A need for speed: rising demand for high-speed Internet is heating up the Web in Latin America.

A decade after the arrival of the Internet in Latin America, the mediums penetration rate remains very small. Just 3.7% of the region's population is online, compared to 61% in the United States and Canada and 40.8% in Western Europe. The number of Web surfers in the region beats only Africa and the Middle East.

Even a 20% increase in connections by 2007, a figure projected by Pyramid Research, means 4.8% of the population will be online, not rapid growth by any measure. Most of that growth will come from higher demand for faster Internet connections like broadband, the fastest growing Internet-access market in the region. According to consultancy Gartner Group, the number of broadband connections will increase by 25% annually in the region through 2009.

"Broadband is the new object of desire among Internet users," says Alexandre Freitas, director of marketing at UOL, a Brazilian portal with 1.4 million paid subscribers and a vast store of content, information, entertainment and services online. "Frankly, it's a growing market, one that includes not only the migration of dial-up users but also new users who bought access to a broadband service with their new computers and software." Freitas believes broadband in Brazil will grow at more than 60% a year for the next two years.

Another key market will be Argentina, where broadband adoption is estimated to grow by at least 50% this year. Spanish telecom giant Telefonica is getting more aggressive, adding on 200,000 new clients so far. "The trend in the market is to offer fixed-line telephone, mobile, Internet and TV from one provider, and broadband is fundamental in attracting customers," says Sebastian Parigi, a spokesman for Telefonica Argentina.

Impsat, which providers integrated telecommunications services like broadband, data centers, telephony and Internet to big companies in Latin America and the United States, also has joined the rush to offer broadband across the region. "Broadband integrates various forms of services, such as voice-over-IP Internet telephony, messaging, etc., and we are preparing to provide those services to small and medium-sized companies," says Osvaldo Tujsnaider, vice president of Internet technology and operations for Impsat, which has 3,500 customers and operates in Brazil, Argentina, Chile, Colombia, Ecuador, Peru, Venezuela and the United States.

In the case of Brazil, which has the largest number of broadband subscribers in Latin America at an estimated 31.8 million, the broadband market increased by 88% over last year. For 2005, a 75% expansion is expected, according to forecasts made by Telefonica, Telemar and Brasil Telecom, the three companies that dominate the digital-subscriber line market for broadband, a kind of telephone line and the most common form of connection in the region; the second most common is through a cable modem provided by a cable television service. Broadband represents 55% of home connections in Brazil, an estimated 18.3 million subscribers, according to Ibope NetRatings.

Buying online. An expansion of broadband services would be good news for e-commerce companies. "Companies need to have visuals to sell their products to customers since they can't touch the goods, plus high-speed Internet makes it easier to navigate quickly," says Andre Shinohara, marketing and business director for Brazilian online retailer Submarino. The company has 2.2 million registered users and sells 23 product categories over the Web; sales are projected to reach $150 million this year. Shinohara says e-commerce is a reality in Brazil, where the medium is now responsible for 1% of national retail sales. "In the next five years this market will grow 30% annually," he says.

Yet growth remains the major challenge for the Internet in Latin America. Some governments, for instance in Brazil and Argentina, are proposing "digital inclusion" projects that include financing for the purchase of computers. The goal is to expand the number of connections among lower-income people. Now, access to the Web is largely restricted to the wealthy and large corporations. "There's a lot of room to grow and newer, more efficient technologies should be a part of that scenario in Latin America during the next five years," says Juan Ignacio Fernandez, a Gartner analyst. "But for now we have one ceiling for reasons of income," he says, "and another, artificial ceiling because of the limited number of cable television and telephone connections."

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MARGARIDA O. PFEIFER * SAO PAULO