By Cintia Garza
For many years, Brazil has been considered a key market with great potential for WiMAX. This is particularly true given it has one of the highest populations in Latin America --192 million at the end of December 2007. Brazil also has the third highest GDP per capita after Chile and Mexico, at $5,666. Yet it also has one of the lowest levels of broadband penetration, at 4.2 percent, according to ITU Indicators.
"In Brazil, there are 71 WiMAX/BWA licenses covering 121 municipalities. Brazil has over 45 million homes and 5,565 municipalities. Ninety-seven percent of these municipalities have less than 170,000 habitants. Most of those municipalities are being provided with Wi-Fi services because there is no DSL or cable modem infrastructure; however, close to 110 million people still do not have access to any service. So there is a huge opportunity for new licenses to be granted in the future and there is a huge opportunity for WiMAX," said José Luiz Frauendorf, Director of MMDS Operator's consortium NEOTEC during an interview with Maravedis.
The regulatory environment in Brazil remains unfavorable for the deployment of mobile WiMAX networks, especially in the 2.5 GHz band. ANATEL, the country's telecom regulator, is still reluctant to allow MMDS operators to deploy mobile WiMAX networks, mainly because of their perceived threat to 3G operators that spent billions to obtain spectrum licenses at the beginning of the year. However, the intention of MMDS operators is to only offer fixed services, as they consider fixed broadband the primary need in Brazil for now. "What we are doing has nothing to do with 3G," Frauendorf said. "The service that we will be providing is not a mobile service. It's a fixed service and we do not have any intention of offering mobility in the next 3 or 4 years. We are trying to convince ANATEL that 3G and WiMAX are two different systems and they will not be competing with each other, but rather complementing each other."
In an interview with TVA Brazil, an MMDS operator belonging to the NEOTEC consortium, Antonio Cesar Santos, WiMAX Project Manager of TVA Brazil, said that everything is ready for its commercial launch. Trials have been completed for projects in Sao Paulo, Rio de Janeiro, Curitiba and Porto Alegre with different vendors including Motorola, Samsung and Nortel. And the results were successful. "We are happy with the technology and we understand that the technology is ready to go," Santos said. "Two years ago, Telefonica acquired 100 percent of the MMDS platform of TVA Brazil, and so we are now aligning our WiMAX projects with Telefonica's goals to supply broadband and VoIP to SME and residential customers in the areas outside Sao Paulo."
Spectrum license expiration is another major challenge, as all MMDS licenses expire in 2009. Some operators were lucky to receive approval from ANATEL to extend their license(s) for another 15 years in a renewal process that began 3 years ago. Others were not so fortunate. It is expected by the end of 2012 that ANATEL will ask MMDS operators to relinquish part of their 2.5 GHz spectrum for a mobile 4G network auction. The regulator's intentions are not clear though we consider this scenario a likely possibility.
If ANATEL provides approval for the deployment of 2.5 GHz WiMAX networks, it is expected that MMDS operators will start launching networks right away that offer broadband access and VoIP services. In the initial stage they are planning to support CPE with VoIP ports while follow-on offerings include USB dongles, notebooks and embedded chipset devices.
The future of WiMAX in Brazil is still unclear. One can expect that ANATEL won't be auctioning spectrum in the 3.5 GHz band until mid-2009 at the earliest. All these regulatory constraints have created tremendous delays and limited participation in the market from various interested players.
Cintia Garza is a market analyst for Maravedis.