Report No: AUS8156 . Republic of Panama ICT Sector Policy Note for Panama Enabling Inclusive Development Through Information and Communications Technologies (ICT) August 6, 2014 GTIDR LATIN AMERICA AND CARIBBEAN 1 Standard Disclaimer: This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Copyright Statement: The material in this publication is copyrighted. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org. 2 ENABLING INCLUSIVE DEVELOPMENT THROUGH INFORMATION AND COMMUNICATIONS TECHNOLOGIES (ICT) ICT SECTOR POLICY NOTE FOR PANAMA AUGUST 6, 2014 3 CONTENTS SUMMARY ......................................................................................................................................................................................... 6 INTRODUCTION ................................................................................................................................................................................. 7 1. ICT SECTOR IN THE ECONOMY .................................................................................................................................................. 7 1.1 Institutional, legal and regulatory environment .............................................................................................................. 7 1.1.1 Universal Access Fund ..................................................................................................................................................... 8 1.2 ICT in the economy .......................................................................................................................................................... 9 2. OFFER ...................................................................................................................................................................................... 10 2.1 International Connectivity ............................................................................................................................................. 10 2.2 National Connectivity .................................................................................................................................................... 12 2.3 Fixed Telephony Market ................................................................................................................................................ 13 2.3.1 Fixed Telephony Pricing ................................................................................................................................................. 14 2.3.2 Fixed Telephony in Rural Areas ..................................................................................................................................... 14 2.4 Mobile Telephony Market ............................................................................................................................................. 14 2.4.1 Mobile Telephony Pricing .............................................................................................................................................. 15 2.4.2 Mobile Telephony in Rural Areas................................................................................................................................... 15 2.5 Fixed Broadband Market ............................................................................................................................................... 16 2.5.1 Fixed Broadband Pricing ................................................................................................................................................ 17 2.5.2 Fixed Broadband in Rural Areas..................................................................................................................................... 18 2.6 Mobile Broadband Market ............................................................................................................................................ 19 2.6.1 Mobile Broadband Pricing ............................................................................................................................................. 19 2.6.2 Mobile Broadband in Rural Areas .................................................................................................................................. 20 3. DEMAND ................................................................................................................................................................................. 21 3.1 Economic, social, and demographic distribution ........................................................................................................... 21 3.2 ICT demand drivers ........................................................................................................................................................ 22 3.3 Business demand ........................................................................................................................................................... 24 3.4 Government demand .................................................................................................................................................... 25 3.4.1 eGovernment................................................................................................................................................................. 26 4 3.5 Mobile Telephony Market ............................................................................................................................................. 27 3.5.1 Mobile Telephony Affordability ..................................................................................................................................... 28 3.6 Internet Service ............................................................................................................................................................. 29 3.7 Fixed Broadband Market ............................................................................................................................................... 30 3.7.1 Fixed Broadband Affordability ....................................................................................................................................... 30 3.8 Mobile Broadband Market ............................................................................................................................................ 31 3.8.1 Mobile Broadband Affordability .................................................................................................................................... 31 4. Cyber Security and Protection of Critical Information Infrastructure ..................................................................................... 32 4.1 Context .......................................................................................................................................................................... 32 4.2 Overview of the legal framework .................................................................................................................................. 33 4.3 Governance model ........................................................................................................................................................ 35 4.4 Awareness and Capacity building .................................................................................................................................. 37 5. CHALLENGES AND OPPORTUNITIES ........................................................................................................................................ 38 5.1 Institutional, legal and regulatory environment ............................................................................................................ 38 5.2 eTransformation ............................................................................................................................................................ 38 5.3 Cybersecurity ................................................................................................................................................................. 39 5.4 Broadband connectivity in remote areas ...................................................................................................................... 40 6. PROPOSED STRATEGIC DIRECTIONS ........................................................................................................................................ 41 6.1 Institutional, legal and regulatory environment ............................................................................................................ 41 6.2 eTransformation ............................................................................................................................................................ 41 6.3 Cybersecurity ................................................................................................................................................................. 42 6.4 Broadband connectivity in remote areas ...................................................................................................................... 43 7. POSSIBLE WORLD BANK SUPPORT .......................................................................................................................................... 44 7.1 Institutional, legal and regulatory environment ............................................................................................................ 44 7.2 eTransformation ............................................................................................................................................................ 44 7.3 Cybersecurity ................................................................................................................................................................. 45 7.4 Broadband connectivity in remote areas ...................................................................................................................... 46 8. CALENDAR OF PROPOSED ACTIVITIES ..................................................................................................................................... 47 5 SUMMARY The ICT sector is growing even faster than the overall economy. The sector growth has positive cross-sectorial impacts, as demonstrates the fact that an appropriate use of ICTs contributes to advance positions forward in competitiveness global rankings. While this is true, it has to be stated that the ICT impact in Panama’s international commerce is more driven by goods than by services. The reason may be rather related to the prominent role of the Canal than to insufficient ICT international connectivity, because the available international broadband capacity exceeds the demand, both in the short and the medium term. In the same regard, ICT national market is competitive on the offer side, as indicate the existence of four market players for a relatively small market and telecommunication services’ comparatively low. On the demand side, cell phone penetration is very high, while computer and internet penetration remain in moderate levels. From the governmental side, public authorities promote ICT-based services, at least in the public sector. Hence, Panama ranks above most regional economies on eGovernment thanks to its dedicated ICT infrastructure, online services and staff. This innovative way to interact with citizenship could be fostered by embracing Open Data initiatives, so that citizens could propose ICT-based services to help authorities improve their public service delivery; thus, upgrading eGovernment to a bidirectional relation. Still, in the private sector, many workers who can benefit more directly from Internet do not use it. The causes are difficult to outline, but although it is true that Panama is fairly well ranked on access and use of ICT, it has a lot of room for improvement on ICT skills, which could be a bottleneck to expand the use of ICT in the private sector. Those three parameters (ICT access, skills and use) achieve heterogeneous levels across the country, reaching lower records in rural and indigenous communities. Among the three, ICT access is an enabler of the other two; and yet, access to ICT infrastructure in remote areas is a big challenge that Panama needs to address in the short term. Nevertheless, there are opportunities to take advantage of. For instance, being prepaid handset-based mobile broadband and fixed broadband comparable on affordability and penetration rate, they constitute complementary alternatives to expand broadband connectivity across the country. Actually, stakeholders from different sectors could think of deploying joint infrastructure to increase their investment profitability in remote areas. To promote it, the government could consider developing tailored regulation and fiscal policies for infrastructure sharing, so that ICT services were accessible to more citizens. Such policies would back current government deployment of free internet access sites in targeted areas to reduce Panama’s digital gap; thus, contributing to reduce economic, social and demographic differences between citizens in urban, rural and indigenous communities. Equally important, Panama achieved remarkable milestones on institutional empowerment. Likewise, it started processes to create legal and regulatory initiatives in several areas. However, the government could take additional actions to create a solid institutional, legal and regulatory framework. For instance, while Panama took important steps on legislating on eGovernment, other areas like open access, shared infrastructure, spectrum management, personal data protection, childhood protection, cybersecurity, open data and eCommerce remain at an early stage of development. In addition, the telecommunications sector ex-post regulation could benefit from an update to better respond to the market changes occurred in the last two decades. Regarding cybersecurity, the government has identified a number of infrastructures to reinforce and started to raise awareness among stakeholders, but it needs to design and implement an inter-institutional cybersecurity strategy comprising every key asset. 6 INTRODUCTION The Government of Panama and the private sector recognize the importance of Information and Communications Technology (ICT) as an enabler of national development. The government wishes to improve local industries’ competitiveness by creating a responsive and transparent framework, as well as establishing an enabling environment that allows the economy of Panama to transition into a knowledge economy that better capitalizes on the global virtual economy. This ICT Sector Policy Note seeks to identify opportunities and challenges for growth of the ICT sector in Panama, particularly on rural access to broadband services and on cybersecurity, and potential for spillover impacts across other sectors. Furthermore, it provides a brief overview of the ICT sector in Panama and outlines a series of strategic actions and recommendations aimed at leveraging ICT as an engine of growth by targeting connectivity infrastructure, policies, regulation, eServices, public data and skills. This report is meant to cater to a wide audience, particularly: local policy makers interested in the ICT development agenda; and governmental institutions interested in modernizing the government processes and public service delivery. Besides the primary audience, this note can be of interest of the following players: telecommunications service providers considering expanding their operations across the country; potential investors from abroad considering investing / using financial services in Panama; and other stakeholders interested in international electronic commerce. The following three sections briefly describe the ICT sector in Panama, breaking down the analysis into supply and demand dynamics. In addition, section 4 describes the sector status from the cybersecurity point of view. Based on these analyses, section 5 identifies challenges that are hindering the growth of the industry, and section 6 proposes policy options to overcome them. Finally, the World Bank describes the ways it could support those policy options (section 7) and proposes a set of joint activities (section 8). 1. ICT SECTOR IN THE ECONOMY 1.1 Institutional, legal and regulatory environment Panama has achieved remarkable milestones on institutional empowerment. Likewise, it started procedures to create legal and regulatory initiatives in several areas. However, there is still room for improvement to consolidate its institutional, legal and regulatory framework. A number of institutions are involved with ICT policy and regulation; among them, ASEP (Autoridad Nacional de los Servicios Públicos or Public Services National Authority), and AIG (Autoridad Nacional para la Innovación Gubernamental or Governmental Innovation National Authority). The first one, ASEP, which belongs to Dirección General de Telecomunicaciones (Telecommunications General Directorate), controls and regulates economic activities in the telecommunications sector and issues concessions to telecommunication services providers.i The second one, AIG, is responsible for modernizing public administrations through the use of ICT. Among many other initiatives, AIG developed the Strategic Digital Agenda for Panama 2012-2014 (SDA 2012-2014 or Agenda Digital Estratégica Panamá 2012-2014) defining national priorities of public interest, governmental entities’ action in the mid-term, and innovation processes.ii 7 While Panama took important steps on eGovernment legislation, other areas like open access, shared infrastructure, spectrum management, personal data protection, childhood protection, cybersecurity, open data and eCommerce remain at an early stage. As stated, there have recently been legislative reforms tackling eGovernment. The Law 65, October 30th 2009 was updated by the Law 83, November 9th 2012 to regulate the use of electronic tools for executing governmental transactions. Among others, this legislation covered the following points: electronic and in person signatures are equally valid; official notices must be published on institutional websites; public institutions must present to AIG an annual proposal on processes improvement and a Digital Agenda; and all documents required for official transactions must be available online. Moreover, a national payment portal was expected to be available by 2013, enabling public institutions to offer ePayment (online payment) options by cards and online banking. However, legislation on Open Data and Personal Data Protection is incipient, and strengthening the telecommunications sector regulation could set a sounder basis for ex-post decisions. On eCommerce the legislation in force is the Law 92, November 9th 2012, which modified the Law 51, July 22nd 2008, giving powers to the Public Registry (Registro Público) as registering and certifying root authority for the national electronic signature system. This institution expected to issue the first electronic signature by 2014. On Data Protection, there are a number of sectorial regulations (e.g. the Health system has its own rules) including economic sanctions, but there is no centralized authority either cross-sectorial uniformity. Last, telecommunications sector ex-post regulation could benefit from an update. The market has changed a lot since it was fully open in 2003. For instance, in the mobile telephony segment, there was a duopoly until 2007, when two additional operators entered the market. In contrast, the current regulatory market dates from 1996; hence, upgrading it could promote fair competition to a further extent. 1.1.1 Universal Access Fund The Universal Access Fund receives taxes from certain telecommunication services to invest them in making ICT accessible to more citizens. The Universal Access Fund (UAF) was established by the Law 59 of 2008 to promote access to affordable telecommunications services including voice telephony and Internet access, as well as broadband connectivity at community, household, and individual levels. A Universal Access Fund serves as an instrument to enhance access among remote underserved locations. The fund is financed by a levy imposed on phone, cable mobile and internet service providers, accounting for 1 percent of their taxable income from local, national and international fixed telephony; personal communication services; mobile telephony; telecommunications signal transport; and internet service. Moreover, 0.01Balboa (USD0.01) was charged until December 2012 to foreigner operators for every minute of international call terminating in Panama. To manage the fund, the same law created the Universal Service and Access Advisory Board (Junta Asesora de Servicio y Acceso Universal), administered by AIG. On average, the fund receives 8 million Balboa (USD8M) per year, which are used to finance the following projects: (i) operation and maintenance of public phones in rural and remote areas (more than 14,000 public and semi-public phones are operated in the country), with an associated 8 cost of 1.4 million Balboa per year; and (ii) operating and maintaining the National Network for Universal Internet Access (RNI or Red Nacional de Acceso Universal a Internet), composed by 1,157 free Wifi Internet access sites across 41 cities and towns, with an associated cost of 32.8 million Balboas in 5 years.iii 1.2 ICT in the economy Figure 1. ICT sector turnover components (2011) The ICT sector is growing even faster than the overall economy. Others, Internet, 2% In 2011, the telecommunication sector contributed to national Signal 8% transport GDP with B./ 2,245.1 million, showing an outstanding 13 percent services, year on year increase; which was substantially higher than the 10% overall GDP year on year increase (a remarkable 10.6 percent). Basic Mobile telecomm telephony Regarding gross income, in 2011, the ICT sector generated B/. 871 unications , 58% million, up from B/. 830 million in 2010, mainly due to the increase services, 22% in the mobile telephony industry turnover. Figure 1 lists the sectorial gross income components and its share, where mobile telephony represents more than half of the sector business. Source: ASEP Executive Report Panama is well positioned as importer and exporter of ICT goods, but its ICT services exporter potential can be further exploited, as illustrated in the following Figures 2 and 3. Probably because of the tremendous influence that the Canal has in the national economy, the country has a very balanced relation of imported and exported ICT goods in the region, only behind Costa Rica, which doubles Panama’s figures. In contrast, probably influenced by the amount of services exports related to the Canal (only bigger countries like Argentina and Chile export more value in services), Panama holds one of the smallest percentages of ICT services exports of total services exports among the analyzed regional countries. Therefore, Business Process Outsourcing (BPO) could be fostered. Figure 2. ICT goods imports (up) and exports (down) (as % of Figure 3. Total services exports in billion USD (up), ICT services exports in billion USD (middle), total imported and exported goods) (2010**, 2011*, 2012) and ICT services exports as % of total services exports (down) (2010**, 2011*, 2012) Costa Rica 18.3% Argentina 6.9 14.9 19.4% 46.0% Argentina 8.3% Chile 2.7 12.6 0.1% 21.1% Panama* 8.1% Panama 9.3 7.9% 0.5 6.8% Chile 7.3% 8 0.3% Dominican Republic 0.3 4.3% Guyana 5.8% 7.4 0.1% Costa Rica 2.4 32.1% Guatemala 5.6% 0.3% Trinidad & Tobago* 85.3% 4.9 5.8 El Salvador 5.0% 2.7 0.4% Jamaica 0.2 9.4% Barbados 4.4% 2.5 0.8% Guatemala 0.5 21.9% Dominican Republic 3.2% 1.8 0.9% El Salvador 0.2 11.5% Trinidad & Tobago** 3.1% 0.1% Barbados** 0.4 1.6 25.9% Suriname* 2.8% 0.1% Guyana 0.3 0.1 41.4% Jamaica 2.5% 0.4% 0.2 Suriname 0.1 26.7% Source: World dataBank, World Bank, 2014 Source: World dataBank, World Bank, 2014 9 Box 1. Investing in broadband triggers growth and employment Increasing broadband penetration has a positive impact on the GDP per capita and job creation. International studies indicate that a 10 percent increase of broadband penetration triggers a 1.38 percent increase of GDP growth per capita while each job directly related to broadband expansion creates 1.5-4.5 indirect jobs. According to the Inter- American Development Bank, in LAC, such increase in broadband penetration is associated, on average with a 3.2 percent GDP increase and 67,000 new jobs in a given country. iv Expanding broadband infrastructure can leverage existing civil society, SMEs, entrepreneurs and Government institutions to distribute services with greater efficiency, reach and impact. Moreover, other models, when applied to the Panamanian case, show that every 1 percent increase of fixed broadband expansion between 2000 and 2010 triggered a 0.045 percent growth of GDP; while every 1 percent increase of qualified jobs related to this expansion triggers a 1.15 percent growth of GDP. Furthermore, this model predicts that a 10 percent decrease in the broadband subscription rate would increase the penetration in more than 21 percent.v 2. OFFER 2.1 International Connectivity The international capacity available exceeds the Figure 4. Panama submarine cables demand, both in the short and the medium term. The primary international traffic access offered by domestic telecom service providers in Panama is via five submarine cables; two more cables were planned to be operational by September 2014. Those cables land in four different points, which are located at both extremes of the canal (see Figure 4). These landing points are located in three areas, thus increasing resilience and security of capacity against natural disasters. They offer international connectivity via several providers, thus increasing competition, and therefore contributing to Source: Submarine Cable Map reduce prices and to increment quality of service. Actually, most main regional providers offer their services in Panama, which positions the country in a privileged strategic situation that could be leveraged to become a regional submarine cables hub. These submarine cables, their respective landing stations and capacity are described in the Table 1 below: 10 Table 1. International submarine cables owned by domestic telecom service providers Submarine Ready For Landing Lit Maximum Owners Cable Service Year point Capacity Capacity South American Colón, Crossing (SAC) / 2000 Fort Level 3 (100%) 2,550 Gbps 22,200 Gbps Latin American Amador Nautilus (LAN) Columbus Networks (94.6%), Axtel, CANTV, Codetel, Hondutel, Belize Telemedia, Enitel, AT&T, Alestra, Verizon Business, Instituto Colón, Costarricense de Electricidad, RACSA, UTS, ARCOS 2001 Maria 1,160 Gbps 8,600 Gbps Telecarrier, Tricom USA, Telecomunicaciones Chiquita Ultramarinas de Puerto Rico, Internexa, Orbinet Overseas, Telepuerto San Isidro, Bahamas Telecommunications Company. Pan-American Fort 2000 Level 3 (100%) 460 Gbps 2,230 Gbps Crossing (PAC) Amador Cable & Wireless Communications (12,2%), Verizon Business (7,5%), Tata Maria Maya-1 2000 Communications (7,5%), Sprint (12,2%), 145 Gbps 245 Gbps Chiquita Hondutel (5,4%), AT&T, CANTV, Entel Chile, Telefonica, BT, Orbitel, MarcaTel AT&T, Telefonica del Peru, Softbank Telecom, Colón, REACH, Entel Chile, Telecom Italia Sparkle, Pan American 1999 Panama Sprint, CANTV, Tata Communications, 140 Gbps 140 Gbps (PAN-AM) City Telefónica de Argentina, Telstra, Verizon Business, PCCW, Telecom Argentina Pacific Balboa, Cable & Wireless Communications, Telconet, Caribbean Planned for Maria Telefonica, Setar, United Telecommunications -planned- -planned- Cable System Sep. 2014 Chiquita Services (UTS) (PCCS) WASACE Planned for Colón WASACE Cable Company (100%) -planned- -planned- Americas Dec. 2014 Source: Telegeography, 2013 These five cables provide Panama with a maximum capacity of 33,425 Gbps; far above of its lit capacity (4,455 Figure 5. International Internet bandwidth (kbps) per user (2012) Barbados 67.4 Gbps) and the 335.9 Gbps of international bandwidth Chile 40.5 consumed by Panama in 2012. It is worth noting that these Panama 30.8 capacities are neither homogeneous nor exclusive, Costa Rica 29.9 Argentina 22.0 because most of the cables land in several countries. As Jamaica 20.2 Figure 5 illustrates, in 2012, international internet Trinidad & Tobago 18.4 bandwidth per Internet user was 30.8 kbps, a level higher Dominican Republic 14.9 Guyana 8.4 than most countries in the region such as Costa Rica (29.9 El Salvador 6.9 kbps), and Argentina (22.0 kbps), while lower than other Guatemala 6.6 selected countries in the region like Chile (40.5 kbps), and Suriname 2.0 Barbados (67.4 kbps). This indicator is calculated as the Source: The Global Information Technology Report 2014 sum of Internet Exchange Points (IXP) offering international connectivity. 11 InteRed Panama is the country’s Internet Exchange Point (IXP) and is mostly used by the main Internet operators in the country. An IXP is a physical network node that gathers and routes traffic from multiple Internet Service Providers (ISP). Generally speaking and disregarding other key aspects, the closer a user has an IXP, the more efficiently its ISP will route his data. For instance, in Panama, the ISPs’ alternative was to exchange traffic through satellite connections, which tend to be slower and more expensive.vi Thus, IXPs help ISPs to better allocate their networks’ capacity, therefore contributing to optimize the use of both national and international bandwidth resources. InteRed Panama’s board members, who manage and have access to the IXP services, are: (i) the main ISPs, (ii) SENACyT (National Secretariat for Science, Technology and Innovation), and (iii) PANNet (Red Académica de Investigación Nacional or National Research Academic Network). PANNet manages the NIC (Network Information Center) Panama, which is in charge of the national Internet domain name .pa and its sub-domains.vii There is a regional initiative to map roads, water, ICT and electricity infrastructure to explore opportunities for sharing its use could be extremely cost-effective. SIEPAC (Central American Countries Electric Interconnection System or Sistema de Interconexión Eléctrica de los Países de América Central), is a project with an important role to play on international connectivity. Actually, SIEPAC triggered the creation of REDCA (Central American Fiber Network or Red CentroAmericana de Fibras Ópticas) in 2007, whose potential can be further leveraged. Regional synergies are active not only on infrastructure, but on regulation as well, as proves COMTELCA (Regional Technical Commission on Telecommunications or Comisión Técnica Regional de Telecomuincaciones) that unites, disseminates and assists regulators in six Central American Countries. The regulator, ASEP (Public Services National Authority or Autoridad Nacional de los Servicios Públicos), is involved in COMTELCA and, despite not being member of Regulatel (Latin American Forum of Telecom Regulator or Foro Latinamoericano de Entes Reguladores de Telecomunicaciones), takes part in a number of its projects. Besides these public-led initiatives, private companies with regional presence (e.g. Continental Towers Corp.) operate in Panama as neutral players to offer shared passive infrastructure to telecommunications operators. 2.2 National Connectivity Stakeholders could consider deploying joint and cross-sector infrastructure. Due to geographic, demographic and socioeconomic distribution, it is not easy or profitable to deploy telecommunication networks to offer fixed telephony and broadband services in certain remote areas or areas inhabited by indigenous population. Therefore, in some of those regions offering internet connection through microwave is a good solution, while in cities operators use more frequently fiber optic cables. The following private telecommunications companies manage the country internet backbone and backhauls: (i) C&W (Cable & Wireless Panamá), which is the incumbent; (ii) Cable Onda, which originally offered only cable television; and (iii) UFINET (Gas Natural y Unión Fenosa Redes de Telecomunicación), which originally provided only electricity. ISPs deploy their own networks, especially in the backhaul and access sections, but they often lease fibers from UFINET, which has a large fiber optics network deployed nationwide with exclusive presence in both geographic extremes of the country. Figures 6 and 8 illustrate that Cable Onda and UFINET networks are mainly deployed around the same areas, which, as described in the Demand section, are some of the most densely populated. UFINET’s fiber network was originally for its own use only. Likewise, ETESA (Empresa de Transmisión Eléctrica S.A.) and the company managing the Canal have their own fiber networks that keep for internal use only. 12 Figure 6. National Geographic Distribution Routes of Cable Onda Figure 7. UFINET fiber optic network Source: AIG, 2013 Source: UFINET, 2013 In fact, there are cross-sector initiatives for infrastructure sharing under execution, while some others are under study. Collaboration between telecommunications and electricity carriers seems quite immediate, since the latter often own fiber deployed across its network, initially for signaling purposes but easily upgradable for commercial transmission data. For instance, AIG and the electricity transmission company ETESA reached an agreement for sharing a segment of ETESA’s network to reach targeted remote areas. Likewise, UFINET operates as carrier of carriers, grouping data transport demand from Cable&Wireless, Claro and Telefónica, and benefitting from economies of scale to buy fiber directly from producers, as well as from its electricity network’s ducts, poles, and dedicated maintenance team. Hence, it offers very competitive prices that their clients would hardly reach by operating their own transport fiber networks. Thus, although there are no signs of power abuse, UFINET holds a dominant position in the broadband transmission market. It offers international connectivity with Costa Rica to its main clients, but the connection with Colombia is still under study, and might be eventually done with submarine cables. In rural areas, UFINET is usually subcontracted by public contract awardees. Nevertheless, UFINET’s network has very limited presence in areas inhabited by indigenous communities, because it has encountered difficulties in agreeing compensations for rights of way and land use. 2.3 Fixed Telephony Market The incumbent, Cable and Wireless Panama, controls the market. The firm is 49 percent state-owned, another 49 percent belongs to C&W Plc., and the remaining 2 percent belongs to its workers. C&W is the incumbent operator, owning the legated PSTN (Public Switched Telephone Network) and holding exclusivity in national and international long distance calls. Moreover, it operates and maintains its country-wide public telephones network, as part of its obligations as Universal Service provider. The possibility of enabling 12,000 payphones with broadband access powered by solar energy is under discussion. 13 Figure 8. Fixed telephone sub-basket, USD per month (2012) Suriname 2.9 2.3.1 Fixed Telephony Pricing Guyana 3.1 Argentina 4.5 Costa Rica 4.7 Fixed telephony’s relatively high prices may have contributed to Guatemala 5.8 mobile telephony’s increasing penetration rate. Panama’s fixed El Salvador 6.9 telephony sub-basket ranked in the mid-range among the Panama 9.5 Jamaica 15.0 selected regional countries, as of 2012, as illustrated in Figure 8; Trinidad & Tobago 15.6 being three times more expensive than in Suriname, while three Dominican Republic 16.6 times cheaper than in Chile. Barbados 22.0 Chile 35.1 Source: ICT Little Data Book, World Bank. 2014 2.3.2 Fixed Telephony in Rural Areas Despite the remarkable number of public and semi-public phones available, their use decreases; probably subject to a substitution process in favor of mobile telephony. As mentioned earlier, one of the uses of the Universal Access Fund is financing the operation and maintenance of public phones. In 2011, there were 13,937 public (80 percent) and semi-public phones, down from 15,453 in 2007. More than 80 percent of those phones belong to Cable & Wireless Panamá. Although those phones are used mainly for local calls, both local and national calls using those devices decreased during 2011, probably because of the increasing trend of mobile telephony use and coverage. viii 2.4 Mobile Telephony Market The existence of four players in such a relatively small market is an indicator of effective competition. Más Móvil (Cable & Wireless Panamá), Movistar (Telefónica), Digicel Panamá, and Claro Panamá (América Móvil) are the four mobile active operators in the country. The two first have been active for more than a decade in Panama and hold a mobile telephony concession, while the other two entered the market in 2008 after obtaining a personal communications service concession. ix The following Figures 9 and 10 show that the two operators that firstly entered the market accumulate about 78 percent of shares; Digicel holds another 13 percent, and Claro the remaining 9 percent; as of June 2014. It is remarkable that Telefónica doubles Más Móvil’s shares in the contract sector, probably due to a major presence in corporate accounts. However, this figure has to be analyzed bearing in mind that there are about 8 times more prepaid connections than contracts, and Más Móvil leads this much bigger prepaid marked. 14 Figure 9. Contract mobile telephony connections evolution and market Figure 10. Prepaid mobile telephony connections evolution and market share share (2014) (2014) 600000 5000000 4500000 Movistar (Telefónica) Mas Movil (C&W) 500000 4000000 (52.7%) (42.3%) 3500000 400000 Mas Movil (C&W) 3000000 Movistar (24.9%) (Telefónica) (35.7%) 300000 2500000 Digicel (12.5%) 2000000 Digicel (13.4%) 200000 1500000 100000 1000000 Claro (América Móvil) Claro (América (9.9%) 500000 Móvil) (8.6%) 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Wireless Intelligence, 2014 Source: Wireless Intelligence, 2014 Figure 11. Mobile-cellular sub-basket (USD a month) (2012) 2.4.1 Mobile Telephony Pricing Costa Rica 3.8 Guyana 9.0 Jamaica 10.5 Probably as a result of price competition, mobile telephony tariffs Panama 12.6 are among the lowest in the region. Comparatively low prices (as Suriname 14.2 shown in Figure 11), high density of operators (four players in a El Salvador 14.7 Dominican Republic 14.9 relatively small market of four million inhabitants), and low market Trinidad & Tobago 15.1 share concentration (as shown in Figures 9 and 10 above) are usual Guatemala 19.8 Chile 22.8 indicators of price competition in the mobile telephony retail Barbados 24.6 market. Argentina 39.4 Source: ICT Little Data Book, World Bank. 2014 2.4.2 Mobile Telephony in Rural Areas Figure 12. Percentage of population and territory with mobile coverage (2012) 100% 93.1% 94.2% 96.1% Population Approximately 20 percent of rural 90% coverage (%) 80% 73.8% population lacks access to mobile services. 70% 72.3% 75.2% Urban Figure 12 shows a comparatively low 96 60% population (%) percent of population with access to mobile 50% 40% 36.3% 32.1% 37.9% Geographic networks as of 2012, according to ASEP. 30% coverage (%) Since mobile network deployment usually 20% starts in densely populated areas to 10% 0% maximize investment efficiency, it is very 2007 2008 2009 2010 2011 2012 likely that almost the whole 4 percent of (est.) population without access to mobile Source: Autoridad Nacional de los Servicios Públicos networks live in rural areas. Additionally, close to 75 percent of population lives in urban areas. Consequently, the 4 percent without mobile coverage is almost one fifth (20 percent) of the 25 percent living in rural areas. 15 Nevertheless, it is worth noting that rural and indigenous communities whose households are not covered by mobile telephony network often own cell phones too, since they can use it while are in areas with network signal. Hence, due to their sporadic use, they probably tend to adopt pre-payment plans under pay-for-use basis, which contributes to unbalance the pre-paid - contract ratio. Figure 13. Percentage of total population covered by a mobile network signal (2007***, 2009**, 2011*, 2012) Comparatively, regarding the percentage of population covered Suriname 100.0% by mobile network signal in 2012, a World Economic Forum Chile* 100.0% report indicates that the value is 96.0 percent, ranking Panama Trinidad & Tobago 100.0% Guatemala 100.0% in the middle part of the chart, only above Dominican Republic. Barbados 99.0% Therefore, there is room for improving telephone coverage, Guyana* 97.0% since mobile technology is often the most viable way to bring Panama 96.0% El Salvador*** 95.0% ICT-enabled services to remote or rural areas. Furthermore, Jamaica*** 95.0% mobile telephony constitutes a baseline to eventually upgrade Dominican Republic 94.6% the service to mobile broadband. Argentina*** 94.1% Costa Rica** 69.5% Source: The Global IT Report 2014, World Economic Forum 2.5 Fixed Broadband Market Despite the overall increase in broadband downstream capacity Figure 14. Available connection speeds (Mbps) (September 2012) available in the retail market, several countries in the region offer higher speed connections. Taking into account the high concentration of business in the country’s capital and the remarkable acquisition power of their employees, there would probably be demand for internet connection with downstream speed Source: Update: the state of broadband in Latin America by BNAmericas above 4Mbps (see Figure 14). In fact, although they were not included yet in the statistics used to build up this figure, in 2013 ISPs offer 10, 20 and 50Mbps downstream for residential clients. 16 Actually, as illustrated in Figure 15, the market trend shows ISPs gradually increasing the speed offered at a more or Figure 15. Fixed broadband subscription as % of GNI per capita (bubble size: less constant price. Cable and Wireless seems to Mbps downstream) have led this strategy in the last five years. It is 30% remarkable that in 2009 C&W launched a high Cable & Wireless 25% Panama (DSL) speed plan considerably more expensive that other 20% offers at that time, which was followed by an offer Liberty Technologies with similar bandwidth about 10 times cheaper the 15% (WIPET) (WiMAX) following year. Thus, the fixed broadband market 10% seems to have reached an equilibrium point around Cable Onda / 5% TeleCarrier (cable) 5-10 percent of GNI (Global National Income) per 0% capita, letting ground for competition mainly in 2005 2006 2007 2008 2009 2010 2011 2012 technology and bandwidth. Source: Telegeography, World DataBank, 2013 Box 2. Broadband Strategy for 2020 After the Broadband Master plan defining this internet service as a minimum of 1Mbps downstream speed and 256 Kbps upstream, the currently under discussion national Broadband Strategy for 2020 intends to increase the connection speed across the country. AIG’s preliminary target for 2020 could be reaching 100Mbps per 20USD/month in urban areas (e.g. Santiago, Colón, San Miguelito, David, Chitré, etc.) and 10Mbps in rural areas (at least in public facilities), but it still needs to evaluate its feasibility. Furthermore, AIG would envisage increasing the current 86 percent of population with potential access to internet up to 100 percent. Pursuing this latter objective, AIG have designed five projects (although not all five have started yet) to increase internet coverage by about 2 percent each project at a cost of 3.5-5 million dollar each. An overall investment of about 150 million dollar (understanding that part of it has already been executed) would eventually enable to achieve such ambitious objective. 2.5.1 Fixed Broadband Pricing Figure 16. Fixed-broadband sub-basket (USD a month) (2012) Trinidad & Tobago 12.3 Probably due to the above-referred competition, fixed Panama 14.0 broadband prices are among the lowest in the region. After Costa Rica 15.8 Figure 16, in 2012 the average fixed broadband service in Panama El Salvador 20.3 was priced at 14 USD per month (168 USD per year), which Guatemala 20.6 Dominican Republic 23.3 represented about 2 percent of GNI per capita. Thus, in general, Argentina 24.3 and disregarding that Panama’s GINI index is one of the highest in Guyana 24.5 the region (scoring 51.9 percent in 2010, according to the World Chile 25.8 dataBank), it was expected to be very affordable for citizens with Jamaica 29.2 Suriname 41.9 sufficient acquisition power to own a computer. Barbados 45.2 Source: ICT Little Data Book, World Bank. 2014 17 2.5.2 Fixed Broadband in Rural Areas The public network of Figure 17. Access Sites of Red Nacional de Internet free Wifi access points contributes to reduce Panama’s digital gap (65 percent of its users are in the country’s interior). However, its economic sustainability and expansion to the remaining 14 percent Source: ASEP, 2013 of population remain an issue. In a first phase, RNI (Red Nacional de Internet or National Internet Network Service) made 1Mb internet service available to inhabitants from 9 out of the 12 provinces through 655 Wifi access points (see Figure 17). AIG, the institution managing the project, expanded it to 41 cities and reached 1,105 points by mid-2013. The project, initially foreseen for 5 years plans to invest a total of USD32 million. Its acceptance is proven by the 1,300,000 registered users by December 2013, from which 25,000 use them in daily basis to exchange more than 180 GB on average. Liberty, which was awarded to deploy NRI, used fiber to connect 85 percent of its access points, while it used microwave to connect 4 of them. For its maintenance, a set of local professionals was trained across the country to provide rapid response to incidences and ensure high availability. Besides RNI, Government funds about 300 community centers equipped with about 10 desktop computers, enabled with free wifi, and managed by 1 facilitator. These centers, named Infoplazas, organize trainings on software like Windows operating system, Ubuntu, Windows Office, Open Office, movie edition, educative content creation, education virtual platforms, coding logics, web2.0 tools, collaborative tools, and SOLCA (Software Libre y Codigo Abierto or Open Code and Free Software) to contribute to bridge the digital gap with impaired citizens. An Infoplaza, which is typically open from 8am to 7pm on weekdays and from 8am to 2pm on Saturdays, is used daily by 70-150 citizens. According to staff, more citizens could benefit from them if opening hours were more flexible and there were more computers, since often there is unattended demand due to limited resources, which are funded by the Government. Furthermore, a number of them have an annex space equipped with a videoconference kit, television, audio system and a projector, which is used by the community as multipurpose room. Additionally, 36 public pay phones in the countryside have been equipped with a 1Mbps free wifi connection. It is planned to double both the number of featured pay phones and their speed connection. 18 Box 3. Economic impact of targeted free internet services Every dollar invested in facilitating targeted free internet access creates economic activity equivalent to 7.53 dollar. According to AIG, its investment in making free internet available in certain spots triggers internet subscription s’ raise, since users want to have independent and uninterrupted internet access. This factor, jointly with the subsequent acquisition of ICT terminals and equipment, as well as the increasing number of existing and new business among those communities adopting ICT, have a positive impact in the economy. This premise serves as baseline to dedicate part of the aforementioned Universal Service Fund to invest in free internet networks like RNI. 2.6 Mobile Broadband Market Mobile internet access, being one of the highest in the region, overtook fixed line Figure 18. Fixed vs. Mobile Broadband access in late 2010. Considering mobile connections of 256kbps or faster and Penetration (2011) including prepaid users who don’t have full data plans, only Brazil and Chile show higher mobile broadband penetration in the region, as of 2011 (see Figure 18).x Market players are the same as in mobile telephony, being their shares quite similar as well: Más Móvil and Telefónica entered the market in 2009 and currently aggregate 83 percent of subscribers, while Digicel and Claro, which entered the market two years later, hold the remaining 17 percent (see Figure 19). The four mobile operators were awarded licenses to offer 4G services, while the Figure 19. Mobile broadband connections evolution and market share (2014) Government plans 1,000,000 Mas Movil to issue a bid for (Cable&WirelessPanamá) the 700MHz band 800,000 (45.0%) Movistar (Telefónica) to increase the 600,000 (38.0%) spectrum range Digicel (14.5%) allocated to mobile 400,000 broadband. 200,000 Claro (América Móvil) (2.5%) 0 2009 2010 2011 2012 2013 2014 Source: Update: the state of broadband in Latin America by BNAmericas Source: Wireless Intelligence, 2014 2.6.1 Mobile Broadband Pricing The four mobile broadband players offer a wide variety of retail options and base their competition strategies, firstly, on data downloading capacity and, secondly, on price. In the postpaid (or contract) market competition is equally based on both price and downloading capacity (see Figure 20), while in the prepaid market competition is rather based on downloading capacity than on price or length of the plan (see Figure 21). 19 Figure 20. Contract mobile broadband price (USD, vertical axis) per data Figure 21. Prepaid mobile broadband price (USD, vertical axis) per number of capacity cap (2013) days plan (horizontal axis). Bubble size: data capacity cap (2013) 90 16 80 Movistar (Telefónica) Movistar (Telefónica) 14 70 12 60 Claro (América Móvil) Claro (América Móvil) 10 50 40 8 Mas Movil 30 Mas Movil 6 (Cable&WirelessPanamá) (Cable&WirelessPanamá) 4 20 Digicel 10 2 Digicel 0 0 0 2 4 6 8 0 10 20 30 Source: Movistar, Claro, Mas Movil and Digicel official websites, 2013 Source: Movistar, Claro, Mas Movil and Digicel official websites, 2013 2.6.2 Mobile Broadband in Rural Areas Figure 22. Digicel’s 4G broadband mobile coverage (2013) Thanks to its wide and increasing coverage, 4G could become an alternative to make broadband available to rural communities. Generally speaking, 3G is available in all cities, while 4G is only available in the main ones. In particular, according to Digicel, its 4G network (see Figure 22) is available to 95 percent of population. Another big operator, Telefónica, so far offers 2G and 3G in Source: Digicel official website, 2013 most cities. The old incumbent, Cable&Wireless, deploys its 4G network by leveraging its high capillarity legated network and upgrading it to GPON (Gigabit Passive Optical Network) technology. In conclusion, although pricing and business model are key issues that would need to be analyzed, mobile technology has potential to partially address the lack of high speed internet in remote or low populated areas. Indeed, it could be a commercial complement to RNI, which offers fixed broadband connection to 80 of population through a subsidized network of wifi access points. 20 3. DEMAND 3.1 Economic, social, and demographic distribution There are clear economic, social and demographic differences between urban and rural areas. Lowest population density, average age, economically active population percentage, and literacy rates are concentrated in the same areas, which are mostly rural (see figures 23, 24, 25, and 26). Figure 23. Population density per district (habitants/km2) (2010) Figure 24. Average age per district (2010) < 20,000 20-40,000 13-21 40-100,000 21-29 100-500,000 29-35 > 500,000 35-45 Source: INEC (Instituto Nacional de Estadística y Censo) Source: INEC (Instituto Nacional de Estadística y Censo) In 2013, urban population was at 76.4 percent, being its average growth rate close to 3 percent in the last decade. Economically active population is mainly concentrated in cities, which are generally areas with lower analphabetism rate, and where most adults develop their careers. Overall, unemployment rate decreased notably from 13 percent to 4 percent in the decade 2003-2012. xi Figure 25. Percentage of economically active population per province (2010) Figure 26. Percentage of analphabet population per district (2010) 1-16% 1-12% 16-32% 12-22% 32-39% 22-32% 39-48% 32-43% Source: INEC (Instituto Nacional de Estadística y Censo) Source: INEC (Instituto Nacional de Estadística y Censo) 21 Figure 27. IDI Index (2012) 3.2 ICT demand drivers Chile 5.46 Argentina 5.36 Costa Rica 5.03 Brazil 5 Panama is fairly well ranked in access and use of ICT (especially for Panama 4.61 social networks), but lags behind the regional average in the skills Colombia 4.2 index. In 2012, Panama ranked 70th, down from the 63rd position in Venezuela 4.17 Ecuador 4.08 2010. With an IDI index of 4.61 points out of 10, Panama ranks behind Mexico 3.95 countries such as Chile, Argentina, Costa Rica, or Brazil (see Figure 27). Peru 3.68 El Salvador 3.25 ICT Development Index (IDI) is a composite index developed by ITU (International Telecommunications Union) combining 11 indicators into Source: ITU Measuring Information Society 2013 Figure 28. Access Index (2012) a benchmark measure to monitor and compare developments in ICT Argentina 5.88 across 155 countries. The 11 indicators can be grouped into Access Chile 5.65 Index, Use Index, and Skills Index, which are described below. Costa Rica 5.53 Panama 5.51 Brazil 5.49 In 2012 Panama’s position in the Access Index was average. It was Colombia 4.35 ranked 66th with 5.51 points, down from 63rd in 2010; below Argentina, Ecuador 4.34 Chile, and Costa Rica (see Figure 28). The Access Index captures ICT Venezuela 4.13 Mexico 4.11 readiness and includes five infrastructure and access indicators (fixed El Salvador 3.95 telephony, mobile telephony, international internet bandwidth, Peru 2.85 households with computers, and households with internet). Together, Source: ITU Measuring Information Society 2013 these indicators measure the basic level of access and infrastructure Figure 29. Skills Index (2012) development within each country. Argentina 8.75 Chile 8.64 Panama ranked comparatively low in the Skills Index during the last Venezuela 8.56 Costa Rica 7.97 decade. It held the 79th position, down from the 73rd in 2002, with 7.11 Colombia 7.79 points (see Figure 29). The Skills Index captures ICT capability and skills Peru 7.45 as indispensable inputs for ICT uptake, and includes three proxy Ecuador 7.29 Brazil 7.19 indicators (adult literacy, gross secondary enrollment, and gross tertiary Panama 7.11 enrollment). Together, these indicators reflect the country’s human Mexico 7.09 capacity and ability to absorb and take advantage of ICT. El Salvador 5.88 Source: ITU Measuring Information Society 2013 Despite its decrease in the Use Index ranking, Panama’s position Figure 30. Use Index (2012) remained average. Panama ranked 73rdin 2012, down from 67th in 2010, Chile 3.67 with 2.46 points (see Figure 30). The Use Index captures ICT intensity Brazil 3.41 and includes three ICT and usage indicators (internet users, fixed Argentina 3.16 Costa Rica 3.06 broadband, and mobile broadband). Together, these indicators reflect Panama 2.46 ICT uptake and use, as well as intensity of use within each country. Colombia 2.26 Mexico 2.23 Ecuador 2.22 Venezuela 2 Peru 1.63 El Salvador 1.25 Source: ITU Measuring Information Society 2013 22 Despite than less than half of population uses internet Figure 31. Use of virtual social networks; 1-7 scale (2012-2013) and ITU’s Access Index indicator is not outstanding, Barbados 6.2 Panama 6.1 Panama leads the region in the use of social networks Chile 6.1 (see Figure 31). Moreover, according to AIG, Panama is the Costa Rica 6.0 3rd Latin American country in eCommerce purchases Argentina 6.0 (books, electronic tickets, etc.) per capita, only behind Dominican Republic 5.9 Mexico and Chile. Therefore, many citizens able to access Jamaica 5.9 Trinidad & Tobago 5.8 internet are heavy users, at least for personal purposes. Guyana 5.8 Thus, such degree of interest or motivation could be Guatemala 5.6 leveraged by reinforcing ICT skills and internet access, Suriname 5.1 making the benefits of information society available to a El Salvador 5.0 bigger share of citizens. Source: The Global IT Report 2014, World Economic Forum Box 4. Governmental initiatives to promote internet adoption across the education ecosystem Internet for all (Internet para todos) is the popular name of the aforementioned country-wide free public wifi network RNI. Access points are installed in public places naturally acting as meeting points, like squares or public schools. Public high schools are being enabled with a minimum of 4Mbps broadband connection in sites reachable by terrestrial network, whereas a 2Mbps internet connection is offered to schools placed in remoter areas. The internet subscription cost of 1,464 schools is USD7million per year. However, those represent only 45 percent of the 3,300 public schools of the country, whereas a number of the remaining 55 percent (often in less densely populated areas) could not be included in the program because of its instable electricity supply. To address this situation, in 2012, MEDUCA contracted the power infrastructure improvement of 162 schools through public contest. Additionally, 6,000 people from disadvantaged communities were provided with house, internet and training. Peer-to-peer (Entre pares) program, leaded by MEDUCA and with Microsoft collaboration, to train teachers to develop ICT skills to incorporate them both as content and vehicular tool in their daily professional activity. Thus, it is ensured that those teachers who had not developed ICT skills during their previous formation can equally offer education at high quality standard to their students. As a result, by 2013 30,000 teachers have been trained and received a laptop. SOLCA, institution depending on AIG, trains and certifies (in person and online) 2,000 university students and professors on IT skills including configuration and administration of servers and firewalls. Its research lab studies and tests technologies that will be eventually used by governmental institutions. Furthermore, it develops specific software for several types of impairments, which could be translated to indigenous and foreign languages to maximize its social inclusive impact. The Technology for all (Tecnología para todos) program, a joint initiative of AIG and the Minister of Education (MEDUCA), gives a customized laptop to public high-school students from grades 10, 11 and 12 countrywide, with views to expand it to grade 9 in upcoming years. Each laptop, equipped with Microsfot Windows 7 costs USD290. This initiative aims to reduce the existing gap between private and public schools regarding the access to computers and internet by delivering 181,300 laptops (half in 2012 and half in 2013) among 162 centers. A microchip enabling remotely blocking the laptops was installed to discourage robbery. Indeed, it was effective since only 40 laptops were reported as stolen. Students have the right to have its laptop replaced once, and the duty to give it back if they do not finish secondary school. In its first phase, 1,500 volunteer students were selected to be members of the Informatics Solidarity Group (CSI or Cuerpo de Solidaridad Informática), being in charge to assist other students on the use and maintenance of their laptop. In order to stimulate the IT skills development of this targeted group of students, MEDUCA organized a robotics contest among them. MEDUCA covers the USD25 million cost of this project; while its total estimated investment reaches USD50 million, which would need to be incremented to about USD 80 million to expand the project to all schools. Source: MEDUCA and AIG. 23 3.3 Business demand About 20 percent of workers who can Figure 32. Business use of Internet (2010) Commercial internet benefit more directly from Internet do not subscribers 1,311,248 use it (see Figure 32). The following 1,400,000 professions are considered that can benefit 1,200,000 Commercial fixed phone lines subscribers more directly from the use of internet: 1,000,000 directors and managers from private sector, Commercial internet users public sector and organizations of social 800,000 655,624 interest; professionals, scientists and 600,000 518,355 Working population > 10 intellectuals; mid-level professionals and years old whose profession 400,000 can benefit more directly technicians; office workers; and market 155,121 from internet workers, salesmen and other service 200,000 Working population > 10 34,557 years old professionals. The following professions are 0 considered that can benefit less directly Source: Instituto Nacional de Estadística y Censo and ASEP from the use of internet: farmworkers, fishermen, hunters, livestock, and forest workers; craftsmen, miners, construction, mechanics and industry workers; joiners, drivers and machinery operators; non-qualified workers on mining, construction, manufacturing, transport; army members; and other professions. In 2011, about 87 percent of subscriptions belonged to residential customers, letting the remaining 13 percent (37,617 lines) for public sector, academia and corporate clients. It is worth noting that almost all Internet subscriptions (97.7 percent) were for broadband service. Moreover, Panama is considered a top outsourcing country with “good” “language skills, c ultural compatibility, government support, and political and economic stability” by Gartner Research. It is ranked 32 nd worldwide, only behind Costa Rica (21st) and Mexico (22nd) within the region.xii Box 5. Governmental partnership initiatives to support high quality training on ICT In 2006, the Government of India contributed to create the India-Panama IT Education Centre of Excellence. India collaborated with INADEH (Instituto Nacional de Formación Profesional y Capacitación para el Desarrollo Humano or National Institute for Professional Training and Capacitation for Human Development) to create this center. In 2012, the Government of Korea contributed to create the Panama-Korea Centre for Information Access. The goal of this center, created in collaboration with AIG, is to offer tailored training programs to Government officials on eGovernment. In 2014, the government envisages to formalize a partnership with Microsoft. This partnership is still under discussion. 24 3.4 Government demand The state-owned telecommunications Multi-Service Network reduces costs, increases interoperability and enables more dynamic relation with citizens. The Multi-Service Network (RMS or Red Multi-Servicios de Telecomunicaciones del Estado), carries voice, data, internet and video to serve State institutions. Moreover, it comprises a governmental switchboard and an IP telephony platform with a wide variety of functionalities. RMS robustness, resiliency and service continuity is reinforced through redundant topology, as illustrated in Figure 33.xiii Figure 33. Line Diagram for Government Multiservice Network Source: AIG, 2013 This network aggregates and channelizes horizontal Government demand for ICT infrastructure, enabling vertical Government demand to provide sector specific systems and services. The following section, eGovernment, summarizes Panama’s average performance in delivering vertical public services, through ICT, on the top of the horizontal infrastructure 25 3.4.1 eGovernment Figure 34. United Nations eGovernment index (2010, 2012, 2014) Ranking 2010 Ranking 2012 Ranking 2014 Panama ranks slightly above most selected regional economies in the delivery of online services. According Chile, 33 Chile, 34 to the UN eGovernment index, the country held the 77th Chile, 39 position out of 190 countries worldwide in 2014; losing Barbados, 40 Argentina, Argentina, Barbados, 44 eleven positions from 2012, but still slightly improving the 46 48 2010 position (79th; see Figure 34). This ranking reflects a Argentina, certain degree of ICT statistical data and interactive 56 Barbados, 59 eGovernment services, but showing that there is still Panama , 66 Trinidad and Tobago, 67 room for improvement. Trinidad and Panama , 79 Tobago, 67 Panama , 77 Actually, in Panama most public institutions’ IT systems Dominican are managed independently, missing the opportunity of Republic, 84 Dominican taking advantage of cost reduction through economies of Jamaica, 89 Republic, 89 Trinidad and Tobago, 91 scale and of quality benchmarking through sharing best practices. Panama developed an eGovernment Master Dominican Republic, Plan to address those and other weaknesses. This plan Guyana, 106 Jamaica, 108 107 foresees, among others, creating an integrated data Guyana, 109 Jamaica, 109 center to systematize governmental IT operations, to Suriname, Suriname, 115 increase security, and to enable resources sharing 116 Suriname, through this cost-effective solution. A number of Guyana, 124 127 governmental initiatives have already been implemented. Source: United Nations eGovernment survey, 2010, 2012, 2014 Thus, in 2013, 100 transactions can be partially executed electronically, while 5 transactions are fully feasible online. Furthermore, national Public Registry (Registro Público) is developing an electronic signature system to set a secure authentication framework that will enable to increase its online transactions portfolio on registering the property of land, building, vehicle, firms, etc. For this purpose, an affordable chip card (i.e. 50-75 USD for 2 years of service) would allow citizens to use a fully operative electronic signature. Moreover, the Government plans to create an electronic payment portal for eGovernment transactions, taking advantage of citizens’ familiarity with the use of bank accounts (a vast majority of salaries are paid by bank transfer, while only a small share are paid by check); but the financial sector needs to deploy eBanking to a further extent for this initiative to become fully successful. EGovernment initiatives are not exclusive of national institutions, but also local governments are adopting this trend. The MuNet project, led by AIG, made available to 28 municipalities an online portal containing practical and tourist information, and they plan to offer electronic transactions in the mid-term. Besides facilitating technical support and ICT infrastructure to those municipal authorities, AIG offers eGovernment capacitation courses. Actually, eGovernment could have an enormous impact on administrative informality among remote communities, because part of their citizens cannot access Government offices and therefore do not register deaths, births, marriages or properties. 26 The appropriate use of ICTs can have a positive impact in competitiveness indices and rankings. For instance, Figure 35. Competitiveness indices ranking (2012, 2013) regarding the Starting a Business index, in 2009 the IFC 2013 IFC 2012 Change introduction of an on-line system for company creation Topic rankings Rank Rank in Rank Trading Across reduced the time to obtain a business license from 18 to 9 10 +1 12 days, which had an important impact in the Borders Getting Electricity 16 15 -1 improvement on this index. Another example can be Starting a business 23 26 +3 found for the Registering Property index, since in 2010 Getting Credit 53 52 -1 the certificate of good standing from the tax agency was Dealing with Construction 73 78 +5 made available online, thus reducing the average total Permits time for Registering Property from 44 to 32 days. In a Protecting similar regard, in 2013, Panama made Paying Taxes easier 82 79 -3 Investors for companies by enhancing the electronic filing system Registering 107 121 +14 for value added tax, which contributed to reduce the Property Resolving average number hours per year dedicated to Paying Taxes 110 111 +1 Insolvency from 482 to 431. Panama’s positive trend in international Enforcing competitiveness indices is reflected in the last IFC’s Doing 125 123 -2 Contracts Business report. In its 2013 edition the country had a net Paying Taxes 172 171 -1 Source: Doing Business, IFC, 2013, overall increase in the ranking of 16 positions, as illustrated in Figure 35. To contribute to the upwards trend on competitiveness, AIG promoted the project Panama sin papel (Panama paperless); created by Executive Decree in 2010. Its scope comprises the judicial system, local governments, public finances, and the public health system. Thanks to this project, online forms and digital files to enable electronic tracking will be available for electronic transactions in public institutions. In addition, the implementation of the Multi-Service Network triggered an important leap forward in global competitiveness indices. 3.5 Mobile Telephony Market Every Panamanian, on average, has more than one and Figure 36. Mobile cellular subscriptions per 100 inhabitants ( 2013) a half cell phone numbers, which is among the highest Panama 162.9% Argentina 159.0% penetration rate across the region (see Figure 36). A Costa Rica 146.0% reason is that it is common to have two cell phones: one Trinidad & Tobago 144.9% for personal use and one for business, especially in El Salvador 136.2% Chile 134.3% more populated areas. Another reason is that it is Suriname* 127.3% common to have two prepaid SIM cards of different Barbados 108.1% Jamaica 100.4% operators, especially in less populated areas. The latter Dominican Republic 88.4% reason is supported by the fact that prepayment is Guyana 69.4% about 13 times more popular than contract, as shown in Source: ITU. 2014 27 Figure 37. This is linked with the fact that often people has two numbers from different service providers in order to take advantage of on-net calls’ lower rates offered by operators. This statement is supported by figure 38, which shows a calling pattern where on-net call minutes triple off-net minutes. Figure 37. Mobile cellular subscriptions and numbers evolution Figure 38. Mobile calling patterns 9,000,000 Cell phone 5,000 8,900,000 numbers assigned 8,000,000 (accumulated) 4,500 Millions of 6,769,106 Mobile 4,000 7,000,000 minutes subscriptions 3,500 within the 6,000,000 6,295,269 Pre-payment 3,000 operator's 5,000,000 2,500 network 4,000,000 3,516,820 2,000 Population 3,000,000 1,500 2,389,684 Millions of 2,000,000 1,000 minutes to Unique 500 other 1,000,000 473,837 subscribers 0 operators' 0 Post-payment 2007 2008 2009 2010 2011 2012 network 2007 2008 2009 2010 2011 2012 (est.) (est.) Source: Autoridad Nacional de los Servicios Públicos, World dataBank, Wireless Source: Autoridad Nacional de los Servicios Públicos Intelligence, 2013 In both temporal evolution graphics many parameters increase abruptly right after 2008, because at that time two new operators entered the market to join the existing two. However, while unique subscribers and post-payment connections increased slightly, population remained quite stable. Therefore, it can be concluded that a big share of new mobile subscriptions were in pre-payment modality after the two new licenses concession, which triggered a remarkable penetration rate raise. 3.5.1 Mobile Telephony Affordability Figure 39. Mobile-cellular sub-basket as a % of GNI per capita (2012) Probably due to price competition caused by the presence Costa Rica 0.5% of four operators in a relatively small market, mobile Trinidad & Tobago 1.2% telephony is among the most affordable in the region. As Panama 1.8% Chile 1.9% illustrated in Figure 39, in 2012, mobile cellular sub-basket Barbados 2.0% only represented a smaller percentage of GNI per capita in Suriname 2.0% Costa Rica (0.5 percent) and Trinidad and Tobago (1.2 Jamaica 2.5% percent) than in Panama (1.8 percent). Furthermore, the Guyana 3.2% Dominican Republic 3.3% high mobile telephony penetration rate (over 160 percent) El Salvador 4.9% and percentage of subscribed citizens (68 percent) indicate Argentina 5.5% that most potential consumers consider that the service is Guatemala 7.6% reasonably priced enough. Source: ICT Little Data Book, World databank. World Bank. 2014 28 3.6 Internet Service Internet penetration is growing at high pace and there is still room for improvement. Internet subscribers increased constantly from 2005 to 2010 at a bigger pace than population (see Figure 40). Furthermore, the number of internet users, based on the average number of people per household and employees per company, increased much faster, which indicates an increasing degree of business and social adoption. As illustrated, in 2010 there were almost 1.5 million of users and more than 3.5 million inhabitants. Therefore 42.9 percent of inhabitants used internet as of 2013, which is a rate close to the average of regional countries used as benchmark (see Figure 41), and above of Latin America’s average (28.8 percent). It is of notable interest the fact that, in 2010, 87 percent of subscriptions were from residential users, while 97.9 percent of connections were considered broadband.xiv Figure 40. Internet subscribers and users evolution (2010) Figure 41. Percentage of individuals using the Internet (2013) Barbados 75.0% 4,000,000 Chile 66.5% 3,500,000 3,516,820 3,238,321 3,350,673 Trinidad & Tobago 63.8% 3,000,000 Population Argentina 59.9% 2,500,000 Costa Rica 46.0% 2,000,000 Internet Users Dominican Republic 45.9% 1,500,000 1,498,328 Panama 42.9% 1,000,000 422,834 913,715 Internet Jamaica 37.8% 500,000 165,618 Subscribers Suriname* 37.4% 82,472 285,070 0 Guyana 33.0% 2005 2006 2007 2008 2009 2010 El Salvador 23.1% Source: The National Authority of Public Services (ASEP), 2011, World Source: ITU. 2014 dataBank, World Bank, 2013 Almost 9 out of 10 internet connections are robust and speedy, being at the head of the region on the percentage of connections with more than 4Mb of bandwidth, but lagging behind on bandwidths bigger than 10Mb. The most popular access technologies, subject to an increasing trend, are ADSL (53.9 percent) and cable modem (35.2 percent), while Dial up has dramatically decreased in the last decade down to 3.3 percent in 2010 (see Figure 42), WiMax and other technologies incremented their presence at slow pace. Actually, 75 percent of broadband connections have more than 4Mb of bandwidth; only Chile has better records in this parameter across the region. However, in the adoption percentage of bandwidth bigger than 10Mb, Panama falls behind many other countries like Chile, Argentina, Brazil, Guatemala, Colombia, Mexico or El Salvador (see Figure 43). Figure 42. Internet Connection Types evolution (2005-2010) Figure 43. Broadband connection percentage by bandwidth range (2013) 300,000 Other 250,000 WIMAX 200,000 WIFI 150,000 ADSL 100,000 Cable 50,000 Modem Switch/Dial 0 UP 2005 2006 2007 2008 2009 2010 Source: The National Authority of Public Services (ASEP), 2011 Source: Banda ancha en América Latina: más allá de la conectividad, CEPAL, 2013 29 3.7 Fixed Broadband Market Although recent public administration efforts for expanding computer and internet access may have not been yet accounted in international databases, penetration rate could be improved. Figures 44 and 45 show that, in 2013, Panama ranked in the mid-range of regional countries on percentage of households with computer (39.3 percent) and with Internet connection (31.5 percent); as well as of on broadband subscription per 100 inhabitants (7.8 percent). Causes may be, among others, lack of electricity access, affordability, ICT skills, or interest. Figure 44. % of households with computer (up), Internet (down) (2013) Figure 45. Fixed (wired)-broadband subscriptions /100 inhabitants (2014) Barbados 69.1% Barbados 23.1% 66.7% Trinidad &… 65.0% Trinidad &… 13.8% 45.0% Argentina 59.2% Chile 12.4% 53.9% Chile 57.0% Argentina 10.9% 49.6% Costa Rica 51.0% Costa Rica 9.3% 46.7% Panama 39.3% Panama 7.8% 31.5% Suriname 33.8% Suriname 5.5% 19.0% Jamaica 30.5% Dominican… 4.3% 23.5% Dominican… 24.5% Jamaica 4.3% 18.6% Guyana 22.9% El Salvador 3.8% 20.6% El Salvador 22.3% Guyana 3.7% 12.7% Source: ITU. 2014 Source: Little Data Book. World Bank. 2014 As mentioned, it has to be taken into account that these figures may do not include remarkable governmental initiatives like Internet para todos (Internet for all) and Infoplazas (info-sites), providing free internet access to citizens in public spaces and community centers. Hence, the impact of those initiatives may be not yet accounted in broadband subscriptions statistics per household or per 100 inhabitants. Likewise, AIG’s initiative of giving a laptop to 9-12 grade students of 45 percent of public high-schools country-wide may be not reflected yet in the percentage of computers per household statistics elaborated by ITU. 3.7.1 Fixed Broadband Affordability Regarding fixed broadband subscription affordability, Panama is very close to reach ITU’s objective on 1 percent of GNI per capita. As shown in Figures 46 and 47, fixed broadband is among the most affordable in the region, representing the average sub-basket’s price 2 percent of GNI per capita, and 1Mb connection’s price 1.04 percent of GDP per capita. 30 Figure 46. Fixed broadband sub-basket as a % of GNI per capita (2012) Figure 47. 1 Mb fixed broadband price as a % of GDP per capita (2012) Trinidad & Tobago 1.0% Uruguay 1.0% Panama 2.0% Panama 1.0% Costa Rica 2.1% Chile 1.3% Chile 2.2% Argentina 1.5% Argentina 3.4% Mexico 1.5% Barbados 3.6% Brazil 1.7% Dominican Republic 5.1% Suriname 5.8% Costa Rica 1.9% El Salvador 6.8% Colombia 3.2% Jamaica 6.8% Venezuela 3.6% Guatemala 7.9% El Salvador 4.4% Guyana 8.6% Guatemala 11.6% Source: ICT Little Data Book, World databank. World Bank. 2014. Source: Banda ancha en América Latina: más allá de la conectividad, CEPAL, 2013 3.8 Mobile Broadband Market The country has a high number of mobile broadband Figure 48. Mobile broadband subscriptions per 100 inhabitants (2012*, 2013) subscriptions per 100 inhabitants. Figure 48 shows that Costa Rica 72.0% in 2013 there were 25.2 subscriptions per 100 Barbados 41.4% inhabitants. In the region, only Costa Rica, Barbados, and Chile 35.6% Dominican Republic 25.4% Chile had significantly higher rates of subscriptions, while Jamaica 25.3% in other regional countries like Guyana this service was Panama 25.2% not available. In Panama, in 2012, according to Trinidad & Tobago 18.9% Telefónica, smart phones penetration in corporate Argentina* 16.2% Suriname* 15.0% consumers was about 65 percent and those are El Salvador 6.0% considered heavy users for international standards. Guyana 0.0% Source: ITU. 2014 3.8.1 Mobile Broadband Affordability Figure 49. Prepaid handset-based mobile broadband basket as a % of GNI per capita (2011) Being prepaid handset-based mobile broadband basket as Uruguay 1.7% affordable as fixed and among the most affordable in the region, it Panama 2.5% Costa Rica 3.1% constitutes an opportunity for broadband penetration expansion. Costa Rica 3.1% In 2011, as illustrated in Figure 49, prepaid handset-based mobile Argentina 3.4% broadband cost 2.5 percent of GNI per capita, only behind Uruguay Venezuela 3.7% El Salvador 5.7% (1.7 percent) in the region and more than 10 times more affordable Guatemala 7.9% than in Colombia (28.6 percent). Affordability, combined with 4G Chile 9.8% Jamaica 10.1% coverage, which Digicel states at 80 percent of population, can be a Dominican Republic 10.7% cost-effective solution to reduce the existing digital gap by bringing Colombia 28.6% high speed internet to citizens living in areas with poor wired ICT Source: Measuring Information Society, ITU. 2012 infrastructure. 31 4. CYBER SECURITY AND PROTECTION OF CRITICAL INFORMATION INFRASTRUCTURE 4.1 Context Together with the rapid expansion of the ICTs in Panama end users, business community, public institutions and Internet service providers (ISPs) began to increasingly face cyber security threats. First cyber security incidents go as far back as 2006 when the DNS servers of the major ISPs were hit by DDoS attacks, and more recently in 2010 the mail account of the Chief of Staff of the Presidency was subject to illegal interception and leakage. After those events the Panamanian government has been subject to two (2) anonymous operations, both in 2012. Few years ago Registro Público faced major cyber security attack which resulted in leakage of personal data of most of the records in their databasexv thru scrapping techniques. Other incidents include web defacement, phishing attacks, botnet proliferation, and more. The fast growing number of cyber security incidents (see Box 6) gained attention of public institutions and private companies, especially the recent ones started to take appropriate technical and administrative measures preventing and protecting its networks and information from the cyber threats. Box 6. Cyber-incident trends in Panama, 2012 Web defacement was the primary type of cyber incident reported in Panama, comprising 27% of all cases managed by CSIRT (country’s national incident response team). This was closely followed by DDoS attacks (23%), and unauthorized login attempts (15%). Cases involving phishing (6%), fraudulent information use (4%), SQL injection (4%), spamming (6%), and unauthorized information disclosure (7%), XSS use (4%), and other unauthorized access attempts (4%) completed the attack chart. The majority of incidents in Panama were reported in the third quarter of 2012 (see Figure 50). Figure 50. Dominant Cyber-Incident Types Reported in Panama, 2012 The aforementioned cyber incidents were paired with reports from Panamanian authorities that customer service centers often had more access to clients’ personal information than necessary, needlessly exposing individuals to insider threats. These service centers were frequently exposed to DDoS attacks, compounding risks to precariously stored sensitive information. Source: OASxvi 32 Apart of the cyber security vulnerabilities Panama has faced energy supply outages which resulted in greater connectivity losses. For instance, and uncontrolled wildfire resulted in a power outage, due to the fact that the electrical network is by itself a single point of failure, the resulting blackout affected the whole country, impacting the availability of mobile networks and Internet services. Nowadays, leading telecommunication companies require additional investments to increase resiliency to electricity cuts. For instance key infrastructure assets of Cable&Wireless are equipped a with 2 hours battery and 5,000 gallon tanks of fuel to ensure 5 days electricity autonomy. A more reliable national electricity system would allow operators to concentrate their investments in more productive assets. Emerging cyber security situation and overall understanding of criticality of the ICT infrastructure to the functioning of the key sectors of the economy, elevated the issue up on the political agenda and resulted in number of legal and policy initiatives aiming to strengthen cyber security resilience and critical information infrastructure protection. 4.2 Overview of the legal framework Legal cyber security framework in Figure 51. Structure of the Cybersecurity Framework and main legislative initiatives in Panama Panama is only starting to emerge however pace of the development is significant. First of all on the international level (see Figure 51) Panama, as well as the other member states, is the signatory to the regional OAS/CICTE AG/RES. 2004 (IV-O/04): Adoption of a Comprehensive Inter-American Strategy To Combat Threats to Cybersecurity on march 2004xvii. On 15 November 2012, Panama was invited to accede to Budapest Source: AIG Convention on Cybercrime. Legislative reforms are underway to enable Panama to become a party. On the national level major developments may be split into the policy and legislative initiatives. Among the most significant policy initiatives are Position paper on Cyber security that describes the official stand in regards of Critical Infrastructure Resilience, protection of minors online and cyber securityxviiiadopted by the Foreign Relations Ministry and the Telecommunications Regulator (ASEP) and the National Cyber Security Policyxix adopted in May 2013. Among the legislative initiatives may be mentioned the draft law number 377 that modifies the penal code which was submitted to Parliament on 2Q 2012 and Law of Data protection which according to the Policy should be adopted in 2013. It is also worthy to mention decree on establishment of CSIRT PANAMAxx (National computer emergency response team of Panama) adopted in September 2011. 33 Despite the great effort, at the moment of writing of the Note Panama is lacking legislative framework for cyber space in number of areas. Among them the legal framework for personal data protection may be named as one of the significant importance due to its capacity to build the confidence of the society and business community in the cyber space and promote broader penetration of the usage of ICTs. Indeed interviewed ISPs (the ISP´s interviewed were Cable and Wireless and Cableonda) named data privacy breaches as a second dominating among the end user complaints. According to the CSIRT unauthorized log in attempts and phishing were accounting to near 50% of all the reported cyber security incidents over 2012 (see also Box 6). However it is expected that Policy will provide strong and coordinated stimulus to the development of the cyber security framework in Panama. Indeed ambitious and concrete 3 years (2012-2015) action plan may be seen as a strong political commitment. Across the Latin and Central Americas Panama is the second country adopting Policy (Columbia has adopted National policy in 2011). However short time horizon definitely challenges the implementation of the Policy. Taking that into account, it may be needed to ensure the continuity of the initiatives launched by the Policy beyond 2015 by, for instance, establishment of Policy review framework and procedures. It could be noted as well that coordination and accountability mechanisms are not embedded into the Policy at this moment and this subsequently may result in additional implementation challenges. Policy in a holistic cross sector way addresses broad set of cyber security challenges. Indeed the Policy document is well organised around six pillars (see Table 2) and it is composed from 36 tasks mainly assigned to the public institutions. Objective of the Policy is: “combining the efforts of our citizens, companies, and public institutions to bring about an increase in cybersecurity, to allow the reliable use of information technologies in all areas of national life while also safeguarding the fundamental rights and freedoms of citizens and an economic and regulatory environment that encourages corporate growth and development and allowing the correct functioning of the state.”xxi Table 2. Public institutions active in the area of cybersecurity in Panama Nr. Pillar Actions per pillar 1. Protecting the privacy and basic rights of citizens in cyberspace 5 Preventing and stopping criminal acts in cyberspace, and its use for any kind of offenses 2. 9 and illicit acts 3. Strengthening the cyber security of national critical infrastructure 6 Promoting the development of a strong national cyber security business community, as a 4. 3 reference point for the region Developing a culture of cyber security through training, innovation, and the adoption of 5. 6 standards 6. Improving the cyber security of public agencies and their ability to respond to incidents 7 Source: National Strategy for the Cyber security and Protection of Critical Infrastructure, Panama Document was toughly consulted with public and private institutionsxxii. It was observed however that higher level of public and private institutions interviewed during the WB missionxxiii was not always aware about the existence of the Policy as such. This may be caused by the fact that preparation of the Policy was carried out on more technical level without deeper involvement of the managerial level of public institutions and private companies. It is however of utmost importance to involve both in order to ensure sufficient level of engagement and commitment to the Policy implementation. 34 So far the legal cyber security framework does not foresee cyber security and CIIP related obligations to the public institutions and (or) ISPs. Existing arrangements aiming to strengthen the cyber security resilience (for instance minimal technical measures), reporting of the cyber related incidents to CSIRT, etc., and limited initiatives in the area of CIIP are based on near entirely on cooperation basis and mutual benefits. During its mission WB noticed a broad agreement across public and private sectors on the need for critical information infrastructure protection (CIIP) framework and endorsement for further implementation of CIIP action plan foreseen by the Policy. It is therefore a recommendation of the WB to gain the momentum arising from that understanding and go ahead with the development of the sound CIIP framework. Emerging as an important international business hub with its strong financial, logistics, ICT and other sectors Panama in many ways leads economic development in the region. Public sector demonstrates great effort in terms of implementation of e-government services for the public and making its own operation more efficient through virtualization and adoption of electronic G2G processes on the following fields: (i) e-Government, where AIG built capacity among public officials on the Panama Paperless initiativexxiv, and developed a payment national portalxxv; (ii) cloud computing, which engaged governmental institutions like the Ministry of Presidency (Ministerio de Presidencia)xxvi, the Ministry of Housing and Land Use (Ministerio de Vivenda y Ordenamiento Territorial or MVIOT)xxvii, and the Land Management National Authority (Autoridad Nacional de Administración de Tierras)xxviii; and (iii) Registro Público, which modernized its online information systems triggered an improvement in international competitiveness indexesxxix. However further development may be put at risk if Critical Information Infrastructure (CII) is not protected from vulnerabilities and threats arising from the increased dependence of the essential sectors of the economy on ICTs. Public institutions running CII, for instance Registro Público, are facing cyber security challenge on daily basis. There were events of the leakage of private data in the past and it is a broad endorsement for establishment of national CIIP framework, including CIIP governance model, CII identification methodology, principles, guidelines and coordination for public CII. 4.3 Governance model As it is usual in the area of cyber security, Panama follows its own governance model with AIG playing the role of the natural leader of the cyber security agenda. Figure 52 presents a list of different organizations that have been identified as responsible of the different task resulting from the identification of the six initiatives that conform the National Cybersecurity Strategy with most of them assigned to AIG. Box 7. Public institutions active in the area of cybersecurity in Panama - Autoridad Nacional para la Innovación Gubernamental (AIG or National Authority for Governmental Innovation) - Ministerio de Relaciones Exteriores (Ministry of Foreign Affairs) - Instituto de Medicina Legal (IMEL or Institute of Legal Medicine) - Ministerio de Seguridad Pública (Ministry of Public Security) - Ministerio Público (Public Prosecutor’s Office) - Universidad Tecnológica de Panamá (Technological University of Panama) - Universidad Nacional de Panamá (National University of Panama) - Superintendencia de Bancos de Panamá (SBP or Superintendence of Banks of Panama) - Procuraduría General de la Nación (Attorney General’s Office) 35 - Autoridad Nacional de los Servicios Públicos (ASEP or National Authority for Public Services) - Secretaría Nacional de Ciencia, Tecnología e Innovación (SENACYT or National Secretariat for Science, Technology and Innovation) - Ministerio de Educación (MEDUCA or Ministry of Education) - Instituto para la Formación y Aprovechamiento de Recursos Humanos (IFARHU or Institute for the Training and Use of Human Resources) Source: AIG AIG hosts the CSIRT PANAMA. The mandate of the CSIRT foresees its key role in ensuring cyber security in the public sector, i.e. coordination of efforts to raise levels of resource security and systems related to information technologies and communications of governmental entities. According to AIG, CSIRT monitors the cyberattacks within the following segments: National Multiservices Network; Government Cloud Computing; Government Agencies; and civil population. However it also active in collaboration with private sector and among is objectives names such as the prevention, treatment, identification and resolution of security incidents attacks on computer systems that make up the nation's critical infrastructure and access to information of the citizens of Panama. Organisational structure of CSIRT is provided on the Figure 52. Figure 52. Organizational structure of CSIRT AIG Coordinator CSIRT - Panama Systems Incidents Dissemination Administrator Management and Support Staff Areas Team Leader Analyst Incidents Incidents Internal Management External Technical Auditing Management Operator Technical Experts Experts Technical Analyst Institutional Human Communication Legal Resources Source: AIG 36 CSIRT plays the key role in ensuring cyber security for such public sector. For instance, within the Multiservices Network (dedicated network for public sector institutions) CSIRT provides an IT Security Perimeter thru Firewalls and Intrusions Prevention Systems for public institutions such as the Ministry of Economy and Finance and the Ministry of Commerce and Industries. Likewise, among others, CSIRT serves the governmental cloud computing initiative, led by AIG, through which several Ministries and national authorities share centralized IT resources and infrastructure. So far CSIRT is not operating on 24/7 basis, but it is foreseen by the Policy to strengthen its real time incident monitoring capacity. CSIRT may be considered very active and rich in different initiatives however systematic annual planning of the CSIRT activities and financial resources securing the subsequent implementation so far is not being performed. In order to secure the leadership, continuity and sustainability of the initiatives in the cyber security area AIG should strengthen its institutional capacity in terms of strategic planning, financial and human resources. AIG has emerged as a natural and strong leader of the cyber security agenda in Panama and the best prove of that AIG was capable to take a lead on a preparation of the Policy document and was designated as a coordinator for its implementation. As a coordinator of the Policy implementation process AIG should coordinate and ensure smooth implementation of planned activities across near 20 public and private institutions. At the same time out of 36 tasks established across the 6 pillars of the Policy AIG leads or co-leads 26 of them. On top of the great implementation and coordination challenge AIG is in charge of many other day-to-day assignments in the area of cyber securityxxx such as running of a CSIRT and cyber security awareness campaigns, organisation of national cyber exercise, etc. There is no doubt however that implementation of the Policy will bring even more functions to AIG, for instance, broader competences for CSIRT extending its competence to private sector, development and potential implementation of data protection and CIIP frameworks, etc. Detailed assessment of the evolving situation, potential implications and strategic planning (including mid and long term) in terms of administrational, financial and human resources is essential for execution of assigned and foreseen functions. 4.4 Awareness and Capacity building Awareness campaigns and capacity building programmes are not coordinated and usually represent stand-alone initiatives most commonly were triggered by the cyber incidents which gain broader public attention. Pattern of the cyber security incidents and experience of the ISPs proves that there is a room to improve the awareness of the society as a whole in terms of the cyber security threats and vulnerabilities. Players from both private and public sectors see the empowerment of the end user as an arising necessity. Panama has signed the STOP.THINK.CONNECT messaging convention, in order to be able to carry out a harmonized message shared by other OAS member states (United States, Canada, and Paraguay have also signed the convention). The campaign is programmed to be launched in 3Q 2013, to address that gap and further activities are foreseen by the Policy. International experience however suggests that better results could be achieved when awareness and capacity building campaigns are systematically planned and coordinated. Such approach also ensures that initiatives are targeting most relevant groups of the society / aspects and there is no overlap between the initiatives. Better planning also provides opportunity to joint forces among different initiatives, institutions, sectors, etc. 37 5. CHALLENGES AND OPPORTUNITIES As a result of the ICT sector diagnosis, several challenges have been identified. Following is a brief summary of the challenges along with opportunities that can help the country to fully realize the potential of the ICT sector, grouped into four areas: (i) institutional, legal and regulatory environment; (ii) eTransformation; (iii) Cybersecurity; and (iv) broadband connectivity in rural areas. 5.1 Institutional, legal and regulatory environment Panama has achieved remarkable milestones on institutional empowerment. Likewise, it started procedures to create legal and regulatory initiatives in several areas. However, there is still room for improvement to create a more solid institutional, legal and regulatory framework. First, AIG is a very active institution with governmental support that is in the position of leading the implementation of strong inter-institutional coordination mechanisms. Second, While Panama took important steps on legislating on eGovernment, legislation on other areas like open access, infrastructure sharing, spectrum management, personal data protection, childhood protection, cybersecurity, open data, or eCommerce remain at an early stage. In addition, Panama could review the application of its Universal Service Law to maximize the impact of its investment and to screen telecommunications services to refine which would be taxed and to what extent. Last, telecommunications sector ex-post regulation could benefit from an update, because the market changed notably since the creation of the current regulatory framework twenty years ago. 5.2 eTransformation While Panama achieved comparatively good assessments in eGovernment, it lags behind in ICT skills, while it is just starting on Open Data. First, Panama ranks above most regional economies in the UN eGovernment index measuring the delivery of online services. As a matter of fact, applying appropriately ICTs can have a positive impact in competitiveness indices and rankings, because ICTs can be effective tools to increase productivity and quality. Nevertheless, the use of ICTs could be expanded to the private sector to address the fact that about 20 percent of workers who can benefit more directly from Internet do not actually use it. Second, ICT skills remain an issue in Panama as the lack of skilled manpower may be a binding constraint to realize the potential of the ICT sector and to foster local innovation. The ITU Skills Index illustrates this lack of skills ranking Panama far from the top countries in the region. To improve this aspect, Panama could adopt targeted skills development and certification programs, which may include supporting university-industry. From its side, public administration did some remarkable efforts implementing ad-hoc programs. Besides continuing building on these programs, Panama could benefit of applying international best practices to those trainings. Finally, despite the ICT sector growing even faster than the overall economy and the country leading the region on ICT goods importing and exporting ratios, it lags behind as ICT services exporter. Given the amount of services generated by the Canal and the financial sector, and taking into account the country’s great potential for Business 38 Process Outsourcing (BPO), governmental support in promoting a strong IT/ITES industry could attract foreign investments and balance the relation between international trade of goods and services. Moreover, joining the innovative international trend of governments opening their data could be an opportunity to stimulate entrepreneurs to create business offering new ICT-based services (e.g. transports and logistics, or even eCustoms, with adequate governmental action). These innovative services could process certain data made available by the government to offer tailored information to citizens in a user-friendly presentation. Consequently, it would foment the creation of jobs, because ICT professionals and citizens could leverage their skills to produce and consume new services, and the government could know better the interests of their citizens by monitoring that emerging market of ICT-based services. 5.3 Cybersecurity Emerging cyber security situation and overall understanding of criticality of the ICT infrastructure to the functioning of the key sectors of the economy has elevated the issue up on the political agenda. However it is of the utmost importance to ensure the continuity of the initiatives launched by the Policy beyond the 2015 by, for instance, establishment of the Policy review framework and procedures. Monitoring of the Policy implementation could be enhanced through the introduction of the coordination and accountability mechanisms which are not embedded into the current framework. Legal cyber security framework in Panama is only starting to emerge however the pace of the development is significant. And despite the great effort in terms of the setting up of national cyber security agenda, at the moment of writing of this Note Panama is lacking legislative framework for cyber space in number of areas , among them the legal framework for personal data protection, protection of critical information infrastructure, etc. Consistent review of the legal base as a whole would allow to identify more gaps and systematic planning of adoption and (or) amendment of legislation base would allow Panama to establish a sound legislative framework in that area. Policy in a holistic cross sector way addresses a broad set of the cyber security challenges and numerous public institutions are supposed to take a role in its implementation. In order to ensure sufficient level of engagement and commitment to the Policy implementation it is crucial to build an awareness of that important role within the participating institutions (on both technical and managerial levels). So far the legal cyber security framework in Panama does not foresee CIIP related obligations for the public institutions and (or) ISPs. During its mission WB noticed a broad agreement across public and private sectors on the need for CIIP framework and endorsement for further implementation of CIIP action plan foreseen by the Policy. AIG has an important opportunity to gain the momentum arising from that understanding and go ahead with the development of the sound CIIP framework. In order to secure the leadership, continuity and sustainability of the initiatives in the cyber security area AIG should strengthen its institutional capacity (including CSIRT) in terms of strategic planning, financial and human resources. 39 Awareness campaigns and capacity building programmes are not coordinated and usually represent stand-alone initiatives. Better and more sustainable results could be achieved when awareness and capacity building campaigns are systematically planned and coordinated. Lack of the work force qualified in the area of cyber security was raised as a serious concern by interviewed ISPs and public institutions running information systems and providing e-government services. To address this issue a number of necessary actions have been documented in the National Cybersecurity Strategy, including the signing and execution of cooperation agreement with the national technical university in order to encourage students to op for security related careers, implement intern programs at the CSIRT and joint research and development projects. It may be concluded therefore that system of high education in Panama is not addressing that gap sufficiently. Policy document foresee certain measures in that regard, however implementation remains an issue and may take time. 5.4 Broadband connectivity in remote areas The lack of critical mass for broadband demand, infrastructure sharing regulation, and ad-hoc funds represents a challenge for operators considering deploying broadband networks in remote areas. However, public works could become an opportunity. Limited affordable broadband connectivity contributes poorly to reduce the economic, social and demographic differences between urban and rural areas. The challenge remains on the viability to expand across the countryside some of the excellent national average figures like affordability (fixed broadband subscription is close to reach ITU’s objective on 1 percent of GNI per capita, and mobile broadband is among the cheapest in the region), mobile broadband penetration (Panama is the regional leader), cell phone penetration (one and a half numbers per inhabitant), or robust and steady internet connections (9 out 10). Nonetheless, the fact that approximately 20 percent of rural population in the countryside lacks access to mobile services impedes the development of mobile broadband as an alternative to rolling out fixed infrastructure in the last mile. In contrast, the government could leverage the following opportunities to designing policies enabling broadband connectivity in remote areas: (i) 50 percent of incomes generated by the 700MHz spectrum band bid will be dedicated to finance the Underground Burying Fund, which could be used as an incentive for joint infrastructure deployment under an appropriate business model; (ii) major works being done for the construction of a subway in Panama City could trigger common interests between electric, telecommunications, water and transport companies, which could establish a precedent on infrastructure sharing susceptible of being expanded to rural areas; (iii) a new entity will be created to manage common underground ducts; (iv) the underground burying cables plan foresees a 24 million investment in government-owned civil infrastructure in the financial district; (v) the Rural Electrification Office plans to expand its network to 200 towns more and there could be room for rolling out fiber on their poles at an estimated cost could be 1 USD per pole; and (vi) a set of governmental initiatives to bring computers and free internet access points to the country-side. 40 6. PROPOSED STRATEGIC DIRECTIONS Given this analysis of challenges and opportunities, the Government could develop strategies around the following areas: (i) institutional, legal and regulatory environment; (ii) eTransformation; (iii) cybersecurity; and (iv) broadband connectivity in rural areas. 6.1 Institutional, legal and regulatory environment The country could improve the institutional, legal and regulatory framework to strengthen oversight of the sector to bring about change. Panama could reinforce the autonomy of the regulator and build capacity and human capital. Then, if technical and substantive staff benefited from specialized training, they could contribute to modernize regulation, to empower cybersecurity, and to better handle the disputes that they are currently mediating or involved in. Updating the legal framework, as suggested in the SDA 2012-2014, would be particularly effective for fostering open access, shared infrastructure, spectrum management, personal data protection, childhood protection, cybersecurity, open data, and eCommerce. The process could include continuing to update substantive regulations in conjunction with ASEP (interconnection, licensing, universal service obligation, tariffs, spectrum, and scarce resources management) and internal procedures (dispute resolution, procedures for investigating and resolving complaints, conducting public consultations, etc.) to give teeth to the new regulations. 6.2 eTransformation Panama could reinforce policies aimed at improving government and private sector efficiency, skills and transparency for national eTransformation. First, Panama could significantly increase cost savings by developing cross-cutting infrastructure and procedures, notably establishing the standards and shared platforms for interoperability of eGovernment services and facilitating the deployment of shared communications infrastructure. Second, the country would need to raise the ICT skills level of their government officials, citizens and professional enabling them to effectively use and design eTransformation services. Finally the Government could open public data for the citizens and private sector to contribute to identify and alleviate problems they face. The first component, developing cross-cutting infrastructure and procedures, would improve the delivery of eServices, including eGovernment, eCommerce, content, eBanking, mBanking, and eSociety applications; which would contribute to achieve SDA’s 2012-2014 goals like offering online half of the State’s services. The relatively high positions in which Panama ranked in the last years in the UN eGovernment index (see Figure 34), should fuel existing and new eTransformation initiatives like opening data to citizens and private sector for them to use it to develop new commercial or community services. Transformational impact could be achieved by creating an opportunity for citizens and businesses to interact with government without the need for a face-to-face contact, instead using ICT. Significant cost savings are generally achieved by focusing on cross-cutting infrastructure, notably establishing the standards and shared platforms for interoperability of eGovernment services, facilitating the deployment of shared communications infrastructure, and digitization of government records. 41 The second component, raising the ICT skills level, would contribute to make available the other two components to all citizens. Thus, Panama should promote developing ICT skills, jointly with content for inclusive software (translations to indigenous languages, tailored accessible programs for different types of impaired people), to expand the impact of its eGovernment and Open Data initiatives among all groups of citizens. The third component, opening public data, could bring benefits from open data and open government initiatives in terms of improving transparency, accountability and citizen participation. Panama could take advantage of creating synergies between eGovernment initiatives and the increasing mass of ICT skilled government officials, citizens and IT professionals, to implement policies related to open data and open government. Thus, engaging public sector, private sector and civil society could trigger innovative solutions that help Government better serve citizens while conceding public notoriety to local qualified IT professionals. 6.3 Cybersecurity Potential actions could be grouped along the four strategic directions: (I) Policy and Legal Framework; (II) Awareness and capacity building; (III) Institutional strengthening (including CSIRT); and (IV) CIIP. Taking into account assessment of the current situation Panama may wish to consider the following actions across those areas: (I) Policy and Legal Framework: (a) To take steps to ensure the continuity of the initiatives launched by the Policy beyond the 2015 and to strengthen the monitoring of the Policy implementation through respectively establishment of the Policy review framework and procedures and introduction of the coordination and accountability mechanisms. (b) In order to establish sound legislative framework in the area of cyber security, to set up and to perform the profound review process of the national legal base aiming to identify the legal gaps and in coordination with other public institutions to develop a plan of adoption and (or) amendment of legislation base, in line with SDA 2012- 2014’s goal of passing regulations to fight cybercrime complying with international standards. (II) Awareness and capacity building: (a) To develop an awareness and capacity building action plan coordinating efforts across public sector, building partnerships and synergies with private sector. Action plan could ensure that initiatives are targeting the most relevant groups of the society and (or) aspects and there is no overlap between the initiatives. Better planning could provide opportunity to joint forces among different initiatives, institutions, sectors, etc. (III) Institutional strengthening (including CSIRT): (a) To perform detailed assessment of AIG (including CSIRT) the context of the evolving situation, potential implications and strategic planning (including mid and long term) in terms of administrational, financial and human resources is essential for execution of assigned and foreseen functions. As implementation of the Policy will bring even more functions to AIG, for instance, broader competences for CSIRT extending its discretion to private sector, 42 development and potential implementation of data protection and critical information infrastructure protection frameworks, etc., in line with SDA 2012-2014’s goal of internalizing CSIRT functions. (IV) CIIP (a) To take advantage of an agreement and broad endorsement across public and private sectors and to launch the development of the sound CIIP framework. 6.4 Broadband connectivity in remote areas The country could put in place policies to determine conditions for infrastructure sharing, so that joint efforts to bring services to remote areas become more feasible. The Government could encourage operators from different sectors to deploy joint infrastructure especially in remote or with less populated areas. Strengthening infrastructure sharing could allow Panama to bridge the remaining geographic gaps in electricity, telephony and broadband communications, especially in the last mile section to reach rural and indigenous communities. Joint rollout of telecommunications infrastructure would lead to an increase in overall coverage, significant financial savings and environmental benefits, with fewer sites required to ensure country-wide coverage. However, there is little indication that the operators are working together to expand telecom infrastructure in remote areas. Consequently, government policies could unblock the situation by designing common rules for sharing infrastructure and by managing taxes and funds to help financing the last mile connection. Besides promoting cooperation between operators, the Government could design a sustainable institutional and economic model to manage shared infrastructure and joint network deployment. Moreover, a law could be passed to enforce the construction of common ducts in the construction of new roads and underground excavations; and it could be included in the Broadband Master Plan as well. In this regard, the Government of Panama should evaluate the long term economic sustainability model and managerial structure of RNI. If this project reached stability, it could be expanded to provide free basic internet to the remaining share of citizens that cannot benefit yet from this public service. As a result, it would contribute to reduce the gap between remote and urban communities, and to achieve SDA 2012-2014’s goal of making broadband available to 95 percent of population and at a cost of B/.10.00 for 20MB in rural areas. Box 8. InterAmerican Development Bank support (IADB) on broadband In 2012, IADB started the Broadband development for competitiveness and integration project in collaboration with AIG. This 2 year project, named Desarrollo de la Banda Ancha para la competitividad y la integración , project pursues increasing broadband penetration, as well as global and regional integration. Moreover, the project is intended to set the basis for a Broadband National Plan. By implementing the above-mentioned policies, the Government of Panama should be able to improve the landscape in the ICT sector and leverage it for a more inclusive and transparent economic growth. 43 7. POSSIBLE WORLD BANK SUPPORT Given the proposed strategic directions, Panama can leverage the World Bank regional and international experience on the four identified areas: (i) institutional, legal and regulatory environment; (ii) eTransformation; (iii) cybersecurity; and (iv) broadband connectivity in rural areas. 7.1 Institutional, legal and regulatory environment The World Bank Group could assist the government with institutional strengthening, legal development and regulatory reforms. Areas of potential Bank support include enabling policy, legal, and regulatory frameworks for open access, shared infrastructure, spectrum management, personal data protection, childhood protection, cybersecurity, open data and eCommerce. This support on ICT policy and regulatory reforms and new legislation aimed at strengthening the telecommunications environment that has led to a well-functioning sector. The World Bank has ample experience at helping governments around the world to design and implement ICT policy and regulatory reforms. Hence, Panama could leverage the Bank’s experience in the region, as well as its role as catalyst in convening other multilateral institutions, to fulfill the requirements of a comprehensive and certain institutional, legal, and regulatory environment that will promote competition and innovation in the ICT sector. 7.2 eTransformation In addition, the World Bank recommends a comprehensive eTransformation strategy emphasizing online applications and cross-cutting ICT-based infrastructure and services. Thus, Panama could benefit from the Bank’s experience and its international experts network to develop eGovernment solutions, ICT skills training and open data programs. The Bank has wide experience in eGovernment projects in countries like Argentina, Moldova, as well as in countries from Africa and OECS (Organization of Eastern Caribbean States). A governance eTransformation project for Panama could transform the delivery of selected public services using ICT. This project could include eLeadership capacity, sharing infrastructure, and developing eServices through multiple channels, including government portals and mobile phones. Indeed, this project could create opportunities for citizens and business to interact with governmental institutions using ICT instead of face-to-face contact. Moreover, regarding the necessary ICT skilled manpower to execute those changes, the Bank supports several successful ICT skills development in different regions. Examples include IT skills assessment and IT industry capacity building programs in Nigeria; Business Process Outsourcing (BPO) and Software Developer Certification (SDC) programs in Kenya; and IT training programs in Mexico. As an example, the program in Mexico established a new organization called MexicoFirstxxxi as part of a World Bank financed project aimed a development of the local IT industry. 44 In addition, the World Bank designed an innovative methodology to perform an Open Data Readiness Assessment to accordingly provide recommendations for conceiving an action plan to develop an open data initiative in a constantly increasing number of countries across the globe. Among them, Russia, Ruanda, Antigua and Barbuda, Burkina Faso, Tanzania and Peru embraced this initiative only during the first semester of 2013. 7.3 Cybersecurity The Bank is well positioned to provide Panama with the access to the global expertise and knowledge in the area of cyber security applying it to the specific case of Panama. The Bank is partnering with both international organizations, governments, for instance, the Government of South Korea, which are recognized leaders in that area and could leverage its broad network of international experts across the different regions of the world. Taking that into account the Bank could assist Panama in implementation of the actions (steps) formulated per strategic directions in the area of cyber security (See section 5.3 of this Note) in particular: (I) Policy and Legal Framework: (a) To assist in ensuring of the continuity of the initiatives launched by the Policy beyond the 2015 and strengthening the monitoring of the Policy implementation through respectively development of both the Policy review framework and procedures, and coordination and accountability mechanisms. (b) To assist in setting up and carry on of the in depth review process of the national legal base of Panama aiming to identify the legal gaps and in development of a plan of adoption and (or) amendment of the legal acts; (c) To assist in drafting (amending, adjusting) of the legal acts identified while carrying on the process defined in (b); (II) Awareness and capacity building: (a) To assist in development of an awareness and capacity building action plan coordinating efforts across public sector, building partnerships and synergies with private sector. As part of that work, assistance in identifying the initiatives, focusing then on most relevant groups of the society and (or) aspects of cyber security and identifying the opportunities to joint forces among different initiatives, institutions, sectors, etc. (III) Institutional strengthening (including CSIRT): (a) To perform detailed assessment of the AIG (including CSIRT) in the context of the evolving situation, potential implications and strategic planning (including mid and long term) in terms of administrational, financial and human resources. (IV) CIIP (a) To assist in development of the sound CIIP framework, aiming to protecting CII related to communication, energy, finance and other critical sectors from the vulnerabilities, with main focus on cyber-attacks. As part of that 45 work, the Bank would provide assistance in development of CIIP governance model, CII identification methodology, principles, guidelines and coordination for public CII. 7.4 Broadband connectivity in remote areas Equally important, Panama could take advantage of the Bank’s experience in the design and implementation of broadband connectivity infrastructure. It could complement IADB projects on reinforcing the network backbone with a project to make broadband accessible to rural and indigenous communities. Thus, a new project could promote cross-sectorial infrastructure sharing by setting equitable conditions through specific regulation and by designing the role and business model of the body in charge of managing the commons assets. Based on its PPP experiences in the region and other parts of the world, the Bank can provide assistance to the government for maximizing the impact and sustainability of public free internet services and infrastructure sharing models. Thus, in order to target investments more efficiently and to ensure continuity in time, the project could outline Terms of Reference and business plan for each initiative, as well as empower the institutions in charge of managing them. Another area where the Bank’s experience could be of help is the licensing the 700 MHz spectrum for the deployment of 4G and LTE services in the country. This would allow government of Panama to respond to rapid increase in the provision of mobile services and the introduction of new broadband wireless technologies, which has greatly increased the demand for spectrum. Box 9. Exploiting WB’s network of peers and experts Due to its constant dialogue with governments across the globe, the Bank can serve as platform to establish international bilateral collaboration. The Bank offers its support to continue catalyzing the exchange of best practices started during the identification mission hold in Panama on May 2013. Indeed, experiences on a remote areas connectivity project that the Bank carries out in Nicaragua could be of interest to Panamanian authorities. In the opposite direction, successful governmental institution experiences on cloud computing management and sustainability could be shared with Nicaraguan authorities. 46 8. CALENDAR OF PROPOSED ACTIVITIES The following table assigns a timeframe for the above proposed activities: Preparation Phase Year 1 Year 2 Year 3 Institutional, legal and regulatory framework WB to provide an ICT  WB to provide technical assistance to modernize the ICT institutional, legal and regulatory Sector Policy Note to framework on telecommunications market, shared infrastructure, spectrum management, identify the personal data protection, childhood protection, cybersecurity, open data and eCommerce. challenges and eTransformation opportunities in the  Identify eGovernment  Foster the use of technology  Under the Government ICT sector in Panama. services and shared eTransformation Program, by the private sector, Findings have been applications to be implementation of selected grouped in the innovation and BPO/ITES implemented under the eGovernment infrastructure following four areas: industries through eTransformation Program. and services through portals  Institutional, legal eCommerce and and mobile phones. and regulatory eGovernment services. framework  WB to contribute to identify  WB to assist to design the  WB to assist to implement  eTransformation ICT skills gaps in officials, upgrade of the existing ICT the upgraded ICT  Cybersecurity citizens and IT professionals. capacitation programs for capacitation programs for  Broadband officials, citizens and IT officials, citizens and IT connectivity in professionals professionals. remote areas  WB to execute an Open Data  WB to assist with conceiving  WB to assist to implement an Readiness Assessment. and action plan for an Open Open Data initiative. Data initiative. Cybersecurity  WB to assist in ensuring of  WB to assist in setting up and  To assist in development of the continuity of the carry on of the in depth an awareness and capacity initiatives launched by the review process of the building action plan Policy beyond the 2015 and national legal base of coordinating efforts across strengthening the monitoring Panama and in development public sector, building of the Policy implementation; of a plan of adoption and (or) partnerships and synergies amendment of the legal acts; with private sector.  WB to assist in development  WB to assist in drafting of the sound CIIP framework; (amending, adjusting) of the legal acts identified.  WB to perform detailed assessment of the AIG (including CSIRT) in the context of the evolving situation, potential implications and strategic planning (including mid and long term) in terms of administrational, financial and human resources. 47 Broadband connectivity in remote areas  WB to assist to identify  WB to evaluate the long term  WB to assist to outline, if bottlenecks that may be sustainability and managerial needed, a policy framework hindering the expansion of structure of shared to ensure the long term broadband in remote areas. infrastructures and sustainability and managerial governmental free internet structure stability of shared initiatives. infrastructures and governmental free internet initiatives.  Bank experts to offer guidance on auctioning the 700MHz spectrum.  WB to catalyze international  WB to catalyze international  WB to catalyze international peer collaboration. peer collaboration. peer collaboration. 48 i Source: ASEP Executive Report ii Source: Agenda Digital Estratégica – Panamá 2012 – 2014. AIG. Available at: http://innovacion.gob.pa/descargas/AIG-PLAN-ESTRATEGICO-2010-2014b.pdf iii Source: ASEP iv Sources: Czernich, N., Falck, O., Kretschmer T., & Woessman, L. (2009, December). Broadband infrastructure and economic growth (CESifo Working Paper No. 2861). Retrieved from www.ifo.de/DocCIDL/cesifo1_wp2861.pdf Katz et.al. (2009). Available at: http://www.elinoam.com/raulkatz/German_BB_2009.pdf Qiang and Rossotto, IC4D: Extending Reach and Increasing Impact, Chapter 3: Economic Impacts of Broadband (2009), World Bank García-Zaballos y López-Rivas, Control gubernamental sobre el impacto socioeconómico de la banda ancha en los países ALC (2012), BID v Source: Katz and Koutroumpis (2012), based on a model developed by Roller and Waverman (2001) for fixed telephony, later adapted by Koutroumpis (2009), and by Gruber and Koutroupis (2011). Banda Ancha en América Latina: más allá de la conectividad. Jordan et al. (2013). United Nations (p. 112 - 113). vi Source. Internet Society. Available at: http://www.isoc.org/inet2000/cdproceedings/8d/8d_5.htm#s5 vii Source: NIC Panama. Available at: http://www.nic.pa/ viii Source: ASEP Executive Report ix Source: ASEP Executive Report x Source: Update: the state of broadband in Latin America by BNAmericas xi Source: World DataBank. 2014. xii Source: SourcingLine. Available at https://www.sourcingline.com/top-outsourcing-countries xiii Source: AIG. Available at: http://www.innovacion.gob.pa/rnm xiv Source: ASEP Executive Report xv For more information see: http://ohuiginn.net/wp/?p=205 xvi Source: Latin American and Caribbean Cybersecurity Trends and Government Responses, Organisation of American States (OAS), 201. Available at: http://www.trendmicro.com/cloud-content/us/pdfs/security- 49 intelligence/white-papers/wp-latin-american-and-caribbean-cybersecurity-trends-and-government- responses.pdf xvii For more information see: http://www.oas.org/juridico/english/cyb_pry_strategy.pdf xviii For more information see: http://www.innovacion.gob.pa/descargas/proteccion%20de%20menores%20de%20edad%20en%20Int ernet%20y%20Seguridad%20Cibernetica.pdf xix Source: Gaceta Oficial de Panamá. Available at: http://www.gacetaoficial.gob.pa/pdfTemp/27289_A/GacetaNo_27289a_20130517.pdf xx Source: Gobierno de Panamá. Available at: http://www.innovacion.gob.pa/csirt xxi Non-official translation. xxii Around 25 public and private institutions were involved into the discussion of the Policy. xxiii WB undertook the 4 days mission to Panama on May 6-10, 2013, with the objective of elaborating the present Policy Note and to identify potential areas for collaboration between the Bank and the Government. xxiv Source: AIG. Available at: http://www.innovacion.gob.pa/noticia/1800 xxv Source: AIG. Available at: http://www.innovacion.gob.pa/noticia/1795 xxvi Source: AIG. Available at: http://www.innovacion.gob.pa/noticia/1905 xxvii Source: AIG. Available at: http://www.innovacion.gob.pa/noticia/1898 xxviii Source: AIG. Available at: http://www.innovacion.gob.pa/noticia/1903 xxix Source: AIG. Available at: http://www.innovacion.gob.pa/noticia/1462 xxx At the moment great effort of launching cyber security agenda in Panama and continuity of undergoing tasks is being sustained by 5 dedicated staff members of AIG out of which 2 are entirely dedicated to the CSIRT activities and 1 to external communication matters. xxxi Source: MexicoFirst. Available at: http://www.mexico-first.org 50