Regulatory restrictions for Cable TV affect broadband and pay TV growth in Brazil
Cable TV growth in Brazil has been affected by regulatory restrictions:
These restrictions are disturbing pay TV and broadband growth in Brazil. The growth of pay TV via satellite (DTH) in 2010 shows that cable TV is failing to reach this market.
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DTH accumulated net adds of 1.4 million accesses in the first 10 months of 2010, against 564 thousand cable TV accesses.
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DTH growth is encouraged by the ingress of Embratel, Telefônica and Oi in this segment. Forbidden of providing the service, these operators started to offer pay TV via satellite, as a way of providing triple play. By that, Net which had 51.4% of the market share in pay TV in 3Q09 saw its participation fall to 44.8% one year later.
3Q09 |
3Q10 |
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Net, which had 79.2% market share of cable TV accesses/MMDS in 3Q10, increased in the last years based on a well executed triple play strategy, offering pay TV, broadband and telephony. Broadband accesses represented 80% of Net's pay TV accesses in 3Q10. Fixed telephony accesses reached 71.2%.
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Meanwhile, broadband accesses represent 21% of the fixed telephony accesses at Oi and 28% at Telefonica.
The expansion of broadband networks of high speed based on fiber requires investment by accesses 5 times bigger than the investments on current technologies such as DSL. To make these investments operators need to offer additional services, like the one offered in pay TV.
Fortunately, this scenario is changing.
Anatel approved on 11/25/10 a new planning for cable TV service, ending the limitation about the number of competitors and making auctions unnecessary for getting licenses.
Authorization cost will be the same as the administrative cost of its emission, like what happens with authorizations for Fixed Telephony Service (STFC) and Multimedia Communication Service (SCM). The process will be regulated by specific rules for cable TV service which will be created by Anatel.
Anatel also withdrew from the Licensing Agreements for Fixed Telephony the restrictions for incumbents to provide cable TV service.
The restriction for foreign capital is still valid in the Cable Law prohibiting companies, like Telefonica, Embratel and GVT, from offering this service. PLC 116/2010 (former PL 29), which is being analyzed by Brazilian Senate, can end this restriction.
If PLC 116 was approved this year, Brazil would start 2011 with a new competitive board with integrated operators offering also cable TV service.
América Móvil's group, which controls Claro and Embratel, may incorporate NET and consolidate itself as pay TV leader in Brazil with 54.6% of the accesses. Telefonica, Oi and GVT are also getting prepared to break into this market building networks for high speed broadband access and offering triple or quadruple play packages.
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