What changes by the new regulation on cable TV
After four years inside the Federal Chamber (PL 29) and one year in Senate (PLC 116) the changes in the cable TV law are likely to be approved until the end of August/2011.
The new law eliminates the restriction imposed to foreigner capital in cable TV giving the opportunity to Telefonica, GVT and Embratel to enter in this market.
In the text approved in Jully/2011, the restrictions that didn't allow incumbents to operate this service were cut out from the concession contracts and Anatel stated a new public hearing on a new regulation for cable TV that ends the restrictions to the number of authorizations by city and establishes home passed targets.
This process may stimulate the growth of cable TV in Brazil, which was overtaken in market share by TV via satellite (DTH) in 2011.
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The biggest impact, however, may be felt in broadband. Most accesses owned by broadband operators in Brazil (SCM) have speed below 2 Mbps.
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Source: Anatel.
In order to offer high speed broadband operators need to build access networks based on fiber that can have the following architectures:
The construction of these networks demands heavy investments that are enabled as the operator can offer a package with fixed telephony, broadband and cable TV.
In the United States, for example, Verizon built a FTTH network in 2011 and surpassed the number of broadband accesses inside its DSL network.
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In 1Q11, Verizon's FTTH network operated in 13.3 million homes and 86% of its broadband accesses were also hired for cable TV.
AT&T chose a FTTN/VDSL solution and had 3.2 million cable TV clients in this network in 1Q11.
In Brazil, DSL is the main technology, but operators are getting prepared to build this new network generation. The architecture adopted by GVT is the same as AT&T's (FTTN/VDSL) and Embratel is building HFC networks. Telefonica chose to invest in FTTH networks and 3G with Vivo.
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The approval of a new law for cable TV will permit also América Móvil Group to consolidate its operations in Brazil by incorporating Net through Embratel. Together, Net and Embratel had 54.7% of the Pay TV accesses in 1Q11.
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