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What Washington can learn from Colombia’s genius plan to lift millions out of poverty

Diego Molano, Colombia's information and communications tech chief, wants to give students and low-income Colombians access to high-speed Internet. (Courtesy  <a href="">Ministerio TIC Colombia</a> )
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Colombia isn't rich. The South American nation tracks six socioeconomic brackets, and 88 percent of Colombians fall into the lowest three rungs. The bottom of the economic pyramid in Colombia lives on less than $2 a day. Yet the country is racing to build what, even by U.S. standards, would be considered bleeding-edge technology: Its leaders are extending fiber-optic Internet access to 96 percent of the country's cities and towns. If all goes as planned, soon all Colombians will even have their own storage space in the cloud — a little piece of digital real estate provided by the government.

Unlike in the United States, where technology has helped create new divisions between rich and poor, Colombia wants to use the Internet to close the wealth gap. Its program appears to be working,  according to Diego Molano, Colombia's minister for information and communications technology. In the last three years, he says, the program has helped lift 2.5 million people out of poverty. But there's still an international digital divide, Molano says, because the majority of the world's apps and services aren't built with poor people in mind. They're built for the rich.

I spoke with Molano by phone this week. What follows is a lightly edited transcript of our conversation.

Brian Fung: You were in Washington this week to discuss Colombian technology in connection with your country's effort to join the OECD. What did you talk about?

Diego Molano: The main objective we have in Colombia is using technology and ICT [information and communications technology] to solve the most important problem in Colombia — and that problem is poverty. Three and a half years ago, when this government started, more than 38 percent of Colombians were living under the poverty line. The government has focused on helping people to leapfrog. We've taken 2.5 million people out of poverty in just three years.

What's the role of technology here, exactly?

There is a very strong correlation between Internet penetration and the reduction of poverty. I see that every day. When we connect, for example, a rural school to Internet, when we connect a small school in the middle of the jungle to Internet, those kids in the middle of nowhere have effectively the same opportunity to access the whole of information society — just like any kid in New York, London or Paris.

Interesting. How many people have you connected to the Web this way?

When we started this government, we had 2.2 million broadband connections. Now we are close to 8.8 million connections. Almost 80 percent of Colombians are connected. My forecast is, we'll go from 8.8 million to 27 million by 2018. Most of that will be wireless, using LTE.

In the United States, broadband is defined as anything faster than 4 Mbps. What does broadband mean to you?

Right now, it's 1 Mbps. But we are moving to 4 Mbps.

Won't that change in the definition have a negative impact on broadband penetration rates?

It may reduce for a few months. But the operators are going to catch up immediately. When we moved from 256k to 512k, in a few months everyone moved up real quick.

So, you have all this Internet capacity. What are you doing with it?

When we looked at the base of the pyramid, around 80 percent of the country, it was basically disconnected. So our focus was to increase the number of broadband connections in the base of that pyramid — both in the rural world and the urban world. But we found that connecting people is not enough. Why is that? The value of the Internet is not in the connection. The value of the Internet is in the applications.

Today what happens is that Internet is the tool for the rich of the world. For the poor, Internet is useless because there are no applications for them. The poor of the world, they have a different economy. They have a different day-to-day. Let's take the most common business ...  very small shops in poor neighborhoods in rural areas. If you tried to sell Internet to them today — or if you even offer it for free — they say, "Why?" Internet is useless to the poor because there are no applications that impact their daily cash flow.

Let me go back to the infrastructure part for a second. Who's building it all, and how much does it cost? 

We collected a lot of money from the government. We put that money on the table, and we auctioned that money. It is a subsidy for the capital expenditure of the investors. We put it on the table and said, "The winner is the company that offers to connect the largest number of municipalities to broadband." Four companies pushed for that, and one company won. It's now connecting 1,078 municipalities, which is 96 percent of the municipalities in the country.

If one company is building it all, how will you maintain broadband competition? In the United States, many areas are served by only one or two providers. This sounds similar.

The company that built the fiber — according to the contract we signed, they are obligated to give access to any operator that asks to use that fiber at regulated prices. So now, six LTE companies are deploying in the country, and they have to cover every single municipality. So those companies are now using that fiber because that fiber is an open network.

Are you working with U.S. tech companies? Which ones? What are you telling them?

We're working with SAP and Google, Oracle and Facebook -- many software companies.  Basically, this is the perfect lab. Colombia is the perfect lab for them because poor people are already connected in this country. We have 7,600 Internet communities in rural areas. If there is a community with more than 100 inhabitants, we connect them to the Internet through an Internet center.

I don't want the money of those companies. I want them to tell me how we train people massively here. We want Colombia to have the most developers using their systems — Android, Facebook, BlackBerry, SIP, Windows applications; we want the iOS experts. What we want from them is help us to massify training because we want Colombia to have the largest number of developers for the base of the pyramid.

Those companies have sometimes been criticized for expanding inequality. Is there a tension between technology's potential to equalize and its potential to create more inequality?

Technology can create inequality — but we are also reducing inequality. When you connect a potato grower in the Andean mountains, and he doubles his income thanks to Internet, you are reducing inequality. And Colombia is a country that has reduced inequality the most in the region in the last three years.

Colombia recently held elections. How did technology manifest itself in the race?

For the first time in Colombian history, people voted for candidates that were concerned about technology. Their campaigns were based on ICT policies.

Can you be more specific?

Some of them, for example — computers are key for the development of this country. There are no value-added taxes on computers or tablets. Today in Colombia, computers are 10 percent cheaper than in the United States. In the next four years, we are going to implement our interpretation of digital rights. One of those rights is for everyone to have a space in the cloud for free. That space in the cloud is going to help every single citizen in Colombia interact with the government. Through services in the cloud, people will have an official e-mail account, medical records will reside there officially, and all major transactions will be stored there, as well. It is going to be the point of contact between the government and the citizen.

And commercial companies will have access to that cloud, as well?

We are going to have a lot of services called the Citizen Folder — every citizen will have an official folder in the cloud with privacy restrictions and cybersecurity measures, but private companies will be able to interact with it, yes.

Sounds like a potential privacy nightmare. Other countries in the region, such as Brazil, have taken a firm stance against the Obama administration on surveillance. Does Colombia have a similar take?

We are very active on Internet governance issues. We are going to be in Brazil soon to discuss that. It is a concern of the Colombian government, as well. We have to adjust Internet governance to the new reality of the Internet. We are working on new regulations we are planning to release in a couple months regarding rules of privacy and also what we've done so far in adjusting a legal framework. We are working very hard on adjusting our internal rules to protect privacy, to strengthen cybersecurity. And we are also joining efforts at the OCED.

Does Colombia have a position on virtual currencies like Bitcoin? 

We are encouraging the development of new payment systems on the Internet, but we haven't settled the issue of digital money. It hasn't been a concern because the penetration of digital currency in Colombia is really low — almost nonexistent. A seven-member family in the second level of the pyramid lives on less than $2 a day.

What kind of Internet applications are still missing for poor people?

Take cement companies. In Colombia, people build their homes themselves. Cement is bought in little mom-and-pop shops. Those warehouses were not connected to Internet. We called the cement companies, the big companies such as Cemex, and we said we'll give you money to develop applications for those mom-and-pop shops. The main cement company now has more than 20,000 of those shops connected to the Internet. And those shop owners, they use Internet to order cement. Why is that a value for them? the cement company saves so much money because now they can manage their inventory online. Before, they had to go store by store, collecting cash. Today, it's all electronic payments. The cement company saves so much money it gives 10 percent discounts to those mom-and-pop shops that order their cement online.

That's what I mean when I say the global applications are not valid for the bottom of the pyramid. You have to solve those problems with local applications.