teleco.com.br

06/24/2009

Broadband density in Brazil is still lower than the world's average

Brazil finished 2008 counting 10 million broadband (fixed) accesses and is among the 10 countries with the biggest number of broadband accesses in the world.

In terms of Broadband density (accesses/100 inhab.) Brazil is lower than the world's average (UIT), the opposite of what happens with the density in mobile and fixed telephony.

Note: doesn't include mobile broadband

Brazil is the 67th country in broadband density in the world, staying behind Mexico (7.1 accesses/100 inhab.) and Argentina (8.0 accesses/100 inhab.).

The map bellow, which gives details of each state in 1Q09, helps to understand the causes of this low density.

State	Acsesses/ 100inhab.	Stake in the total Brazil
DF	15.9	3.8%
SP	9.8	37.6%
SC	8.4	4.8%
PR	7.9	7.9%
RS	7.4	7.5%
RJ	7.2	10.6%
Total	8.9	72.1%

Note: doesn't include mobile broadband

We can divide Brazil into two regions:

Seven states with densities of 8.9 accesses/100 inhab., superior than the world's average, that concentrate 72.1% of the country's broadband accesses and represent 45.5% of the population.
The remaining states with densities of 2.9 accesses/100 inhab., inferior than the world's average, that concentrate 27.9% of the country's broadband accesses and represent 54.5% of the population.

This division is aggravated by the low geographic coverage offered to broadband in Brazil.

Fixed telephony operators, that use ADSL technology, are the main providers holding 70% of the accesses, followed by Pay TV operators (26%). Together they hold 95¨of the Brazilian broadband accesses (1Q09).

Teleco estimates that these operators (fixed telephony and Pay TV) covered in 2008 about 49% of the Brazilian cities. The attendance in the remaining cities is done through small broadband providers that are present in 74.2% of the cities, according to a research carried out by Teleco in 2008. We can notice that problems in coverage aren't limited to the quantity of cities: even in those attended cities, the coverage is restricted to areas of greatest demand.

In capitals and big cities there are competition and larger offer of broadband. For example, São Paulo, Rio de Janeiro and Belo Horizonte concentrate together 28% of broadband accesses of the country and have densities of 16, 13 and 18 accesses/100 inhab. respectively. In other cities of these states, in most of the cases, the service doesn't exist.

In order to increase broadband accesses in Brazil it would be necessary:

Stimulate investment in infrastructure to increase Broadband offer to more Brazilian cities. A positive aspect in this direction was the change of goals in the Post of Service of fixed telephony concessionaries, by the backhaul expansion to cities not covered.
Stimulate the competition in Broadband offer in a larger number of cities. Even in the state of São Paulo, while Telefonica provides with ADSL 61% of the cities other Pay TV operators attend only 6.4%.

Wireless solutions (WiMAX, 3G, Wi-Fi, ..) are the most viable options to increase Broadband attendance and stimulate competition. Brazil finished May 2009 counting 4.3 million mobile accesses via data terminals (Anatel). The following figure presents this evolution fro the United States.

However, expand coverage isn't the only challenge to be faced in order to raise Broadband in Brazil. In regions with higher concentrations increases the demand for higher speeds and network complexity, what may lead to problems like the ones faced by Telefonica in São Paulo. The state has about 4 million broadband accesses, this quantity is superior that Argentina's (3.2 million).