Another World Cup is in the books, and it’s fair to say that most people will remember 2014 for the inglorious and improbable performance of the host nation, losing 7-1 and 3-0 in its semifinal and consolation matches. Brazil’s sad exit capped off a year of soul-searching about the nation’s massive investment in hosting the World Cup (and the Olympics yet to come).
But Brazil shouldn’t lose sight of one important silver lining to their World Cup cloud: the startlingly vibrant development of the Brazilian Internet, and the critical role Brazil now plays in the Internet connectivity and ICT development of South America.
Brazil and South Africa invite comparison because of their many parallels: two emerging economies, each the dominant contributor to the GDP of an entire southern hemisphere continent, each having struggled to attract foreign investment and enough north-south Internet submarine cable infrastructure to build a 21st century economy.
Since the start of 2011, Brazil’s count of connected autonomous systems has increased by 213%, from 733 to 2,299. South Africa, in the same timeframe, grew by only 72%, from a meager 107 to 185. Brazil is the more populous country, by a factor of four. But Brazil now boasts 11.6 participating ASNs per million people, while South Africa has only 3.6.
Brazil’s Internet: Growing Strong
|What explains the different outcomes in these two World Cup host nations? The answer probably lies in the comparative diversity of the two nations’ Internet ecosystems. Since 2004, Brazil has taken significant steps to create a national system of PTTs (Pontos de Troca de Tráfego): a network of provider-neutral Internet exchange points located in every major metropolitan area.|
These neutral points of interconnection make it easier and less expensive for Brazilian enterprises to connect to the Internet as “first class citizens” — utilizing the BGP routing protocols to negotiate simultaneous service from multiple service providers, and reducing their dependence on any single one of them.
In a country like South Africa, a typical enterprise (like a bank, or a factory, or a school) might look at the market prospects, weigh the costs, and elect to simply buy service from Telkom ZA and call it a day. In Brazil, that same enterprise is more likely to consult the experts at NIC.BR, register for an AS number and some IP space, sign contracts with a couple of service providers to route that space, and thereby maintain their provider independence.
Growing At the International Frontier
Local interconnection prospects seem to help improve the diversity and thus the growth prospects of the local Internet ecosystem. By paying the relatively low costs for local interconnection to a PTT in their nearest city, even small local Brazilian providers are able to directly connect to international service providers for Internet transit, rather than relying on a single large Brazilian incumbent to mediate their relationships with the outside world. That disintermediation step keeps prices lower, and the market more competitive, than if a large incumbent took a cut of every Internet transit transaction.
Once again, Brazil outcompetes South Africa by a substantial margin (305 to 48 at last count). This is the same metric that Renesys uses to compute our Internet Risk of Disconnection metric, with any number greater than 40 representing strong resistance to Internet shutdown. Years after their World Cup hosting experience, South Africa has struggled to reach this milestone, while Brazil adds a whole South Africa’s worth of directly connected providers each year.
It’s hard to distinguish cause and effect, but Internet growth certainly seems to go hand in hand with strong economic growth. In the years since the PTT system buildout began (2004), Brazil’s per capita GDP (in current dollars) has steadily pulled away from South Africa’s.
Some part of that growth is attributable to the rise in non-extractive industries (especially services) that generate substantial exports, the kind of services that are enabled by a healthy, growing Internet infrastructure. Here’s a plot of the percentage of national service exports represented by ICT; that is, computer and telecommunications services, computer data, and news-related service transactions. In Brazil, ICT now represents the majority of all service exports; in South Africa, only about 10%, a figure virtually unchanged since the 2010 World Cup.
Yes, Brazil still has a long way to go in terms of developing a content hosting industry that can reliably keep Brazilian content in-country, instead of sending Brazilians to the US to fetch their content.
|Yes, Brazil still has congestion problems at peak hours, at least in some towns and regions that are farther from the PTTs, as demonstrated by this plot of latencies during first round World Cup games.|
But if you were a company seeking to make a technology investment, would you wager on South Africa or Brazil? Strong growth in the Internet ecosystem, and the availability of direct access to international providers, make the answer seem pretty clear.
The basic diversity of infrastructure is in place to make the Brazilian Internet a survivable, high-growth environment in which to grow its ICT industries over the coming decade. There’s no need for extra time or penalty shootouts here; comparing the last two World Cup host nations, Brazil’s Internet is a clear winner.
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