Technology and Media
Argentina is one of the countries in Latin American with the best (or least bad, as it is not a region with good results) indicators of access to and use of information and communication technologies (ICTs, including telecoms, Internet access and audiovisual services). However, the country has been falling behind in the adoption of, access to and use of ICTs when compared to other countries in the Southern Cone, particularly Uruguay and Chile.
With a population of 44.2 million people in 2018, there were 60.8 million mobile phone lines (139.5% penetration) in Argentina in 2018, most of which (89%) by prepaid usage. Data is relevant as it shows a socioeconomic gap that discrimenates those who access to lower quality mobile phone services and pay a higher cost per minute to access the Internet (those are the main features of prepaid lines). In addition, even though there was a significant growth since the opening of the 4G market, most of the active mobile phones lack that service. Around 23.8 million users enjoy 4G, making Argentina the country in the Southern Cone with the third highest access to 4G, after Uruguay and Chile.
The fixed phone sector had 9.6 million subscribers and reached 70% of Argentine households in June 2018. Like in many other countries in the world though, mobile phones have replaced fixed lines at a mass scale for both telecoms service and Internet access in the last 15 years.
Mobile Internet penetration, which is conditioned by the lack of an effective adoption of 4G and by the relatively lower speed of the service available, is high in comparative terms, given the fact that 69% of the Argentine population has access to it, compared to an average of 50% across Latin America. Nevertheless, even the speed of 4G in Argentina is lower than the average speed in other countries, such as Peru, Bolivia, Chile, Brazil, Uruguay and Colombia. Accordingly, the performance of 4G is perceived as low-quality by mobile data experts from other Latin American countries.
With regard to Internet access via fixed lines, Argentina has 8.1 million broadband users (59% household penetration), though this figure should be considered carefully as the definition of broadband includes certain mandatory speed ranges. The average speed of these connections is 13.85 Mbps. Around 95% of fixed Internet connections are either by cable modem (almost half of the total) or ADSL (almost 45%). According to the ITU report “The state of broadband” from September 2018 (which compares data from 2017), Argentina was the country in Latin America with the second highest number of fixed broadband subscribers, after Uruguay.
What are the key players in Internet, mobile and telecommunications?
Internet and mobile communication industries are highly concentrated in Argentina, as the largest operator in the country was involved in an unprecedented merger in Latin America between 2017 and 2018, thus positioning itself as the leading company in Internet access, fixed and mobile communications, and media. [LINK concentation]
The following section will provide more information on the situation.
Based on infrastructure, Internet access, communication services provided and the number of operators, the mobile phone market can be divided in three parts, while the fixed line phone segment can be divided into two.
The three leading companies in the mobile phone segment are Movistar (with headquarters in Spain), Claro (with headquarters in Mexico) and Personal/Telecom (with headquarters in Argentina), while the two companies controlling the fixed phone and Internet access segment are Movistar and Personal/Telecom. Smaller companies and cooperatives also operate in these markets. In addition, the role of State-owned wholesale service provider ArSat needs to be mentioned. Since 2010 investments in the optical fiber backbone network (which is 34.000 km long today) have prevented an excessive concentration in the sector and higher prices in the areas where ArSat is operating.
When looking at a map of Argentina’s largest operators, since 2017 the emergence of a national champion conglomerate can be observed that is controlling the communication market. For instance, their competitors lack a robust network of pay TV services.
President Macri’s administration supported the conglomerate’s role in the merger between the largest fixed broadband provider in the country and two leading mobile and fixed phone operators (which provide Internet access services). The merger also included the largest cable operator in Argentina (pay TV penetration in the country is 80%), which is controlled by the shareholders of the largest multimedia group (Grupo Clarín). This group also owns the broadest circulation newspaper in Argentina (both printed and online), the leading radio stations, one of the most viewed open TV channels, as well as one of the leading pay TV news channels. Grupo Clarín is also the controlling shareholder of the only newsprint factory in the country (Papel Prensa), in a joint-venture with Argentina’s National State and the second broadest circulation newspaper in the country, La Nacion. [LINK concentration]
The merger resulted in the concentration of a company (Telecom) with a dominant position in the ICT access infrastructure market in Argentina. After the merger was announced in June 2017, the services provided by Cablevisión and Telecom included fixed phone (42%), mobile phone (34%), fixed broadband Internet access (56%), mobile Internet access (35%) and pay TV (40%). In addition, the law that regulates the mobile phone frequencies was violated, and Cablevisión-Telecom received privileges regarding the management of the communications backbone network in the center and north part of Argentina – the most populated areas in the country, where Telecom also operates the public phone service.
In other words, the market control by the prevailing company is much higher in the country’s most populated areas with a higher purchasing power. The conglomerate controls 75% of the market in the country's main cities in different industries, such as fixed broadband in Rosario, Córdoba and the north part of the Greater Buenos Aires area, or pay TV in Córdoba.
With regard to content, browsers and social media, the dominant players in Argentina are Google and Facebook. Google controls the industry of Internet browsers (with Google Search and YouTube), while Facebook leads the social media and messenger platform segment (with Facebook, Instagram and WhatsApp).
There are 32 million Facebook accounts in Argentina, and 88% of these users access the platform using mobile devices. Owned by Facebook, Instagram has increased its number of users, with 14 million accounts in Argentina (data provided by We Are Social [(https://wearesocial.com/]). WhatsApp, another app of Mark Zuckerberg’s company, is also massive: 70% of mobile Internet access users have the app.
Google is the browser that concentrates almost 95% of the searches done in the country, while YouTube is the most used video platform. According to We Are Social, 68% of all Argentines frequently access the platform. What’s more, Android is the dominant system in mobile phones, and several other apps of Alphabet Inc. (the conglomerate behind Google, Android and YouTube are used massively.
With regard to information and news content on the Internet, the sites with the highest numbers of visitors are those of Grupo Clarín (including the group’s most visited site, clarin.com; other media portals, such as tn.com.ar; or the sites of the newspapers of Córdoba [La Voz del Interior] and Mendoza [Los Andes]).
What is the relation between tech companies and the Government?
The relation between Mauricio Macri’s administration and the sector has been defined mainly by the merger between Cablevisión and Telecom, which took place between 2017 and 2018, and involved Grupo Clarín’s shareholders. This event caused both support and criticism towards the decisions made by the President.
Since his inauguration in December 2015, Macri signed several executive orders to promote the expansion of Grupo Clarín in the telecoms sector. The goal of the Government was to further the sector’s convergence and modernization, while promising to grant licenses to other operators to compensate for the benefits given to Clarín. The Government said that their executive orders were temporary measures and that they would send a comprehensive bill on convergent communications to Congress soon. The bill was never drafted, let alone sent to Congress.
In fact, the merger between Cablevisión and Telecom first required laying the ground and amending several regulations by means of executive orders and resolutions issued by regulatory body ENACOM, created by President Macri. The regulations that were amended had been passed by the Argentine Congress in previous years (in particular, Law No. 26522 on audiovisual communication services from 2009 and Law No. 27078 on telecommunications and ICTs from 2014, also known as “Argentina Digital”).
The close relationship between the Argentine Government and the leading operator in the telecoms industry was widely criticized, as it further distorted the sector’s competition and affected media’s and ICTs pluralism and diversity. This criticism led to a formal administrative and legal complaint, which was filed by Telecom’s direct competitors, Movistar (Telefónica) and Claro, and by small and middle-sized players and cooperatives.
The relationship between large Internet intermediaries (Facebook, Google) and the Argentine Government is very good, always within the limits defined by those companies’ global corporate policies in the countries where they have offices and provide local and regional employment opportunities. The Government is an important client and tends to hire these companies for official advertising and political campaigns, which has resulted in criticism by traditional media. Also, Facebook considers Macri a “success story” because of the way in which he has used the social network during the presidential campaign and for the promotion of his image (both as candidate and as president).
What is the relation between tech companies and the media?
Historically, telecoms companies have been (and continue to be) a significant source of advertising for the media. This is why, in spite of the huge number of complaints about the high price and the low quality of the services, that have been advanced by consumer defence organizations, the media shies away from providing more information on these companies’ activities, let alone scrutinize them. So in general terms, the relationship between tech companies and the media is fairly good.
However, Internet intermediaries have different criteria and opinions than those of legacy media companies, who have been denouncing a reduction in their income from advertising due to Internet conglomerates. This has eventually led to rising tensions and claims by the media industry. Those are based on two aspects: draining income from advertising and the copyright violations of those contents that are still created by the media industry, but whose marketing and value chain it no longer controls. An example of a claim was the bill on “intermediaries’ responsibilities”, which was strongly supported by Google and Facebook, as well as by Internet access providers and app developers in Argentina. The bill, which had been preliminarily approved by the Upper House, was no longer considered by the committees in the Lower House in late 2018, due to media companies and copyright management organizations’ criticism.
With regard to the integration of telecoms and the media, the ongoing convergence process, which is also furthered by digitalization, is considered a challenge in Argentina by the leading companies and groups in the industry, which tends to get closer to each other by means of partnerships and concentration processes, like in many other countries in the world.
The controlling telecoms operators in the country (Telecom, Movistar and Claro) are offering quadruple play services (fixed phone, mobile phone, Internet access and pay TV packages) in certain areas in the country. Their expansion is still limited because of regulatory constraints and the lack of robust Internet access networks ready to support all these services together. Yet, as a trend, the integration of the sector is growing.
However, there is no real contact in place between global Internet giants and local media companies.
What is the financial/economic situation in the tech market?
According to official estimates, the telecoms and ICT sector as a whole creates 78,400 direct jobs and accounts for 2.7% of Argentina’s GDP (sources: INDEC and ENACOM indicadores.enacom.gob.ar/IndicadoresNacionales.aspx).
With regard to telecoms, towards the end of the 2017 fiscal year, the turnover from mobile services amounted to $103 billion; pay TV, $42 billion; fixed broadband, $23 billion; and fixed phone, $13 billion.
Nevertheless, there is no financial data about global Internet giants and their operations in the country. In this regard, Argentina, as well as many other countries in the world, experiences the lack of transparency and the absence of basic data about the economic performance of these giants.
How are tech companies regulated?
Legal regulations in Argentina cover telecoms services (Law No. 27078 on telecommunications and ICTs from 2014, also known as “Argentina Digital”, amended by executive orders and resolutions issued by Mauricio Macri’s administration, especially Necessity and Urgency Decrees 267/15 and 1340/16) and audiovisual communication services (Law No. 26522 on audiovisual communication services from 2009, amended by Law 27078 from 2014 and executive orders and resolutions issued by Mauricio Macri’s administration, especially Necessity and Urgency Decrees 267/15 and 1340/16). This information is included in this section as it covers audiovisual operators as well. In spite of the fact that President Macri classified audiovisual services as telecoms services, they still remain subject to the taxation regulations set by the audiovisual law.
Nevertheless, there are only a few regulations on Internet besides some general legislation on the scope of the constitutional guarantee of freedom of expression on the Internet (Law No. 26032 from 2005), network neutrality principles stipulated by Law 28078, or specific regulations on online child grooming (Law 26904 from 2013). The current Personal Data Protection Law (No. 25326) was enacted in 2000 in Argentina and, therefore, it is not adequate for the twenty-first century technological developments in the field of communications, in particular the evolution and transformation of mobile communications, plus web 2.0, digital social media, massification (Google) or new platforms (Facebook, YouTube) that define Internet today.
Finally, Argentina has a legal framework for software promotion (Law No. 25922 from 2004) that covers many tech companies (those who are actually software manufacturers for e-commerce intermediaries, such as Mercado Libre).