Abstract
Brazil privatized its telecom industry in 1998. The country's size and stable
economy make it an attractive market for telecom firms based outside the
country. These include America Movil, which is based in Mexico, and
Telefônica, which is based in Spain and owns Telefônica Moviles.
Between 2001 and 2004, internet usage in Brazil rose by almost 700 percent.
This growth was primarily driven by a reduction in operating costs and an
increase in internet speed. However, Brazil had a broadband penetration rate
of only 1.9 percent as of September 2005, slightly below the regional average;
and the country's 3.46 million broadband connections represented less than 10%
of its 40 million wireline subscribers. These figures indicate that broadband
has considerable potential for growth.
Brazilian cellular communications has grown rapidly, with total subscribers at
57 million as of the end of August 2005, up 42% from a year earlier. ANATEL
the Telecommunications Regulator Agency (Agência Nacional de
Telecomunicações) announced that this figure reached 85 million at the end of
2005, which would make Brazil the fourth largest cellular subscriber base in
the world. In this respect, Brazil has been one of the two most active Latin
American nations, along with Mexico, in promoting broadband fixed wireless
services and in testing both fixed and portable solutions.
Despite the wireless investment activity in Brazil, interest in 3G technology
is remarkably low. Several mobile operators have stated that they intend to
recover some of their existing investment in GSM/GPRS before moving to 3G and
that their priorities were to obtain more spectrum for basic services and to
rapidly move to high value services such as video. They want to deliver mobile
broadband in a shorter timeframe than is possible with 3G, because of either
ANATEL's reluctance to set a timeline for auctioning 3G spectrum or the
operators' own economic pressures. But Brazil's operators have new choices:
open up 3G bands for non-3G services, including additional 2G coverage; or use
broadband wireless to create islands of high-data-rate, high-margin offerings.
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