The landlocked condition as determinant for development of internet: The Bolivian case

A Davalos Yoshida

doi:10.17485/ijst/v13i34.1145

Abstract

Objectives:To validate if the condition of Bolivia as a landlocked country is the main reason for the low Internet penetration, or whether there are others relevant factors. Specific objectives: To review the telecommunication infrastructure as an essential facility, as well as to verify if deficient regulation or absence of incentives are other reasons for the low Internet penetration.Methods: Some literature about the role of telecommunications in the economic development, the theory of firm and the non-cooperative behavior, have been analyzed. As part of this research of the theoretical framework and empirical validation, some works about the use of technology, as well as others about performance of Internet markets in landlocked countries around the world have been reviewed. Some South American country cases have been analyzed. Additionally, the regulatory, legal, and economic aspects of Bolivian telecommunications were studied in comparison with the other landlocked South American country. For the empirical validation, a costs model of the firm has been designed. Findings: In comparison with other countries in the region, Internet access in Bolivia is among the most expensive ones.The evidence found in this study points out that this is due to absence of appropriate regulation and because the Internet market is highly concentrated, but it is not due to its condition of being a landlocked country. Novelty:Contrary to what would be expected using conventional wisdom, the lack of Internet development in Bolivia is not a consequence of its landlocked condition. Conversely, according to the results of the cost model developed for this study, low Internet penetration seems to follow a process of high market concentration as result of insufficient regulation. Hence, it seems necessary that the market of Internet access in Bolivia be economically regulated and to accomplish this, the normative needs to be revised and amended. Keywords: Internet; telecommunications; regulation; competency; landlocked countries; development

Highlights

Since its inception in the 60s the Internet has been growing rapidly, expanding its scope and dramatically impacting almost every field of human activity in practice
This work is carried out to corroborate, through empirical verification for the case of Bolivia and making use of the reference of other landlocked countries, whether the high prices observed in the Bolivian Internet market are mainly due to reasons based on its status as a landlocked country; or by the contrary, whether this phenomenon is due to other factors
3.1.1 The internet in landlocked countries The Internet Society is a non-profit, non-governmental organization dedicated to the global development of Internet, which since 1991 has focused its efforts and actions on relevant Internet issues

Summary

Introduction

Since its inception in the 60s the Internet has been growing rapidly, expanding its scope and dramatically impacting almost every field of human activity in practice. For example(1), the Internet is one of the technological advances that has changed not just the way of conducting businesses, but the way of life of the worlds entire population as well This phenomenon is so important, that this period has come to be known as the digital age. The Internet, viewed from the perspective of its own ability to create value, has been analyzed under the Value Chain approach (2) and it is the subject of ongoing studies and monitoring From this perspective, according to(3), for the Global System for Mobile Communications Association (GSMA) at worldwide level, the Internet value chain has tripled from 1,200 billion dollars in 2008 to almost 3,500 billion dollars in 2015 with an annual growth rate of 16%. This cited behavior is driven mainly by three factors: (a) the increase of Internet access by users, (b) the decrease in cost of mobile devices (c) activity diversification and longer periods of time spent using Internet by the average user

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