Mauricio Agudelo
Director de Transformación Digital, CAF- banco de desarrollo de América Latina y el Caribe-
Look around you. In the near future, all the objects around you, from appliances to production machines, will most likely be connected to the internet, and you will be able to control and manage them remotely. And I am not just talking about your cell phone, but also windows, lamps, toys, TVs, tables or any other tool or utensil. But this change will probable have the greatest impact on industries, operations, healthcare and smart cities.
In addition to bringing us closer to worlds seen before only in science fiction, this phenomenon will likely transform consumer dynamics, production processes, value chains across all industries and, ultimately, the way we relate to all objects around us. A practical example is that data such as temperature or energy can be taken and uploaded instantly, and when processed, can be used to make real-time decisions, e.g. on environmental pollution, traffic and industrial production lines.
The digital interconnection of objects, also called the Internet of Things, represents a great opportunity and a major threat at the same time, especially for developing regions such as Latin America, where a strong digital divide persists (only 53% of Latin Americans are internet users), and so do the risk of lagging behind in technological advances. In fact, only 1% of Latin American companies, individuals and industries are prepared to cope with the next technological revolution.
This also entails opportunities, including the prospect of creating a Digital Single Market for Latin America, which will allow free movement of goods, services and digital capital, standardize laws across countries, encourage free competition and protect consumers. Interoperability and interconnection of objects is a key issue. According to the European Commission, the Big Data sector is growing 40% per year, seven times faster than the entire IT market. And some estimates forecast that this sector may open a €12-billion market.
This means basically evolving from national digital markets—of different sizes but mostly small ones—to a Latin American market, with more than 600 million users, in addition to millions of objects, thus opening a huge opportunity to move towards the productive transformation of the region. We must remember that the expansion of broadband connectivity in the last ten years alone has mobilized nearly $195 billion and created around 900,000 jobs. This impact could be even greater if the operational scale of the digital goods and services market is expanded.
The Digital Single Market would also help reduce digital barriers and create a more economically efficient area where people and businesses can trade, innovate and interact legally, safely and at low cost, resulting in greater economic competitiveness compared to the most advanced economies.
But this is not without its threats. In order to prevent the region from lagging behind in the Internet of Things, we must ensure at the same time a transition to IPv6 (the addresses through which new devices and objects will connect to the internet). According to the IPv6 Deployment report for socio-economic development in Latin America and the Caribbean, prepared by CAF and Lacnic, Latin America shows a very low IPv6 deployment. Only four countries show potential IPv6 user rates greater than 1% (Bolivia, Brazil, Ecuador and Peru), which should be improved substantially in order to ensure the development of high-quality internet. One hopeful sign is that 30% of internet organizations in the region are planning to deploy IPv6 in 2016.
In preparation for the definitive arrival of the Internet of Things, Latin American professionals should be trained and develop the necessary skills. This is precisely the purpose of CAF—development bank of Latin America—, the Technical Secretariat of eLAC and GSMA through the CE-Digital program, Digital Ecosystem Training, which will train regulators and policy makers in the area of ICT. The program comprises twelve training courses, held at the facilities of public agencies and through the website www.cedigital.org
Advancing the digitization of production processes in different sectors poses a major challenge of the region, because connecting these sectors will lead them to greater productivity, and better operation and control.
Addressing the challenges of digital transformation in the region requires improving the regulatory frameworks of the ICT sector, which is feasible provided that our regulators and public representatives have the right training.
