14 March 2012

The Potential Hidden Cost of Free Wifi in Brazil's Favelas

Earlier this week, Brazilian tech website Tecnoblog reported that free, public wifi will be rolled out to a number of favela communities. The intention of the project is to help combat "digital illiteracy." One part of this initiative confuses me, and I'm concerned about its possible unintended consequences for the private sector.

First, the report on Tecnoblog indicates that the free wifi will be available until July 2012. That's only a few months away. It seems like a lot of work for a very short run. I'm wondering if the website gave the wrong year in the report, or if perhaps this is just "phase one" and will be renewed or not based on some metrics we haven't been told about.

Second, I'm concerned about what this free wifi will mean for private providers. A "LAN House" can be a decent small business in Brazil. When I lived there almost 9 years ago there seemed to be cybercafes everywhere. I've heard that in the intervening years many have also begun providing paid wifi access. If so, the government will now be their competitor in some underresourced neighborhoods of Rio de Janeiro.

Besides LAN houses, private individuals may be providing and administering wifi access for users in these areas. Project Cauã is one organization that promotes sustainable self-employment through just this type of business. Even if there aren't many such entrepreneurs in the communities now, if government-provided free wifi becomes a permanent fixture, there will be no place for them in the future.

Although I'm very much in favor of greater Internet connectivity in poor communities and believe that tech education will prepare young people best for their future careers, I have my doubts about this particular strategy. I'm thinking that if fully implemented long-term, free public wifi could come at a high cost for small businesses and entrepreneurs already providing this service for a fee.