Digital divide: the situation in Peru and the role of the State

1. Público FTAA.ecom/inf/111 25 de octubre de 2001 Original: español Digital divide: the situation in Peru and the role of the State Hugo Gallegos General Manager Instituto Peruano de Comercio Electrónico

2. I.Overview

3. What is the IPCE/? • Founded on 15 April 1999, the IPCE is a private non-profit organisation, comprising all the foremost Information Technology companies, businesses using Information Technology, business associations and educational bodies, as well as public sector organisations. • The goal of the IPCE is to promote the development of e-commerce in our environment through actions such as research, submission of proposals, promotion of new forms of intermediation, and dissemination of knowledge in these fields.

4. The IPCE’S MISSION The Instituto Peruano de Comercio Electrónico will be the promoting and disseminating agency par excellence in the fields of B2C e-commerce, B2B e-commerce, e-government and other forms of electronic business that may be developed; contributing to the use of new information technologies by local organisations in their business processes in order to become more competitive; recommending the use of national and international best practices, in an appropriate legal framework.

5. The Internet situation • The number of Internet users is estimated at 80,000 to 1 million. Percentage Total number With computers and internet

6. Number of Internet hosts per 10000 inhabitants Source: OSPITEL - 1999 Data

7. In Peru the average connection speed available to users is below 56 Kbps. • Commercial users are in the 56 Kbps to 384 Kbps range, and the maximum speeds are between 1.6 and 4.5 Mbps.

8. Telecommunication Services Nationally Fixed Telephone Cable TV Cellular Telephone Dish TV Modem/TV Internet Access Radio Transceiver Beeper None Source: Instituto Nacional de Estadistica e Informatica - INEI

9. Fixed Telephone in Households by Layers (Quintiles) Nationally Source: Instituto Nacional de Estadistica e Informatica - INEI

10. Source: Instituto Nacional de Estadistica e Informatica - INEI

12. Demand for Telecommunication in Households Nationally Fixed Telephone Cable TV Modem/TV Internet Access Cellular Telephone Dish TV Radio Transceiver Beeper ISDN Telephone None Source: Instituto Nacional de Estadistica e Informatica - INEI

13. Computer Ownership in Households Nationally yes no yes no Source: Instituto Nacional de Estadistica e Informatica - INEI

14. Computer Ownership by Income Level (Quintiles) Source: ENAHO – 1ST QUARTER 2000

15. Internet in Households Nationally yes no yes no Source: Instituto Nacional de Estadistica e Informatica - INEI

16. Internet Access by Income Level (Quintiles) Nationally Source: Instituto Nacional de Estadistica e Informatica - INEI

17. Perception of Difficulties of Internet Access in Households • Other • Lack of information • Don’t want/ not interested • Don’t have necessary devices • Telephone rates • Economic problems Source: ENAHO – 1ST QUARTER 2000

18. Internet Access of Household Members Without Access at Home Public Booth Workplace School Friends/ relatives Do not use Source: ENAHO – 1ST QUARTER 2000

19. Public Internet points (known as telecentres), are the chief means of Internet access. • There are 1500 of these. More than 50% of them are in the capital. They provide access for all classes of society.

20. Internet Uses Other Purchases Entertainment Work Study Source: ENAHO – 1ST QUARTER 2000

21. Think some public Service should be provided via internet Don’t know no yes yes no Don’t know Source: ENAHO – 1ST QUARTER 2000

22. E-mail use in Households Nationally yes no yes no Source: Instituto Nacional de Estadistica e Informatica - INEI

23. Means of payment • Low level of credit card ownership limits the spread of B2C. • The banks are not yet fully committed to the Internet. • In cooperation with Visanet they have launched the SET protocol to ensure security of Internet credit card transactions. • Use of debit cards is still hesitant, and the use of smart cards even more so.

24. 8% of the population, or about 2 million people, have debit cards. The commercial card market is also growing, with more than 1.5 million users. • Development of alternative systems: ViaBCP card, Pagum, NetActiva, Pagonet (B2B).

25. Legal situation • Four laws: • Law authorising contracts at a distance and expression of wishes by electronic means. • Law concerning computer crime. • Law concerning digital signatures and digital certificates. • Amendment to Article 11 of the law concerning digital signatures and digital certificates. • The Regulations pertaining to the law on digital signatures and digital certificates are now being drafted.

26. LAW PERMITTING ELECTRONIC CONTRACTS (Act No. 27291) Important aspects: • Article 141 authorises the use of electronic or similar media as a means of expressing wishes (previous means were only oral, written or any other direct channel). • When an express declaration of wishes is required by law, this can now be made electronically.

27. Important aspects: • Contracts at a distance are permitted. For this purpose, when contracts are concluded electronically, receipt of acceptance and any other contractual declaration addressed to a given person will be presumed once the sender has received acknowledgement. • It will facilitate and streamline negotiations and contracts; it will mainly be the framework for B2B relations.

28. LAW CONCERNING DIGITAL SIGNATURES AND DIGITAL CERTIFICATES (Act No. 27269) • Promulgated on 28 May 2000. • It is technologically neutral and recognises digital certificates issued in the country or abroad. • An official agency (called Competent Authority in the Act) is created to regulate this market.

29. Machinery: • Certification bodies: Legal entity providing services of issuance, cancellation or other services inherent in digital certification. Can also perform functions of a Registration or Verification Body. • Registration or Verification Bodies: Natural or legal person authorised to collect and verify data concerning an applicant for a digital certificate. Its services are used by the Certification Bodies.

30. Machinery: • Competent Administering Authority: Official agency responsible for registering the Certification and Registration or Verification Bodies, recognising technological standards to be applied in the Official Electronic Signature Infrastructure, and supervising that Infrastructure, as well as the other functions set out in the Regulations.

31. V.Policy considerations in the promotion of electronic commerce in Peru

32. Problems identified in the Draft National Plan • There is no culture of Internet buying, owing to a weak tradition of distance purchasing. • Mistrust and scepticism on the part of users and consumers, manifested as fear of fraud. • Lack of a culture of distance selling on the part of national businesspeople, and prevalence of corporate structures unfavourable to the adoption of technology.

33. Prejudice against technology, manifested in a business culture hostile to change. • Language problems due to the predominance of English on the Internet, which causes frustration in users. • Lack of technical knowledge in general and ignorance of benefits to be derived from doing business on the Internet.

34. Technological centralism due to the concentration of technology in the big cities. • Lack of legislation to protect personal data of users. • Lack of regulations to govern the use of electronic invoices and receipts.

35. Undue delay in promulgation of the Law concerning Digital Signatures and Certificates, which is holding up the legally valid implementation of this technology in electronic transactions. • High cost of computer equipment (hardware and software) and high Internet connection charges.

36. Depressed economic environment limiting users’ access to costs and tariffs, and capacity of businesses to invest in projects. • Inefficiencies in postal and transport services, making completion of transactions uncertain.

37. Role of the State in the promotion of the Information Society

38. Preliminary aspects • The Transitional Government provided a stimulus to the process of adoption of the Information and Knowledge Society with the creation of the Commission for the Popularisation of the Use of the Internet (Supreme Decree No 66-2001-PCM). • The IPCE was designated the representative of the private sector on the Multisectoral Commission.

39. Preliminary aspects • On 23 June this year, the Multisectoral Commission presented the document “e-PERU: Proposals for an Action Plan for Democratic Access to the Global Information and Knowledge Society”.

40. Role of the State • Promote and facilitate the development of ITs for the benefit of the population, safeguarding the rights of the citizen and the protection of intellectual property. • Facilitate equity of access to ITs. • Promote the development of the telecommunications infrastructure through effective competition. • Take steps to ensure intensive use of ITs by State agencies. • Facilitate the development of Electronic Commerce by means of an adequate legal framework. • Implement education and training activities to lay the foundations of the knowledge society.

41. Measures proposed in the Draft National Plan • Actively promote electronic commerce, within an effective regulatory framework, to achieve more efficient management and greater competitivity for businesses, and thereby improve local employment levels by stimulating the emergence of new business activities. • Regulate the use of Electronic Proofs of Payment, since these must be recognised by the tax authorities, taking into account the characteristics of the medium and ensuring that consumers in electronic commerce are afforded no less protection than is afforded to consumers in traditional transactions.

42. Finalise the rules to put into operation the model for electronic signatures as a means of authentication of parties to electronic transactions. • Finalise the rules for the Electronic Clearing House to facilitate business-to-business transactions. • In business-to-business transactions, allow the parties to choose the forum and the jurisdiction for dispute settlement. • Become an active participant in electronic commerce by promoting and using machinery for State procurement via the Internet.

43. Encourage the private sector, and particularly specialist companies, to propose e-commerce solutions for SMEs, and collaborate with these companies to develop and promote websites for export and promotion of production, as well as accessible and secure means of payment, training programmes and regional technical centres tailored to the needs of SMEs. • Promote computer literacy in SMEs through private and State mechanisms.

44. Support and encourage the earmarking of co-operation funds for training of SMEs. This training should be done with the support of the private sector. • Promote, jointly with the private sector, Peruvian products through electronic commerce. • Encourage the use of the Internet for export promotion activities through promotion agencies such as the Export Promotion Commission (PROMPEX), and make use of commercial attaches for this purpose.

45. Promote the implementation of a regulatory framework to guarantee the protection of economic actors and consumers, through regulation of secure payment instruments for all types of electronic transactions. • Promote the use of existing international product codes to facilitate transactions with other countries. • Promote adequate measures to improve the efficiency of postal and transport systems to guarantee finalisation of e-commerce transactions.

46. Initiatives taken by the Peruvian State to reduce the digital divide

47. Universal Access: FITEL • This is a fund administered by the Organismo Supervisor de la Inversión Privada en Telecomunicaciones (OSIPTEL). It was created during the process of privatisation of telecommunications. • Its funds come from 1% of the gross annual billing of all carrier firms. • Among its goals for the period up to 2002 are the installation of five thousand public telephones and 500 Internet access points in the capitals of rural districts.

48. Universal Access: Banco de la Nación Project • The goal is to install Internet access points in 75 population centres in the interior of the country. • The population to be served is estimated at 750,000 inhabitants.

49. Education: Plan Huascarán • This is the continuation of the EDURED Project, which was intended to benefit 100 thousand pupils throughout the country. The intention was to service 345 educational centres, but only 85 were able to participate. • The Plan Huascarán was launched on 15 October of this year.

50. Education: Plan Huascarán • This is the first phase of a great crusade to popularise the use of the Internet and information technologies throughout the country. It aims at servicing 2 million 110 thousand primary and secondary school pupils over a period of 3 years. • It is being implemented by the Ministry of Education and the Ministry of Transport and Communications. Its purpose is to improve the educational level in schools throughout the country in three years, by putting in place a platform to give educational centres access to cyberspace with state-of-the-art technology.