When the Cardoso government promoted the privatisation of the telecommunications sector in Brazil in 1998, the promise was that increased competition would bring down prices. While the extension of services has reached most areas for voice, prices have remained relatively high, and the availability of new services such as broadband has been slower and more costly than expected. In addition the telecom sector has become more concentrated among fewer dominant players which are mostly owned by foreign operators. The PNBL is clearly responding to this market environment, aiming to reduce costs, increase coverage and support local Brazilian industry.

It is notable that the PNBL did not come out of nowhere, and builds on much prior experience, including in sector regulation. However most initiatives concentrated on public access facilities (telecentres), e-applications development and low cost access equipment – open source, locally manufactured desktop computers. Since then the environment has moved on, broadband has become a priority, local applications development has continued to take place and access devices have switched to laptops, smartphone and tablets which are a once-off cost and becoming increasingly affordable. As a result lowering broadband costs and improving performance is rightly seen as the key priority to achieve digital inclusion and leverage the benefits of ICTs for development.

The operators' mixed reactions to the PNBL has highlighted the continuing tension between public and private sectors, and between the dominant players and the small ones, in defining the best way forward. The technical and market complexity of Internet provision generally, and in Brazil in particular, has not helped either side to identify a clear collaborative strategy, and as elsewhere in the world, this is an ongoing area of debate.

The discussion over the role of the public versus the private sector is also taking place within different parts of the federal government. Subsequent to the announcement of the PNBL, which was largely developed by the Ministry of Planning, some other parts of government have indicated that they are not entirely in agreement with the strategy, and similarly to the private operators, have indicated their preference for a model focussing on subsidising the cost of providing connections to those who cannot afford current market rates.

In any event, ‘the proof is in the pudding' and it remains to be seen how effective Telebras will be in competing with the private sector to drive down prices and extend the range of services. However it already seems that simply the threat of this type of initiative has already caused the private operators to respond by lowering prices and increasing their coverage targets.

In Brazil, as in China, the role of the state is notable in equipment development and the efforts of the government to support local manufacture of equipment are extensive, ranging from R&D support, tax breaks and import barriers for foreign equipment. The effectiveness of import barriers is as yet unclear, but currently the cost of much of the consumer equipment available in Brazil is higher than it is in Europe or North America. This has also resulted in a small but significant grey market in ICT goods, either bought from tourists, or while travelling abroad, and sometimes even smuggled in.

Among the other key issues that the initiatives taking place in Brazil have drawn attention to so far are:

• The setting of performance targets for the quality of broadband services under the PNBL has highlighted discussion of the relative importance of speed versus traffic limitations. Many have said that with low monthly traffic caps, access to higher broadband speeds is largely meaningless.

• Price target setting needs to be able to take into account bundled service offerings which can extend the basic broadband service to double and triple-play, where TV and voice services may be part of the broadband package. In fixed line ADSL services, the bundling of voice telephony subscriptions is also very common, but increasingly unneeded due to the availability of mobile telephony.

• If the setup cost for the access equipment (modem and terminal device) is not taken into account, and remains at market -related prices, the lowest income-groups will likely find the cost of entry unaffordable. Some operators have initially responded by making a USB modem free if a contract is signed, but this is not guaranteed to continue indefinitely.

• Brazil's experience also show that tensions between broadcast and telecom sectors, and between fixed and mobile sectors needs to be anticipated. The broadcast sector will resist opening up to telecom operators and the subsequent debate over network neutrality can slow down implementation of effective solutions.

• Technically, the debate over the ability of mobile operators to service the demand for high speed broadband (>5Mbps) continues. Clearly, in developing and emerging markets where the penetration of fixed infrastructure is low, mobile wireless will have a vital role to play for some time to come. But even in these markets, notwithstanding the lack of experience with LTE, fixed-line infrastructure – fibre to the home in particular, may well be the ultimate evolutionary path to cope with exploding demand for capacity.

• The consolidation of fixed, TV and mobile operators in single integrated companies offering triple- and quad-play services is also taking place around world trend, improving operator profitability with economies of scale, streamlined management and better optimization of investments. Demand for broadband is also an accelerator of this process in the mobile sector - with 3/4G mobile broadband, the only way to scale services sufficiently is to use fibre in the backhaul transmission to connect cell sites. These conclusions seem to be gaining wider acceptance as underlined by the merger of Embratel and Claro, the purchase of GVT by Vivendi and the efforts of Telefonica to buy Portugal Telecom's share in Vivo. A similar dynamic is also evident between the broadband and TV broadcasting sectors.

• Fiscal measures such as tax exemptions for equipment and broadband services are a key plank in Brazil's broadband strategy, but do not seem to be as well recognised elsewhere. Brazil's approach is particularly innovative in that it proposes to exempt operators who reduce the cost of their offerings by a significant margin. In a federal system such as Brazil, the variation in the extent of exemptions underscores the need for buy-in at each level of government.

• Top-level support from government has been observed as a key feature of many of the more successful national broadband plans, and Brazil is no exception. The PNBL was devised under the previous President Lula's close leadership and reaffirmed by the current President Rousseff, who said, in her first public address to the nation following her taking of office earlier this year, that the implementation of the PNBL would be accelerated. At the other end of the spectrum, the efforts of a number of municipal governments to support broadband development, and even provide free broadband services, are noteworthy, highlighting the important role of municipal governments in provision of broadband as a utility, just like water, electricity and sanitation. Finally, the variation in activities of the federal, state and municipal governments also calls attention to the need for all levels of government to co-ordinate their efforts to ensure the most effective use of resources and to make affordable high speed broadband available as quickly as possible.

• The opportunity to massively reduce the costs of broadband network deployment by ensuring access to other complementary infrastructure sectors – namely power and transport, has not gone unnoticed by Brazilian broadband policy makers - one of Telebras' first actions was to secure access to the fibre infrastructure of the petroleum and electricity distribution networks. However less discussion has so far taken place for the future advantages of ensuring that ducts are provisioned in every new road, and ensuring smooth and low cost access to rights of way for fibre cable.

• In making additional radio spectrum available for broadband, the tensions with the dominant players, and incumbent mobile operators in particular, to use control over access to spectrum as a way of staving off competition, signals the importance of forward planning in spectrum management and the need for strong independent policy-making.

In conclusion, although it is early days in the PNBL programme, developments over the coming year will be watched with keen interest by policy makers, civil society and providers wherever the promotion of access to ICTs has become a national policy issue. In this respect the Brazilian experience is and will continue to be a valuable one for most other countries planning broadband strategies.