información," July 1998, http://www.innovacion.cl; "Subtel exige interconexión de ISP para fomentar competencia," El Mercurio Online, http://www.elmercurio.cl, 25 October 1999.
⁵ See http://www.estado.cl.
⁶ Sistema de Información para Compras y Contrataciones del Sector Público, http://www.compraschile.cl.
⁷ See http://www.sii.cl.
⁸ "Javier Etcheberry: El impulsor clave de Internet en Chile," El Mercurio Online, 20 January 2000, http://www.elmercurio.cl.
⁹ See http://www.enlaces.cl; also see The second generation to REUNA—Red Univ ersitaria Nacional (National University Network), http://www.reuna.cl.
¹⁰ Informe Final de la Comisión Nacional de Nuevas Tecnologías de la Información y Comunicaciones, Chile, January 1999, http://www.modernizacion.cl; "Subtel exige interconexión de ISP para fomentar competencia," El Mercurio Online, http://www.elmercurio.cl, 25 October 1999.
¹¹ See http://www.sii.cl/SIIPR ENSA/2401/06.htm.
¹² The second generation to REUNA—Red Universitaria Nacional (National University Network). See http://www.reuna.cl.
¹³ Informe Final de la Comisión Nacional de Nuevas Tecnologías de la Información y Comunicaciones, Chile, January 1999, http://www.modernizacion.cl.