SAO PAULO — According to Frost & Sullivan, a positive economic outlook as well as investments in multiple-play bundles and 3G mobile network expansions have given a huge boost to the Brazilian telecommunications services market.
Analysis of the Brazilian Total Telecommunications Services Market, finds that the market earned revenues of $66.15 billion in 2010 and estimates this to reach $97.64 billion in 2016.
Brazil has been languishing behind most other Latin American countries in terms of household penetration of fixed broadband services and pay TV services, as well as mobile data services revenues. However, all this is set to change with operators recognizing an opportunity to increase service adoption through lower-priced services and multiple-play offerings.
The increasing coverage of alternate telecommunications networks will enhance penetration among low-income users and even in distant geographic areas, including small- and medium-sized cities.
Although the Brazilian mobile services market could be considered saturated after it surpassed 108 percent in penetration in 2010, the prevalence of multiple SIM cards, mobile to mobile (M2M) services, mobile broadband, mobile virtual network operators (MVNOs), and the emergence of a social middle class are likely to help the market grow further.
“Another important factor that will accelerate the penetration of telecommunications services is the intensifying competition brought on by the deregulation of the cable TV market in Brazil,” said Frost & Sullivan Industry Analyst Renato Pasquini.
“This escalating rivalry among integrated participants to provide convergent services, the entrance of telecom companies in the pay TV market, and the rise in the number of cities with coverage overlap of different fixed and mobile networks are all expected to take the market to the next level of competitiveness.”
The offer of converged services by integrated companies will particularly enhance the penetration rates of fixed broadband services, pay TV services, and mobile data services usage. On the other hand, the lack of competition in remote areas and small cities, the high tax burden, and regulators’ delay in taking important decisions related to spectrum auctions and competitive remedies could hold the market back.
To resolve these issues, the government has to ensure the implementation of the National Broadband Plan. This plan can coordinate public policies with Brazilian National Telecommunications Agency (ANATEL) and reduce the tax burden on equipment as well as network elements and services.
In the current scenario, telecommunications operators have to negotiate with each other, utilities, road concessionaires, and the government to find ways to minimize the costs and red tape for infrastructure deployment.
However, the recent change in the regulatory framework for pay TV services in Brazil unite the regulations for the different pay TV technologies (Cable TV, direct to home (DTH), microwave multipoint distribution service (MMDS), and internet protocol television (IPTV)) and will allow telecom companies to offer cable TV/IPTV in their concession regions. This will not only enable them to offer convergent services at competitive rates, but also stimulate investments in fiber and cable networks.
“Most telecom companies have announced voluntarily agreements to offer popular broadband services in their footprint, which is expected to drive service adoption,” said Pasquini. “Nevertheless, the increasing penetration of smart devices, and the resulting data traffic growth, is spawning challenges related to the quality of service and return on investment for operators.”
Over-the-top and Internet neutrality are likely to be main issues in this complex scenario. These challenges can be assuaged to some extent by network upgrades to high-speed packet access (HSPA+) and long-term evolution (LTE). Mobile data services adoption will also surge with the extended coverage of mobile broadband networks to serve more than 90 percent of the population.
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