IT IS TIME TO STOP PLAYING DEFENSE
The vigorous growth that took place in the consumer market over the last decade has created numerous supply and demand imbalances. The traffic jams in the major cities and queues at airports are two conspicuous examples of this. But there is another
type of jam that is not mentioned much but has become one of the main bottlenecks in the Brazilian economy - the slowness of the Internet. Brazil has quickly become one of the largest global markets for computers and smartphones, and it is apparently moving in the same direction with regard to tablets. But what would seemingly be a step forward - the absorption of technology on account of digital inclusion - is gradually becoming a risk of a cyber-blackout. The reason behind this is the mismatch between the explosive surge in Internet traffic and an insufficient increase in telecommunication infrastructure.
Last month, Communications Minister Paulo Bernardo stated there is "nearly a blackout in much of Northern Brazil." The minister is downplaying an issue that is blanketing the country.
It is estimated that 70% of accesses made in Brazil are at speeds below 1 megabit per second. When it comes to surfing the web - a critical activity for 21st century businesses and citizens - Brazil, the world's seventh largest economy, ranks a modest 35th place in Internet quality. Only 3.9% of the connections are faster than 5 Mbps, the standard required for conference calls and high-resolution video streaming.
This clutters efficiency in the daily affairs of business such as distance learning. "Our students experience image and voice reception delays of upwards of 20 seconds," says Stavros Xantopoylos, director of FGV Online, a school that has 100,000 students enrolled in its business and economics courses. In 2010, after launching a flashy
National Broadband Plan that called for investments in the order of 10 billion Reais to connect 80% of the municipalities, in July the government set new targets to coincide with the 2014
World Cup. The goals are more modest this time around - and even at that it is feared they will not be met.
LACK OF AMBITION?
The government's plan to expand the broadband service in Brazil in the coming years is modest compared to those of other countries
Broadband Internet speed and coverage targets
The goal now is for operators to provide 5-Mbps packages for a price yet to be set in the 12 World Cup host cities by 2014. In theory, this would benefit 58 million Brazilians and the 600,000 tourists who are expected to visit the country.
"During the games, everyone will want to download videos, watch TV over the Internet and connect with their friends," said Erasmo Rojas, a Director of 4G Americas, an association of companies operating in the telecommunications industry. "Under this scenario, there is potential for network congestion,
leading to slowness or connection loss." For now, the government signed an agreement in order for five major ISPs to sell 1-Mbps packages for 35 Reais per month from September. As required by FIFA, state-owned Telebrás will invest 200 million Reais to equip the stadium media centers with 20-gigabit-per-second Internet connections. "The government will meet its commitments with the population and FIFA," said Cezar Alvarez, the Executive Secretary for the Ministry of Communications. "Besides encouraging competition among providers, we want to foster digital inclusion for education and in rural areas."
TOO SLOW
Growing broadband Internet in Brazil requires heavy private investments. But the government must also do its part
Demand grows exponentially in the country...
Evolution of the broadband market in Brazil (in millions of users) (1)
...but service quality is poor
Global ranking of fast Internet connections (3)- total of 45 nations
(in % of connections above 5 Mbps)
However, to get there it will be necessary to untie a series of knots. The first is a National Telecommunications Agency auction scheduled for April 2012 to put
the fourth generation mobile Internet, or 4G, which is required for connections from 5 Mbps, up for bid. "As demand for mobile Internet grows exponentially, the hardest part of our mission
is predicting the average traffic volume on 4G in the coming years," says Anatel officer João Rezende. "But the auction will be held as scheduled." Once the auction has been held, the winners will not be able to install their fiber optic networks immediately. The reason for this is because the Brazilian 4G will use a frequency band that is currently used by cable TV. Therefore, it will first be necessary to "evict" current users and compensate them in order to clear the band. According to analysts polled by EXAME, providers will have 12 to 18 months to install the new technology. "This is a tight deadline," says consultant Ronaldo Sá, formerly a Telebrás CEO. "There is no guarantee that the auction and band cleaning will allow the deployment, setup and activation of the 4G network in time for the World Cup." To Sá, the World Cup host cities where it will be most difficult to install the system will be São Paulo, Manaus, Natal and Cuiabá.
In addition to these hurdles, there are the traditional Brazilian obstacles such as the tax burden - which accounts for some 43% of the final price of the Internet - and the lack of rules for wireless operators to work in the cable TV market, similar to what occurs in Europe and the United States. None of this discourages businesses, however, which are slated to invest 70 billion dollars in infrastructure by 2014. "After the mobile telephony revolution, we have good reasons to be optimistic," says Telefônica CEO Antonio Carlos Valente. This year, his company is expected to invest 6 billion dollars. Rival operators are no less aggressive. Embratel recently implemented a fiber optic network between Porto Velho and Manaus, tearing through the forest and running under the Amazon River. Oi, meanwhile, arrived in Manaus from the north, deploying a cable coming from Venezuela. As can be seen, with such a promising market at stake, the private sector plays on the offense. But the government will have will facilitate access to a vital service to the country - before, during and after the World Cup.