Search

 

Cablegate: Brazil's National Broadband Plan

VZCZCXRO9340
RR RUEHRG
DE RUEHBR #1400/01 3411224
ZNR UUUUU ZZH
R 031911Z DEC 09 ZDS
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 0003
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAFCC/FCC WASHINGTON DC
RUEHBR/AMEMBASSY BRASILIA
RUEHRG/AMCONSUL RECIFE 0001
RUEHRI/AMCONSUL RIO DE JANEIRO
RUEHSO/AMCONSUL SAO PAULO

UNCLAS SECTION 01 OF 02 BRASILIA 001400

C O R R E C T E D C O P Y - FCC INFO ADDRESS ADDED

SENSITIVE
SIPDIS
STATE FOR EEB/CIP/BA TFINTON

E.O. 12958: N/A
TAGS: ECON ECPS EINT BR
SUBJECT: Brazil's National Broadband Plan

REF: 09 BRASILIA 615

BRASILIA 00001400 001.2 OF 002


1. (SBU) Summary: Brazil's Minister of Communications (MOC), Helio
Costa, unveiled Brazil's national broadband plan (NBP) aimed at
addressing Brazil's soaring broadband usage demand (reftel) on
November 24. The proposal, entitled "A national plan for broadband
- Brazil at high speed," lays out MOC goals, to be accomplished by
2014 when Brazil hosts the World Cup, of increasing individual
access to fixed broadband service in Brazil to 30 million people,
providing 60 million users with mobile broadband access, and
connecting all government agencies, public schools, public health
facilities, public libraries, and federal state and local law
enforcement agencies to the plan's expanded broadband network. The
plan also calls for the construction of 100 thousand new community
telecenters (reftel) with broadband access designed to reach the
rural areas of Brazil. In describing the NBP as essential to
sustaining Brazil's economic growth, increasing its economic global
competitiveness, and enhancing the social welfare of its citizens,
the plan envisions a concession model that utilizes existing
telephone fiber optic networks, and calls for government investment
of U.S. $ 26.49 billion and $ 49.01 billion in private investment.
To stimulate private investment, the plan proposes IT related tax
breaks, favorable financing terms through Brazil's National
Development Bank (BNDES), and regulatory reform. President Lula is
currently evaluating MOC's NBP proposal along with alternative NBP
option from Brazil's Ministry of Planning that recommends the use
of private energy companies' power lines as the NBP network. GOB
has not yet reached consensus regarding how the Plan will be
funded. President Lula has said that he will be meeting with MOC,
the Ministries of Finance, Planning, and Energy within the next two
weeks to decide these two fundamental questions of how broadband
will be delivered (phone lines or electricity lines) and how the
expansion will be funded. However, Mission believes these
questions will not be resolved before the end of the year. End
Summary.

PLAN'S STRATEGIC GOALS/APPROACH

-------------------------------

2. (SBU) Communications Minister Costa highlighted that expanding
Brazil's broadband infrastructure would forward GOB strategic goals
including universal access, greater governmental operational
efficiency, improved public interface experience with government
services, enhanced development of Brazil's telecommunications
networks, contribution to the industrial and technological
development of Brazil's ICT sector, increased competitiveness of
Brazilian small and medium enterprises in other sectors as well as
companies in the ICT sector thereby adding jobs, and GDP growth.
Costa stated that without the NBP, Brazil would reach about 21
million broadband users by the end of 2014, representing
approximately 31.2 accesses per 100 households, a number lower than
the 37 per 100 households found in the analysis of the broadband
infrastructures of Argentina, Chile, China, Mexico and Turkey. In
contrast, Costa argued that implementing the proposed Plan could
result in Brazil achieving an access ratio of 50 per 100
households. The key to achieving this growth, according to Costa,
is to target rural area broadband usage where geographical
isolation and lower income levels have contributed to lower
broadband usage (Note: The Brazilian State of Sao Paulo accounts
for 40% of Brazil's broadband use and is considered a saturated
broadband market. End Note). It is also critical that Brazil
stimulate innovation, efficiency and competition aimed at expanding
coverage and reducing consumer retail costs to USD30/month, a level
MOC believes is critical in attracting middle to lower income
consumers.

NBP FUNDING

--------------

3. (SBU) Sources of government funding for the plan are still to
be determined by President Lula, but recognizing that public money
cannot subsidize the entire plan, the MOC's NBP calls for a
combination of tax cuts and government financing to encourage
needed private investment. The NBP proposes to reduce social
contribution tax rates on Brazil's social security tax (COFINS) and

BRASILIA 00001400 002.2 OF 002


its social integration tax (PIS) for IT companies, and to reduce
the tax on broadband related goods and services (ICMS). The plan
recommends adding NBP-based businesses to the national micro or
small business plan called "Simples Nacional." This would provide
IT companies with tax benefits, streamline licensing and market
entry challenges, qualify the companies for attractive lines of
credit, and allow them to receive services from Brazil's National
Microbusiness Support Agency (SEBRAE) including business plan
development, tax consultation, training, and market research. The
NBP proposes that BNDES offer attractive lines of credit to
NBP-based companies for projects to expand broadband infrastructure
for fixed and mobile services, for digital inclusion projects with
broadband access aimed at rural areas, and for IT related training.

REGULATORY CHANGES

------------------

4. (SBU) The primary goal of NBP regulatory reform is to stimulate
competition and reduce consumer prices by expanding licensing
regimes and reducing entry barriers for new service providers. The
NBP calls for an increase in the availability of new fixed and
mobile concessions for cable TV with the goal of increasing by 25%
the number of households with access to broadband internet via
cable TV by 2014. Additionally, the plan establishes a special
broadband spectrum division within Brazil's Telecommunications
Regulatory Agency (ANATEL) for the auction of broadband licensed
blocks in order to facilitate the participation of large, medium
and small providers of telecommunications services in the process.
The division's responsibilities would entail identifying a
spectrum's coverage and scope (national, regional or local),
establishing a maximum allowable pricing regime with the service
provider, defining long term, extended coverage commitments within
each spectrum auction, and capping the maximum allowable bid during
spectrum auctions in order to foster greater participation.
Spectrum in the 450Mhz, 2.5GHz and 3.5GHz bands for mobile
broadband will soon be released and the plan calls for the
establishment of the broadband spectrum division before the
auctions take place. ANATEL's Jeferson Nacif told Econoff that
these goals were consistent with ANATEL's agency objectives of
fostering greater competition, enhancing operational efficiencies,
and lowering consumer prices through regulatory reform. In this
sense, Nacif mentioned that ANATEL would be reviewing Brazil's
compensation network regulations, IT infrastructure sharing
regulations, and interconnectivity regulations to find asymmetries
that create greater market access. Nacif added that ANATEL will
also be giving priority to the regulations on network neutrality
(elimination of tiered internet pricing regimes) and to ensuring
that service providers are delivering the connection speed that
consumers are paying for. (Note: many of these topics will be
included on the agenda during the ANATEL/FCC workshop in February
2009 in Washington. End Note)

5. (SBU) Comment: As bold as the strategic thinking of MOC's NBP
appears to be, it is still just an introductory proposal. Until
GOB addresses the critical issues of how broadband is to be
delivered (via landline telephone infrastructure or electricity
grid infrastructure - either option would require expansion of
existing networks) and how the government will fund expansion,
strategic planning will not turn into tangible implementation. As
in Brazil's energy and aviation sectors, Brazil's IT infrastructure
has failed to keep pace with demand. There is no doubt that past
underperformance in this sector has had a negative impact on
potential GDP growth and economic competitiveness, as well as on
Brazil's social inclusion goals, due to limited information access
for Brazilians in rural areas with lower income. The GOB sees an
opportunity to help bridge those gaps and, with Brazil hosting the
World Cup in 2014 and the Olympics in 2016, realizes fundamental
decisions on delivery mode and funding must be made soon. That
said, Mission believes GOB is unlikely to meets its December
deadline to make these decisions. End comment.
KUBISKE

© Scoop Media

 
 
 
World Headlines

 

ALRANZ: Denounces US Senate Confirmation Of Judge Barrett

ALRANZ Abortion Rights Aotearoa denounces the US Senate’s confirmation of Judge Amy Coney Barrett to the Supreme Court seat formerly held by Justice Ruth Bader Ginsberg. “This action demonstrates the rank hypocrisy of the once-respected upper chamber ... More>>

OECD: COVID-19 Crisis Puts Migration And Progress On Integration At Risk, Says

Watch the live webcast of the press conference Migration flows have increased over the past decade and some progress has been made to improve the integration of immigrants in the host countries. But some of these gains may be erased by the COVID-19 pandemic ... More>>

Reporters Without Borders: Julian Assange’s Extradition Hearing Marred By Barriers To Open Justice

After monitoring four weeks of evidence in the US extradition proceedings against Wikileaks publisher Julian Assange, Reporters Without Borders (RSF) reiterates concern regarding the targeting of Assange for his contributions to journalism, and calls ... More>>

OHCHR: Stranded Migrants Need Safe And Dignified Return – UN Migrant Workers Committee

The UN Committee on Migrant Workers has today called on governments to take immediate action to address the inhumane conditions of migrant workers who are stranded in detention camps and ensure they can have an orderly, safe and dignified return to ... More>>