Channelling investment, connectivity and development

A bold national telecommunications plan combined with an effective social development strategy could connect millions more Paraguayans to the internet by 2020


I N – D E P T H  / BY  Tamar Hayrikyan


By the year 2020, up to 80% of Paraguay’s population will be connected to the internet, according to government projections in its National Telecommunications Plan (PNT) for 2016-2020. In order to achieve these ambitious goals in just five years, the government will have to successfully combine strong incentives for the telecom industry with effective strategies for social development. But if the results of the December 2015 public auction for licenses to provide 4G LTE services throughout the country are any indication, then 80% connectivity by 2020 could be within reach.
One of the two winners of that bid was Tigo, Paraguayan operator and market leader for the mobile sector. Within five months of obtaining the license, Tigo launched LTE services in 20 cities.Moreover, the company’s five-year plan anticipates additional investments in Paraguay’s telecom industry amounting to US$617 million. Tigo isn’t alone in betting on Paraguay’s telecom sector: The Inter-American Investment Commission is considering spending nearly half its 2017 CAPEX to help Tigo expand its 3G and 4G networks. In addition, the government of Paraguay has announced plans to invest US$595 million in the telecom industry over the next five years.
These promising developments for the future of telecom are impressive in light of the numerous structural obstacles to the industry’s development. In addition, the country is landlocked and thus at a geographical disadvantage, as it must depend on bordering nations for access to submarine cable networks and suffer the resulting higher prices for telecom services. However, these challenges appear to have had a positive effect on the development of the mobile market, as a large part of the population sees mobile networks as the most reliable way to connect with one another and the rest of the world. The mobile/landline imbalance is so extreme in favour of mobiles that according to one study, “there are about 18 mobile phones in Paraguay for every landline in service, the highest proportion in Latin America.”
Despite this relative success of the mobile phone industry, much remains to be done to meet the ambitious goals of the PNT, with only 30% of Paraguayan homes currently connected to the internet. Whole communities exist across the country with no access to electricity, let alone telecom services. These conditions will significantly increase the costs of expanding telecom services, and a substantial percentage of the population will remain unconnected.
The government of Paraguay created the Universal Service Fund (the Fund) to help businesses overcome the obstacles to expanding their services by offsetting some of the costs through targeted subsidies that simultaneously promote social development. Its purpose is to expand connectivity to rural areas and to other populations with considerable obstacles to accessing telecom services. The Fund also aims to reduce costs for basic services in education and health. Accordingly, in 2014, the Fund issued subsidies for three projects: the expansion of transmission infrastructure and other equipment for fibre optic lines in 15 municipalities; the expansion of infrastructure for mobile networks, basic services, internet access and broadband in public interest zones (36 different locations in the western and eastern regions of the country); and improved internet access and data transmission services for the Ministry of Health, specifically for promoting telemedicine. In previous years, the Fund granted subsidies for providing free internet access in public spaces, developing and providing tools for informal education, including computers, internet access, and virtual private networks for remote learning, provision of computers and free internet access in formal educational institutions, and the expansion of the emergency services, including public phones.
The telecom sector in Paraguay is governed by the National Telecommunications Law of 1995. The National Telecommunications Commission (CONATEL) is the regulatory authority for the telecommunications sector. Its responsibilities include publishing telecom regulations, approving technical norms, setting the objectives in the National Telecommunications Plan, regulating the concession of licenses, approving transfers and acquisitions, applying sanctions and fines, setting interconnection rules, overseeing compliance with norms, applying duties, fees and taxes, and managing the Universal Service Fund.
The state-owned telecom company, Corporación Paraguaya de Comunicaciones (Copaco), holds a monopoly over landline voice services and local and international long-distance calls, as well as Voice Over IP. By contrast, mobile and internet industries have been competitive since 1998. In the broadband market, Copaco is the dominant actor, facing strong competition from Tigo. The mobile market boasts the highest level of competition with four operators: Tigo (the market leader), Telecom Argentina’s Personal, América Móvil’s Claro, and Copaco’s Vox.
Increased investment in the telecom sector is directly related to the capacity of the Fund to subsidise extended services in the less-developed regions of the country. The 1995 Telecommunications Law stipulates that the Fund’s resources come from 20% of the total of operators’ commercial exploitation tax, as well as from other donations or transfers to the Fund from private or public, and foreign or national individuals or entities.
According to the president of the telecom industry’s regulatory agency, the National Telecommunications Commission (CONATEL), which oversees the operations of the Universal Service Fund, the latest auction for licenses to develop 4G networks in the country resulted in US$80 million in revenue for the government, and an additional US$20 million for social development in the health, education and security sectors. This translates to 4G connectivity in more schools and 9000 computers with internet access for the top students at the National University, prioritising those studying education, as well as increasing the availability of telemedicine through collaboration with the Ministry of Health, strengthening the national police force with the purchase of security equipment and launching a technologically advanced communications network, and building telecentros (establishments where people can access the internet) in various communities throughout the country.
With greater and increasingly longer-term investment by government and operators, the Fund’s resources will stretch even further. Infrastructure development and expanded connectivity will increase the market for telecom services, in turn attracting more investment. The Universal Service Fund is key to enabling this virtuous cycle of investment and development.
A crucial component to the success of the PNT and the role of the Universal Service Fund in channelling telecom wealth towards social development will be transparency. The targets of the PNT and the goals of the Fund are already clear, specific and measurable. The government’s expressed commitment to transparency implies that it will collect data to measure progress towards these targets and evaluate the impact of the Fund’s strategy on social development and connectivity, while at the same time ensuring that this information is accessible to the public.



1-TeleGeography A. Division of PriMetrica, “Tigo Paraguay Launches LTE Services in 20 Cities,”
2-TeleGeography A. Division of PriMetrica, “Tigo Paraguay Shares Five-Year Plan,”
3-“TIGO | Inter-American Investment Corporation.”
4-“Paraguay Telecoms, Mobile, Broadband, Digital Media, Market Analysis.”
5-“Plan Nacional de Telecomunicaciones Impactará En Reducción de Tarifas de Internet Hasta En Un 80% Para El Año 2020.”
6-“Subsidios Otorgados.”
7-Presidencia de la CONATEl. “4G: 90 millones de dólares ingresó al gobierno por la subasta en Conatel. 20 millones de dólares serán invertidos en tecnologías para salud, educación y seguridad.”