Latin America Is the Next Frontier for the Internet, Analyst Predicts

The Internet will shift from its decidedly U.S.-centric focus to a broader international one in the coming years, with Latin America being a major source of growth.

But that region faces significant challenges, an industry analyst told the LatinChannels seminar last week in Newport Beach.

Currently, Latin America has 3 million Internet users, about half of whom get online at home, a rate that is somewhat lower than the U.S. rate of home Internet use, said Annika Alford, research manager at International Data Corp. of Framingham, Mass.

The area’s poor technological, financial and logistical infrastructures mean that electronic commerce may be slow to take off there, Alford said.

Electronic commerce currently depends on the ubiquity of credit cards, which are nowhere near as prevalent in developing nations. Also, delivery services such as United Parcel Service of America Inc. and Federal Express Corp. make selling on the Web a snap in the U.S. But in Latin America, shipping hassles and customs can make sending packages costly. And the cost of Internet access in Latin America, as in other countries with monolithic telephone systems, makes it unaffordable.

And then there is the region’s faltering economy, which Alford characterized as a “short term” issue.

Still, the nascency of the Internet and the possibility of leapfrogging older technologies by building from the ground up means that regions like Latin America are rife with opportunities that make the waters worth testing.