Internet and e-commerce in Colombia

What do you know about Columbia? Colombia is the fourth largest economy in South America. It has the 29th largest population in the world and the second largest in South America, after Brazil. Colombia has the third largest Spanish-speaking population in the world after Mexico and Spain. But we are to find what stage the country managed to reach in IT sphere and e-commerce, as the result of Internet development.  

Broadband Internet access has been available in Colombia in 1997. Initially Internet service was very expensive and was charged in US dollars. The originators of broadband access in Colombia were Bogota based University of the Andes and Cable operator TV Cable S.A. During the period of 1997-2001 Internet still remained too expensive and only the richest neighborhoods of Bogota and Bucaramanga could afford having a broadband Cable Internet access.

And only in 2001 ADSL Internet access was launched, that appeared to be a reason for a commercial war between the telecom companies and the cable operators. There is an interesting and strange fact: the Internet was first launched and developed better in two cities: the capital and the largest city Bogotá and the fifth largest Bucaramanga. Today, the cities ranked by size of the population as second, third and fourth in Colombia - Medellin, Cali, and Barranquilla respectively - have only one ADSL operator each that reaches the city as a whole, while Bogotá and Bucaramanga have cable and ADSL operators available throughout the whole city at the same time. There is a number of cable ISPs, each of them is available only in its native city, and claims to be a monopolist in a certain city. So that’s obvious that Internet tariffs in Medellin, Cali, and Barranquilla are much higher as the ADSL operator and the cable operators are not the direct competitors. 

Colombia-Telecom, the company owned equally by the Colombian Government and Telefónica from Spain, provides ADSL Internet access to the cities and towns that have fewer than 1 million citizens. And of course, as Colombia-Telecom is the only ISP in these regions, it claims to have a monopoly position, that’s why Internet service remains very expensive.  

In 2007 DSL Internet access was introduced by Telefonica Colombia company, which expanded DSL operations to all Capital and Major cities and all cities with a main office and a main satellite. As for xDSL service it is mainly concentrated in Bogota, Bucaramanga and Popayan.


Below there is the list of the main national and regional Internet service providers: 
National ISPs:
•    Telecom/Telefonica - has monopolistic ADSL and WIMAX Access in Bucaramanga; has a monopoly ADSL position in all the cities and towns between 1 000 000 million inhabitants and 100 000 inhabitants; its also has a minor share of ADSL Access in Bogotá, Medellin, Cali, Barranquilla 
•    Empresa de Telecomunicaciones de Bogota "ETB" (90% owned by the city of Bogotá, and 10% owned by private investors) - near monopolistic ADSL provider in Bogota; near monopolistic WIMAX provider Armenia, Medellín, Barranquilla, Palmira, Cartagena, Villavicencio, Neiva, Pereira, Ibague, Manizales, Montería, Bucaramanga, Tunja, Santa Marta, Valledupar, Popayan , Cúcuta, Cartago; has small WIMAX share in Cali 
•    Empresas Publicas de Medellin "EPM" (100% owned by the city of Medellin) - near monopolistic ADSL and WIMAX provider in Medellin; small ADSL Share in Bogota; near monopoly WIMAX share in Cali 
•    Coldecon - has small ADSL share in Colombia; near monopoly wifi share in Cali; near monopoly wifi share in Barranquilla 
Regional ISPs are:
•    TV Cable SA - has a major share on the cable broadband access in Bogotá; focuses on the richest neighbourhoods of Bogotá. It is the only company providing Triple play in Colombia. 
•    CableCentro - has a minor share of CABLE broadband access in most of the cities above 100 000 in Colombia 
•    Cable Union de Occidente - has nearly monopolistic share of CABLE Broadband Access in Cali 
•    TV Cable Promision SA (completely unrelated with TV Cable SA) - has nearly monopolistic share of CABLE Broadband Access in Bucaramanga 
•    Dinanet - has monopolistic share of CABLE Broadband Access in Barranquilla

Colombia’s ccTLD or Internet top-level domain is .com.co. The registration in the zone of .com.co domain is very much expensive, thus two year contract costs $349. This price may be compared to Mexico’s and Argentina’s lower costs of $109 and $260 respectively, and Brazil’s higher price of $495. 

In terms of Internet usage Colombia is still far behind Brazil and Argentina. Thus Colombia has 13.2% users of total for South America, occupying the third position, while Brazil has 48.1% and Argentina has 15.4%. Meanwhile, Colombia shows significant growth over the last several years. If, for example, there was just 878,000 users (only 2.1 % of the population), in 2006 there were already 6,705,000 users or 15.8 % of those who could use the Web actively. And 2008 revealed a 38.8% usage that means 17,478,505 Colombians got the Internet access. These figures reflect enormous growth of 1,465.6% for the period of 2000-2008 (as for www.internetworldstats.com)

Of course, e-commerce development directly depends on Internet penetration in the country. e-commerce in Colombia reflected rapid growth in 1999-2000 when Internet infrastructure in the country was just settled. However e-commerce in Colombia is still left behind by Brazil’s, Argentina’s, Mexico’s and Chile’s – commerce spheres. e-commerce facilities in Colombia are applied to mainly by the high-revenue groups of population. That’s probably because of the concentration of majority of ITs and related services, as well as banks, large businesses and so on, in certain regions of the country and can be affordable for narrow masses of the population. 

According to the economist Intelligence Unite, e-commerce platforms was set by the largest retail chains like Carulla-Vivero and Exito, achieving to complement their regular multiple business. Bogota’s telecoms firm, ETB, and El Tiempo and Intermarke are among the main e-commerce investors.

As for the banks, the majority of them in Colombia such as Bancolombia, Banco de Bogota, Conavi, Citibank and Daviviend have their security capabilities for online access to accounts, transfers, payment of utility bills, credit cards and other bills advanced enough. These largest domestic banks appeared to be the originators of e-banking in Latin America. The system introduced by Davivienda and Bancolombia’s Audiobic under the name of the Red Phone gave a birth to online payments’ culture that became the basis for Internet systems of the certain banks.

Colombian government participates actively in the development of e-commerce in the country. Thus it encourages electronic resources use aiming to reduce red tape. However, with its initiatives the government doesn’t still manage to support e-commerce sphere completely. Nevertheless, amid the countries of South American region Colombia was the first to accept electronic signatures and to recognize electronic documents as valid for commercial transactions or notifications with and from state agencies. 

In spite of the fact Colombia doesn’t take the first position in Internet and e-commerce infrastructure, it’s still one of the leaders among the countries of South America. And enormous growth of the users’ activity, e-commerce appliance increase, internet business development makes Colombia to be a country with a great potential of further development and advancement.