Telecommunications Minister Announces Broadband Development Plan for Brazil

Brazil's Minister of Communications Hélio Costa on Tuesday (24 November) presented a first proposal for the implementation of the country’s broadband development plan—Plano Nacional de Banda Larga (PNBL). The 169-page document contains a series of actions aimed at reaching 30 million fixed broadband accesses and 60 million mobile broadband connections by 2014. The ambitious plan looks to bring broadband access to all government bodies and institutions in the country, including local government agencies, health centres in rural and urban areas, schools, public libraries, and public security institutions. The plan also aims to bring affordable broadband access to 50% of urban and 15% of rural households, as well as all micro and small firms that request a connection. According to the minister, without this initiative Brazil could only reach 18.3 million broadband connections by 2014.

Brazilian president Luiz Inácio Lula da Silva, who has yet to make a final decision on the plan, has asked a ministerial group in charge of the plan's development to provide additional technical information. A new meeting will be scheduled in three weeks.

Outlook and Implications

Costa’s proposal promotes broadband development on different fronts, including initiatives to promote public-private partnerships to bring affordable internet access to all Brazilians, as well as the allocation of public investment funds to streamline the use of the government's data transmission infrastructure, such as the rehabilitation of fibre-optic networks of state oil company Petrobras and electric company Furnas. The government plans to invest a total of 75.5 billion reais (US$43.7 billion), of which 26.49 billion reais will be provided by the government and the remaining 49.01 billion will be provided by private operators. Operators have already expressed their concern over the implementation of the ambitious plan and have urged the government to introduce more investment incentives.

The government is also pushing forward new regulatory initiatives to boost mobile penetration levels. This includes the preparation of frequency auctions for WiMAX and 3G services. Costa has also said that the government is considering giving free mobile handsets to low-income groups. The plan, which would reach 11 million potential subscribers, has an estimated cost of 2 billion reais (US$1.2 billion) that would be partially financed by operators in exchange for fiscal benefits. The Brazilian market is highly competitive, particularly in the main urban centres in the wealthier central, western, south-eastern, and southern regions, where mobile penetration rates are markedly higher. In the Federal District this rate reached 155.5% in September 2009, while in the states of Piauí and Maranhao mobile penetration rates were 58.2% and 41.7%, respectively. Under this scheme, each family would receive a mobile handset free of charge and 7 reais per month for calls. Private operators expect subscribers to exceed the 7-reais credit and plan on making profits from any extra minute. According to the latest figures published by telecoms regulator Anatel, Brazil ended September with 166 million mobile accesses, 18% more than in the previous year, and a penetration rate of 86.7%. Vivo continues to lead the market with 48.8 million subscribers and a 29.4% market share, followed by América Móvil’s Claro, with 42.3 million subscribers and a 25.5% share of the market. Italy's TIM Brasil, once Brazil's second largest mobile operator, ranks third with 39.6 million accesses and 23.9% of the market, while Oi maintains fourth position with a 20.9% market share and 34.8 million accesses. With regard to technology of choice, GSM continues to be the most popular option, adopted by 90.5% of the total subscribers.