High speed broadband is a bottleneck for the "Dream Package"
By Eduardo Tude
Operators of the América Móvil's Group (Embratel, Net and Claro) launched a 5-play package ("Multi Combo") which includes:
The offer represents the Brazilian "Dream Package" of telecom services and is only available for a restricted percentage of the population, that happens not only due to the price but also by the service availability.
Package Price
The initial price for the América Móvil's package (R$ 399.90 by month) doesn't include closed channels. For having access to the initial pay TV package in the "Combo Multi2" (77 channels in SD – Standard Definition + 19 channels in HD – High Definition), clients have to pay R$ 499.90 by month.
In other words, typically the current client of HD + Broadband (of 5 Mbps) will have to pay about R$ 200.00 more by month in order to add the following services: mobile broadband (2GB) + 3G modem, NET Fone with unlimited use for fixed telephones in the whole country + 100 minutes to be used in Claro's cell phones in all the Brazilian territory, unlimited WiFi in the Group's hot spots, 2 cellular lines + 1 Smartphone + 100 minutes to call NET Fone + 100 local minutes to call mobile or fixed tel. + 100 sms + 200 MB of cellular data.
The example shows that acquire a package is advantageous. Besides having a smaller price in comparison with how much would be paid purchasing the services separately, facilitates the use of integrated services. This "Top" offer will certainly be split into cheaper packages that will allow users to balance their "consumption dream" with the money they intend to spend with telecom services.
In Jun/11, Brazil reached 43 million fixed telephones, 39 million postpaid cellules, 28 million accesses with 3G cellulars or data terminals, 15 million fixed broadband accesses and 12 million pay TV subscriptions.
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Part of these 12 million pay TV subscribers, has also other four services and would be candidates to acquire a service package like that.
High speed broadband is the bottleneck
It's not enough if the client wants to acquire these five services (inside a package or not). It's necessary to them available in the users' houses.
Fixed and cellular telephony and pay TV via satellite are available in all the domiciles and 3G broadband are operated on more than 1,500 cities (covering 75.4% of the population).
The big difficulty to accomplish the "telecom dream consumption", represented by América Móvil's package, is the capacity of offering high speed broadband (10 Mbps).
América Móvil, for example, could provide service for one user with its package in domiciles covered by NET s cable. This number hit 10.8 million in 2009 (18% of the Brazilian total). This quantity increases if we consider the 256 cities recently covered by Embratel's cables.
Telefônica and Oi faced equal difficulties, even inside their fixed telephony assigned area, São Paulo and the rest of the country respectively. Despite of having a fixed telephony network that covers almost 100% of the urban domiciles, only in part of them the network has capacity to offer fixed broadband (ADSL) and even so with speeds lower than 2 Mbps.
Offering high speed fixed broadband (10 Mbps) requires investments in access network with the implementation of solutions based in fiber like FTTH that Telefonica is implementing and that will be available by the end of 2011 in 1 million houses. It's good to remember that the "dream" speed in three years ahead will be faster than the current 10 Mbps.
TIM intends to offers fixed broadband inside metropolitan region of the states of São Paulo and Rio de Janeiro using AES Atimus' network acquired this year.
For GVT, that provides 69% of its clients with speeds that are lower or equal to 10 Mbps (5 Mbps is the minimum) the difficulty to offer a package with all services is in mobile area (Cellular and 3G Internet). These services could be offered only through a partnership with other operators.
The liberation of cable TV is more important for fixed broadband than for pay TV
The liberation of cable TV licenses will be more important to expand the offer of high speed broadband than pay TV. The possibility of having an additional revenue source with TV will help to increase the investments in high speed broadband network.
Pay TV demand on Brazil, even in high definition, is being answered by DTH (Satellite), which overtook cable TV in number of accesses in 2011.
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Cable TV is available today in 258 Brazilian cities (4.6% off the total) and even in cities where there are cables they don't cover most of the domiciles, including high-income condominiums.
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The growth of DTH is resulting in changes in pay TV market shares by the growth of SKY, Embratel and Telefônica. Net has 79.5% of the pay TV and MMDS operators' market share.
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