Paraguay's digital transformation: A challenge for the new govt

Paraguay faces the challenge of accelerating the digital transformation in the country and continuing policies that have allowed the ICT sector to grow in recent years.

“It's a country with a good business climate despite the institutional instability. The public and private sectors have good dialogue and continuity can ensure this nationalist, conservative but also pro-private sector profile,” Andrés Piazza, co-director of digital development institute IDD-LAC, told BNamericas.

The institute produced a report on the ICT proposals in the campaigns of the presidential candidates in the run-up to the general election on April 30, showing that president-elect Santiago Peña, a member of the Colorado party like current President Mario Abdo Benítez, made very little mention of the industry.

The lack of proposals for the ICT sector in the electoral platforms has become "a distinctive sign of the region," Piazza said.

"In the case of the president-elect, there was no definition or specific section on ICT or the digital agenda, but there were some references that we can interpret, given that this is continuity, as the government party," said Piazza. For example, the campaign mentioned strengthening public companies, so continuity is expected for state-owned telecoms operator Copaco.

Peña's electoral platform also mentions some cross-cutting issues that could impact ICT, such as the improvement and modernization of public banking, the creation of 500,000 jobs (although the emphasis was on construction), improvement of Paraguayan infrastructure and what the party called “a big leap towards development.”

Maryleana Méndez, general secretary of business organization Asiet, hopes that the creation of jobs includes the ICT sector as it "creates good-quality and well-paid employment," while the development of infrastructure should include of assets for telecommunications.

The leap towards development mentioned in the president-elect's campaign should also include actions to strengthen the ICT sector.

"Paraguay has a recent-generation digital agenda and the proposals made by the president-elect are consistent from that perspective," Méndez told BNamericas.

Paraguay already has a digital agenda in place for the period until 2025, which outlines specific goals for the sector and a telecommunications development plan that targets expanding broadband coverage to 80% of the population by 2030.

“There is strong cooperation with the Inter-American Development Bank on issues for the digital agenda and capacity building. It's a very ambitious project, with a very large loan for the modernization of public administration,” Piazza added.

SPECTRUM

Paraguay is preparing to hold a 5G spectrum tender later this year, but it must first overcome some challenges in terms of spectrum management.

Telecommunications operators are demanding a review of the duration of spectrum licenses, which in Paraguay are granted for five years, well below the average duration of 15 years and the minimum of 20 years suggested by best international practices.

Méndez said that the next government should consider updating the telecommunications law to extend these terms. The current administration had intended to reform the regulations, but the amendments were eventually not processed. “It's something that was already discussed as a matter of mutual agreement,” Méndez said.

“This is in addition to an onerous renewal scheme and costly regulatory obligations that create uncertainty for investments,” Lucas Gallitto, GSMA director for Latin America, told BNamericas via email.

According to a GSMA analysis to be published shortly, the results of which have been shared with BNamericas, total spectrum costs in Paraguay have grown at an annual rate of almost 11% since 2014 and are not in line with the real-term evolution of revenues, which have declined at an average annual rate of 4.3% since that year.

In 2020, the spectrum renewals were set at a lower cost than the initial allocations. “It's key to maintain that trend with the renewal of 700MHz in 2023,” Gallitto added.

CONNECTIVITY INFRASTRUCTURE  

Like in most Latin American countries, Paraguay faces various challenges to deploy telecommunications infrastructure in remote areas.

“It's important not to add more barriers to deployment, but instead to simplify administrative processes and remove bureaucratic barriers that exist at different levels of government,” Gallitto said.

Meanwhile, Asiet has pointed out that Paraguay still has a great opportunity for deployment of fixed networks, as well as international terrestrial connectivity.

Asiet indicates that the 3G network in Paraguay covers 98% of the population, while the 4G network is on the way to reaching 97% of the country, driven by the coverage commitments outlined in the last 4G spectrum renewal.

However, according to data from GSMA Intelligence, 43% of Paraguayans live within the coverage range of mobile broadband networks, but do not access the services due to the affordability of devices, safety and security concerns, and a lack of digital skills, among other factors.