Search

 

Cablegate: Growth Trends in Brazilian Telecommunications

VZCZCXRO1340
RR RUEHRG
DE RUEHBR #1332/01 2821435
ZNR UUUUU ZZH
R 081435Z OCT 08
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 2613
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 6724
RUEHSO/AMCONSUL SAO PAULO 2879
RUEHRG/AMCONSUL RECIFE 8560
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREAS WASH DC

UNCLAS SECTION 01 OF 02 BRASILIA 001332

SIPDIS
SENSITIVE

STATE FOR WHA/BSC, WHA/EPSC, EEB/CIP
DOC FOR ADRISCOLL, PHERNANDEZ

E.O. 12958: N/A
TAGS: ECON ECPS EINT MARR PINR TINT TSPA BR
SUBJECT: Growth Trends in Brazilian Telecommunications

SENSITIVE BUT UNCLASSIFIED

1. (SBU) Summary: Brazilian Ministry of Communications (MOC) staff
noted in a recent meeting that information technology use has
increased by 40% over 2006 in the mobile service sector, by 35% in
the internet service sector and by 30% in the pay TV service sector.
The MOC also confirmed the rumor of the pending merger between
Brazilian mobile services companies Oi and Brasil Telecom, which
will create the second largest mobile service company in Brazil.
Jefferson Nacif, a primary MOC contact, will be transferring to
ANATEL, the Brazilian telecommunications regulatory body, in
mid-October. He cited an increased emphasis on regulatory
oversight, given the industry's growth, as the main reason his
expertise is needed at ANATEL. End Summary.

MOBILE PHONE USAGE GROWING
---------------------------

2. (SBU) In a meeting with Econoff, MOC's International Affairs
officer Jefferson Nacif highlighted the mobile sector's growth,
stating that Brazil currently has 138 million cellular phone users
compared to 99 million in 2006. The MOC attributes this growth to
the presumption that many Brazilians are using more than one cell
phone, often separating them between professional and personal use.
Nacif commented that monthly service packages are still much cheaper
than pre-paid phone cards on a cost per minute basis given that many
mobile service companies are using the user access fee (VUM), which
is generated on each call, to subsidize the packages in hopes of
enticing customers into long term contracts. Nacif cautioned that
this practice unduly favors those who can afford these packages,
while marginalizing those consumers who can only invest limited
resources in the phone cards.

MAJOR TELECOM MERGER IN THE WORKS
---------------------------------
3. (SBU) The merger between Oi and Brasil Telecom was announced
last month with approval by ANATEL expected in December 2008. This
new company, whose name is yet to be announced, will directly
challenge major mobile phone service provider TIM in terms of
geographic coverage, with the only omission in their coverage being
the state of Sao Paulo. Nacif predicted that by 2016, Brazil will
have complete geographic mobile service coverage.

INCREASES IN INTERNET USAGE
----------------------------
4. (SBU) Nacif commented that internet use in Brazil, through fixed
and mobile connections, will be the largest IT growth sector in the
years ahead. Currently Brazil has about 30 million internet users
(out of a total population of 189 million) and Nacif stated that the
GOB's goal is to have 90 million by 2010. To achieve this goal,
Nacif stressed the importance of continued fixed line infrastructure
expansion, especially to rural areas. However, he noted that, given
the infrastructure challenges expanding fixed line access in
extremely remote areas presents, mobile internet access would be the
largest growth component of this sector. He also pointed to the
steady decline in the prices of computers and mobile internet
devices as another factor that will contribute towards achieving
this growth target. (Note: Apple Brazil introduced the iPhone 3G on
September 26. End note). Nacif referenced an uptick in consumer
preferences for premium access in Brazil, citing the 10 million
broadband access users who are willing to pay for these premium
services.

MORE WEALTH MEANS MORE UPSCALE CABLE TV
--------------------------------------
5. (SBU) Nacif cited pay TV service growth as an indicator of
increased consumer purchasing power in Brazil. Both cable and
satellite TV service companies have shown impressive growth over the
past decade. Nacif noted that cable TV appeals to an audience
looking for multiple service packages through
one service provider. The convenience of having telephone, internet
and pay TV managed by one company has attracted more than 5 million
users in the last 5 years. Nacif commented that Satellite TV
appeals to a consumer that wants more international channel options,
but noted that this service tends to be more expensive than cable
TV. Nacif mentioned that this segment of pay TV has more growth
limitations due to its higher cost, the scarcity of dish supplies
and dish placement restrictions in certain types of residences.

6. (SBU) Comment: Sustainable economic growth in Brazil will greatly
depend on its ability to broaden economic benefits to Brazilians on
the margins, and this connection, according to Nacif, begins with
information technology. Post believes these growth trends in the
Brazilian IT sector present excellent opportunities for U.S.
business participation, especially in the area of mobile

BRASILIA 00001332 002 OF 002


connectivity. Post believes Nacif's transfer to the ANATEL, where he
will retain the portfolio of international issues he followed at
MoC, will be helpful in encouraging ANATEL to maintain a
forward-looking, open approach to developments in the IT sector. END
COMMENT.

SOBEL

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO:

 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC