With many of the region's economies contracting in 2009, the Dominican Republic's continued growth over the period permitted investment in telecommunications and broadband infrastructure to remain strong. Broadband penetration has grown from 4.6% in 2010 to over 5% in 2012, while fixed-line telephony experienced modest growth from 10.4% to 10.6% over the same period. Meanwhile, mobile subscriber penetration dropped slightly from 91.5% to 91.3%, as the trend toward multi-SIM usage began to fall away.
In an effort to open up services in rural areas, INDOTEL allocated more of the digital spectrum to mobile services, in a move that will encourage greater coverage in underserved areas. Furthermore, the regulator has also solicited funds from the World Bank for a national fiber-optic network in order to project voice and broadband services into those areas.
In the IT arena, the country is making steps to strengthen its software development base while also promoting its growing list of business process outsourcing (BPO) companies. Mainly located at the Parque Cibernética, the country's premier technology park dedicated to the nearshore provision of IT and call center services, the country now hosts 35 call centers and BPO companies, as well as 50 software development firms.
Like the rest of the sector, the Dominican Republic's mobile telecoms segment is fully private. The mobile penetration rate, which is in line with regional averages, stands at 91.3%. While this reflects a drop off from 91.5% in 2010, the slowdown in new subscriptions is seen as a result of market saturation and a trend pushing away from multi-SIM usage, as has been the norm in developing economies in recent years, as mobile operators consolidate their offerings.
The market is currently disposed toward pre-paid lines, with over 7 million of the country's almost 9 million users opting for its service. Smartphone uptake has been high in the country, a fact that has also brought in data revenues across the board. While broadband penetration remains low at around 5%, overall internet penetration is estimated to be much higher due to those using mobile devices to surf the web. Huawei is one of the latest entrants into the smartphone market, and the company has 80 employees on the ground in the Dominican Republic. The company also works with the country's major telecoms providers and is developing LTE infrastructure.
The country's mobile service providers include Trilogy International Partners, which operates under the Viva brand, Claro República Dominicana, which operates the Claro brand and is a subsidiary of América Móvil, Telecable de Tricom, which operates the Tricom brand, and Orange Dominicana, a subsidiary of France Télécom. While competition remains intense, Viva's Executive President Tomás Pérez-Ducy highlights the need for modernization and regulatory evolution, “particularly the cost of cross-operator connection charges," if the end user is to see the benefits.
While much of the world awaits 4G, Orange Dominicana has taken the first steps toward a nationwide LTE service offering in the country. Launched in mid-2012, its service initially offered high-speed data downloads to the Santo Domingo region. The firm invested $150 million in the project and offers download speeds of up to 100 MB/s.
Despite possessing relatively advanced digital telecoms infrastructure, fixed-line penetration is low compared to Latin American averages. Mobile penetration is almost 10 times higher than fixed-line penetration, which currently stands at 10.6%, up only a tiny fraction from 10.4% in 2010. Mobile operators Claro and Tricom also offer fixed-line services, alongside WIND Telecom and OneMax. INDOTEL remains committed to increasing the number of fixed lines in the country, especially in rural regions. It currently operates a policy to provide fixed-line telecoms to all rural communities with more than 300 inhabitants. INDOTEL also inked a deal with Codetel, now Claro, back in 2008 in order to invest $100 million in rural connectivity. While Claro is the largest landline provider, Tricom is the second largest provider.
Claro dominates the internet segment in the Dominican Republic, with over 40% of the market. Tricom is second, at over 21%, while Orange Dominicana is third with 16%. Claro offers broadband and wireless services, as does Tricom, in addition to WiMAX. Orange Dominicana also has wireless offerings, and does Viva. Onemax and WIND Telecom offer WiMAX services.
Broadband penetration currently stands at just over 5%, while the number of internet users is around 4 million. The number of mobile broadband users is expanding far more rapidly than fixed internet lines due to the relatively high price of the latter and its low speeds. The expansion of the fiber-optic network, partly funded by the World Bank, will push competition in the coming years and encourage more ISPs to upgrade their services. As the country moves through 2013, an expanding fiber-optic network, as well as the emergence of LTE networks, is likely to see growth in internet usage continue.
Despite the relatively high cost of fixed broadband, getting online is easy in the Dominican Republic due to the prevalence of wi-fi, which is available at most hotels and some universities.
The Dominican Republic's IT sector revolves around software development and the growing demand for nearshoring services. The National Systemic Competitiveness Plan (PNCS) outlines the need for human and technological capital and staying ahead within a globalized world, especially since the signing of the Dominican Republic-Caribbean Free Trade Agreement (CAFTA-DR). Parque Cibernética, the country's primary technology park, forms the core of the country's IT sector. A free zone dedicated to IT and BPO firms, the facility hosts many of the country's 35 call centers and BPO companies, as well as many of its 50 software developers. The technology park also hosts tech start-ups and outsourcing firms, in addition to several universities and educational institutions. One such institution is the Las Americas Institute of Technology (ITLA). It offers certified training programs in many areas, including software programming, telecommunications, industrial design, and multimedia.
“It is hard to find people trained in ICT in this country. However, the quality of the people you do find is high," said Jorge Cabeza, General Manager of Microsoft in the Dominican Republic, adding weight to the argument that more needs to be done to ensure a broad base of IT professionals in the future. One such venture is the DR Cluster of Software Companies (ClusterSoft). The newly created non-profit organization includes all major software developers, technology universities, government agencies responsible for the promotion and export of IT services, and BPO firms. ClusterSoft now aims to make the country the region's preferred nearshoring destination, in an age when offshoring has become less viable. The plan has four prongs, including developing talented human resources, certifying software developers to international standards, promoting the country abroad, and strengthening the domestic legal framework. According to the plan, 10,000 bilingual software engineers are to be trained over 24 months.
Strong government support for efforts such as ClusterSoft, as well as Parque Cibernética, are reflective of the encouragement provided across the ICT sector. As rural regions begin to come online and also take advantage of more competitive mobile offerings, investments in the latest technology are likely to continue spurring growth into 2014.