Mobile Telephone Expansion in Brazil

The cellular system has grown exponentially since this technology was introduced in Brazil 25 years ago. In this article we will show you how the mobile phone system has grown through the years in Brazil.

The First Cellular Phone System in Brazil

Mobile telephones effectively started in Brazil in 1990, when Telerj, or Telecomunicações do Estado do Rio de Janeiro, deployed in the city of Rio de Janeiro 30 radio base stations with the capacity of 10 thousand access terminals. The A-band was implemented based on the AMPS, a North-American cellular standard, representing the first generation, 1G, of mobile telephones. Brasília, which deployed a previous-generation cellular system in the previous decade, deployed A-band connections later in 1990. The city of São Paulo, considered to be the most important financial center in the country, was one of the last to deploy the system, operated by Telesp Celular, in mid-1993, covering an area of 640 municipalities.

The maintenance and operation of the A-band system was very expensive, which demanded each user pay USD 22 thousand for the activation of the services, not including the rates charged for calls. The shortage of available access led to the implementation of the B-band over the next few years. The B-band was already conceded to private companies when it was deployed in the country in 1997, even before the dissolution of national monopole Telebras the following year, using a digital technology with the CDMA and TDMA standards.

Privatization of Mobile Operators

In 1998 a regulatory measure was released which stated among other things the privatization of the Brazilian telecommunication system, representing a turning point for the telecommunication market, since it led to its quick expansion and ended the government’s monopole over telephone companies. The mobile telecommunication providers which were part of the Telebras holding were auctioned and mostly sold to private foreign companies, such as Telecom Itália, Global Telecom, BellSouth and Bell Canada Int. The government had revenue of close to BRL 30.5 billion with the privatization of the Telebras system, not including the sale of concessions for the B-band.

The plans for dissolving the telecommunication monopole in Brazil started being discussed by the country’s authorities in 1995, in order to allow for private companies to operate in the country. In the same period, Anatel, the National Telecommunication Agency, was also created to regulate the market and guarantee competition among service providers. Privatizing the system brought lower fees and more options for services, but the popularization of mobile phones in the country would only come a few years later.

The recently privatized telecommunication service providers continued operating in a monopoly until 2002, since only in the following year did the telecommunication market open for competition for the serviced areas. In 2001, Anatel released new regulations for the exploitation of the cellular telephone system in Brazil, with more simplified rules for operating in the market, and auctioned two more operational bandwidth spectrums.

The new players in the mobile telephone market and owners for the new operational B-band, which were a result of an auction of a total of 10 coverage areas for the amount of BRL 7.613 billion, were:

• BCP, controlled by Grupo Safra, BellSouth, OESP Splice and BSB Participações
• Tess, controlled by Telecom Américas, Tel Investimentos and Eriline
• ATL, controlled by AI, Telecom Américas/SBCI and América Móvil
• Maxitel, a property of Telecom Itália
• Global Telecom, controlled by Daini do Brasil SA, Global Telecom and Inepar S.A.
• Telet, former CRT Celular, which was not part of Sistema Telebras, is now a property of BCI - Bell Canada Int.
• Americel, controlled by BCI - Bell Canada Int.
• Norte Brasil Telecom, owned by TCO and Inepar SA
• BSE, a property of Grupo Safra, BellSouth, Ljesp and Splice

The Expansion of Mobile Telephones in Brazil

The globalization process accelerated the evolution of telecommunication technologies throughout the years, providing more quality, connection speeds and stability for users. Currently there are 8 groups of mobile service providers in Brazil, of which four combined hold more than 90% of the market share.

The mobile telephone market in Brazil continues to grow exponentially even with the burden of high taxes charged for services, for example in 2012 telecommunication service providers paid BRL 61 billion in taxes. However the rates charged per minute registered a reduction of 57% across seven years, resulting in the increase of the client base. The average consumption times were calculated at around 120 minutes per user in the first trimester of 2015, and the average price per minute is close to BRL 0.16. Mobile phones are already replacing landlines in the country mostly due to affordable prices and better usability. According to research by IBGE, half of Brazilian households use cellphones as their main means of communication.

Brazil already stands as the fourth country with most active cellphones in the world, and the activation overpasses the number of inhabitants. Around 283 million accesses are accounted for in the country, corresponding to 1.37 lines per citizen. Prepaid plan users are the majority in the market, representing 75.5% of the accesses, but these numbers are slowly decreasing. Operators are investing to activate even more cities across the country, especially those where the landline infrastructure is not available, expanding the coverage of mobile services to remote areas.

The providers, which resulted from the privatization of the telecommunication system, went through profound changes in the following years of its creation, mostly merging with other companies to create a smaller number of stronger competitors. In the table below, the main mobile providers are listed with their respective market share according to data from Anatel in the first semester of 2015.

Mobile Broadband Access

The growth of broadband connections helped the digital inclusion of a large share of the population, becoming even more popular with the introduction of mobile broadband, which currently represents 78% of internet accesses, being the largest density of broadband access in Latin America. Anatel registered 6.76 million accesses of 4G networks in Brazil in 2014, 416.55% more than the previous year. The usage of 2G technologies, currently with almost 9 thousand accesses, is decreasing with the advance of technologies available.

3G technology only started being deployed in the country in 2008, using the WCDMA and HSPA standards. But until the first deployments of the 4G LTE technology later in 2012, 3G was not yet fully consolidated in the market, considering that this technology did not cover most of the cities in the country. Both generations of technologies are still growing in the mobile market in Brazil with more accessible prices along with the popularization of smartphones and tablets, resulting in the demand for faster connections. Nowadays, 93.8% of the population are served by 3G coverage, and only 44% by 4G technologies. The 4G implementation was given extra attention by the government and regulatory agencies in order activate the cities that would host the 2014 FIFA World Cup Brazil™.

The PNBL, the Programa Nacional de Banda Larga, created with the purpose to bring broadband connections and to universalize access of the internet to most parts of the country, was also supposed to cover regions where mobile networks had not yet reached. Even though the program had plans for taking internet connection to several households in the country, most of them are still not serviced by mobile broadband, which represents only 0.8% of the accesses.