Internet and e-commerce industry in Venezuela

Venezuela is a tropical country on the northern coast of South America, that represents a continental mainland with numerous islands located off its coastline in the Caribbean Sea. Venezuela is considered to be one of the most urbanized countries in Latin America; the majority of Venezuelans live in the cities of the north, especially in the capital Caracas which is also one of the largest cities along with Maracaibo, Valencia, Maracay, Barquisimeto and Ciudad Guayana. Today we are to find what the country’s broadband market and e-commerce infrastructure like.

As for the Internet penetration in Venezuela, it’s considerably lower than average for Latin America. Thus, according to the worldstats.com data related to the second quarter of 2008 Venezuela accounted 5,900,000 Internet subscribers occupying the sixth position far behind Brazil with 50,000,000 users taking the first place, Argentina with 16,000,000 and Colombia with 13,700,000, taking second and third places, respectively. Fourth and fifth place are taken by Peru and Chile, having the penetration levels that are slightly higher than Venezuela’s one. 

As for the Internet usage growth, for the period of 2000-20008 it made up 607.7%, but anyway, it’s still lower than in other developed countries and made up just 25,5 % with 6,723,616 subscribers. Thus, for example, in 2000 it was just 950,000 users or only 4.1% of the population; by 2005 their number grew to 3,040,000, or 12.2 %. 

• Internet access in Venezuela is available through ADSL, Cable, Satellite, EDGE, EV-DO, WiFi Hotspots and more recently WiMax. So, a big number of ISPs, exist on Venezuela’s broadband market, that is dominated by state-owned CANTV.net supplying with ADSL and Dialup services. Thus four largest ISPs are represented by:
• CANTV.net - ADSL/WiFi hotspots and also EV-DO through the Movilnet brand. 
• Intercable - Cable/WiFi Hotspots 
• Movistar - Cable/WLL/EV-DO/UMTS/HSDPA 
• Movilmax - WiMax (Only available in Caracas. WiMAX technology based on the 802.16d wireless transmission standard.

Prices for Internet access can vary from $45 to $60 USD per month for basic broadband plans. 

Venezuela’s Internet top-level domain, or ccTLD is .ve or .com.ve. Two year registration agreement costs $145. That can be compared to the lowest pricing of $109 in Mexico and the highest in Brazil - $450. (http://www.rwgusa.com)

As for e-commerce in the country, the development was hampered by low PC and Internet penetration as a technology manufacturing base. The rapid economic recovery seen in 2004-2005, while instability has deterred investment in the country, driven by windfall oil revenue, provides much scope for catch-up as pent-up demand is fulfilled, but longer-term investment growth remains uncertain, in light of a difficult policy environment and a deficient legal and regulatory framework, according to Economist Intelligence Unit. So e–commerce in the country remains in a period of consolidation, and poor education, disastrous mail service and scant access to computer technology limit its advancement. However, in terms of the world ICT and e-commerce progress, the development of this infrastructure in Venezuela is fatal.  

The national media and many regional outlets have largely established themselves online. Thus, some national newspapers, like Tal Cual and El Nacional are trying to turn their websites into subscription-based services, but still not very successfully.  

The sector where e-commerce, particularly B2B sector, is developed mostly is the oil industry, as ICT adoption in this sector is on a high level. The state oil company Petroleos de Venezuela (PDVSA) is cooperating with its larger suppliers via the web, however, managers still often insist on paper confirmation of the transactions.

One more example f B2B ecommerce is represented in Venezuela by Nueva Esparta Import , providing with the set of 1000 reports and documents referred to e-businesses and e-commerce, e-procurement, e-supply chain, e-crm, wap technologies, etc (alibaba.com). 

As for the banks, they’re also supporting the e-commerce development in Venezuela, boosting their customers to shift transactions online where it’s possible. Local banks such as Banco de Venezuela (a unit of Banco Santander Central Hispano of Spain) and Banco Mercantil have aggressively provided their online banking services.

As for the government support, lack of regular availability of the Internet reflected slow establishment of e-government sites in the country. Thus in 2005 the passport office implemented a portal to take over the old paper-based system for arranging appointments to obtain passports. But, unfortunately poor infrastructure and insufficient server capacity led to widespread dislike of the new system it appeared to be very difficult to access it.

So, in spite of the fact ICT progress in Venezuela reflected rapid growth, e-commerce continues to drag behind its South American neighbors, Brazil, Argentina, Colombia, Chile, Peru. On Among the reasons of such a slow e-commerce sphere development are the scarcity of computers, the limited number of credit-card holders and the unreliability of the mail system. But, anyway, the country is on a way of ICT and electronic industry high development, and hopefully, Venezuela will catch up soon its neighbors.