E-commerce and Internet industry in Chile

Today, we are talking about Chile, a country in South America that occupies a long and narrow coastal strip wedged between the Andes Mountains and the Pacific Ocean. It is one of just two countries in South America that does not have any borders with Brazil, but borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage at the country's southernmost tip. Today, Chile is one of the most stable and prosperous countries in South America. Thus, Chile leads in terms of human development, GDP per capita, competitiveness, quality of life, political stability, globalization, economic freedom, low perception of corruption and comparatively low poverty rates. So, let’s see how much the Internet and e-commerce infrastructure is developed in such a successful Latin American country. 

Chile has an advanced telecom infrastructure and regulatory system. Internet penetration and PC rates in the country are also the highest in Latin America. The broadband market is considered to be one of the fastest growing businesses as the cable modems growth makes approximately 45% a year, and ADSL access increases nearly 108% (according to the www.internetworldstats.com). Cable modems have traditionally been the leaders on the broadband market, but in 2004 ADSL lines occupied leading position. In terms of convergence Chile is a regional leader since it was the first (in 1999) Latin American country to witness the deployment of triple play solutions, which combine fixed line, broadband and pay TV services into a single package. Chile also presented Broadband Powerline (BPL) first, which was launched commercially in March 2005. 

As of December 2008 there were 1,461,799 broadband Internet connections in Chile, as www.ciscoredaccionvirtual.com says, reflecting a 4.1% increase compared to the previous half of a year (from June 2008). The number of home broadband connections is 1,233,802 (or 84.4% of all the broadband connections). The nationwide broadband penetration rate is 8.8%. The Chilean regions that have the highest broadband penetration rate are the Tarapacá Region (14.2%), the Antofagasta Region (12.9%) and the Santiago Metropolitan Region (12.0%). The Internet country code top-level domain, or ccTLD, is .cl costing $180 for two-years. (www.rwgusa.com) 
There are several companies on Chile’s broadband market, offering such services (as of November 10, 2008). The largest one is VTR, Chile's cable company, that provides with several "always on" plans through cable modem: flat-rate plans from 2 to 8 Mbit/s/512 kbit/s (US$40.91 to US$55.47 per month), 1 Mbit/s/512 kbit/s (1 GB monthly download cap) for US$19.24 and 15 Mbit/s/512 kbit/s (20 GB monthly download cap) for US$71.64. 

The large ADSL plans provider is Telefónica Chile, Chile's biggest phone company. It offers flat-rate plans (using a Ethernet and USB modems): from 300/200 kbit/s for US$34.75 per month to 6 Mbit/s/550 kbit/s for US$54.16 per month (but they are differently available in the different regions of the country); the company also offers a pre-paid plan: 1 Mbit/s/550 kbit/s, US$32.34 (2 hour extension for US$0.81, 24 hour extension for US$1.62).

Entel is the other major telecommunications company, offering several plans through ADSL. It provides with flat-rate plans, from 200/64 kbit/s for US$37.30 to 2 Mbit/s/256 kbit/s for US$69.50, and Wireless radio-based connections, 512/128 kbit/s for US$50.90. 

One more company that offers plans through ADSL is Gtd Manquehue that provides flat-rate plans from 128 kbit/s for US$27.50 to 4 Mbit/s for US$80.30. (Most of the prices are in October 2008 rate of 1 US dollar = 618.39 Chilean pesos)
As December 2008 statistics shows, distribution of download speeds in the country can be ranged in such a way:
•    >160 kbit/s: 0.8% of total connections 
•    >160 kbit/s and ?256 kbit/s: 1.7% 
•    >256 kbit/s and ?512 kbit/s: 9.3% 
•    >512 kbit/s and ?1 Mbit/s: 24.8% 
•    >1 Mbit/s and ?2 Mbit/s: 41.7% 
•    >2 Mbit/s: 21.7% (ciscoredaccionvirtual.com says )

To see the real picture of population’s access to the Internet, let’s look at the statistics presented by internetworldstats.com. It says that during the period from 2000 to 2008 internet usage has grown 320.3%. Thus in the year 2000 the amount of users was 1,757,400 (or 26.2 %), and in 2008 this figure increased almost twice and reached the level of 16,454,143 (44.9 %). However, concerning 2009, a national survey, published by Subtel on January, showed that 40.6% of Chileans used the Internet, while 59.1% did not. 

The place where Chileans get online can be also ranged (as of www.subtel.cl). Thus citizens, connecting Web from home, make up 45.6%, from their workplace - 39.0%, from Cybercafé - 29.0%, from their friends or relatives' house -18.4%, at the university - 12.8%, at school - 8.9%, the people who don’t use Internet at all revealed a figure of 2.6%. Concerning the connection speed users prefer, the statistics shows that 53.4% of Chilean users apply to > 1-2 Mbit/s speed, while >256 kbit/s are in demand of just 3.9% users. > 256-512 kbit/s speed is preferred by 8.7% of users, 15.3% work with the speed of > 512-1,024 kbit/s, and 18.7% use > 2 Mbit/s connection speed.

As for the e-commerce development it is also on an advanced level and becomes an essential part of business. Moreover it is necessary to say that here ecommerce is the most developed compared to the other countries of Latin America. This is true not only for IT sphere, but for online business industry as well since Chile has the highest penetration of credit cards, personal computers and Internet access. The World Economic Forum’s Global Competitiveness Report for 2005/06 ranked Chile 35th out of 117 economies estimated in terms of technological readiness, well ahead of its nearest regional competitor, Brazil, which occupied just the 46th position. Though, compared to other countries all over the world, Chile is developing more slowly, that was reflected by Chile’s slip from 32nd position, of the 2004/05, ranking to 35th. In 2007 Chile was ranked 6th among the Latin American countries and in recent time Brazil is leading the countries in Latin America. 

Over the last few years B2B e-commerce in Chile revealed a significant growth, while B2C e-commerce is still very small in size and the growth is slower compared with B2B e-commerce. E-commerce growth in the country has been advanced by business-to-business and business-to-government transactions. Thus, online payments of taxes, online transactions through the governmental site Chilecompra.cl, and fast growth of electronic invoicing have been the e-commerce drivers in Chile.

Online banking is also getting more and more popular in Chile. Such e-banking services as transfer of funds to other bank’s current accounts, debit orders for regular utility bill payment, stock market dealings, credit cards or consumer credit, investments in mutual funds and in other certificates, and overdraft facilities are applied to mostly.  

According to America Economia Intelligence statistic data, e-commerce sales volume in Chile in 2006 reached US$472 million. During 2007, good time for the global economy, e-commerce in Chile registered an essential growth by 46% during the period of one year (since 2006): in 2007, the total sales of e-commerce in Chile made up an amount of US$687 million. During early 2008, when the world economy was at a start of the recession, e-commerce still kept up. But, after the mid 2008, the world economy troubles influenced significantly the country’s e-commerce market development, so at the end of 2008 e-commerce made up just 25%. 

E-commerce and IT development in this Latin America country is on advanced stage, and Chile claims to be one of the most developed and most successful amid its neighbors. However, Chile has been behind many countries in the world that managed to reach highest progress level in terms of e-commerce and Internet infrastructure. But the country strives and it is not to stop its improvement and development. So, as it has already become leader in its region, probably in the nearest time it could compete with most developed countries.