07/16/2007


How's telecommunication service attendance in Brasil?

 

 

With the shares that had culminated in the edition of the General Law of Telecommunication (LDT) in 1997, and with Sistema Telebrás's privatization in 1998, Brazil started a new way of provide telecommunication services.

 

The objective was to provide services to the whole country, using to advantage private capital and supplying steady environment with well defined rules so the companies could be fixed in the country and invest to initialy join (universalization) the basic service of Commuted Fixed Telephony. Two of the privatization foundations had been Universalization and Competition.

 

Almost after 10 years and with investiments which always exceed Billions Reais, in fact what it was obtained?

 

The following table shows the attended cities per each one of the main telecommunication services available in Brazil. The cities were classified in 9 bands of population so it's possible to observe the penetration of each service in accordance with the size of the city.

 

 

Attended Cities
Bands of População
(millions)
Total
Fixed Telephony
Cellular
Broad Band
Pay TV*
Until 5
1371
1371
392
360
11
From 5 to 10
1291
1291
603
442
20
From 10 to 20
1291
1291
796
445
38
From 20 to 30
585
585
490
198
23
From 30 to 50
448
448
423
191
40
From 50 to 100
311
311
309
182
89
From 100 to 500
231
231
231
201
185
From 500 to 1.000
22
22
22
22
22
Over 1.000
14
14
14
14
14
Brazil
5564
5564
3280
2055
442
Note: Population according to IBGE – 2006. Pay TV considering the cities in operation.

 

 

Attended Cities (%)
Bands of Population
(millions)
Total
Telefonia Fixa
Celular
Banda larga
TV por Assinatura*
Until 5
24.6%
100%
29%
26%
0.8%
From 5 to 10
23.2%
100%
47%
34%
1.5%
From 10 to 20
23.2%
100%
62%
34%
2.9%
From 20 to 30
10.5%
100%
84%
34%
3.9%
From 30 to 50
8.1%
100%
94%
43%
8.9%
From 50 to 100
5.6%
100%
99%
59%
28.6%
From 100 to 500
4.2%
100%
100%
87%
80.1%
From 500 to 1.000
0.4%
100%
100%
100%
100%
Over 1.000
0.3%
100%
100%
100%
100%
Brazil
100%
100%
59%
37%
7.9%

 

 

Fixed Telephony

 

Since the edition of LGT. Commuted Fixed Telephonic Service (STFC) was basic service to be universal and much had been invested to reach this goal. As you can see, this service is provided to every brazilian city and also available to the whole population.

 

However, in May/07, according to Anatel, there were 40.8 million individual accesses installed and 34.2 million fixed accesses in service. Considering that the population of Brazil already exceeded 187 million inhabitants, despite this service had been universal, its penetration is around 18.2 fixed telephones/ 100 inhabitants.

 

One of the reasons of low STFC penetration can be the low purchasing power of the classes C, D and E, whose monthly budget cannot absorb the cost of this service in permanent base, although the attempts made to offer plans differentiated and compatible with bands of lesser incomes.

 

 

Cellular

 

In Cellular Telephony, the Personal Mobile Service (SMP) had a vertiginous expansion in the country, with sufficiently expressive investments and great acceptance of the population. With the advent of pre-paid and with retailers and operators shares to facilitate the acquisition of cellular terminal, even the population with less purchasing power has had the chance to use the service.

 

As the current law, the totality of the cities with population above 30 thousand inhabitants must be attended. The table above demonstrates that this goal is next to being reached, since, in the cities of this band, only 27 aren't attended yet.

 

On the other hand, for the cities with population lesser than 30 thousand inhabitants and didn't have formal attendance commitment, almost 50% of these cities are being attended by cell phone service.

 

According to data published by Anatel, in May/07 there was 105 million cellulars and density of 55.7 cellulars/100 inhabitants in Brazil. In this case, although not having objectives of universalization of this service, when it considers the number of active terminals, cellular presents a sufficiently superior penetration to other services.

 

However, it has to be considered, while the fixed telephone is considered a residential item (of the domicile), cellular is considered personal usage.

 

Broad Band

 

The table above presents the attendance of the Broad band service of Internet access based on technologies ADSL, Cable TV and Radio, not considering Satellite access, which attend the whole country. This service had more evidence expansion in last 2 years, so the growth number of accesses in the last year was 40%.

 

Although the service operating in approximately 37% of the cities, its expansion still depend on the population purchasing power and on the network providers, cause its presence is more intent in the urban area of the cities.

 

Moreover, it is verified that its presence is bigger in the cities with more than 30 thousand inhabitants, and the cities with more than 500 thousand inhabitants already are attended, mainly in its urban area.

 

In March/07 there was about 6 million broad band connections in Brazil, what it approximately corresponded to penetration of 3.2 accesses/100 inhabitants.

 

Pay TV

 

The table above presents the attendance of Pay TV service of the cities in operation, what it differs from Anatel, that considers an attended city when a there's license. This attendance only considers services of Cable TV, MMDS and DTH, disconsidering Satellite service, which attends the whole country.

 

Although this service has been available for more than 15 years in Brazil, its expansion occurred slow and with bigger intensity in cities with more than 100 thousand inhabitants. In the cities with less than 100 thousand inhabitants, the strategy seems to have attended those with greater purchasing power or sinergy and with other services (broad band, TV or fixed telephony network). The networks that provides this service generally are concentrated in the urban area of the cities.

 

The service was restricted to the classes A and B, having little penetration in classes C, D and E, although the offers of more popular plans in some cities.

 

According to Anatel, in March/07 there was 4.7 million Pay TV subscribers in Brazil, which corresponded to penetration of 2.5 accesses/100 inhabitants.

 

Trends

 

Although the universalization of fixed telephony service, the statistics have shown that, as example of the remaining portion of the world, the service of cellular telephony had greater penetration in Brazil. This trend still must continue for some time, since cellular terminal must become each time plus an object of multiple uses, and the mobility that it offers has much relation with the freedom and the necessity of the human being.

 

Pay TV and Broad Band markets lack of expansion of infrastructure access so the taxes can be become enlarged highest. The adoption of wireless technologies (without wire) as WiMax and 3G cellular networks, can be a way of these and other services expansion that demand networks data with high transmission taxes and greater band availability.

 

The fixed telephony service will have to remain unchanged, with little or no expansion and the existing infrastructure could be used to advantage to the expansion of broad band services.

 

The disaggregation of networks (unbundling), in case that it comes to happen, will be able to contribute positively for this expansion, in case companies can offer these services using the existing infrastructure, with some competition and accessible prices.

 

In regards to the cost of telecommunications services and its relation with the attendance expansion, mainly next to classes C, D and E, it has to consider that, not only to offer more attractive plans for all the services, but also to degenerate these services of the high current tax burden, that meets in general in the band of 40% of the paid costs to the population.

 

You could ask:

  • It will be viable to promote the access to fixed telephony services, offering cheaper plans and subsidized by government securities of social inclusion, as is the case of the Fust?
  • The wireless access technologies, as WiMax or 3G, will promote proclaimed expansion of broad band services ? In fact will occur a bigger competition with its adoption?
  • Will be possible to expand Pay TV service also being used wireless technologies access ?
  • Which will be the form of cellular telephony services expansion to not attended cities? The implantation of virtual operators, in model MVNO, could be a viable solution in Brazil?
  • It will be possible to diminish the current tax burden, allowing more access of the population to telecommunications services and increase the collection of these tributes?

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