The following is a guest post from Sofia Bobrik, CEO and Co-founder at TechWaves PR.
Latin America is a tough market for the region’s telcos and their customers. From indebted operators, falling revenues, and counterproductive incentives to unaffordable tariffs, low service quality, as well as a gap in connectivity and demand, the LATAM telecom industry must undergo a substantial transformation to become financially sustainable for participants.
Decentralized Physical Infrastructure Networks (DePINs) are capable of tackling these challenges and fostering the sector’s much-needed evolution with a distributed and resilient infrastructure facilitating scalable, reliable, and affordable telecom solutions across LATAM and beyond.
A struggling telecom market
Despite internet penetration rising from 46% in 2013 to 81% by 2023 in Latin America and the Caribbean, the region’s telecom industry faces unique problems that make it less sustainable and competitive than in Europe, North America, or Asia.
First, a gap in coverage impacts 7% of the region’s population, which is mostly concentrated in remote locations with complex terrains—like Columbia’s mountainous regions—where it is not financially viable for mobile network operators to expand their services. But there’s also a usage gap affecting 28% of Latin Americans, who don’t access telcos’ solutions despite residing in areas with active mobile broadband coverage.
In Argentina, the coverage gap affects 4% while the usage gap is 23%. On the other hand, just 66% of Brazil’s population has access to mobile broadband services, with 12% and 23% struggling with the connectivity and usage gaps, respectively.
One of the main reasons for this usage gap is telecom services’ lack of affordability, caused primarily by infrastructural challenges, CapEx-heavy expansions, indebted regional operators, and regulatory challenges. In countries like Argentina, taxes significantly increase broadband costs, with up to 44.5% of the price attributed to taxes. While fixed internet prices have dropped in Buenos Aires since 2018, they still make up 4% of the average household income, which is the double of the UN’s 2% affordability threshold.
DePIN’s transformative effects for LATAM telecom
DePIN leverages the blockchain to decentralize physical telecom infrastructure ownership and control. Currently, the sector’s total addressable market stands at an estimated $2.2 trillion, which is projected to reach $3.5 trillion by 2028.
With DePIN technology, a decentralized telecom infrastructure can be established where individuals and small businesses set up hotspots, antennas, or routers to provide internet users with coverage. For their valuable contributions to the ecosystem, operators are rewarded with native token payments backed by network usage fees.
For Latin America’s indebted telecom providers, DePIN’s primary advantage is that it doesn’t cost them additional OpEx or CapEx to offload traffic from their networks. They don’t have to spend funds on hardware deployment or maintenance either, as DePIN infrastructures are crowdsourced.
Instead of competition, collaboration makes the greatest sense between DePIN networks and telcos in the LATAM market. As DePINs still have much room for growth, they can tap into the established telecom infrastructures of traditional providers to offer their users coverage at a fraction of the costs of legacy services. This provides telecoms with an additional source of revenue, which could help offset their operational expenses.
With crowdsourced hardware and the right token incentives, DePIN networks can fill coverage gaps in remote locations and areas with complex terrains across Latin America. Since this infrastructure development is drastically cheaper than telcos’ CapEx-heavy expansions, DePINs can offer telecom services in underserved regions at affordable prices. Thus, they also address the LATAM market’s usage gap, potentially bringing 28% of the population online.
Through collaboration, DePINs and telcos can create an interconnected network of telecom solutions offering customers affordable prices, more reliable services, and enhanced coverage. In fact, blending an established infrastructure in major locations and a decentralized ecosystem with capabilities to expand rapidly in remote areas can substantially improve service quality and decrease outage frequency.
While token incentives accelerate DePIN infrastructure development, the blockchain’s distributed, decentralized, and immutable nature makes the network more resilient. Unlike conventional telcos, DePINs lack the single points of failure attackers could exploit in data breaches. This could make the Latin American telecom market significantly more attractive for clients.
A real-world example of implementing DePIN principles is OpenRoaming, a worldwide federation enabling seamless Wi-Fi connectivity on the globe with decentralized identity management and secure and automatic connections. The OpenRoaming ecosystem is upgraded by Uplink, an internet DePIN provider, by bridging members into a decentralized platform to solve their connectivity problems. It is an expansive and scalable approach, fostering the extension of coverage to underserved areas. As the company states on its official website, Uplink’s approach also helps telcos decrease their CapEx and OpEx by offloading traffic into its decentralized infrastructure.
The challenges and future of Latin American DePIN adoption
Each LATAM nation’s regulatory policy varies, complicating operations for both telcos and DePINs. Industry players must collaborate with governments to create robust frameworks that foster growth and innovation.
Another barrier for DePINs is actually onboarding Latin American telcos operating within the Web2 framework to the Web3 market. It is a new sector underpinned by transformative technologies, and legacy providers need a straightforward process to join this new market.
Considering the financial struggles of Latin America’s population, telcos, and national economies, DePIN has an even more significant potential in the region than in more developed areas. With the right incentives and regulatory frameworks, DePIN could transform Latin America’s telecom sector into a competitive, innovative, and accessible market.
