Internet and e-commerce industry in Argentina

Argentina. That is a South American country located between the Andes mountain range in the West and the southern Atlantic Ocean in the East and South. Argentina is the second largest country in South America and eighth in the world by land area and the largest among Spanish-speaking nations, while Mexico, Colombia and Spain are more populous Spanish-speaking countries. The country is currently classified by the World Bank as an Upper-Middle Income Country or as a secondary emerging market. And we are to study today how the processes of Internet and e-commerce development are going on in the country that considers to be one of the G-20 major economies. 

Argentina has one of the best and high developed and fastest growing broadband markets in Latin America. Experts sees the Argentina Internet market to have huge potential, heartening by increasing demand, however it is still largely untapped outside the province of Buenos Aires. Argentina produces half of the Internet’s Spanish-language content and is supporting 11 of the top 15 sites in terms of traffic in Latin America and Spain.

 As for the Internet penetration in Argentina it’s twice as high as the world average. Though it’s less than the half, compared to such European countries as Norway and the Netherlands. Thus, amid the countries in South America, Argentina occupies the second position with 20,000,000 users in December 2008 after Brazil with 67,510,400 users, concerning the Internet penetration level, according to http://www.internetworldstats.com. So, the amount of users in 2008 made up almost 50% of the population. That may be compared with the previous years when the broadband market in the country had been only establishing. For instance, year 2000 reveals 6.9 % penetration rate with only 2,500,000 users. In the 2004 the amount of people getting Internet access trebled and reached 7,500,000 or 20 % of the population. Thus, for example, among approximately 7 million PCs registered in Argentina in 2008, the number of residential and business computers connected to Internet made up 3.3 million, and about 92% of them were broadband connections. As for the amount of e-mail accounts, it totaled around 5.15 million, with a monthly traffic of 1.59 billion messages in 2008. So the enormous growth of Internet infrastructure is obvious, though Argentina still has just around 15% of the South American broadband market, while Brazil has over 50%.  

Nevertheless, Argentina’s Internet market remains one of the most developed in South America. Thus, in the year 2007 Argentina was ranked 63rd out of 122 countries, concerning the ICT integration and penetration, according to the NRI (Networked Readiness Index) of the World Economic Forum.

A lot of Internet services providers in Argentina have commercial agreements with the telephone companies for charging a slightly higher communication rate to the user for that communication, though without any monthly fixed fee. And, of course, like in the majority of the countries, in Argentina Internet access is mainly available in big cities and related areas, such as Buenos Aires, Buenos Aires Province, including Gran Buenos Aires, Santa Fe Province, Córdoba. 

Argentina's Internet top-level domain, or ccTLD, is .ar or .com.ar. Two year registration agreement cost $260. That may be compared to Mexico, having a lower price of $109, and a very high price of $450 in Brazil. (http://www.rwgusa.com)

As for the ISPs, previously cable modem used to be the main broadband technology, however now the leadership is captured by the ADSL providers. A cable provider, Fibertel, now offers Cablemodem service in a limited range of cities. Speedy and Flash have a declining user base, many opting to go the way of Fibertel, offering only 6 Mbit/s / 512 kbit/s as the best connection. Their services are often mentioned to limit P2P download activity. 

ADSL, originally, appeared in Argentina in 1998 under the name Speedy by Telefónica, a Spanish company. So, ADSL has been monopolized by the 2 major phone companies: Telecom (in the north with Arnet ADSL) and Telefónica (in the south with Speedy ADSL). Actually, now three main broadband competitors, Telefonica de Argentina, Telecom Argentina, and Grupo Clarin, exist in Argentina, that are always rivaling each other in getting leading position on the Internet market. 

In 2004 Arnet announced new plans to launch capped plans up to 4 GB, that, being modified, were put in practice at the end of 2005, that heavily affected the company’s reputation which has still been slowly recovering. So, there were no any capped plans offered further. Today the company provides the users with plans from 640/128 kbit/s download/upload to 5 Mbit/s / 256 kbit/s (the second highest download rate offered in the country after Fibertel's Fiber6M 6 Mbit/s / 256 kbit/s). The uncapped 5 Mbit/s plan costs about US$ 48 or (148 AP (Argentine Pesos)), while the 2.5 Mbit/s /256 kbit/s plan costs US$ 35, or 109 AP. The minimum theoretical ADSL speed is considered to be 1 Mbit/s for download and 128 kbit/s for upload. However, due to severe overselling started in 2007 and cheap prices, this speed is rarely effective.

Thus, the tendency of both ADSL and cable ISPs has been towards lowering costs to the public, instead of making investments to offer more advanced services and higher speeds.

Being in the process of constant development, broadband market in Argentina is getting more and more popularity among citizens. And, if during the recent years Argentinean used Internet mainly for communications, e-mail, chats, forums, messengers, etc, and information searches, over the past couple of years they started turning to electronic business and electronic banking. Thus, for instance, the amount of e-commerce subscribers, according to the Argentina E-commerce Chamber, more than doubled during 2006. It was also figured out that the same year 5 million Argentineans Internet users made purchases through the Internet, for a total of about $3.3 million; and online advertising in Argentina during 2006 increased by about 35%. 

E-commerce sector in Argentina, like in the majority of countries, is represented by B2B and B2C services. And, in general, the variety of services provided through the web has been increasing significantly over the last several years. Thus, the strongest growth was seen during the years 2006-2007, when the amount of online purchases and consequently incomes from the e-commerce businesses increased dramatically. The most popular items purchased online appeared to be technology. The other most preferred goods are clothes, home appliances, handicrafts, financial services and retail products. Sales of cinema, concerts and theatres tickets and electronic learning also met firm demand. One of the main Internet uses also became music, even beating e-mails and chat that have been too much popular among the Argentineans. Such huge music download popularity became the result of the appearance of piracy, totaling to 74% of all music purchases, so, only 26% of the purchased songs pay copyrights. 

As for the online banking, it has always been one of the most required web services, however, mainly for checking balances and paying utility bills. Today, Argentineans are increasingly using the web to transfer money and pay for everyday items such as school fees and hotel bookings, says Economist Intelligence Unit.

Well, it’s obvious that, the rapid Internet and e-commerce spreading resulted the great amount of merchants appeared in Argentina during just the couple of years.

Argentina has a strong performance on the broadband and e-commerce market among the Spanish-speaking countries, occupying the second position in South American region. However, country still needs to be advanced and developed a lot, probably with the help of the government sustain and some investors’ infusions. But, any way this Spanish-speaking country has a great potential, that might let it to become a strong competitor on the world’s ICT and e-commerce market.