Expansion of Telecommunications in Brazil

Over the last few years, many telecommunications sectors have expanded rapidly in Brazil. The sale of smartphones and acquisitions of mobile data plans, for example, grow year on year, to the point that the country now holds over 280 million mobile access points, compared to the country’s population of 200 million.

Not only does the sheer number of connected devices continue to grow but the overall quality of telecommunication services is increasing and prices are dropping. Recent research shows that mobile phone calls and data plans in Brazil are some of the most affordable in the world, while mobile service coverage is improving.

These current statistics display the results of a number of measures implemented by the country’s government aimed to facilitate the population’s access to connections and devices while ensuring operators serve wide-reaching, quality services across Brazilian territory.

Tax Incentives

The highly burdening bureaucracy and taxation instituted by the Brazilian government are well known across the world, and end up generating impediments for the population to have access to products that are vital to the development of the country itself, which is the case of telecommunication devices.

In an effort to incentivize the consumption of these products, a number of tax incentives were introduced over the last few years that made the retail prices of connected devices drop by up to 25%.

Perhaps one of the main reasons for the sales surge of smartphone in Brazil was the Lei do Bem, a law that was initially conceived to promote the development and access to technology in the country by reducing taxation on certain categories of electronics manufactured in Brazil.

From 2013 onwards, smartphone consumers were presented with products much more aligned with their purchasing power and started to acquire mobile devices on a massive scale.

According to data from market intelligence provider IDG, the third quarter of 2014 saw the sales of smartphones in Brazil increase by 49% compared to the same period of 2013, with over 15.1 million of these devices sold in the country.

Along with the surge in sales of mobile devices, the number of subscriptions to data plans also grew considerably during 2014. 3G mobile accesses jumped from 97 million to 140 million in this 12-month period, while 4G mobile accesses increased from 1.5 million to 5.7 million, which represents a growth rate of over 400%.

Granted, the offering of LTE connections in Brazilian territory is still limited to highly populated areas, while 3G signals can also be hard to find in mainland regions of the country. This is an issue government organizations are also intending to address through the reduction in taxation and regulatory requirements, in this case the ones directed to operators.

An example of these initiatives is the Special Taxation Regime for National Broadband Plan, or REPNBL, a special taxation regulation that presents exemptions for mobile operators that carry out infrastructure expansion in Brazil.

Regulation on Telecommunications in Brazil

The rigid regulation for the Brazilian telecommunications sector may also be one of the most important factors to be accounted for in the recent expansion of these services in the country. The Brazilian Telecommunications Agency, or Anatel, which was created after the privatization of the sector at the end of the 1990’s, provides the country’s state with considerable headroom to direct the offering of telecommunication services.

A notable example of the benefits from the government’s intervention over telecom services were the auctions for the LTE bandwidths in the 700 Mhz spectrum which took place in 2014. That year, Anatel provided Brazilian carriers Claro, Tim and Vivo the rights to explore these profitable radio bandwidths on a national scale, but also required each of them to establish an infrastructure and assure connectivity in the rural, less populated regions of the country.

The question of telecom service coverage in Brazil, considering the extent of country’s territory and the severe economic and population disparities between regions, arguably justifies the intervention of the government to institute a more fair distribution to the entirety of the population.

Data from the Brazilian Internet Steering Committee shows that only 21% of the Brazilian population in rural areas have access to the internet, a challenge that needs to be tackled by the government’s initiatives in conjunction with the private sector in order to reach the entirety of the country’s population with quality telecommunication services.

Innovation Norway is responsible for promoting the Norwegian industry abroad. Our office in Rio de Janeiro manages Innovation House Rio, our business incubator office, and helps Norwegian companies in their efforts towards the Brazilian market.

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Posted in ICT

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