1. 1 Telecommunications Industry in Brazil: problems and issues Antonio Carlos G. Bordeaux Rego Director Fundação CPqD - Centro de Pesquisa e Desenvolvimento em Telecomunicações Campinas, SP - BRAZIL ITS 15 th Biennial Conference Berlin, Germany September, 4-7, 2004

2. 2 Telecommunications Industry in Brazil: problems and issues Outline 1.Brazilian Reform Agenda 2.Brazilian Current Agenda 3.Main Issues 4.Future Perspectives of Brazilian Telecom Industry

3. 3 Telecommunications Industry in Brazil: problems and issues Brazilian Reform Agenda (1995 – 2001) n 1995 - Constitutional Amendment: End of State Monopoly n 1996 - Opening Mobile Telephony to Competition n 1997 - New Telecommunications Act: “General Law” n 1997 - Creation of Regulatory Agency: ANATEL n 1998 - TELEBRÁS Privatization o 4 Fixed Telephony Operators o 11 Mobile Telephony Operators

4. 4 Telecommunications Industry in Brazil: problems and issues Brazilian Reform Agenda (1995 – 2001) What Govern did expect ? n Consolidation and Competition by: o Services, Marketing and Technological differentiation o Duopoly Regime (until 2001) and subsequent opening n Universalization by: o Tariffs Decreasing and Quantitative Expansion n Internet Access Expansion

5. 5 Telecommunications Industry in Brazil: problems and issues Brazilian Reform Agenda (1995 – 2001) What did happen ? n Competition: o Exists on Long Distance and Mobile Telephony Market o Does not exist on Fixed Telephony Market n Universalization: o Tariffs still high and number of fixed subscribers has saturated o Public Telephony is great success n Internet Access still limited

6. 6 Telecommunications Industry in Brazil: problems and issues Brazilian Current Agenda (2003 - 2004) n Enormous Growth in Mobile Market: pre-paid services* n Competition is moving on Corporate Market and Broad-Band Access n Internet traffic begins to grow again (B2B, B2C, e-gov) * Universalization is happened with combination of pre-paid mobile services and public pay-phones services.

7. 7 Telecommunications Industry in Brazil: problems and issues Main Issues n Cost and Business Models: o Unbundling and Interconnections n International Impact in Brazil (ex. “Bubble” ) o Different Causes o Local and International cycles in the same moment n Digital Divide: o Poor Income Distribution o Tariff Strategies n Competition Issues: o Concentration versus Competition n Political and Regulatory Definitions: o Role of Ministry of Communication versus ANATEL o ANATEL Accountability

8. 8 Telecommunications Industry in Brazil: problems and issues Future Perspectives n Emphasis on Competition o Intensity on Regulatory and Public Politics to increase competition and consequent tariff decrease n Govern Programs to decrease Digital Divide o FUST, GESAC and others n Stimulate Industrial and Technology Developments according to Brazilian Issues o Digital TV o NGN and VoIP o New solutions for rural areas and remote locations o E-govern services and applications

9. 9 Telecommunications Industry in Brazil: problems and issues Thanks CPqD – Telecommunication R&D Center www.cpqd.com.br Antonio C. Bordeaux Rego bordeaux@cpqd.com.br