Latin America’s telecommunications advancement: unlocking the possibilities of DePIN.

The following is a submission from Sofia Bobrik, CEO and Co-founder at TechWaves PR.

Latin America presents a challenging environment for the region’s telecommunications companies and their customers. With operators burdened by debt, declining revenues, ineffective incentives, high tariffs, poor service quality, and a gap in connectivity and demand, the LATAM telecom sector requires significant transformation to achieve financial sustainability for its participants.

Decentralized Physical Infrastructure Networks (DePINs) have the potential to address these issues and drive the necessary evolution in the sector by providing a distributed and resilient infrastructure that enables scalable, reliable, and affordable telecom solutions throughout LATAM and beyond.

A struggling telecom market

Although internet penetration has increased from 46% in 2013 to 81% by 2023 in Latin America and the Caribbean, the region’s telecom industry encounters specific challenges that render it less sustainable and competitive compared to Europe, North America, or Asia.

Firstly, a coverage gap affects 7% of the region’s population, primarily in remote areas with difficult terrains—such as Colombia’s mountainous regions—where it is not financially feasible for mobile network operators to expand their services. Additionally, there is a usage gap impacting 28% of Latin Americans, who do not utilize telecom services despite residing in areas with active mobile broadband coverage.

In Argentina, the coverage gap impacts 4%, while the usage gap stands at 23%. In Brazil, only 66% of the population has access to mobile broadband services, with 12% and 23% facing connectivity and usage gaps, respectively.

A key factor contributing to this usage gap is the lack of affordability of telecom services, primarily due to infrastructural challenges, capital expenditure-heavy expansions, indebted regional operators, and regulatory hurdles. In countries like Argentina, taxes significantly inflate broadband costs, with up to 44.5% of the price attributed to taxes. While fixed internet prices have dropped in Buenos Aires since 2018, they still constitute 4% of the average household income, which is double the UN’s 2% affordability benchmark.

DePIN’s transformative effects for LATAM telecom

DePIN utilizes blockchain technology to decentralize ownership and management of physical telecom infrastructure. Currently, the sector’s total addressable market is estimated at $2.2 trillion, projected to reach $3.5 trillion by 2028.

Through DePIN technology, a decentralized telecom infrastructure can be established where individuals and small businesses set up hotspots, antennas, or routers to provide internet coverage to users. In return for their valuable contributions to the ecosystem, operators receive local token payments supported by network usage fees.

For Latin America’s indebted telecom providers, DePIN’s primary advantage is that it does not impose additional operational or capital expenditures to offload traffic from their networks. They are not required to allocate funds for hardware deployment or maintenance, as DePIN infrastructures are crowdsourced.

Rather than competing, collaboration is more beneficial between DePIN networks and telcos in the LATAM market. Given that DePINs still have ample room for growth, they can leverage the established telecom infrastructures of traditional providers to offer coverage to their users at a fraction of the costs associated with legacy services. This creates an additional revenue stream for telecoms, which can help mitigate their operational expenses.

With crowdsourced hardware and appropriate token incentives, DePIN networks can address coverage gaps in remote areas and regions with challenging terrains across Latin America. Since this infrastructure development is significantly less expensive than the capital-intensive expansions of telcos, DePINs can provide telecom services in underserved areas at affordable rates. Consequently, they also tackle the LATAM market’s usage gap, potentially bringing 28% of the population online.

Through collaboration, DePINs and telcos can establish an interconnected network of telecom solutions that offer customers affordable pricing, more reliable services, and improved coverage. Indeed, combining established infrastructure in major areas with a decentralized ecosystem capable of rapid expansion in remote locations can greatly enhance service quality and reduce outage frequency.

While token incentives accelerate DePIN infrastructure development, the blockchain’s distributed, decentralized, and immutable characteristics enhance the network’s resilience. Unlike traditional telcos, DePINs do not have single points of failure that attackers could exploit in data breaches. This could make the Latin American telecom market significantly more appealing to consumers.

An example of applying DePIN concepts is OpenRoaming, a global federation that enables seamless Wi-Fi connectivity worldwide through decentralized identity management and secure, automated connections. The OpenRoaming ecosystem is enhanced by Uplink, an internet DePIN provider, which integrates members into a decentralized platform to address their connectivity challenges. It represents a broad and scalable approach, promoting the extension of coverage to underserved areas. As stated on its official website, Uplink’s strategy also assists telcos in reducing their capital and operational expenditures by offloading traffic into its decentralized infrastructure.

The challenges and future of Latin American DePIN adoption

Each LATAM country has varying regulatory policies, complicating operations for both telcos and DePINs. Industry participants must work together with governments to establish robust frameworks that encourage growth and innovation.

Another obstacle for DePINs is the onboarding of Latin American telcos operating within the Web2 framework into the Web3 market. This is a new sector supported by transformative technologies, and legacy providers require a straightforward process to enter this new market.

Considering the financial difficulties faced by Latin America’s population, telcos, and national economies, DePIN holds even greater potential in the region than in more developed areas. With the right incentives and regulatory frameworks, DePIN could transform Latin America’s telecom sector into a competitive, innovative, and accessible market.

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