Country’s internet providers in financial trouble and some could shut down

Sep 11, 2020 | 10 comments

According to a statement from the Ecuador association of private internet service providers, the sector is in “extreme economic distress” due lack of payment from customers. “Some companies have seen a 50 percent drop in payments and because of government health emergency rules, we are compelled to continue providing service without compensation,” the statement said.

Under authority of the national health emergency, companies providing what the government considers “essential services,” must continue service until two months beyond the end of the emergency. With the state of emergency ending September 13, companies will not be allowed to begin demanding payment until November 12.

According to Francisco Balarezo, president of the Ecuadorian Association of Internet Suppliers, lost income has amounted to more than $50 million a month to members. “Annualized, this means losses of $600 million to $700 million, which we cannot sustain,” he says. “We understand the need to provide services during the pandemic but this has been a killer to many of the providers. I will not be surprised that some of our members are forced to close their doors in the coming months.”

Not only are many customers not paying their monthly bill, Balarezo says, but the health emergency makes it difficult to add new business. “None of our members have added a significant number of accounts since March and our business model depends on growth.”

He adds that some customers who have the means to pay their bills are taking advantage of the government’s offer to defer payments. “We understand the need to help those who have lost income but too many customers who are able to pay have decided not to and this is unfair. In November, the providers still in business will demand seven or eight months of back payments and this will be difficult to collect.”

Balarezo says very few of the country’s 11 million fixed and mobile internet users have cancelled their service during the health emergency. “The current estimate is that 500,000 to 700,000 have cancelled,” he says. “We expect the rest to pay.”


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