Brazil gets WiMax

FROM THE GLOBAL TECHNOLOGY FORUM

By Nina Hallquist

WiMax is finally being deployed in Brazil.   Several carriers are rolling out networks in the main cities and even some rural areas are  benefiting.

In many parts of the world, WiMax, a form of wireless broadband service with broad coverage capabilities, has been two years away from the market for the past six years.   Many carriers have been reluctant to invest in WiMax after spending billions on third generation (3G) mobile telecoms licenses. Regulatory disputes have also discouraged investment in WiMax technology. 

In Brazil, for example, a row over whether fixed line operators such as Brasil Telecom could bid for spectrum to offer WiMax services has delayed WiMax rollouts.   The Brazilian telecom regulatory agency, Anatel, wanted to prevent the incumbent telephone companies from acquiring spectrum within their concession areas (where they already own wired networks).   One of the effects of this dispute is that currently, there are only a small number of WiMax networks in operation.  They account for less than 1% of the broadband market, according to Alex Zago, Telecom Services Program Leader at market research firm Frost & Sullivan in Brazil. 

In 2007, Anatel will attempt to auction spectrum frequencies for WiMax once more.  If the auction rules prevent incumbent companies from bidding on spectrum in their concession areas, Frost & Sullivan’s Zago expects to see significant WiMax investments from companies targeting both the consumer and business segments (particularly small to medium-sized businesses, or SME’s).  Broadband Wireless Access (BWA) operator Neovia has currently deployed a WiMax network in Sao Paulo, and is planning to expand it. 

 TVA Sistema de Televisao S.A., a cable television company, carried out tests using Samsung’s WiBro (wireless broadband) system in 2006, and is planning to launch its network in the southern city of Curitiba.  Telmex-owned Embratel also has WiMax trials underway, and operates a 3G network as well.  Wireless operator Vivo has also deployed a 3G network, with services aimed at the corporate market.

WiMax vs 3G

Can WiMax and 3G co-exist as offerings in the Brazilian telecoms market?    The main difference between WiMax and 3G is that 3G networks operate on a low spectrum that allows customers to walk or travel in trains while on the phone or surfing the Internet.  WiMax operates on a higher spectrum, which isn’t fast enough for that kind of mobility.  As Anatel has delayed auctioning 3G licenses up until now, analysts have speculated that Brazil could jump directly into the fourth generation (4G) world, which allows customers to move around while using the service and has greater bandwidth than 3G, in the medium term.   So, there has not been much direct competition between 3G and WiMax services to date. 

However, late in December 2006, Anatel announced that it had approved the rules of spectrum use for 3G, which will allow carriers to apply for 3G licenses.   The main mobile carriers such as Vivo are expected to apply for the licenses, but view 3G as a niche market because only 20% of their customers have post-paid accounts and can afford 3G services.  With that said, Brasil Telecom announced in February 2007 that it plans to launch a mobile WiMax network in the southern cities of Porto Alegre and Curitiba.  So, the market could yet see some competing offerings from these companies.

In the short term, analysts expect most WiMax deployments to be fixed,
coming from operators that target the consumer segment with triple play (wireline, wireless and television) services and from operators targeting the business segment – particularly SMEs –with voice and data solutions.  In 2006, Motorola forecast that the market for WiMax services in Brazil would grow to US$100m in 2007.   Maravedis, a research consultancy, projects an accumulated 768,000 subscribers by 2010, with WiMax representing two-thirds of those subscribers.  The consultancy also predicts that approximately 70% of the WiMax subscribers will be mobile residential customers, while fixed WiMax will continue to be driven by large corporations and SME customers.   These estimates will depend on whether WiMax spectrum auctions proceed and WiMax service rollouts continue. 

Some more altruistic programs such as US chip giant Intel’s World Ahead are also targeting the rural populations of Brazil, offering WiMax broadband services in places like Parintins, an island in the Amazon River, that sometimes does not even have electricity.  Intel is using a satellite link to beam bandwidth to one of its WiMax towers, which it installed in the center of the city.  Intel officials declined to disclose the investment necessary for making WiMax operational in Parintins.  However, it seems that the government has money available.  For reasons that are not entirely clear, Brazil has yet to spend the US$2bn it has collected in universal service taxes, which is collected from mobile service operators to pay for networks in rural areas.  Firms looking to find backing for WiMax projects to improve teledensity should take note.

Source: GLOBAL TECHNOLOGY FORUM