By Filipe Pacheco

BRAZIL’S IT SERVICES BUSINESS HAS BEEN GROWING at a remarkably fast pace. But does the country have enough of the basic infrastructure — like affordable broadband connections and widespread wireless access — needed to sustain that growth?

Even though mobile broadband is appearing very rapidly in many parts of the country, the service is extremely expensive in comparison to that of neighboring countries, and some deep structural changes will have to be done for the country not to be left behind when it comes to Internet speed and availability.

According to a study recently published by Teleco (the biggest telecommunications consulting firm in the country) in partnership with the Chinese company Huawei, Brazil has:

• 14.5 million points of fixed broadband connection

• 24.4 million phone devices for mobile broadband — of which 22.9 million are 3G

• 6.3 million mobile modems used with portable devices like laptops or netbooks

Mobile broadband in Brazil showed growth of 138% in 2010, and the country expects to finish 2011 with 32 million mobile points of Internet access and 17 million of fixed broadband, the study said.

The biggest growth in mobile broadband reflects the strong recent sales of smartphones — one in every four phone devices bought in the country today falls into this category and offers access to the Internet, social platforms, and e-mail.

Four mobile phone service operators dominate mobile telephony services in Brazil: Oi, owned by Portugal Telecom; TIM, an Italian giant communications company; Vivo, owned by the Spanish group Telefónica; and Claro, one of the companies under the business umbrella of Mexican tycoon Carlos Slim. Claro is the one with the biggest number of 3G users, followed by Vivo, Tim, and Oi. In Brazil, the main mobile broadband technology used is WCDMA/HSPA.

In comparison to world averages, the country is not too far behind. The density for fixed broadband in Brazil is 7.1 for every 100 inhabitants, while the world average is 8.0 per 100. When it comes to mobile broadband, Brazil has a density of 10.6 inhabitants using it for every 100 people, while the global average is 13.6.

Even though more Brazilians are using mobile broadband, the portion of Brazilian territory from where someone with a cellphone with 3G can actually connect to the Internet is still limited. While fixed broadband covers nearly 94% of Brazilian “municípios” (or counties), only 26% of them have mobile broadband coverage. For 2016, the expectation is that 68% of the municípios will be covered and able to access the technology. That would certainly be convenient for the Olympics.

The cost of a smart phone here reflects the high costs of electronics as a whole in Brazil. As an example, a Nokia N97 (prepaid unblocked model) costs about R$2,281 (US$1,464) in Brazil, while the same device costs R$602 (US$386) in Colombia, R$835 (US$536) in Uruguay, R$1,016 (US$652) in Argentina, and R$1,404 (US$901) in Chile.

Many Phones, Not Very Many Connections

It might be quite impressive that there are more cellphones in Brazil today than inhabitants — 210 million devices, or 1.1 device for every Brazilian, according to numbers from Anatel and IBGE, the national statistics institute.

There’s one thing to keep in mind when looking at numbers about broadband use in Brazil, and that is a characteristic that’s very typical of the Brazilian mobile phone user, says Eduardo Tude, president of Teleco: Almost 80% of them use prepaid telephone cards, on which users deposit the amount they want whenever necessary. In Brazil, unlike in the United States and Europe, it is not necessary to have phone credits in order to receive calls. But accessing broadband with those prepaid services is very expensive. “So, even though people could have access to broadband on their phones, they don`t use it because they don`t pay for it,” says Tude.

Broadband services in Brazil are still expensive in comparison to those in neighbor countries, like Chile and Argentina, due to the high tributary taxes, Tude says. From all the liquid income of the telecommunications companies, 41.8% of it is destined to pay taxes. Another factor that makes a difference on the final costs is the appreciation of the Brazilian currency, higher than those of neighbor countries.

But there is also an infrastructure issue. For Tude, prices could be lowered by more investments in higher-capacity networks and also with the implementation of backhaul fibers throughout the country.

National Broadband Plan

The national government of Dilma Rousseff has set the goal of greatly increasing the use of broadband by 2014, the year when the country will host the World Soccer Cup. Started by the government of Luiz Inácio Lula da Silva and called Plano Nacional de Banda Larga (PNBL), the objective is to expand access to broadband throughout Brazil, “contributing to the technological and industrial development of the country, in particular with IT and Communications sectors,” says the official webpage of the project (hosted in the portal of the Ministry of Communications).

The minister of Communications, Paulo Bernardo, said recently that by early this month a few cities will start to have broadband Internet at a price of R$35 per month for 1Mbps. In at least seven states there will be an exemption from ICMS, a tax over services provided, and then the cost can get as low as R$29.90 per month, he said.

The states first chosen to benefit, according to Telebrás (the state company responsible for coordinating the PNBL) will be the Federal District (Distrito Federal) and Goiás, both in the inland portion of the country and close to the capital, Brasília.