 Brazil: Telecoms and technology background
FROM THE ECONOMIST INTELLIGENCE UNIT
Privatisations and liberalisation in the 1990s attracted major inflows of private investment into the telecommunications sector, leading to an increase in fixed-line density from extremely low levels (although these remain low by international standards).
Growth of fixed-line penetration has tailed off in recent years, as cheaper mobile technology has become the major driver of increased telephony penetration among low-income users. Income is highly skewed in Brazil, and fixed-line services are accessible only to higher-earning groups. Mobile-phone penetration overtook fixed lines in 2003 and continues to experience dynamic growth, spurred by the availability of cheaper handsets (most of them manufactured locally) and the introduction of pre-pay contracts in 2001.
Brazil is by far the largest information technology (IT) market in Latin America, with an industry producing computer and telecoms equipment worth over US$30bn. Government policy proactively encourages the development of new technologies. Computer penetration has tripled from a very low base in the past five years, and Internet penetration has also risen strongly, although both remain low by international standards.
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Brazil: Overview of e-commerce
FROM THE ECONOMIST INTELLIGENCE UNIT
Brazil is one of the most promising countries for Internet development. It has the largest market for goods and services in South America and is also the most important advertising market in the region.
E-commerce sales have more than doubled within two years, according to a study by the Getulio Vargas Foundation (Fundação Getulio Vargas—FGV). The share of electronic business-to-business (B2B) sales had increased from 9% of the total in all of 2004 to 19.6% during March 2006. Electronic transactions accounted for 7.45% of overall business-to-consumer (B2C) sales in March 2006, compared with 2.9% in March 2004. The number of personal computers sold should increase to 7.1m units by end-2006, a 15% increase on 2005.
The value of B2B transactions amounted to R267.6bn in 2005, a 37% increase in local-currency terms on the 2004 total, according to the Brazilian Chamber of Electronic Commerce, Camara-e.net. Some 79.3% of the B2B total for 2005 was transacted through proprietary portals of companies dealing directly with suppliers, distributors and other partners. The remaining 20.7% of the deals occurred via independent electronic marketplaces.
The oil and petrochemicals industries have been the most active users of e-commerce resources, putting them ahead of the automotive industry. The consumer goods, healthcare and pharmaceuticals, and information technology industries exhibited the strongest growth in use of e-business services in 2005, according to Camara-e.net. The chamber expects the growth of B2B transactions to expand by more than 30% in 2006–07.
The 2005 Christmas shopping season helped deliver better-than-expected growth in B2C transactions. Holiday season online sales totalled R458m, accounting for more than 18% of all B2C sales registered in 2005.The value of online retailing reached R2.5bn in 2005, for a 45% increase on 2004. Consumers’ growing adoption of broadband services and a steep appreciation in the value of the Real compared with the US dollar contributed to a fast expansion in the volume of B2C transactions.
According to local press reports, the overall number of Internet users climbed from 20.9m in 2004 to 25.1m in 2005, a 20% year-on-year rise. The number of online consumers increased from 3.2m in 2004 to 4.5m in 2005, a 40.6% jump.
In April 2006 there were some 13.4m Brazilians accessing the Internet from their homes. According to the most recent figures from Ibope/NetRatings, Brazilian users spent the most time online—they spent an average of 19 hours and 26 minutes online in that month, followed by Japanese (18 hours and 7 minutes) and French (17 hours and 50 minutes) users. One year earlier, Brazilian Internet users spent a monthly average of 16 hours and 54 minutes online.
Mobile-phone use in Brazil has continued to expand dramatically over the past several years. Brazil had 92.38m mobile phones in use at end-May 2006, up from 86.2m at end-2005 and 65.6m at end-2004, according to the most recent statistics from the National Telecommunications Agency (Agência Nacional de Telecomunicações—Anatel). According to Anatel’s latest statistics, fixed voice services are by far the largest segment in the telecoms market in revenue terms. There has been rapid growth in the corporate data market, but consumer interest in broadband Internet has been growing slowly since rates remain prohibitively high. A few services are now available, mostly digital subscriber lines (DSL) and cable lines. But most are available only in large cities such as São Paulo.
The World Economic Forum ranks Brazil 11th in the world in terms of the sophistication of online business and transactions conducted by central governments. The ranking, released at end-2002, was part of a study in partnership with the World Bank’s information and development programme, infoDev, which used data from 82 countries. Within Latin America, Brazil ranked first in terms of information-technology infrastructure. The country ranked eighth for online government services and government use of e-mail. Brazil’s relatively high placements reflect improvements in its telecoms infrastructure since privatisation in 1998 and the development of its electronic-government programme in recent years.
More users and growing e-commerce sales prompted the government to pass the Information Technology Law (Lei da Informática, No. 10.176) on January 11th 2001. The government pledged to help develop the computer industry by providing numerous incentives to the sector. Before contracting suppliers, all federal departments must now use the list on the federal electronic-procurement portal, Comprasnet (www.comprasnet.gov.br). The list had 235,098 suppliers at end-2005, up from 214,398 suppliers at end-2004, and 194,000 suppliers at end-2003. There were 245,180 suppliers listed in July 2006.
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SOURCE: The Economist Intelligence Unit
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