Peruvian Internet operating costs to decrease by 91 percent

The president of Osiptel, the State regulator of Peru’s telecommunications sector, announced a plan today to increase competition among Internet providers by reducing the operating costs for broadband Internet service providers by 91 percent.

Internet providers in Peru currently need 34 broadband connection points, which has a monthly cost of $166,000, Agencia Andina reported Guillermo Thornberry saying. However beginning next week, Internet operators will only need three broadband connection points, costing between $7,300 and $14,600 a month.

“It won’t only reduce the costs but also the entry barriers for an operator that wants to enter the Internet broadband market,” said Thornberry.

There is little competition among Internet providers in Peru. Telefónica del Perú — a subsidiary of the Spanish telecommunications giant of the same name — provides more than 90 percent of Internet service. The next four biggest companies provide less than seven percent combined.

An October 2007 report released by the California-based Cisco Systems found Peruvians were paying at least 40 percent more for Internet service than their neighbors in Chile, Colombia, and Argentina.

“With this reduction of intermediate prices for broadband operators, we hope to see an interesting impact on the level of prices for consumers,” said Thornberry. “The different operators could provide their clients a more competitive service than Telefónica.”

Thornberry added they also hope to increase the number of Internet users in Peru. He said there are currently about 655,000 Internet connections in the country, however 80 percent of those come from Internet cafes.

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