|Topic:||The Telecommunications Market In Brazil – Past Present & Future|
|Author:||Antonio Carlos Valente da Silva|
|Organisation:||Anatel - National Telecommunications Agency, Brazil|
Anatel has been a force for renovation of the Brazilian telecommunications sector since its inception in November of 1997. Under its auspices the government’s monopoly of telephony was privatized and a process to create a fully competitive marketplace introduced. Fixed telephony has recently been totally opened to competition. With few exceptions all services are already open to competition. As a result Brazil will have 58 million fixed accesses, and an equal number of mobile accesses, by the end of 2005.
The inauguration of Anatel, on November 5, 1997, and the privatization of the companies in the Telebrás System, on July 29, 1998, marked the start of a new period in the Brazilian telecommunications sector. In 1998, after the privatization, the tender process for choosing new Commutated Fixed Telephony Service (STFC) providers was initiated. These competitive local exchange carriers (CLECs), called “mirror companies” in Brazil, in other countries, were to be licensed to compete with the privatized Telebrás System operating companies known as the incumbents. On July 3, 1999, Anatel coordinated the assignment and implementation of Provider Selection Codes (CSP). This new step, established competition between all STFC operators for national long distance calls – one of the cornerstones of the new model. The year 1999 also saw the tender of authorizations for mirror company operators. The “Mirrors” were conceived to operate fixed telephony in direct competition to the incumbent STFC concession holders in four regions of Brazil defined by law in the “General Plan for Concessions.” In the year 2000, many other significant events followed. The mirror companies began operations in January, consolidating the principle of competition in telephony for intra-regional and international long distance calls. Another auction was held for authorizations to operate the, so-called, “little mirror companies.” “Little mirror companies” were licensed to provide fixed telephony services in areas that were not adequately covered by the mirror companies. In August 2000, Law no. 9998 was approved to create a Fund for the Universalization of Telecommunications Services (Fust). The fund began operations in January 2001. Its purpose is to raise the resources needed to energetically expand the process of universalizing telecommunications. In November of 2000, Law no. 10052 was approved, which instituted the Fund for the Technological Development of Telecommunications (Funttel). Funttel’s objective is to stimulate the process of technological renewal in an accountable manner; encouraging the acquisition of skills for human resources; stimulating the generation of jobs and increasing the competitiveness of the Brazilian telecommunications industry. Significant growth took place, in the years 2000 and 2001, in the availability of fixed and mobile telephones. At the end of 2001, the mark of 47.8 million fixed accesses installed in the country was attained; 37.4 million of these are already in service. The density of fixed telephones reached 21.7 accesses for every 100 inhabitants, one of the highest in Latin America. The number of cell phones in service also grew significantly and now totals 28.7 million users. The subscriber TV segment registered 3.6 million subscribers in 2001 corresponding to a density of, roughly, 8 subscribers per 100 homes. With regard to tariffs and the pricing of services, the results were also significant. The price of a defined mix of fixed telephone services, or “basket, ” dropped from US$ 119 in 1990 to approximately US$ 30 by 2001. The reduction in the cost of the basket was due mainly to the drastic reduction in the cost of obtaining a telephone line after privatization. The same phenomenon has taken place with the tariff for acquiring a Mobile Cell Service (SMC) line. In 1990, it cost US$ 22,000 to obtain a cellular line in Brazil; in 2001 it cost, on average, US$ 12. Indeed, in some states, the cost of acquiring a cellular line has dropped to ZERO. Right now, we are seeing a veritable revolution in the provision of telecommunications services in Brazil. Until not long ago, it was unthinkable for the great majority of the population, to have access to fixed or mobile telephone services at affordable prices. Today, every day, advertisements throughout Brazil offer these services at prices that even many of our lowest income citizens can afford. Every citizen of Brazil, today, can obtain Mobile Cell Services whenever the want, wherever they want, in virtually any part of the nation’s territory. The approximately 800,000 users at the end of 1994 have grown to more than 28 million by the end of 2001. In 1994 the service density was 0.5 telephones per 100 inhabitants. Today there are 17 accesses per 100 inhabitants. The price for acquiring a line fell from 320 dollars at the end of 1994 to twelve dollars today. The networks have been digitized and the quality of service has improved constantly. Having concluded the initial phase of privatization and regulation of the Brazilian telecommunications sector, Anatel is now proceeding to cement the cornerstones of the model – competition and universalization – in place by continuing the process, now quite advanced, of restructuring and modernizing Brazil’s telecommunications sector. Full competition in telecommunications services will only take place after the termination of the current “duopoly period.” The duopoly period was created during the privatization process to give the companies that acquired concessions and authorizations for fixed and mobile telephony, often at great cost, a chance to consolidate their operations prior to facing full competition. Full competition in the mobile telephony sector will begin when the new band “D” and “E” Personal Mobile Service (SMP)operators start to offer their services to the public. SMP, a successor to the traditional SMC mobile service, operates in the higher, 1.8 GHz, band of the spectrum, and gives the user another option and greater freedom of choice. The consolidation of the competitive process is expected to result in a significant improvement in the quality of services, greater growth in access availability and an accentuated reduction in tariffs through a wide range of service plans that are increasingly tailored to customers’ profiles and needs. The Brazilian market in fixed telephony (STFC) has been totally open to competition since January 2002. Any operator interested in providing service in Brazil, including in the national and international long distance categories, can do so. In principle, they will be subject only to the limitations resulting from the administration of scarce resources, such as the radio frequency spectrum and numbering resources – there is only a limited number of Provider Selection Codes (CSP) that can be dialed. Anatel has ceased to restrict the entry of new operators since January 2002; we expect a wide variety of new service providers will emerge as a result. It is worth highlighting that the holders of existing concession that have already, by December 2001, met all the obligatory universalization targets set for December 31, 2003, can request permission to operate in additional STFC fixed service areas. They may also request licenses for other services, in addition to those provided at present, thus broadening their range of activities in the Brazilian market. With the exception of the SMC mobile and STFC fixed services, where new operators are just beginning to enter, all the other services have already being opened to full competition. Accordingly, it is expected that Brazil will have something like 58 million fixed accesses, and an equal number of mobile accesses, by the end of 2005. The density of Brazilian telephony, measured in terms of the number of fixed accesses per one hundred inhabitants, will increase from today’s 21.8 accesses to approximately 32 accesses for every hundred citizens. Brazil will have a population almost 180 million by that time and they will have more and better services than at any time in the country’s history. We aim to fully integrate Brazilian society into the world’s Information Society - a basic condition, for any society, to succeed in the globalized world. The fifth anniversary of privatization will be marked in 2003. Great activity is expected in the market as a result of changes originally envisaged in the Brazilian telecommunications model. It will finally be possible then to transfer the control over the concessions of privatized STFC providers. This is expected to lead to a round of company reorganizations that will change the face of the sector. In the same timeframe, negotiations will also start for the renewal of the existing concession contracts for fixed telephony (STFC). In 2004, a new Universalization Target Plan (PGMU) for the STFC will be discussed and drawn up. New goals for the universalization of service will be defined, and interested companies will apply to renew their concession contracts at that time, In 2005, the first PGMU plan will be concluded. By then, every locality with one hundred or more inhabitants is expected to have at least one public telephone, and those with three hundred inhabitants should have normal fixed telephone service available at home or at work. By 2005, citizens can expect that a request for fixed telephone service, any place in the country, be fulfilled within a maximum of one week. Anatel, is not just a regulatory body. In addition to regulating, approving and supervising every aspect of Brazil’s telecommunications services, it also plays a vital role as the representative of Brazilian society at the table where the decisions are made regarding the future of telecommunications in Brazil. To play its role well Anatel needs informed feedback from society. To this end, citizens need detailed knowledge of events taking place in the sector. The Agency has spared no effort to provide society with the information it needs by transparently publicizing all its acts and participations. Conclusion Anatel has a well-structured Portal on the Internet; it consults the public on all its acts. In its relations with the press and organized consumer defense entities, Anatel has always positioned itself, undeviatingly, in favor of the citizens’ interests. Citizens are the main watchdogs of the Agency’s actions. Anatel constantly seeks to publicize and disseminate the new reality of the telecommunications sector. It is a question of showing Brazilian society that the key advances within the sector are, first and foremost, gains for society. Anatel’s quest to better inform and serve all Brazilians is a permanent commitment to the nation.