TELECOMMUNICATION
Organizational Structure
Currently telecommunication services in Brazil are provided by 28 operators of the national Telebrás (Telecomunicações Brasileiras S.A.) system and by a couple of independent operators. The Telebrás System is responsible for operating about 90% of all 15 million telephones and 5 million mobile phones in the country. The holding company Telebrás is nowadays an authorized open capital company subordinated to the Ministry of Communications. Telebrás coordinates 27 state operators, one in each state, and Embratel (Empresa Brasileira de Telecomunicações S.A.) a company providing Brazil's interstate and international communication services. Each subsidiary operates with a certain amount of autonomy but Telebrás has, by now, been required to own at least 51% of the controlling interest in its state subsidiaries, by now, but the companies are expected to be privatized as the new law for telecommunications is expected to be set in 1997.
In Brazil the Ministry of Communications has a double role in the existing government structure. It is the agency regulating telecommunication and postal services, and also the agency supervising and controlling governmental business activities in both areas. The Ministry of Communications establishes national telecommunication policies; regulates, grants, and inspects telecommunication services as well as postal services. On the other hand, it controls business policies and the activities of Telebrás system and Brazilian Post and Telegraph company.
The subsidiaries provide local and long distance services as well as cellular and data transmission services within each of the 27 states of Brazil. The six largest subsidiaries include Telesp of São Paulo, Telerj of Rio de Janeiro, Telepar of Paraná, Teeming of Minas Gerais, Telebrasília of Brasília and Telebahia of Bahia.
The monopoly position of the Telebrás system has allowed the operators to gain over 50% profits. But, for example, American call-back services have been taken lots of customers from Telebrás' international services. However, these trends are fading as margins decrease due to privatization and tougher competition.
Technical Infrastructure
The centralized Telebrás system has resulted in a standardized communication system with uniform service standards throughout the national territory. The network is basically analog, but the biggest cities already have some digital connections and local operators are digitizing their networks at varying pace. Brazil is also one of the few nations having its own development and production technology for large size digital switching equipment. Over 20% of fixed lines are connected to automatic Stored Program Control (SPC) centers.
Brazil's telecommunication transmission relies very much on satellites and microwave radios. Rural areas cover two thirds of the country's territory and wireless systems are the only reasonable way to reach all regions. After the four Brasilsat satellites were launched in 1985-1995 Brazil has had a modern domestic satellite communication network that has made possible the extension of voice, video, data, and text services to remote areas integrating all municipalities. International services are provided through satellites, analog submarine cables, and fiber optic cable systems.
Mobile Systems
Brazil has the biggest mobile telephone network in Latin America with approximately 5 million users. The expanding rate is also remarkable, estimated to be 45% new users annually. The operator market within cellular systems is expanding almost 190% a year. At present, there are up to 2.5 million people on waiting lists for cellular lines. Cellular systems are typically run by a local state-owned operator which operates on A-Band. The new digital B-Band is to be licensed to private consortiums, typically formed by a financial, media and telecommunication company operating on one of the ten B-Band regions of Brazil.
American standards for mobile communications have strongly influenced the Brazilian cellular system. Analog 800 MHz AMPS system is the main mobile communication standard and also the digital system will be a North American standards: CDMA or TDMA. However, Brazil must also take other Mercosul members into account when considering new communication standards. The systems should be as compliant as possible. The national roaming service based on the IS-41B standard covers the whole country, being one of the widest automatic roaming systems in the world.
Paging services have always been rendered by private enterprise. At the moment there are four paging operators in the market: Mobitel, Teletrin, Powernet and Connectel serving altogether 1.5 million subscribers. Eighty new channels will be opened in 1997 and the paging market is expected to grow to nearly 4 million subscribers by 2003. Also, new voice pager devices will emerge on the market by 1999. Pagers in Brazil are alphanumeric, i.e. the message is sent to the receiver directly and not left in a voice mailbox. The reason might be in culture: Brazilians do not feel comfortable talking to a machine. The pager operator market has been open to competition for years and the companies are healthy and well-prepared for the future.
Data Communication
Data communication is also a free market as long as the transfers do not cross state borders. Interstate and international data communications are still Embratel's monopoly. Data services consist of data-, voice-, and video services. So far, the biggest user groups for data communication services are banks, multinational companies and national organizations but the market is growing at a rate of 30% a year.
Development Plan
Development Plan
Brazil's telecommunication sector has a huge improvement potential. Communication resources have not been capable of meeting the needs of rapid economic growth. There are far too few telephone lines available, approximately 11 lines per 100 inhabitants, and they are expensive. Queuing time for a telephone line can range from half to three years, while the nation's economic expansion increases the network load on existing lines. A dense public telephone box network combined with paging and virtual telephone services have offered a cheaper alternative for telecommunication. The most urgent need for communication services is within the triangle region of São Paulo - Belo Horizonte - Rio de Janeiro.
The Ministry of Communications has elaborated an ambitious plan for developing telecommunications and postal services in Brazil. The project is named The Recovery and Expansion Plan Program for Telecommunications and Postal Systems (PASTE). To meet the country's needs, huge investments are planned to be directed to the sector by 2003 - a sum of about USD 75 billion. The government is also intensively opening markets for foreign investors to gain a surge of capital inflow for building a massive communication system in the country.
Opportunities
If privatization of the communication sector will materialize as planned and Brazilian economy stays stabilized, business opportunities are numerous for foreign companies. Privatized markets are easier to enter and the market grows rapidly, especially among cellular and data transfer systems. Brazilian telecommunication operators are willing to invest intensively on new technology, but usually it requires cooperation with some domestic company. Thus, a cooperative R&D work would be one good way to start a high-tech business in Brazil. All value-added services around cellular communications and data networks are a good opportunity especially for small and medium sized companies.
MAIN OBJECTIVES OF THE NEW TELECOMMUNICATIONS CODE
To provide conditions for all telecommunication services to be developed in a competitive environment.
· To create conditions for the full participation of private sector initiative in the telecommunication service sector, ensuring equal opportunities.
· To stimulate the capabilities of sectors from the telecommunications industry to participate in domestic and foreign markets creating attractiveness for Brazil to become an international telecommunications center.
· To institute an objective and transparent process to grant licenses to exploit services to ensure the efficient utilization of the radio electric spectrum and of the orbital positions of satellites.
· To establish a tariff and pricing system that will lead to the allocation of resources in the sector, stimulating the achievement of productivity gains and consequent transference to society, also making feasible an appropriate offer of telecommunication services throughout national territory.
To provide conditions for all telecommunication services to be developed in a competitive environment.
· To create conditions for the full participation of private sector initiative in the telecommunication service sector, ensuring equal opportunities.
· To stimulate the capabilities of sectors from the telecommunications industry to participate in domestic and foreign markets creating attractiveness for Brazil to become an international telecommunications center.
· To institute an objective and transparent process to grant licenses to exploit services to ensure the efficient utilization of the radio electric spectrum and of the orbital positions of satellites.
· To establish a tariff and pricing system that will lead to the allocation of resources in the sector, stimulating the achievement of productivity gains and consequent transference to society, also making feasible an appropriate offer of telecommunication services throughout national territory.
Source: Ministry of Communications
- A. Jonathan Buhalis
- A. Jonathan Buhalis
