5 Unique Challenges for IoT Appliances in Brazil

The opportunities with the Internet of Things are well known and most of the applications are ubiquitous around the world. In this article we will take a look at the unique challenges that the implementation of new IoT applications are facing in Brazil.

1. Established Systems and Professions

It is well known that labour unions are strong in Brazil but so are the loyalty to established systems. IoT applications that are aiming to increase productivity and replace existing professions will be facing an uphill battle.

The idea of smart elevators have been iterated upon for decades and suppliers like ThyssenKrupp have for a long time been working with Microsoft and other technology companies to make elevators smarter. In Brazil, smart elevators have for years been challenged by “Elevator Operators”, a profession that was created during the era of the manually operated elevator.

Similar problems also apply to other environments like access control systems and other applications that are intended to replace the private security workforce. One example is the bus system in Brazil’s largest city, São Paulo. The ticket system has been digitalised for years and the digital system is used by a large majority of the commuters, however all local buses in the city still have a dedicated fee collector assistant in addition to the driver.

2. Laws, Regulations and Interoperability

All equipment that includes any type of radio transmission needs to be homologated by the Brazilian Telecommunication agency known as Anatel. Unlike most other countries, the Brazilian Telecommunication agency requires all tests be performed in Brazil by authorised laboratories.

If your equipment requires an external antenna of any type you will be facing a completely new set of regulatory challenges. There are currently 296 different state and municipality laws that regulate the installation and operation of antennas for commercial use.

Brazil is a country with a variety of standards that do not provide interoperability with each other. The best example is the electricity system where some parts of the country use 110 Volts while most of the country uses 220 Volts.

Laws that apply to one municipality might be completely different in the neighbouring municipality and bringing goods across state borders in Brazil is as complex as bringing goods across country borders in Europe.

3. Additional Cost of Operation

Infrastructure theft is common in Brazil to the point that “illegal telcos” are operating entirely on unauthorised infrastructure access. Anatel closes down several dozen illegal telco operations annually. In addition to this, you have hundreds of thousands of individuals and companies that deploy unauthorised infrastructure access for their own use.

Backup batteries and cables are frequently stolen from telco’s peripheral equipment and as new smart applications are being implemented it is expected that thieves will find new and higher value targets.

In addition to theft and unauthorised access, IoT equipment that connects to the telco infrastructure are subject to regulatory taxes upon each connection. This makes large scale IoT deployments with a high number of connections costly. Even for government projects like the Smart Streetlight in the city of São Paulo, the tax burden in combination with telcos costs is a concern which eventually might cause them to select a different technology of communication.

4. Design for Low Trust Environments

By default all IoT applications that are deployed in Brazil should be designed and developed for operation in low trust environments, this is especially the case for applications intended for professional usage.

If your IoTs appliance have exposed risks you must expect that these will be exploited.

Some of the basic design weaknesses that are well known to be exploited in Brazil include:

• Smart appliances with SIM cards will need to find ways to prevent that the SIM card is not stolen or replaced to obtain free data access
• Payment terminals need to make sure that fraudulent visitors cannot swap machines in a store making all transactions paid out to their bank account

Different applications have different risk profiles and all types of connected devices will need a thorough check for how they can be either tampered with or be subject for unauthorised usage.

Many of the applications that in Europe and North America are design for trusted environments need to be completely redesigned.

5. Taxes

It is easy to sound like a broken record when talking about challenges in Brazil and to bring up taxes. Although taxes do not oppose a direct challenge in terms of the deployment of IoT appliances in Brazil, it creates a major viability challenge.

Replacing a light-switch that cost USD 10 to produce with one that cost USD 20 to produce can result in a product which is 10 times more expensive in Brazil. “dumb light-switches” are considered a construction material and benefit from a very low tax burden, but “smart light-switches” are considered to be computers, and are subject to a completely different tax burden.

The tax burden will, of course, depend on the state where you are planning to sell the product.