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Help coming, the IDB to provide capital support

The Dominican Republic’s (Dom Rep) digital infrastructure is woefully inadequate and lagging behind the region.

In fact, 95.3 per cent of the territory does not have fixed broadband coverage or it offers little capacity while the mobile broadband reaches to just 61 per cent of the country. Broadband in the Dom Rep must become more affordable.

“Closing the gap in digital infrastructure is important to increase the digitisation of production and the insertion of local companies in regional and global value chains, which have the potential to increase the country’s productivity and generate more and better jobs,” said Fabrizio Opertti, manager, integration and trade sector, Inter-American Development Bank (IDB). 

The Dom Rep’s shortcomings around digital infrastructure has motivated various initiatives to build higher levels of connectivity and access to broadband at affordable prices. With the intention of elevating the country’s competitiveness in foreign direct investment attraction and as a knowledge service exporter, the IDB is preparing a programme with an expected US$115-million loan focusing on increasing the digitisation of citizens of  Dom Rep.

“The project aligns directly with two of the five areas that the Bank will focus on in the region within the IDB agenda, ‘Vision 2025 – Reinvesting in the Americas: A Decade of Opportunities’, the mission of which is to contribute to recovery and sustainable economic growth in Latin America and the Caribbean. These two areas are the promotion of the digital economy to foster innovation, as well as regional integration and the strengthening of value chains,” said Opertti. 

As much as 95.3 per cent of the Dom Rep does not have fixed broadband coverage or offers little capacity.

For Antonio García Zaballos, IDB Connectivity, Markets and Finance specialist, the low level of access of the citizens of the Dominican Republic to fixed and mobile broadband constitutes the general problem that this project has identified and that it will contribute to solve. 

In the case of the Dom Rep, according to data from the International Telecommunications Union (ITU), the proportion of individuals who use the internet is 74 per cent, below the 83 per cent in the OECD.

Internet usage below average

Antonio García Zaballos points out that internet use in the Dom Rep is below average levels of the OECD. The COVID-19 pandemic and restrictions on movement fuelled the need for high-speed, reliable broadband across all daily activities. 

The impact on education has been particularly dramatic and school closings due to concerns of contagion have turned a spotlight on the possible long-term effects of educational and income inequalities.

In the Dom Rep, 80 per cent of students who attend public schools did not have the necessary tools to convert to virtual classes at the beginning of the pandemic. 

Despite certain government actions, such as promoting televised classes and distributing laptops and notebooks among students and teachers to facilitate distance learning, the financial and resource disparities continue. This is a trend in Latin America and the Caribbean, where at one point last year, an estimated 95 per cent of students enrolled in schools are no longer attending classes at any educational level. 

The government had an initial intention to move all educational activities to a ‘distance-learning mode’, but weren’t able to accomplish that. Major cities have the best connectivity while rural zones face a very different situation. 

That’s the reason behind this project and the main focus of the Dominican Telecommunications Institute (INDOTEL).

Julissa Cruz Abreu, executive director of INDOTEL, points out what when looking at digital services challenges, the Dom Rep’s urban-rural divide in access and usage is apparent. 

Limited spectrum allocation

Most municipalities have fewer than 500 connected homes; just two have more than 100,000 connections.

According to García Zaballos, this problem is a consequence of limited spectrum allocation and digital connectivity.

INDOTEL data indicates that businesses with Internet accounts are largely concentrated in six of the 32 municipalities, and about half of the municipalities have fewer than 50 connected businesses. This infrastructure dichotomy heavily impacts the Dom Rep’s socioeconomic development prospects.

“This connectivity project is of vital importance to make the Dominican Republic more attractive as a destination for foreign direct investment.”

Fabrizio Opertti, manager, integration and trade sector, Inter-American Development Bank

“This connectivity project is of vital importance to make the Dominican Republic more attractive as a destination for foreign direct investment,” Opertti said.

Today, the Dom Rep’s economy is still largely built upon tourism, Free Trade Zone export-oriented industry, traditional agricultural exports and extractive industries — all of which depend on an intensive, low-cost workforce. However, in recent years, the contribution of the ICT sector has increased significantly.

The expected entrance of a new ISP will help drive down internet costs, says Julissa Cruz Abreu.

This progress has been threatened as the pandemic-induced work-from-home trend found the Caribbean island in an unfavourable position in terms of digital readiness.

Reliable internet needed

Many companies and workers, which need reliable internet to participate in the digital economy cannot afford fixed line broadband internet access at home. This situation has elevated the urgency of broader broadband access as an enabler of cost structure transformation in the services industry by enabling remote connectivity.

Despite strong competition at the retail broadband level, there is little competition for wholesale broadband capacity in the Dom Rep. The increase in broadband penetration has branching network effects that impact job growth in various ways.

From the development of new technologies and applications to expedite innovation, enhanced productivity due to utilisation of advanced, complex and structured processes, to outsourcing employment with remote service delivery and information processing. 

Quality broadband connection could accelerate the incentives for outsourcing providers and customers alike. An increased level of broadband infrastructure in the country should open spaces for the use of new technologies that allow more agile connectivity for the benefit of knowledge-based services such as contact centres and BPOs, and other digital services that could be developed.