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Issue 7: Developing Countries - Brazil

Politics and Technology Converge: Case Studies on the Effects of Regulatory Reform on VSAT Adoption in Developing Countries

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C: COUNTRY CASE STUDIES - BRAZIL

Telecommunication Regulation in Brazil

Brazil is a large country with very diverse geography. Its terrestrial networks have not always been able to provide the highest quality of service to all who needed it. If information is critical to development, then information and communications technologies as a means of accessing, processing, and sharing information are links in the chain of that development.[51]

It is in this respect that VSAT deployment became necessary in Brazil. 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 a specified point. A favorable telecommunications regulatory environment was also necessary to make this happen.

In the 1990s, timely organization-wide communication in Brazil was nearly impossible because of the lack of reliable terrestrial telephone infrastructure in many areas of the country. Besides that, lack of appropriate telecommunications technologies was hindering the operations of organizations utilizing a standard dial-up telecommunications network to transfer information and update customer files. Line reliability was insufficient for volume data transfer and had long been a vexing issue in many locations. Cost of line installations was high and timetables for installations could be up to four years. It was difficult to communicate in real time with high reliability and reasonable cost. There was the need to change the dynamics of the telecommunications system. VSAT was chosen as a solution.

VSAT Applications in Brazil

The VSAT technology enjoys widespread application in Brazil especially within business sectors. Two cases among the many successful stories on the use of VSAT solution are presented here.

Banco do Brazil: In the 1990s, with a growing regional economy bringing greater competition, top executives at Branco do Brazil realized that a new communication network was needed. The decision was made to invest in VSATs as the best IT solution available. Within two years, some 2,000 Banco do Brasil branches were connected to the corporate WAN, many for the first time. The VSAT communication link provided each location with fast and reliable data. Savings related to network charges and internal management costs added up to millions of dollars per month. The Bank was able to serve nearly three times the number of customers with 40% fewer employees, enhancing profitability.

The implementation of the VSAT network helped to automate data gathering, giving Banco do Brasil the opportunity to redeploy employees to other tasks. The Bank also had the idea to use the VSAT network for distance learning programs to reduce costs and allow for more timely training of employees at all branches. As a result of moving to satellite interconnection, Banco do Brasil is now a multi-national banking powerhouse with more than 13 million customers served by nearly 7,600 branches throughout Brazil and other countries in South and Central America, as well as in the U.S., Europe and Asia.[52]

GM do Brasil: GMB is an auto manufacturer selling vehicles in Brazil via a network of 460 dealerships spread throughout an area almost as large as the U.S., with many storefronts in remote areas surrounded by challenging terrain. Good communication is critical for the success of this business especially in very competitive environments. GMB adopted a satellite telecommunications solution from Hughes Network Systems that it named GM Connect. The in-house VSAT network provided instant and cost-effective connectivity anywhere within the country, simply by installing a small terminal on site. GM Connect has helped the company to modernize, implementing a number of programs and applications that would have been impossible without a broadband network and high speed Internet/intranet access.[53]

StarBand Latin America: Star One, Universo Online (UOL) and Gilat Satellite Networks Ltd.'s StarBand of Latin America have entered into an agreement to provide Brazil's first consumer, two-way broadband Internet service. Under the agreement, StarBand will serve as a wholesale provider of VSAT satellite communications equipment and operations support for the service. In addition to the hub and advanced technical services, the company will provide 3,700 VSAT terminals to Star One for the market launch.[54] Broadband Internet access will also be offered to residential and small/home office (SOHO) users across Brazil. Consumers are expected to be able to connect to the Internet at browsing speeds up to 10 times higher than normal modem speeds available.[55]

Internet-Brazil: Brazil's 6.1 million Internet users represent 40% of the total for Latin American. Up to 27.4 million users were estimated by the end of 2003. The following diagrams show the trend in Internet use in Brazil.

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Source: Brazil Internet Research, 2001.

It is worth noting that despite a difficult domestic and global economy, the sales of VSAT systems and services in Brazil remained relatively buoyant throughout 2003.[56] This can be attributed to the characteristics of the VSAT technology that enables it to meet the basic infrastructure needs of business in this large country, but the technology itself could only be made available under a favorable regulatory climate in Brazil.

VSAT Regulation in Brazil

Governments traditionally require that each individual VSAT terminal be licensed in addition to the requirement that the network operator have a license. Prior to 1998, when the Brazilian government began telecommunications deregulation, telecom equipment provider VICOM, formally known as Victori Communications, was unable to provide communications services direct to Brazilian organizations due to government regulations. VIACOM sold equipment and provided satellite installation, systems integration, and technical support services to customers installing company-run dedicated networks.

In 1998, VICOM received a license to offer satellite communication services directly to the customer. The company was allowed to enter the market place as a shared-hub services provider. VICOM's was convinced that entering the satellite services market would make VSATs attractive to a wider pool of potential customers. The relaxing of regulation allowed VICOM to attract customers from all segments of the Brazilian economy. VICOM found that a wide range of industries from retail to agribusiness to utility companies were interested in adding a VSAT component to their corporate WANs. Deregulation of the Brazilian telecommunications market has a history that goes back some years. PanAmSat was able to secure approval to operate its PAS satellite in Brazil from ANATEL, the government agency that regulates Brazilian telecommunications services, at a time when most countries were committed by international treaty to use INTELSAT as their exclusive satellite services provider.

Regulatory clearance to provide commercial service on the PAS-9 Ku-band payload in 2003 was a big opportunity for the delivery of video, data and Internet services across the country. PAS-9 will offer Brazil broadband VSAT applications to serve its growing telecommunications market.[57] The regulatory changes have prompted additional investments in the communications sector. Brazil's Communications Ministry awarded a $23 million contract to Gilat Satellite Networks Ltd. to provide two-way satellite Internet service to 3,200 sites nationwide. The satellite communications network will help to bridge the country's wide digital divide.[58]

Regulatory criteria affecting VSAT communications are largely based on the ITU Radio and Mercosol Resolutions, adopted by ANATEL in February 1999. Following these guidelines, reception-only terminals do not need a license. But to initiate and deliver services for in-country reception an authorization is required by ANATEL. The satellite used must also be authorized to operate in Brasil. For temporary use, for a maximum period of 45 days, the request to ANATEL must be made 15 days in advance addressed to the Radiofrequency and Fiscalization Superintendence with information about location, frequencies, power, gain and so on. Earth stations must be under the jurisdiction of an Authorized Service Provider. The license term is 15 years, renewable once.[59]

Immediately following the granting of a Multimedia Communications Service license by ANATEL, Hughes Network Systems, the world's leading provider of broadband satellite solutions, launched its DirectWay broadband satellite services in Brazil. Through a newly formed subsidiary, Hughes Telecom Americas, located in Sao Paulo, DirectWay services are being marketed to both large and small enterprises, including finance, utilities, retail outlets, automotive, agribusiness, mining, government agencies, schools, Internet/Application Service Providers, kiosks, gas stations and convenience stores.[60]

Hughes Telecom Americas can offer these enterprises high-speed connectivity regardless of location. The VSAT solution allows them to deploy such applications as Internet/intranet access, interactive training and distance learning, e-commerce services, Voice over IP (VoIP), corporate video and audio broadcasting, IP multicasting and video advertising/point-of-sale television.[61]

Telespazio Brasil, a leading provider of network communications services in Latin America, has selected PanAmSat's PAS-1R Atlantic Ocean Region satellite to support a variety of applications throughout the region. For example, financial institutions will rely on its VSAT network for long-distance transactions and inventory control.[62]

Ghana | China | India | Brazil | Israel | Lessons for Africa

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