Expansion of the national fiber optic network
Expansion of the national fiber optic network
Business Model Description
Invest in telecommunications infrastructure through direct public investment, co-investment, subsidies or private investment to increase national fiber optic coverage.
Expected Impact
Investment in telecommunications infrastructure will reduce the digital divide of the Dominican population.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Cibao Norte
- Cibao Sur
- Cibao Nordeste
- Cibao Noroeste
- Valdesia
- El Valle
- Enriquillo
- Yuma
- Higuamo
- Ozama
Sector Classification
Technology and Communications
Development Need
The digital divide persists in the DR. 91.7% of Households have access to an ICT device/service (1). However, only 56% of households have a fixed Internet connection (2). This limits their productive development and opportunities for access to quality services because they are on the margins of technological development, with this gap being greater in rural areas (3).
Policy Priority
The National Development Strategy establishes in its specific objective 3.3.5 to achieve universal access and productive use of ICTs (4). Likewise, it established its roadmap towards digital transformation embodied in the Digital Agenda 2030 (5).
Gender inequalities and marginalization issues
Only 39% of women were employed in the ICT sector in 2018 representing a high gap in access to specialized work considering that this is a high-income sector (6). By 2021, the enrollment of women in the ICT knowledge area represented 21.6% in contrast to 78.4% of men enrolled in higher education (7).
Investment Opportunities Introduction
This sector represents an attractive high-growth market with great potential for investment. In 2022, the communications sector had a growth rate of 4.6% in its contribution to GDP (8). In addition, the flow of foreign direct investment to the telecommunications sector in 2022 totaled USD 191.9 million (9).
Key bottlenecks Introduction
High infrastructure costs represent one of the main bottlenecks in projects related to telecommunications services. Regulatory issues such as licensing and spectrum allocation may limit investment projects in this sector (10).
Telecommunications
Development Need
The Dominican Republic needs an estimated CAPEX investment, both fixed and mobile, totaling USD 872,671,618.37 million to generate 315 thousand jobs and close the digital gap that exists in comparison with OECD member states. According to the Broadband Development Index, this country ranked 52nd out of 65 countries in 2020 (11).
Policy Priority
The Digital Agenda 2030 prioritizes in its Connectivity and Access pillar the objective of connecting all Dominicans to affordable broadband internet to close the digital divide and the development of an inclusive digital economy (12). This is supported by other policies such as the establishment of the national broadband plan and infrastructure (13, 14).
Gender inequalities and marginalization issues
Women in vulnerable situations and in areas with low levels of access and connectivity may contribute to higher levels of inequality. On average, women are less likely to have access to a cell phone. The latter being an essential tool for combating inequality (15)
Investment opportunities introduction
Between 2010-2017, public investment in telecommunications infrastructure averaged 0.001%. of GDP (13). In 2021, telecommunications investments increased by 66% with a calculated dollar estimate of USD$ 372.16 million (16).
Key bottlenecks introduction
The incorporation and regulatory compliance processes could slow down the implementation of the investment (10).
Telecommunication Services
Pipeline Opportunity
Expansion of the national fiber optic network
Invest in telecommunications infrastructure through direct public investment, co-investment, subsidies or private investment to increase national fiber optic coverage.
Business Case
Market Size and Environment
730 km of fiber optic cable installed.
Demand for mobile Internet access grew by 7.85%, with 8 million accounts in 2021 (16).
46.1% of households in the Dominican Republic have fixed Internet service. However, the greatest demand comes from mobile Internet access services, where 78% of cell phones in the country have broadband contracts (15).
Indicative Return
10% - 15%
By 2021, revenues from telecommunications services will have experienced an annual growth rate of 6.95%, amounting to an estimated total revenue of US $1,629.07 million (16).
55% of these telecommunications sector revenues come from mobile telephone services, 20.2% from internet access and data services, 7.3% from fixed telephony services, 9.0% from subscription TV, and 7.9% from other revenues (16).
It is estimated that investments in infrastructure projects for the expansion of fiber optic coverage have an average return on investment of between 10-15% (22).
Investment Timeframe
Medium Term (5–10 years)
Telecommunications development projects and the expansion of fiber optic networks have a positive investment profile. The return on investment is medium term, between 7 to 10 years to generate return with long term contracts (19, 20).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Only 46.1% of households in the Dominican Republic have access to fixed Internet (16).
The broadband lines with fiber optic access per 100 inhabitants is 1.3% (11).
Gender & Marginalisation
Only 49.6% of people with disabilities have access to the internet (23).
The digital divide in the Dominican Republic is high. Only 26.28% of the rural population aged 5 years and older uses a computer and 75% uses the Internet (23).
Expected Development Outcome
Increase the percentage of households with access to fixed internet in the Dominican Republic.
Increase the number of broadband lines with fiber optic access per 100 habitants.
Gender & Marginalisation
Increase the percentage of people with disabilities with access to the Internet.
Reduce the digital divide in the Dominican Republic by increasing the percentage of the rural population with access to telecommunications services such as internet and telephone.
Primary SDGs addressed
9.c.1 Proportion of population covered by a mobile network, by technology
The population covered by at least one mobile network 35 for 2018 was 99.15% (24)
Increase the number of residents connected to broadband internet, the population's capabilities in digital technologies and to digital technologies and leave an integrated digital ecosystem (25).
17.8.1 Proportion of individuals using the Internet
The percentage of the population aged 10 years and older that used the Internet in the three months prior to the survey is 84.4% (1).
Increase the percentage of people using the Internet, from 74.82 to 90.69 (25).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Public sector
Indirectly impacted stakeholders
Planet
Public sector
Outcome Risks
Risk of increased anticompetitive practices in the telecommunications sector.
Gender inequality and/or marginalization risk: Increase the number of cases of cybercrime or cybercrime cases towards vulnerable population.
Impact Risks
Increased public expenditure for the maintenance of the fiber optic network due to the high cost of infrastructure development (9).
Lack of technical personnel for the maintenance and management of the fiber optic infrastructure.
Failure of the fiber optic network caused by climatic factors affecting the infrastructure.
Gender inequality and/or marginalization risk.
Impact Classification
What
Increased accessibility to telecommunications services.
Risk
Failure to develop the project could lead to an increase in the digital divide and inequality in the Dominican Republic.
Contribution
Increase of the national fiber optic network in the Dominican Republic.
Impact Thesis
Investment in telecommunications infrastructure will reduce the digital divide of the Dominican population.
Enabling Environment
Policy Environment
National Development Strategy 2030 creates the basic conditions that favor the synergy between public and private actions for the achievement of the Long-Term Vision of the Nation and the Objectives and Goals of said Strategy (4).
The Digital Agenda 2030 established as a national priority to expand the national fiber optic network (5).
Presidential Decree 539-20 establishes as a national priority to define a National Broadband Plan to guarantee universal access to last generation internet and the productive use of ICT (13).
Financial Environment
Foreign investors, whether natural or legal persons, have the right to remit abroad, in freely convertible currencies, without the need for prior authorization (31).
Other incentives: Residence Permits for Investment Program, through an agreement with the General Directorate of Migration, having as a prerequisite the Certificate of Registration of Foreign Direct Investment (31).
Regulatory Environment
Law No. 47-20 on Public-Private Partnerships that establishes the regulatory framework that regulates the initiation, selection, adjudication, contracting, execution, monitoring and termination of public-private partnerships throughout the national territory (27).
Law No. 344-43 on Expropriations, which grants the Executive the power to authorize the expropriation of property for duly justified reasons of public utility or social interest (28).
Law No. 153-98 – General telecommunications that created the Dominican Institute for Telecommunications to regulate the telecommunication sector (29).
Decree 629-07 creating the Dominican electric transmission company (30).
Marketplace Participants
Private Sector
Telecommunications companies (e.g. Claro, Viva, Wind, Altice).
Government
General Directorate of Public-Private Partnerships (DGAPP), the Dominican Electric Transmission Company (ETED), The Dominican Institute of Telecommunications (INDOTEL).
Multilaterals
Interamerican Development Bank, International Telecommunications Union, World Bank and others.
Non-Profit
Association of companies in the communication and technology sector (Comtec).
Public-Private Partnership
Potential PPAs that might have an impact on rural connectivity.
Target Locations
Cibao Norte
Cibao Sur
Cibao Nordeste
Cibao Noroeste
Valdesia
El Valle
Enriquillo
Yuma
Higuamo
Ozama
References
- (1) ONE, 2023. National Multi-Purpose Household Survey 2022. https://www.one.gob.do/publicaciones/2022/encuesta-nacional-de-hogares-de-propositos-multiples-enhogar-2022-informe-basico/?altTemplate=publicacionOnline
- (2) Srinivasan, S. et al., 2022. Internet access and use in Latin America and the Caribbean. Results of the LAC High Frequency Telephone Surveys 2021. https://www.undp.org/sites/g/files/zskgke326/files/2022-09/undp-brlac-Digital-ES.pdf
- (3) IBD, 2021. DR-L1147: Program to Improve Connectivity for Digital Transformation in the Dominican Republic. https://www.iadb.org/en/project/DR-L1147
- (4) Law 1-12 National Development Strategy 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (5) Agenda Digital 2030 – República Dominicana. https://agendadigital.gob.do/documentos/
- (6) ONE, 2020. Survey of Human Resources Demand in Information and Communication Technology and University Business Cooperation in the Dominican Republic 2019.https://www.one.gob.do/publicaciones/2020/encuesta-demanda-de-recursos-humanos-en-la-tecnologia-de-la-informacion-y-la-comunicacion-y-cooperacion-empresarial-universitaria-en-la-republica-dominicana-2019/
- (7) MESCYT, 2022. Higher Education Data 2021. https://mescyt.gob.do/transparencia/wp-content/uploads/2022/10/DATOS-DE-EDUCACION-SUPERIOR-2021-MATRICULASEGRESADOSDOCENTES-E-INVESTIGADORES.pdf
- (8) Banco Central, 2023. Dominican Economic Report 2022. https://cdn.bancentral.gov.do/documents/publicaciones-economicas/informe-de-la-economia-dominicana/documents/infeco2022-12.pdf
- (9) ProDominicana, 2023. Report on foreign direct investment performance in the Dominican Republic year 2022. https://datamarket.prodominicana.gob.do/Documentos/2022%20%20Comportamiento%20de%20la%20Inversi%C3%B3n%20Extranjera%20Directa%20en%20Rep.%20Dom..pdf
- (10) World Bank, 2021. Dominican Republic Leveraging Competition in the Telecom Sector to Accelerate Economic Growth. https://documents1.worldbank.org/curated/en/203161623989071011/pdf/Dominican-Republic-Leveraging-Competition-in-the-Telecom-Sector-to-Accelerate-Economic-Growth.pdf
- (11) BID, 2021. Broadband Development Index Annual Report: IDBA 2020: Digital Divide in Latin America and the Caribbean. http://dx.doi.org/10.18235/0003337
- (12) Agenda Digital 2030 – Connectivity and Access Pillar. https://agendadigital.gob.do/ejes/conectividad-y-acceso/
- (13) Decree No. 539-20 which orders the preparation of a National Broadband Plan (PNBA).https://presidencia.gob.do/decretos/539-20
- (14) MEPYD, 2020. National Infrastructure Plan 2020-2030 https://mepyd.gob.do/wp-content/uploads/drive/DIGEDES/Publicaciones/Plan%20Nacional%20de%20Infraestructura.pdf
- (15) Rotondi, V., et al, 2020. Gender digital inequality in Latin America and the Caribbean. https://repositorio.iica.int/handle/11324/12489
- (16) INDOTEL, 2022. Annual Telecommunications Performance Report 2021. https://transparencia.indotel.gob.do/wp-content/uploads/2022/12/informe-desempeno-de-las-telecomunicaciones-2021.pdf
- (17) Maneejuk, P., & Yamaka, W. (2020). An analysis of the impacts of telecommunications technology and innovation on economic growth. https://doi.org/10.1016/j.telpol.2020.102038
- (18) M. Mokeresete & B. M. Esiefarienrhe, 2020. Botswana broadband policy and regulatory framework analysis: Issues and solution for improved service and user access. https://ieeexplore.ieee.org/document/9334143
- (19) World Bank, 2018. Innovative Business Models for Expanding Fiber-Optic networks and closing the access gaps. https://documents1.worldbank.org/curated/en/674601544534500678/pdf/Main-Report.pdf
- (20) Ministerio de Transporte y Comunicaciones de Perú. National Backbone Fiber Optic Network. https://cdn.www.gob.pe/uploads/document/file/4015477/INFORMACION%20PARA%20P%C3%9ABLICO%20EN%20GENERAL.pdf.pdf
- (21) Remeikiene, R., Gaspareniene L., Fedajev, A., & Vebraite, V. (2021). The role of ICT development in boosting economic growth in transition economies. https://www.jois.eu/files/1_1171_Remeikiene%20et%20al.pdf
- (22) Shibanov, E. & Torres, S., 2023. Need for Speed: Opportunities and Risks of Fiber Optic Investment. https://www.detecon.com/en/journal/need-speed-opportunities-and-risks-fiber-optic-investments
- (23) ONE, 2022. General Report ENHOGAR 2021. https://www.one.gob.do/publicaciones/2022/informe-general-enhogar-2021/?altTemplate=publicacionOnline
- (24) Comisión ODS. 9.c.1 Proportion of population covered by a mobile network, by technology http://ods.gob.do/Indicador/Index/121?fromMenu=True
- (25) National Multiannual Public Sector Plan 2021–2024. https://mepyd.gob.do/publicaciones/plan-nacional-plurianual-del-sector-publico-2021-2024
- (26) World Bank, 2022. Rural population (% of total population) – Dominican Republic. https://datos.bancomundial.org/indicator/SP.RUR.TOTL.ZS?locations=DO
- (27) Law 47-20 on Public-Private Partnerships. https://dgapp.gob.do/wp-content/uploads/2020/09/LEY-47-20.pdf
- (28) Law No. 344-43 on Expropriations. https://drlawyer.com/espanol/leyes/ley-344-de-1943-que-establece-un-procedimiento-especial-para-las-expropiaciones-intentadas-por-el-estado-el-distrito-de-santo-domingo-o-las-comunes/
- (29) Law No. 153-98 – General telecommunications. https://transparencia.indotel.gob.do/wp-content/uploads/2022/10/ley-no-153-98-ingles-1.pdf
- (30) Decree 629-07 creating the dominican electric transmission company. https://eted.gov.do/index.php/marco-legal/file/87-decreto-629-07-que-crea-la-empresa-de-trasmision-electrica-dominicana-de-fecha-19-de-noviembre-2007.html
- (31) Law No. 16-95 on Foreign Investment. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-16-95-sobre-Inversion-Extranjera.pdf