The Internet of Things: The Next Digital Divide for Latin America?

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Compared to the rest of the world, especially developing regions, the Internet in Latin America has quickly grown, and looks to be on a healthy path towards more connectivity in the next few years, despite the economic and political challenges facing some major countries in the region.

But the proportion of people joining the global network is arguably an obsolete metric for the future of the Internet, as the Internet of Things (IoT) is accelerating and moving the global village into a new phase. And as Cisco VP Robert Pepper noted in the Huffington Post this week, based on the company's 2015 Visual Networking Index (VNI), Latin America is currently poised to fall behind in the next big evolution of the Internet.

So Far, So Good

The growth of the Internet in Latin America has been swift in the past few years, due largely to the mobile Internet and smartphone boom in leading countries like Brazil, Mexico, Chile, and Argentina. As Cisco's 2015 VNI report found, last year Latin America as a whole grew in IP traffic by 25 percent, with traffic growth for the mobile Internet at an incredible 87 percent.

The consensus among Cisco's report and other studies is that Internet penetration by percentage of the population across all of Latin America is at least over 50 percent by now, which is higher than the world average, and projected to grow by around 10 percent over the next five years.

Fixed broadband and mobile Internet (measured by both adoption and speed) and overall data traffic in Latin America are all projected to grow, by varying figures depending on the study.

But the picture is clear: the Internet as we know it is spreading through Central and South America quickly. Latin America is closing the gap, especially in mobile, with the rest of the developed world and nearly 400 million people will be connected in the near future.

IoT: The Next Phase

However, as Pepper argues, while Latin America has been one of the most successful developing regions regarding the expansion of the Internet of people, things are not looking as bright for the growth of the Internet of Things there.

Judging by Cisco and the Broadband Commission's studies of adoption and deployment of machine-to-machine (M2M) connectivity and services -- a fundamental building block of IoT -- Pepper sees an emerging digital divide in the next phase of the Internet, ironically hidden by Latin America's current booming adoption of the consumer Internet.

That's because the Internet of Things is expected to quickly dwarf the "people" Internet in the near future, in size, complexity, and the economic advantages that come with adopting it.

Pepper notes, "As over one billion additional people connect to the Internet over the next five years, over 10.2 billion new devices (smartphones, tablets, sensors, etc.) will come online at the same time, growing from 14.2 billion in 2014 to 24.4 billion in 2019," of which 10.5 billion will be M2M devices, the backbone of IoT.

And according to Cisco's study, Latin America isn't expected to make much progress over the near-term in the number of connected devices, especially of the M2M-variety.

In Latin America, there were about two connected devices per person in 2014, Cisco found, which is expected to rise to just under three per person in the next five years, a 9 percent increase. Compare that to Western Europe in 2019, which is expected to have over eight Internet-connected devices per capita, or North America, with a forecasted 11.6 devices per person in five years.

Growth in specifically M2M devices paints a bigger divide. Globally, the average M2M connected devices is expected to be 43 percent by 2019, with Korea leading at 72 percent and the U.S. reaching around 58 percent by that time. But in Latin America, leading countries like Brazil and Mexico are expected to reach 32 percent by that year, falling behind the global average by about the same amount that the region as a whole currently surpasses global average Internet penetration today.

Why it Matters

As it is still in its nascent phase, the overall importance of the coming Internet of Things is sometimes hard to see. The IoT revolution isn't about smartwatches and refrigerators that send notifications to your phone. And it's much more than thermostats or light bulbs you can monitor and adjust from the office.

Consider the economic disruption and opportunity brought by the fixed Internet, when people could shop from home: Amazon. Or the changes broadband has brought to entertainment: Netflix. Or the social Internet: Facebook. Or the smartphone Internet: Apple, Google, Uber, Snapchat, Airbnb and many more.

Then imagine 50 billion objects being connected together, from consumer goods to manufacturing systems, to appliances, healthcare systems, infrastructure, mass and personal transportation -- and the list goes on and on. In the future, IoT is what most of the Internet will be, and anyone left behind will be at a huge disadvantage.