THROUGH THE WIRE

Panama 2014 | TELECOMS & IT | REVIEW: TELECOMS & IT

While the mainstays of Panama's IT industry are benefiting from the country's economic growth, start-ups and new entrants are set to shake up the industry.

In January 2003, the government ended the monopoly enjoyed by Cable & Wireless Panama (CWP), and opened the telecoms industry to full competition. With a decade of impressive GDP growth rates under its belt (barring the 2009 financial crisis), the future looks equally promising, especially for the ICT sector. After more than a decade of infrastructure development, a liberalized market, and extensive fiber optic connectivity, Panama has become an attractive country for further telecoms development. According to the Public Services Authority of Panama (ASEP), the number of fixed lines in operation in 2013 rose to over half a million, up 2.9% over 2012. Residential and commercial phone lines also increased in 2013, by 0.69%. Subscribers to mobile networks rose in 2013 from 6.2 million to 6.3 million, representing a 1.3% increase over 2012, with 90% of Panamanians now using cell phones. These numbers mean that there are about 1.6 cell phones per person in Panama, of which 5.6 million were pre-paid users in 2013. In spite of heavy per-capita cell phone use, only 37.7% of national territory currently receives coverage, and further expansion is crucial.

NEW KIDS ON THE BLOCK

Although the tech-sector is still under the radar of most causal observers of the Panamanian economy, the sector's remarkable growth warrants closer inspection. Specifically, a tech start-up scene is emerging that may soon launch regional or global brands. Thanks to a series of initiatives that foster innovation, such as the Panama Business Accelerator (AEP) and the Venture Club, investors and start-ups are able to launch their ideas in Panama. The AEP is located in Panama's City of Knowledge tech and research hub, where the company provides resources for start-ups, such as advice from their successful predecessors, access to capital, space, and visibility. In addition, the AEP is connected to a network of angel investors, and organizes events to connect start-ups with capital. The Venture Club bills itself as the first group of investors focused on developing innovative entrepreneurship culture in Panama. The group provides direct funding to start-ups in exchange for a percentage of the company, thus combining the incubator and investor roles.

This environment has launched a number of exiting new start-ups that are worth mentioning. For those of a culinary bent, Degusta is an online and mobile supported restaurant guide for Latin America. Another company, Aquasense International Corporation, is undertaking computerized fish farming. The farm has a remote command center that is kitted out with the latest technologies, including remote and satellite communications, which enable technicians to monitor the environment, the sea, and the fish, from a laptop 3,000 miles away. Jigle is a Panama mobile messaging app that separates contacts based on the frequency of online interaction, and was also developed in Panama. Another mobile-based app that is garnering attention is Deciderr, which aggregates user input to create answers to other questions posed.

There are many more companies coming online such as Ubiqua, Gogetit, Elconix, YoCotizo, TuChofer, SAVES, MercadoMovil, 2GoStore, Tubeisbol, Regalatón, Costea.me, Todosdicen, and Tuvivi. In short, these developments are exciting not only on a technical level but even more so because they represent an entirely new entry into Panama's economy.

WAITING FOR THE CITY

When Panama assumed control of the canal from the US Army, they inherited empty military bases as well. One of these bases has been converted into an IT development and research hub. Dubbed the City of Knowledge, the old US Army Southern Command is now home to educational institutions and NGOs. McGill University has a semester program at the city, as does the School for International Training. Other universities like UC Davis, Cornell University, Texas A&M, and Iowa State also run programs at the City of Knowledge. IT companies have also taken up residence in the facility, and the private sector is well established there. In addition to start-up incubators like AEP, professional services and IT solutions companies like Infosgroup are using the proximity of the education sector to hold seminars and focus groups dedicated to advancing the sector in Panama. By bringing industry professionals from Panama and around the world into the City of Knowledge, events organizers can maximize the exposure of new ideas.

THE CABLE MAN

According to market research firm Research and Markets, the value of the telecoms market in Panama will be worth $1.71 billion by 2018. With a valuation of $1.38 billion in 2013, most of this growth is expected to come from mobile data, pay TV, and fixed broadband. CWP is also expected to maintain its market dominance in the next four years. Regarding broadband, in late 2013, Panama's National Authority for Governmental Innovation (AIG) launched a plan to expand broadband coverage nationwide. The plan, called the Plan Estrategico de Banda Ancha Panama-2022, aims to increase fixed and mobile broadband services adoption and use throughout the country. The project includes expanding broadband services to under-served, and rural parts of the country. The AIG reports that currently, only 42% of the country has internet access, and of those connections, 98% are broadband. In provinces such as Panama and Colón, access is widespread, whereas the rural province of Darien has almost no access. According to the AIG, around 138,547 homes in the province of Panama have internet access, which represents around 29% of the total internet access points in the country. Statistics reveal that internet customers in 2013 increased to 304,068, and of these users 264,539 were residential customers and 39,529 were commercial. This means that in 2013, there were eight internet users for every 100 Panamanians. Despite room for improvement regarding internet access, Panama was one of the first countries in the region to launch 4G technology, in 2011-12, and was also a leader in Android and iPhone services.