Espuelas Expects Strong Internet Growth in Latin America

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NEW YORK - The number of global Spanish and Portuguese speakers online has grown from 100,000 in 1996 to 28 million today, and Latin America has become the fastest growing Internet market in the world -- just as Spanish is the fastest growing language.

Speaking at the international network 2000 conference here, Star Media CEO and co-founder Fernando J. Espuelas said in his keynote address that 10 percent of all foreign investment in Latin America this year had gone to the Internet.

In the last seven months, he said, 400 new Internet companies were founded in Buenos Aires alone. He cited a survey of 22,500 Internet users across the continent that showed rising faith in the Web's ability to deliver.

"Nine out of 10 people surveyed said the Internet would play a major role in flattening social differences in Latin America, and the same number thought the Internet would bring prosperity to the hemisphere."

Technology and innovation have begun to leapfrog over older systems, he said, and are coming on stream faster than in countries such as the United States that had more technology much earlier.

Brazil, he noted, launched wireless Internet services just 30 days after it was launched in the United States. And he expects Brazil to have more wireless than land lines in a matter of years if not months.

Free Internet services providers moved into Brazil much more quickly than they did in the United States. Today, some 35 percent of Internet users have dropped paid ISP, and free ISP is rapidly becoming the dominant Internet access model not just in Brazil but across Latin America.

More than in the looser Anglo-Saxon cultures, the Internet is bringing social, economic and political change. Borders are falling. Economic models are being rebuilt. The nature of opportunity is changing.

Latin-American consumers are having a larger say in their purchasing habits.

Entrepreneurship is booming in an environment where banks compete to make loans to startups rather than have them beg to pay 20 or 40 percent interest rates.

Politically the Internet is helping produce greater stability in a region noted for nonstop upheavals. Espuelas argued that dissemination of wrong information -- as the Argentine government did during the Falkland War in the early 1980s -- is not possible in the Internet age.

"This is a glorious time for democratic capitalism in Latin America, but it is also a time of incredible risk," because, he said, millions of people do not use the Internet. As a result, "the Internet could be the tool that deepens the digital divide."

He gave strong support to plans to spend $1 billion to wire every school in Latin America.

Espuelas did not address the problems his own company is having with falling stock prices and rising competition for market share in Latin America. But he was scathing about prospects for Terra-Lycos to make inroads.

The alliance was formed last month when the Spanish Telefonica daughter Terra bought the U.S. portal firm for $12.5 billion with the express intent of making Terra a bigger global Internet player.

"Telefonica has spent $1 billion in Latin America trying to catch up with us and is 60 percent our size and has 30 percent of our revenues. Terra lacks critical mass, and Lycos is not the leader in any market."

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