Brazil's broadband market is serviced by a wide range of access technologies
deployed by the network operators. These range from fibre to the home, copper
cable-based DSL, broadband over power lines and cable-TV, to a variety of wireless
and satellite-based systems, but mainly 2.5/3G, MMDS and WiFi.
Similarly there are substantial variations in the types of broadband providers
(fixed, mobile and TV network operators, as well as domestic and internationally
based companies), and many do not compete directly with each other due to geographic
market segmentation of licensing at the four government levels – national, regional,
state, and most recently, municipal.
In addition, the sector is going through major transformation, with the merger
of a number of the large fixed and mobile operators, and the recent opening
up of the subscription/cable TV market to foreign owned telecom operators. Mobile
operator Claro, and fixed operator Embratel, are both now majority owned by
the Mexican businessman Carlos Slim, and
Telefonica of Spain controls the country’s leading mobile carrier by subscribers,
Vivo Participacoes, as well as Telesp, the incumbent operator in Sao Paulo state.
This web of technologies, multiple licensing regimes, types of service providers,
geographic separation and supplier consolidation has created a highly complex
broadband market compared with most other countries.
2.1 National ICT sector management - policy and regulation
The main ICT sector policies are determined at a national level by the Ministry
of Communication (known as MiniCom) and regulated by Anatel*,
the national telecommunication agency. Anatel is also responsible for regulating
satellite capacity provision and administering radio frequency channels for
use by both telecommunications service providers and broadcasting companies.
Brazilian telecommunications services
do not have a unified legislation, and policy is implemented through the many
fragmented directives that have built up over the years to respond to the evolution
of the market. The telecommunications legal regime
is defined at a high level in the General Telecommunications Law*
(LGT) of 1997 which provides the main guidelines on telecommunication services,
universal service goals and the functions of Anatel. The licensing regime includes
that if an operator does not provide the services it has agreed to in
its license, the State can take over its operations, including its existing
The LGT is supported by a large number of more specific regulations, the major
ones of which are outlined below.
In 1998 the General Grant Plan*
(PGO), with a 10-year scope, identified which telecommunication services must
be provided as a public service, with consequent price controls, quality of
service and universal service obligations. At the time PGO only included voice
services, and this did not change in the 2008 updated PGO, however MiniCom has
since proposed that it be modified to include broadband services. The 1998 PGO
also established the basis for privatisation of the state owned monopoly operator
and divided Brazil geographically into four major licensing regions, limiting
cross ownership and the number of players in each of the regions.
In addition, the 1998 PGO also established the basis for a universal service
fund known as the Fund for the Universalisation of Telecommunication Services
(FUST). An additional fund was also established at the same time, aimed at supporting
innovation and capacity building to make the Brazilian telecom sector more competitive,
called the Fund for Telecommunications Technological Development (FUNTTEL).
There is a third fund, the Telecommunication Inspection Fund (FISTEL), to cover
the cost of managing the telecom sector. Revenues for the three funds are gathered
from the operators licensed to provide public telecommunication services (i.e
not ISPs currently, although this would likely change if broadband becomes defined
as a public service under the PGO).
Figure 2-1 CGI.br structure
Universal service objectives (USOs) and obligations are defined in more detail
in Anatel's General Plan of Universalization Goals*
(PGMU). The PGMU has been updated a number of times, and in September 2010 the
PGMU III was adopted, and is expected to cost participating service providers
R1.7 billion for the network infrastructure and maintenance costs between 2011
and 2015. While not directly focussed on broadband development, the infrastructure
that will be required will naturally be used to support broadband services.
In 2008 Anatel issued the General Update Plan of Brazilian Telecommunications*
(PGR) which defined the 10-year strategic vision for the sector and included
goals for improving broadband access and establishing mobile virtual network
operators (MVNOs). The 1998
PGO restriction which precluded the incumbents from operating in more than one
of the authorized regions was also ended at this time.
In August 2009 the Steering Committee for Digital Inclusion Programmes*
(CGPID) was established, which laid the groundwork for the National Broadband
Plan (PNBL), which was subsequently announced in May 2010. The PNBL is described
in more detail in section 5.
2.1.1 Broadband licensing
Anatel requires a license for all entities that provide broadband access, with
the most prevalent licenses being 3G mobile, cable TV and the Multimedia Communication
(SCM). The latter
is the most common public ISP license, allowing service delivery using wireless
technologies, and more recently cable technologies, following Anatel's sanction
of broadband over power lines (BPL) in 2009.
In addition, the Limited Private Service*
(SLP) permit is available and mainly used by municipalities to provide free
access to relevant public information services (such as for libraries and e-government
applications in public spaces). The Private Network Service*
(SRP) permit is similar, but for corporate entities. The SCM license currently
costs R9000 annually (but is being revised – see below), while both the SLP
and SRP permits cost R400 per year.
Voice over IP (VoIP) services are permitted, and unlicensed in Brazil, as they
do not qualify as a telecommunications service - rather they are seen
as value added services that are supported by the underlying telecommunication
2.1.2 Radio spectrum
Figure 2-2 Brazil’s submarine cable
SLP and SRP licensees may use the unlicensed Wifi spectrum in the 2.4 and 5.8GHz
bands. SCM licensees may also use these bands, but they can also operate in
the 2.5GHz band using MMDS type services, which are often used for subscription/cable
TV, or sometimes WiMax.
Spectrum licenses are required for all frequencies in cities larger than 500
000 people, including WiFi 2.4 and 5GHz bands. In towns smaller than 500 000
people, licenses for these bands are not required.
Spectrum licenses are required for Wimax (available in the 2.5, 3.5 and 10.5GHz
wavebands) and for 3G in the 800 and 900MHz bands. The auctioning of the 1.9/2.1
GHz band with mandatory sharing of infrastructure, took place in December 2010,
despite some operator protests against the inclusion of Nextel, a new fifth
player (the band was only to be available to operators with a mobile voice license).
The mobile operators have a total of about 340MHz of spectrum allocated, with
the maximum amount available per operator being 85MHz.
2.1.3 Internet governance
Management of key Internet resources, such as domain names, the CERT*
and Internet exchange points (IXPs), is carried out by the Brazil Internet Steering
(CGI.br) which also monitors the uptake of Internet services and helps guide
the development of the Internet in the country. As shown below, CGI.br is structured
as a multi-stakeholder group comprising an equal mix of government and civil
society representatives appointed by Ministerial decree.
2.2 The broadband ecosystem
2.2.1 Backbone networks
With Oi/Telemar's purchase of Brazil Telecom in 2008, the group now operates
the largest fibre network in the country, as well as one of the main submarine
cable networks linking the country to the global backbones. The terrestrial
network is about 138,000 kilometres of long distance fibre, 30,400 kilometres
of metropolitan fibre and the 22,000 kilometre Globenet submarine cable network
which links Brazil to Venezuela, Bermuda and the USA. As shown in the map below,
an indication of the challenges presented by the vast size of the country, combined
with the low income and population levels in the northern region, is that capital
of Amazonas was only connected to the fibre backbone this year, and it was more
cost-effective to do this via Venezuela's network.
While not even close to the same scale as Oi's network, the incumbent long distance
operator Embratel's network is also among the largest in the country, running
from the extreme south to Rio Grande do Sul in the north, totalling about 26,000
kilometres of optic fibre.
Figure 2-3 OI/Tele Norte Leste backbone
Aside from Telebras' recently established national network of about 31,000 kilometres
combining the infrastructure of the electricity and fuel distribution operators
(see Section 5), the other major backbones are operated by AES/AES Electropaulo
Telecom, GVT, Geodex and CEMIG Telecom. AES/AES Electropaulo Telecom has a network
of about 4,700 kilometres. GVT (owned by Vivendi) has about 25,000 km of optical
fibre, while Geodex (owned by UBS, Deutsche Bank and Meridiana Interprises)
has a network of 11,000 km. CEMIGTelecom, which changed its name from
Infovias in 2010, offers the largest optical fibre network in the state of Minas
Internationally, a number of other submarine cables connect Brazil to the region
and to North America and West Africa (Sam-1, SAC, Americas-I, Americas-II and
Atlantis-2). There are also plans for a large (12Tbps) cable called SAex to
connect Brazil with Angola, which will also give it an alternative route to
Europe and Asia via the west African coastal cable systems.
2.2.2 Alternative/complementary infrastructure operators
The operators and owners of overhead electricity pylons and poles, ducts and
rights of way for highways and railways are a major potential resource for backbone
fibre operators, but are well known for charging high fees for use of these
resources for telecommunication cabling in Brazil. It is not uncommon to find
a charge for overhead poles as high as R10 per month per pole, compared to R1
in the USA.
Figure 2-4 Petrobras and Electronet
The current situation also favours the incumbent operators, which negotiated
long-term contracts decades ago, and there may not be physical space available
for new entrants, or if there is, prices are now much higher for the much more
valuable resource that these rights of way have become.
Considering that much of the new investment in backbone infrastructure is going
into the more remote and less population-dense areas, where returns are lower,
the high costs of access to alternative infrastructure is a significant constraint
to more rapid deployment of broadband to the peripheral areas.
There are also a variety of large electrical energy generation and transmission
companies operating at either the federal or state level that sell telecommunication
services directly, usually via a subsidiary. The largest of these are:
Eletronet, a joint venture between the parastatal Eletrobrás and AES. The
Eletrobrás group has subsidiaries in different provinces - Furnas, Chesf,
Eletronorte and Eletrosul, with a total of 16,000 kilometres of optical
fibre drawn. The network runs through 18 states, but only reaches the outskirts
of large cities. In the least well-served area, northern Brazil, the Eletronorte
network is now expanding considerably because of plans to distribute hydroelectric
energy to many cities due to the construction of new hydroelectric schemes
CEMIGTelecom operates a carrier-to-carrier model using the infrastructure
of its parent company, electrical energy provider CEMIG in Minas Gerais.
Petrobras has an extensive fuel distribution network across the country
There is a well-developed Internet traffic exchange infrastructure in Brazil,
with 16 exchange points*
(IXPs) in different cities around the country. These improve performance for
customers and applications located on the networks of different providers and
save on transit fees for broadband providers by reducing the amount of local
data that transits externally. The IXP model in Brazil is independent non-commercial,
with NIC.br providing financial and capacity building support for establishing
IXPs where needed.
The first IXP in the northern region will be inaugurated this year and their
deployment in a number of major cities in other states is also underway.
As to be expected, the largest IXP is in Sao Paulo city with 185 members exchanging
about 50 Gbps of traffic at peak times, with the remaining IXPs exchanging a
total of about 10 Gbps of traffic at peak times.
2.2.4 Broadband providers
188.8.131.52 Fixed broadband
The current extent and future growth of fixed line broadband services is limited
by the stagnating market for fixed voice services, although this is being increasingly
augmented by other fixed technologies, in particular deployments of subscription/cable-TV
services, spread spectrum/Wifi, fibre to the home (FTTH) and broadband over
power lines (BPL).
Figure 2-5 Growth in average traffic
exchanged on Brazil’s IXPs
Brazil's fixed-line teledensity is about 23% higher than average for Latin America,
but there has been little growth since 2002, partly because fixed line rentals
are relatively expensive compared with other countries in the region. The fixed
voice market is dominated by three groups which all have substantial foreign
ownership - Spain's Telefonica, which owns Telesp (and mobile provider Vivo),
Mexico's America Movil, which owns Embratel (and mobile provider Claro) and
fixed/mobile provider Oi (Telemar Norte Leste/Telemar), which is owned by Portugal
Telecom and Brazilian investors. The market leaders are the two incumbents Oi
and Telesp, with 48% and 27% respectively of the fixed lines in the country.
Two other companies, the long-distance incumbent Embratel, and Vivendi's GVT,
have gained an increasing share of the market with 18% and 5% respectively.
Figure 2-6 Mobile coverage in Brazil
Although there are over 2,500 fixed broadband providers in Brazil, the five
largest hold about 95% of the market. These are mainly
the incumbent voice operators, and according to the government's Institute for
Applied Economic Research (IPEA), in June 2011 Oi was the largest broadband
provider, with about 36% of the broadband market, followed by NET Servicos (Embratel)
with 26%, Telefónica Brazil with 24%, and GVT with 8%.
Until the arrival of Telebras (see below) there has been little structural wholesale/retail
separation in the market, and the smaller ISPs largely resell capacity from
(and compete with) the larger telecom operators.
The principal operators in Brazil's cable/subscription TV market are Net Servicos,
Sky Brasil, Embratel, Telesp, and Oi TV. Net Servicos is the largest multi-service
cable provider in Latin America, and is controlled by local media group Globo,
although long-distance fixed-line incumbent Embratel owns a majority of the
company's stock. Sky Brasil, the largest High Definition satellite TV operator,
is controlled by DirecTV, with Globo as a minority shareholder. Independently
of Net Servicos, Embratel also provides satellite TV services.
All of these companies provide TV/broadband double-play packages, except for
Sky, which has a partnership with GVT for broadband services. However Sky will
soon enter the broadband market as it is now in the process of establishing
one of the first deployments in the world of TD-LTE technology, following its
purchase of radio spectrum in the 2.5GHz band.
Fibre to the home (FTTH) is now beginning to take off in Brazil's major cities,
seeing much increased investment over the last two years. Telefonica Brasil
is among the largest providers of FTTH services and is planning to extend its
network coverage, initially focussing on Sao Paulo state. Backed by Telefonica
of Spain, the group already has fibre coverage of a potential 400,000 households,
of which 20,000 are currently signed up to its services. By the end of 2011
it plans to increase coverage to about one million households and boost the
actual subscriber base to 70,000, with a long term plan to have one million
fibre customers by 2015.
Intelig, a subsidiary of TIM Brasil (owned by Telecom Italia), has launched
broadband and telephony services using broadband over powerline (BPL) technology
in areas of Sao Paulo city, provided over the infrastructure of local power
Table 2-1 Broadband users by type
of technology, 1000s, February 2011
Triple-play bundles (voice, Internet and IPTV) and quad-play bundles (plus mobile)
are becoming increasingly available, following recent consolidation of fixed,
mobile and subscription-TV providers. The triple-play leaders in this area are
GVT in partnership with Sky, and TVA (owned by the Abril Group and Telefónica),
while Oi launched the first, and so far only, quad-play service in the country
Table 2-2 Fixed broadband subscribers by speed of access, 1000s, February 2011
184.108.40.206 Mobile broadband
There are seven GSM operators in Brazil – Vivo, Claro, TIM, Brasil Telecom,
Oi, Sercomtel and CTBC (now Algar Telecommunications). By August 2011 they had
rolled out 3G services in 28% (1,588) of the 5,565 municipal areas, covering
about 144 million people, or 76% of the total population. Vivo is the dominant
player in numbers of subscribers and also in terms of coverage - it is present
in over 1,500 municipal areas, while it's nearest rival, Claro, is present in
only about 500 so far but is expanding fast with plans to cover 1000 by the
end of the 2011.
Having heavily invested in new 3G spectrum (a total of R2.7 billion was realised
in the H band auction in December 2010), the mobile operators are now rapidly
expanding their 3G networks, which should cover at least 2,000 municipalities
by 2012. In the H band auction, a new operator, Nextel, acquired frequency in
virtually all of Brazil and will soon become a specialised 3/4G competitor in
The government is looking to ensure that 4G/LTE networks are in place in time
for the FIFA World Cup in 2014, and it has already identified about R200 million
worth of investments to encourage this. Bidding for 4G mobile network licenses
is scheduled for April 2012.
Because of the remoteness of many areas in Brazil, the country has an extensive
satellite sector. Three companies operate national satellites: Star One, Telesat
Brasil, and Hispamar. Star One was the first to provide satellite services,
and is the market leader. Star One C3, scheduled for launch in 2012, will cover
all of South America including Brazilian territorial waters. The launch of Telstar
14R (known as Estrela do Sul 2 in Brazil), was launched in mid-2011 and covers
the whole Brazilian territory as well as delivering services to the rest the
2.2.5 Access devices
PCs and laptops are becoming more widely present in households, although smartphones
are now the dominant consumer broadband access device in Brazil. In total it
is estimated that there are 60 million PCs and laptops in use in Brazil, rising
to 100 million by 2012. Not all of these are connected to the Internet and many
are in businesses or large households which share their Internet connection.
In contrast, there is a closer match between the number of 3G phones and the
number of 3G broadband subscribers, although the match is not 1:1.
In a field survey, Grupo Mobi estimated in February
2011 that there were 19 million smartphones in Brazil; this is higher than the
number of 3G subscribers due to the large number of subscribers with multiple
phones, and many using smart phones on 2/2.5G subscriptions. The survey found
that 41% of their sample of mobile phone users in general, and 83% of the smartphone
users used their phone to go online.
The federal government has a long history of support for local industry to develop
low cost access devices. In 2000 strong efforts were made to establish reference
models for low-cost open-source based PC manufacture. As a result Linux is widely
available as an option on locally made desktop and laptops from the major white-goods
chain stores and other outlets. In 2010 it was estimated that about 14 million,
mostly locally made computers, had been sold in Brazil, often on instalment
plans provided by the major retailers.
Recent plans to provide tax incentives to promote the local manufacture of low-cost
tablet devices echo these earlier efforts, and have attracted Taiwanese computer
manufacturer, Foxconn Technology, to produce Apple's iPad tablet in the city
of Jundiai in Sao Paulo state. In addition Motorola, Samsung and Asus have also
expressed interest in producing tablets locally.
2.2.6 Public access facilities
Internet cafes, or LAN-houses, as they are commonly called in Brazil,
are widely used throughout the country and are present in virtually every community,
either to serve the youth in the richer areas, or to serve the general population
in the poorer areas. Privately run, usually by small businesses (90% of which
are informal), Cetic.br*
estimated in 2010 that there were about 100,000 in the country, serving 30-35
million people. This is a slight decline on previous years, most probably because
of the increased penetration of broadband in homes and on mobiles.
Provision of public access facilities for those who cannot afford their own
equipment and connections has also long been part of the Brazilian government's
digital inclusion strategies. The largest of these is government parastatal
digital inclusion programme (PSID*)
which has rolled out over 8,000 telecentres since 2003, providing free access
in 98% of municipalities. Part of Serpro's remit is to facilitate citizens'
relations with the government, including the development of e-government applications.
The programme includes donation of computers to public and civil society institutions.
Serpro is now developing a new programme with the Ministry of Agricultural Development
which will support integrated management of telecentres, called the Brasil Digital
which will be used to support the digital inclusion initiatives of both institutions.
The proposal is to form a central database with information from a variety of
digital inclusion initiatives in order to generate inputs for the implementation
of government policies.
In addition to a tool kit for the management of telecentres, the Brazil Digital
Network provides a decision-support system. The data are presented in reports
and graphs, as well as geo-referenced, providing a mechanism for monitoring
and tracking of benefits to the population and the variables that hamper the
smooth operation of telecentres in Brazil.
Serpro's PSID is also collaborating with the government's Casa (House) Brazil
Broadband in Schools*
and One Laptop per Student programmes*.
Casa Brazil is a similar but much smaller project, also established in 2003.
Working in poor communities, the project provides computers and connectivity
to communities, focusing mainly on use of open source technologies to promote
culture, art, entertainment, popular participation and community liaison. A
Casa Brazil typically has a telecentre, a reading room, an auditorium and several
laboratories and workshops where use of digital technologies can be made. About
100 units have so far been established with support from the Ministry of Science
and Technology, in partnership with other government agencies, the private sector
Banco Brazil and other large businesses are also donating computers to public
access programmes such as the above to support digital inclusion efforts.
2.2.7 Content and applications
With a large population and advanced electronic and print media market, along
with the relatively high number of wealthy people, Brazil's local online content
market is well-developed. This has been encouraged by the popularity of local
social networking sites, the distinctive independent forms of cultural expression
in Brazil, the substantial efforts by government to provide online services,
and by the lack of Portuguese content elsewhere (except to a certain extent
In addition, e-commerce services for consumers are widespread, partly due to
the relatively high proportion of the population that have bank accounts and
It is expected that e-commerce will have a turnover of US$18.7 billion at the
end of 2011, representing an increase of around 26% compared to 2010. By the
end of 2011 it is expected that about 32 million people will have made at least
one purchase online.
Another indication of trends in Brazilian applications and content is that Google
Brazil's revenues grew 80% in the last year, bringing in close to US$500 million.
2.3 Patterns of broadband utilization
As of mid-2011 there were an estimated 43 million broadband subscribers in Brazil,
representing a penetration rate of about 23% of the population. With about 74
million Internet users in the country, this brings the proportion of broadband
subscribers to about 60%.
The rate of broadband uptake also appears to be accelerating fast - new activations
hit a record in the month of August 2011 when there were 2.2 million additions,
compared to the average of about 1 million a month between July 2010 and July
2011. As a whole, broadband subscriber growth of about 60% was recorded over
the last year, and 3G broadband overtook fixed broadband subscriptions. Telebrasil's
August 2011 assessment indicates that fixed broadband grew by 25% in August
2011, while mobile broadband had a growth rate of 87%. Other features of broadband
uptake in Brazil include:
About 27.4% of households had Internet access of some form in 2009 according
to IBGE's National Household survey, while 12% of households had broadband access
in 2010, estimates IPEA.
Regional variations in access to broadband are large, mainly reflecting the
pattern of income levels and population densities. About 80% of broadband users
are concentrated in the Southeast, while the Northeast and Midwest have 9% each,
and the North, only 2%.
Table 2-3 Key features of the broadband market in Brazil
Teleco Note: Data are for end of Q2 2011 unless otherwise stated.
Fixed line subscribers
Fixed Broadband Subscribers
3G Phone Users
3G Modems/Data Terminals
Total 3G users
Total 3G + Fixed Broadband subscribers
Broadband users as % of total Internet users
Municipal Districts with 3G
Average 3G speed
Broadband subscriber growth Aug 2010-Aug 2011
Subscription/Cable TV Subscribers
Cable TV broadband subscribers (Q4 2010)
Computers in use
Subscription/Cable TV had about 11.1 million subscribers in mid-2011, representing
a growth of 31.8% over the last 12 months.
A number of projections have been made on the future levels of broadband uptake.
Mobile chip manufacturer QUALCOMM estimates that there are likely to be over
107 million 3G subscribers in Brazil by 2014.
Telecom industry group SindiBrasil estimates that if investments of about R145
billion are made in network infrastructure and services, broadband penetration
could reach 78 million subscribers in 2014
and 153.6 million in 2020. If no action to encourage public or private investment
takes place, this expansion would be limited to 57.3 million in 2014 and 93.2
million in 2020.
The IPEA estimates that if the price for broadband is reduced to the PNBL target
of R35/month (see next section), the number of households connected would rise
to 35 million (52% of total households).
Brazil also has had an extensive 'Broadband
in Schools” program which has resulted in about 84% of Brazilian students having
access to free broadband in urban public schools.