The Microtelco Opportunity: Evidence from Latin America

Abstract

ICT networks and services are not effectively reaching the poor, particularly those living in rural areas. Public subsidies for traditional operators to cover the difference between tariffs and cost-recovery levels have proved limited in addressing this continuing gap. This article explores the role that could be played by a largely unnoticed set of actors we call microtelcos—small-scale telecom operators that combine local entrepreneurship, innovative business models, and low-cost technologies to offer ICT services in areas of little interest to traditional operators. Through a series of case studies from Latin America, we document how microtelcos combine organizational and informational advantages that allow them to service the poor effectively and with limited access to public subsidies. In fact, we show that they have done so despite a less than favorable regulatory environment. The article examines the case for microtelcos as an effective alternative to address the ICT needs of the poor and suggests how existing regulatory obstacles may be removed so that microtelcos could be more effectively harnessed to bridge continuing access gaps.