M2M Incentives in Brazil

The broadening of M2M applications has led the government to create fiscal incentives for further development of technologies in Brazil. In this article we will learn what these incentives are and the segments that will benefit the most from these reductions.

The M2M segment is back in the spotlight with IoT being the buzzword, and according to Anatel, the National Telecommunication Agency, there are approximately 20 million active connections of this type in Brazil. This may not sound like an impressive number but estimates from Frost&Sullivan shows that the M2M market in Brazil is not a passing fad, and will grow at a rate of 13.5% until 2021.

Fiscal incentives for M2M connections

In 2014, the Brazilian government announced two important reductions in telecommunication fees specific for M2M connections with no human intervention, which are called M2M Especial. The decision was initially intended to incentivise and accelerate developments on the smart grid networks and tracking of vehicles. The latter one, was a project from the government to require carmakers to install tracking devices on all new cars produced in Brazil, an idea which is being postponed repeatedly, even though it was largely publicised at that time.

The fees for M2M Especial are as follows:

• TFI, short for Taxa de Fiscalização de Instalação, which is charged per activated chip, was reduced from BRL 26.83 to BRL 5.68
• TFF, short for Taxa de Fiscalização de Funcionamento, which is charged annually per active chip, was reduced from BRL 13.40 to BRL 1.89

Both the TFI and the TFF fees are paid by the operators to Anatel, so owners of the IOT device do not pay these fees directly to Anatel.

Even though the incentives are only valid for applications where there is absolutely no human interaction, which excludes mobile POS machines, the reduction has later proven to be a vital measure to pave the way for the IoT developments that are happening in the country now. The Ministry of Science, Technology, Innovation and Communication is currently working on directives for national IoT plan, to incentivise internet of things projects.

While it is still unclear what industries this plan will benefit, similar plans like the PNBL, which was intended to expand access to broadband to even the most remote areas of Brazil, obtained success in meeting the targets, and it is expected that the entire chain of M2M providers will leverage from the plan.

The reduction of the telecommunication fees led to increased competition among the carriers too. Most mobile operators improved their M2M offers and new MVNO players, like Vodafone, entered the Brazilian market to focus on this specific segment. In absolute numbers, M2M connections represent the main growth area for Vivo, the largest carrier in Brazil, which had a 18.2% growth in 2016 compared to the previous year.

Growth areas for M2M in Brazil

Most Brazilians associate M2M connections with POS terminals and to car tracking devices used in fleet management. While there is a large number of devices of this type and still potential yet to be uncovered within these segments, Brazil still has a lot more exciting prospects for solution providers interested in tapping into this market:

• Smart Metering: There is already a notable presence of M2M connections in smart grid, with pilot projects being run by the largest electricity providers, like AES Eletropaulo, but there is still a lot of potential for solution providers within other utilities technology providers such as water and to some extent gas metering in larger cities
• Fintech: Fintech is perhaps where you find the highest number of active M2M connections in Brazil through POS terminals, but apart from these terminals, the market is still underdeveloped. Solutions to increase safety on transactions, use of wearables as payment options, and solutions to improve customer relations and experience are not yet widely available in the country. Brazilians are relatively comfortable using technology in relation to their finances and the openness level to test innovation is high
• Agriculture: In order to keep competitive prices, farmers are beginning to employ precision farming technologies in order to maximise the yield. Agribusiness represents 23% of the country’s GDP in 2016, and there are a number of technology companies, especially in the startup community offering solutions to attend to this sector
• Industrial applications: This is a segment that is still very shy in Brazil, but has a lot of potential especially in the automotive, food and chemical industry. We have discussed the application for M2M connection in this article “Industrial Internet of Things in Brazil”
• Health: Considering the prospect that M2M solutions can reduce costs for both the government and private health insurance companies, technical innovations in this area are considered to be rather welcome. Solutions of this kind are already being used to monitor patients in Brazil remotely. FIT Institute in Sorocaba, for instance, has already created a prototype of a real time heart monitor that is connected to a central to track the patient in real-time and provide preventative, or a quick response in case of an emergency