Will the new authorizations for Cable TV accelerate Pay TV growth in Brazil?
Pay TV growth has been accelerated since 2003. Cable TV net adds reached, however, its peak in 2008. Since 2009, Pay TV operators through satellite (DTH) lead this growth.
The entrance of Oi, Telefonica and Embratel increased the competition inside the DTH market. MMDS is losing clients.
DTH growth shows that there's space for cable TV growth in the country. According to Anatel, cable TV is offered in 236 cities covering 15.9 million domiciles (home passed), in other words, only 28% of the Brazilian homes. In the United States, cable TV home passed reached 126 million in 2009 (NCTA), more than the total of domiciles.
Pay TV licenses are authorized by city through auction, what doesn't happen in more than 10 years. Cable TV expansion is important in order enable the construction of an infrastructure that offers also broadband, like in fiber networks to homes (FTTH).
Broadband and Pay TV would have grown more over the last years if there weren't limits for Pay TV authorization.
In face of this climate, Anatel decided to suspend the effectiveness of the plan about Cable TV implementation, which was approved by the Brazilian Communication Ministry in 1997, and will come up with a new plan indicating a limited number of licenses per cities.
According to the opinion of Anatel's general attorney, Marcelo Bechara, if the amount of licenses was unlimited, the restriction imposed to fixed telephony incumbents to get pay TV licenses becomes ineffective.
In this scenario, there would remain the restriction on the majority share of foreign capital created by the cable law, which depends on the approval of the PL 29 (PL 29 proposes to eliminated this restriction). It disables Telefonica, Embratel, Tim and GVT to operate in the cable TV market and, consequently, has an impact on investments in broadband networks.
Oi and other providers controlled by Brazilian capital would get benefit if Anatel decide to authorize the cable TV licenses before the approval of the PL 29, by the elimination of this restriction. Net could also expand its coverage area before being incorporated by Embratel.
Net is the market leader holding 47.6% of the pay TV accesses in Brazil and 78.5% of the cable/MMDS accesses (1Q10).
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