Wendy was out of data, so she walked down to the center of Alotenango, her hometown. Engrossed in her smartphone, she took shelter from the midday sun under an arch along the side of the municipal government building. When Wendy’s family can’t afford to buy data packages for their phones, she comes to the town square, she told Rest of World.
Alotenango is 50 kilometers southwest of Guatemala City and home to roughly 28,000 people. It also plays host to a wireless hotspot — one of the 220 coverage zones that have been set up across the country by Wayfree, a Guatemalan internet startup.
As a sixth grader, Wendy uses the hotspot to access videos sent over WhatsApp by her teachers at the local school, run by a nonprofit association for low-income students. She also uses it to watch YouTube videos.
Using Wayfree is not a seamless process: Every 15 minutes, the internet would cut off, redirecting her back to the initial Wayfree landing page. She’d then have to click the connect button and watch a slideshow of three advertisements for pharmacies and banks before gaining access again.
Guatemala is marked by a disparity in internet access. Wayfree’s founder and CEO, Sergio X. Plaza, frames the company’s mission as a crusade for connectivity against the country’s mighty duopoly of Tigo and Claro, but the truth is murkier. Wayfree and Guatemala’s big two telecomms companies are paving separate routes for what the future of the internet will look like in developing markets. Even if they intersect, it might not be enough to bring the country online.
In a 2018 government census, only 29% of the population reported having used the internet in the three months prior to answering the census. The digital divide is exacerbated by the duopoly of the country’s two telecommunications giants, Millicom and América Móvil, which respectively own the mobile providers Tigo and Claro. Together, they own 100% of the market, and the cost for data is out of reach for families like Wendy’s.
“They control the market, and they control the prices,” said Plaza. “They are so powerful that countries in Latin America don’t properly regulate them.”
Wayfree is a small company of 27 employees, which includes team members who manage the Guatemalan operations for the electric scooter company Bird. Plaza, an Ecuadorian entrepreneur, founded Wayfree in 2016 in an effort to bring more Guatemalans online through a freemium advertising model on their smartphones — 15 minutes at a time. Despite Wayfree’s diminutive size, Plaza is supported by an impressive coterie of international partners, from Facebook to the American mobile-first conglomerate Rokit.
They face a steep climb. While the country has a high share of internet users compared to the average in Latin America, most of those users are in urban centers. In the department of Guatemala, for example, which includes the capital and other major cities, 55% of people reported having internet access in the 2018 census.
Meanwhile, rural and indigenous communities cite far lower rates of connectivity. A 2018 study from the research center PDC Global found that only 10.4% of households in Wendy’s department of Sacatepéquez had internet access.
Progress in bringing the internet to Guatemala’s rural population has come in fits and starts since the country’s state-owned company, Telecomunicaciones de Guatemala (GUATEL), was privatized in 1998.
“After privatization, there was significant progress, at least in terms of increased coverage,” said Samuel Pérez Álvarez, a congressional representative and secretary-general of the opposition Semilla party. But he noted there have also been setbacks in quality, price increases, and major market issues. Tigo has been accused of bribing lawmakers, and proposed antitrust legislation has stalled.
As a result, the cell networks in Guatemala are expensive and underdeveloped. The vast majority of people with smartphones buy data and minutes as they go. According to the internet analytics service Cable.co.uk, the cheapest available gigabyte of access costs on average $1.29 in Guatemala — almost 26 times the cost of the cheapest data in India.
Still, Plaza saw opportunity through mobile phones. Wayfree set out to build a network of hotspots in public spaces. The company secured agreements with the two major electricity distributors to gain access to lampposts, where Wayfree would install its routers. The company partnered with Facebook’s Express Wi-Fi initiative to help with analytics and made a deal with Rokit to integrate its mesh network technology, which would allow the hotspots to amplify each other and expand their reach.
Wayfree’s 350 hotspots are spread over 70 municipalities, with a plan to build around 1,000 throughout all 340 over the next 12 to 18 months. According to Plaza, over 900,000 devices have connected to their networks.
Given Tigo and Claro’s complete dominance of the market and Wayfree’s role as the challenger, Plaza eagerly assumed the vaunted status of tech disruptor — at least in his rhetoric. He maintains that the duopoly has tried to impede Wayfree’s progress. “We have faced resistance from every corner,” he told Rest of World. “They have a lot of ties and power with the government.”
When pressed for details, his claims were vague and nearly impossible to tie to the telecomms. Plaza said Wayfree received defamatory local press coverage, which he asked Rest of World not to explicitly reference, as he is currently trying to get it removed. He also alleges that someone built signal blockers to prevent users from accessing Wayfree hotspots in Guatemala City, though he did not offer Rest of World any evidence of these claims.
Tigo and Claro did not respond to Rest of World’s request for comment.
“We have faced resistance from every corner. They have a lot of ties and power with the government.”
Meanwhile, Wayfree continues to make agreements with the Guatemalan government, both on the municipal and national levels, including an initiative with the Ministry of Education to help with health and virtual learning outreach.
Plaza’s claims obscure the fact that Wayfree likely doesn’t register as a blip on the telecomms’ radar — if anything, their goals are aligned, especially as Wayfree’s capacity grows. “I’ve never heard Sergio call [Tigo and Claro] a competitor,” said Brian Moses, vice president of sales and business development at Wefi, a U.S.-based connectivity company. “I think he considers them an opportunity.”
Jan Kluth, the chief commercial officer in charge of Rokit’s collaboration with Wayfree, also told Rest of World that the company has not faced any resistance from the telecomms nor their political allies. “On the contrary, the government embraced us because we’re not here to compete with mobile network operators,” he said.
Wayfree and its partners are actively looking to collaborate with telecomms companies.
According to Wayfree stakeholders, the startup would have a lot to gain from teaming up with the duopoly. Plaza says the startup is open to forming an alliance through a practice called offloading, where cell providers can automatically switch users between complementary networks, depending on which one is stronger at a given time. “We’ll invite the operators,” he said. “It’s not like we’re going to fight [them], instead we’ll be helping people who don’t have access.”
Moses said that Wefi has already been in talks with major carriers in Central America about potential partnerships, where users would automatically switch between cellular networks and Wayfree Wi-Fi networks, depending on which is stronger.
Under this type of agreement, Wayfree would be a funnel to bigger providers such as Claro and Tigo. Wayfree would likely still exist in its freemium model, with people able to access hotspots in public places, but it would also serve as underlying infrastructure — and a marketing channel — to the bigger carriers, ultimately still making the startup dependent on them.
“Ad-based services in some of these underserved countries are great training wheels for people that have never had a device before and never had access to the internet,” Moses told Rest of World.
Pérez Álvarez, the congressional representative, isn’t as bullish. He had a meeting with Wayfree representatives to discuss the company’s plans, viewing it as a positive initiative that would nevertheless be unable to address Guatemala’s structural internet access problems.
He hopes to tackle the issue of connectivity in Guatemala through legislation. Earlier this year, he partnered with another Semilla lawmaker to present a bill to address the barrier to internet access, which has become especially difficult to overcome due to the pandemic. The bill would require telecommunications companies to provide free access to online education resources as well as government sites.
Wayfree has helped fill in some of the gaps, especially in smaller towns like Alotenango, offering educational and health resources through its app.
In the meantime, Plaza says that Wayfree has to improve its outreach efforts. “One of the challenges that we constantly face is communication about our coverage areas,” he said.
Floridalma Urías Coc, the director of a different primary school in Alotenango, said she didn’t know about the Wayfree hotspot, even though she works right next to it. “The issue of technology is complicated in the community,” she said.
For students like Wendy, the brief spurts of ad-powered data are better than nothing. Even so, the country’s internet access dilemma is deeper than infrastructure patches. The digital divide will not be overcome in 15-minute increments.
