Is the market for broadband access in Latin America worth pursuing? At first glance, the prospects look daunting. Latin America has almost as many households and small enterprises as the United States has, but far fewer of them can afford broadband access. In fact, the market for broadband services in Latin America—some 10 million to 16 million households and small enterprises—is about one-tenth the size of its US counterpart. Factor in the low overall number of phone and cable lines that can currently support broadband, as well as the very recent arrival of broadband service offerings, and you end up with only about 300,000 broadband subscribers in the whole region at present.

But if providers look more closely at their opportunities in Latin America, and over the longer term, the picture is brighter, as a recent McKinsey study shows.¹ One encouraging sign: despite low addressability rates—that is, the low number of households and small enterprises in Latin America now reached by the broadband-enabled infrastructure—the percentage of higher-income households reached by that infrastructure is relatively high.² Offers targeted at these households might therefore prove to be good business for providers even now (Exhibit 1).

Another positive factor is...