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Issue 7: Current Developments - Brazil Telecom Services

Brazil Opens Its Market for Alternative Telecommunications Providers

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When VICOM, a Brazilian telecommunications service provider,opened its doors in 1985, the company's founders had one objective in mind - to offer high quality and innovative telecommunications services to all regions of Brazil, whatever the topography or current infrastructure.

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VICOM executives decided early on that to achieve this goal they must review other alternatives in addition to traditional telecommunications service offerings. "Brazil is a large country with very diverse geography and its terrestrial networks have not always been able to provide the highest quality service to all who need it," said Guilherme Saraiva, project manager at Rio de Janeiro-based VICOM. "From day one, the company knew that we'd have to look beyond existing technologies and services if we wanted to achieve our mission and remain competitive."

After evaluating the options, VICOM concluded that satellite communications based on very small aperture terminal (VSAT) networks would offer corporations the most effective method of supporting their wide area networks (WANs) given the limited reach of Brazil's terrestrial infrastructure.

"VSAT networks provide rapid, reliable satellite transmission of data, voice, and video to an unlimited number of geographically dispersed sites or from these sites to headquarters," said Saraiva. "Because reliability and cost are so important to companies selecting a telecommunications backbone, VICOM felt that this was precisely the technology that would offer Brazilian businesses the best choice for their networks."

Deregulation Opens Markets and Opportunities

Unable to provide direct service to organizations because of government regulations, VICOM, formerly known as Victori Communications, initially established itself in the service arena. They sold equipment and provided satellite installation, systems integration, and technical support services to customers installing company-run dedicated networks. To expand its business base and introduce more companies to satellite communications, VICOM began to lease equipment in 1994. This proved very successful and is an area that VICOM believes will continue even now that deregulation in the satellitecommunications market has occurred.

In 1998, the Brazilian government deregulated the telecommunications industry and VICOM received a license to offer satellite communication services directly to the customer. This deregulation now allows VICOM to enter the marketplace as a shared-hub services provider.

VICOM believes that entering the shared-hub services market will make VSATs very attractive to a wider pool of potential customers. For a number of reasons, many companies do not wish to build and operate their own hubs. Dedicated hubs require significant capital investment in infrastructure and equipment and they require in-house network management by trained personnel.

Consequently, it is an attractive option for many companies to pay a flat monthly fee per site for end-to-end service that includes remote equipment, installation, network management, and field service. As most of the costs are fixed, added capacity raises the costs only incrementally. Unlike many terrestrial solutions, a VSAT network easily accommodates system expansion, network reconfiguration, and new applications.

"Many companies wish to focus their investments on their core business rather than on a telecommunications infrastructure," states Saraiva. "The shared-hub system allows them to do this." VSATs offer a very attractive alternative to many Brazilian businesses. Until recently, the cost for dedicated leased lines in Brazil was so expensive - as much $10,000 a month per 500-600 miles of landline - that many companies were left without networking solutions. Even now, Brazil's terrestrial alternatives, when available, can be more costly than its satellite competitors, especially when performance is taken into account. By contrast, the broadcast nature of satellite communications ensures that one transmission will reach all branch offices or company locations wherever they are located, whatever the terrain, and for one flat fee.

Down-to-Earth Costs Triumph Over Terrestrial Alternatives

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In addition to the technical advantages of VSAT networks, VICOM has made significant efforts to differentiate itself in terms of the service it offers. VICOM has more than 20 offices in cities across Brazil that offer a range of technical and management services to their clients.

In many cases, a VICOM employee is located on the customer's premises to ensure hands-on service. Adds Saraiva, "We made a decision that we would sustain a well-trained workforce so that our customers would benefit from high standards of workmanship wherever they are located in Brazil."

VICOM feels that it has built on the inherent reliability and flexibility of the VSAT technology with its own concept of service. "We try to tailor the customer's network around its needs rather than ours," said Saraiva. "In addition, whilst many of the local phone companies provide maintenance services only during normal business hours, we offer our customers 24x7x365, round-theclock service and availability. Nothing in Brazil matches this."

As their business continued to grow VICOM found that they needed an established VSAT vendor with a comprehensive set of offerings that were scalable and well supported. According to Saraiva, VICOM based its decision on quality of network reliability, global experience, cost, and bandwidth capacity. "Stability was a significant factor in selecting Hughes Network Systems as our satellite communications provider," said Saraiva. "The company has an excellent reputation for offering good quality products. The more stable our telecommunications services are, the more our customers can concentrate on their core businesses."

VICOM supports a number of applications from back-office systems such as file transfers and downloads, intranets, and batch processing to point-of-sales applications that include credit verification, pricing updates, and inventory control.

Satellite communications' unique ability to offer high-speed broadcast transmissions offers tremendous benefits for both the central data center and each remote site or branch office. VSATs avoid costly replication of data and multiple service providers, by broadcasting common data just once from the data center to hundreds, even thousands, of remote sites.

For example, the ability to automatically download software upgrades to store locations via the VSAT network saves VICOM's customers both time and money. The branch offices are now assured of timely, worry-free upgrades, and the central office can be confident that everyone is operating on the same platform at the same time. VSATs' ability to multicast applications is not limited to data and offers the perfect transmission vehicle for broadcasting uniform in-store music, advertisements, or consumer information across your chain of stores.

Ubiquity, Flexibility, and Reliability Win Over Brazilian Businesses

VICOM has customers in all segments of the Brazilian economy and has found that a wide range of industries from retail to agribusiness to utility companies have been quick to adopt VSAT technology for their corporate WANs.

"From retail applications to enterprise resource planning to monitoring consumption and usage to email facilities, our customers find that the range of applications supported meets their needs today and allows them the flexibility to expand their networks in the future," Saraiva said. "In addition, some of our customers are located in rural areas where they just don't have terrestrial alternatives and a VSAT network gives them reliable service 24 hours a day at a price that they can afford."

The asymmetric nature of VSAT networks is conducive to most organizations where a data warehouse is located at a central office and sends information to remote sites that are geographically dispersed. Most requests sent to the data center are low-bandwidth requests for information that is often quite bandwidth intensive. The low bandwidth inbound route and the high bandwidth outbound route combined with its broadcast ability make the VSAT system particularly well suited for wide area networks.

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The ubiquity of service has proven invaluable in countries such as Brazil whose terrestrial infrastructure does not cover the entire country. "VSATs are definitely making our customers more competitive, simplifying their operations, and reducing costs," Saraiva said. "With a satellite network, retail stores can offer their customers more payment options such as credit cards, communication is enhanced through email and ERPs in the farm co-ops, and intranets keep bankers up to date on the latest banking information."

As Brazilian companies look for their networks to support secondgeneration applications, VICOM knows that VSAT technology will enable its corporate customers to implement applications such as IP multicasting and interactive distance learning.

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Many of these applications require very large bandwidth and even if terrestrial lines are available, few alternatives can offer the high bandwidth option of VSATs.

"I'm confident that IP multicasting, satellite-supported intranets, and interactive distance learning are all applications that our customers will add in the near future," Saraiva said. "We're fortunate that whenever our customers need these next generation services, our satellite network is already in place to make them a reality."

VICOM launches shared-hub services using Hughes VSAT networks.

Hughes Network Systems: A unit of Hughes Electronics Corporation, is the world's leading provider of broadband satellite network solutions for businesses and consumers, with over 400,000 systems installed in more than 85 countries. HNS pioneered the development of high-speed satellite Internet access services, which it markets globally under the DirecPC® and DIRECWAY™ brands.

For terrestrial access, it offers the comprehensive AIReach® family of broadband wireless point-to-multipoint products. In addition, HNS is a leading manufacturer of DIRECTV® satellite television receivers. Headquartered in Germantown, Maryland, USA, HNS maintains sales and support offices worldwide.


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