The 5th CLT (Latin American Telecommunications Congress) has been held this week in Cartagena (Colombia). The Congress is the most important annual event for the ICT sector and the mobile ecosystem in Latin America.
Within the framework of the Panel on the Role of the State in the Digital Economy, Carlos López Blanco, Telefónica’s Global Director of Public and Regulatory Affairs, discussed the role of public policies within the context of the digitization of production, data flows, innovation systems, technology-based entrepreneurship and the emergence of technological platforms with renowned international experts such as Roslyn Layton, among others, in a debate chaired by Raúl Katz.
The panel underlined that we are undergoing an unprecedented transformation. The changes brought about by digitization will provide new opportunities for economic growth and social welfare, as well as substantial improvements in the competitiveness of businesses and industries. This wave of innovation will generate a chance to rebalance the leadership of companies, industries and countries.
Latin America will be able to address this new situation in the best possible conditions:
- Its telecommunications infrastructures are among the best in the world.
- It has a population in an excellent position to join the digital economy: young and urban, hooked on the Internet, with a middle class made up of over 200 million people. Latin America is one of the largest Internet users in the world.
- We should not forget either that it has a large market for its products and services.
However, there are not many companies in the region which actually produce. The flows of production and value are in danger of migrating to other increasingly digitized countries if the appropriate measures are not taken.
In this regard, at the moment the main bottleneck for the development of the digital economy is not the infrastructure. Connectivity has spread swiftly over Latin America, as a result of the investments made by telecom operators throughout the last 25 years.
There are other bottlenecks: shortcomings in terms of relevant local content, digital literacy and digital skills.
SMEs account for 99% of companies in Latin America. The productivity gap between SMEs and large companies is far greater than in Europe. Therefore, the digitization process in Latin America necessarily depends on the growth and digitization of its SMEs.
Finally, the lack of training constitutes one of the main barriers facing the digitization process in Latin America. Such is its importance that some analysts consider that “the problem of the generation of human capital is more complex than that of infrastructure”.
Given these challenges, what policies should be undertaken for the digital transformation?
It is vital to develop a comprehensive vision which combines measures aimed at enabling, facilitating and promoting the digitization of the public apparatuses and production and measures designed to ensure an adequate distribution of the value generated by means of the digital transactions executed in the region. Public-private cooperation is essential to achieve the above.
As Carlos said in the panel “the challenge is to establish the rules that should apply in the digital space”. Telefónica has proactively worked on a decalogue of specific proposals for the digitization of Latin America which will enable the region to climb onto the bandwagon of the digital revolution and capitalize on all its benefits.
In particular, Telefónica considers necessary:
- To adapt the models of governance of the digital economy in the region, seeking a suitable institutional framework for the development of the bases of the digital economy, thereby accelerating digitization and ensuring the sustainability of the digital economy.
- To build the necessary bases for the digital economy, creating and using human capital and digital connectivity.
- To accelerate the digitization of the public administration and production processes, generating an appropriate environment for the creation of digital enterprises.
- To promote the sustainability of the digital economy by means of a legal and regulatory framework applicable to cross-border digital services without forgetting a “level playing field” which gives an answer to the “the great political question about the protection level that should be offered to the users.”
- To enable the infrastructures to go on growing and the technological innovation cycle to continue, it is necessary to update the public policies in the region so as to encourage investment and network deployment, including in rural areas.
Together with the industrial associations (e.g. ASIET and GSMA), efforts have been made to identify the changes the region requires in order to connect the disconnected, developing projects to modernize the public policies for the region.
- We cannot fail to mention the development of digital trust and adequate protection for consumers in a balance which does not hinder innovation. As Carlos said, “data is much more than goods”.
In short, the role of the State is fundamental in this process, as it defines the policies which govern the ecosystem and regulates industry, while it can facilitate supply and promote demand.