Written by Mike Hibberd, Editorial Director, Telecoms.com
Just over ten years ago I went backpacking in Brazil for a month with some friends. We arrived in Rio de Janeiro, one of the world’s great party towns, at nightfall and found, to our dismay, that we couldn’t get a caipirinha for love nor money. It turned out that we’d landed on the day of the presidential elections and there was a blanket ban on sales of alcohol because the authorities were concerned that violence might erupt if politics mixed with booze.
Eventually we managed to persuade a man running one of the street food outlets on the Copacabana beach to sell us a beer. He told us that the winner of the election would be a man known as Lula. Lula, leader of PT, the worker’s party, went on to become perhaps the most popular president in the history of Brazil, introducing sweeping social reforms designed to lift millions of Brazilians out of poverty.
Ten years on, 40 million of the country’s people have been brought above the poverty line into a new middle class thanks to the creation of a welfare programme, the taxable population has been increased, and there is rising demand for a wide range of consumer products and services.
Brazil will host the FIFA World Cup and the Olympic Games in the next four years and many of the people you speak to in the cities today project a sense of great optimism about the country’s upward trajectory. Of course the corporate extravagance of Sao Paulo, now surely one of the most expensive and traffic-congested cities in the world, and the carefree glitz of the Copacabana are only part of the story.
Socio-economic diversity in Brazil is on the scale of the country itself and it is in the poorer communities that you can perhaps see the changes most visibly. Communications services are central to these changes and, from the Favelas of Rio to the remote communities of the Amazon River, access to the internet, and to one another, is changing people’s lives. It is a reminder that the Connected World is about more than machine-to-machine communications.
The current president of Brazil, Dilma Roussef, is alive to the importance of these services, something that Communications Minister Paulo Bernardo said she stressed to him when he was appointed in 2010. Bernardo was speaking at Ericsson’s Business Innovation Forum, which took place in Sao Paulo in November.
“One of the missions of the [communications] ministry was that we had to make an effort to give widespread access to ICT,” Bernardo said. “The new middle class had buying power now and was willing to buy services and devices like tablets and smartphones. We are working with these goals,” he said.
A 2010 census revealed household internet penetration of 27 per cent, Bernardo said. That figure rose to 38 per cent as 6.3 million homes came online in 2011 and the government is aiming to have broken the 50 per cent barrier by the end of 2012. The number of 3G devices—smartphones, tablets and wireless modems—grew by 99 per cent in 2012 and the expectation is that growth will be in the region of 70 per cent this year, he said.
Meanwhile there are ambitious plans in place for the digitisation of domestic power meters which will be internet connected and enabled as access points for the homes at which they are sited. The energy ministry is currently working to install 70 million such meters.
Bernardo said that the government has pledged to connect more than 80,000 schools that are currently without internet access by 2015, alongside a programme that will supply tablet computers to teachers. “The internet is a means,” he said. “Access to these technologies will improve our performance in education and health, and it will connect rural areas where there are large agricultural businesses, small fishing communities and Indian tribes.”
The private sector, inevitably, has an important role to play, as Bernardo was at pains to stress. But the government is keen to ensure that at least some of the benefits that private sector companies derive from investing in the country remain in Brazil.
Bernardo explained that the government will continue to require that a significant portion of telecoms network equipment is manufactured locally as it seeks to harness the sector’s growth to create jobs and local wealth.
He said that, in Brazil, the state is responsible for over 50 per cent of investment in innovation and was committed to creating the right environment for continued private sector participation. In return, he said, the government expects technology developed locally to be available at a low enough cost to make connectivity across some of the most challenging geography in the world truly viable.
“The treasury has been removing taxes from equipment and civil construction works because two reach our objectives, and our national broadband plan next year, we need infrastructure available at fair prices,” he said. “We have policies that will demand products made in Brazil because it helps create jobs and trade. In my opinion this is a policy that is here to stay; it is reasonable for companies to invest to develop here in Brazil.”
He added that Brazil is “betting on LTE from the beginning”, as the performance of WCDMA networks reaches its limits. Sergio Quiroga da Cunha, Ericsson’s head of Latin America, said that the Brazilian government had originally suggested that all LTE technology deployed in the country be locally produced. But while the vendor does manufacture equipment and conduct R&D locally, and is the only large network vendor to do so in its own factories, he said, many components have to be imported. Instead the firm gets tax breaks for guaranteeing that its products contain up to ten per cent of locally produced hardware.
But investment alone cannot guarantee that Brazil’s targets will be hit. Quiroga da Cunha said that a fund for the universalisation of telecoms in Brazil, created by collecting 0.4 per cent of operator revenues since 1998 currently sits at almost $5bn but is not being tapped because “nobody is sure how to use it”.
One thing is clear, he said: greater density of mobile networks is essential in Brazil. Currently there are only 60,000 cell sites in the country and, while much of Brazil is sparsely populated or uninhabited, this number needs to have more or less doubled before the kind of coverage and capacity that the market requires is available.
One problem is that the aims of the communications ministry are not always in tune with other government departments, he said. “Site acquisition is a nightmare. 99 per cent of the time you can be guaranteed a refusal for planning applications for a new cell site.” It was a point echoed by Minister Bernardo, who said he was constantly battling with regional and municipal governments whose planning legislation made it impossible to expand and densify the network. “We have many cities where they say we cannot have antennas near schools. But how can I connect a school if not with an antenna nearby? We need to change this, the law has to help us.”
Up in the Amazon this is much less of a problem. Here the challenge lies in convincing Brazil’s mobile operators that there is value in connecting the remote region’s inhabitants to the mobile network. Such was the operators’ resistance to the idea that it was Ericsson that undertook the region’s first deployment. In 2009 the Swedish vendor installed a base station site in the small town of Belterra, bringing 3G connectivity to the Amazon for the first time.
The site was attached to the Vivo network, owned by Spain’s Telefónica, but Vivo did not contribute to the cost, which was in the region of $300,000. It began to generate traffic immediately, according to Carla Belitardo, head of sustainability in Latin America for Ericsson, at a rate that led the firm to forecast that RoI, had it been paid for, would have been delivered inside six months. A significant number of Belterra residents already had mobile devices, which they would use when travelling to Santarém, a far larger city 50km to the north. When connectivity reached their town, they were ready to take advantage immediately. “We demonstrated that there was hidden demand,” said Belitardo. “One year after the site was deployed, 43 per cent of students in the town were using it to access the internet. This was about finding ways for [companies in] the private sector to invest in areas that they would never think about.”
The same power source also enabled charging points for laptops and mobile devices, although regulations prevent Vivo from charging for this energy. In other markets, however, telecoms operators can also provide energy services and off-grid base stations can present more than just a communications opportunity to the companies investing in the installations, Belitardo said.
Technology and innovation can solve problems like remote installation, although Belitardo conceded that there have been a number of instances of downtime when there has been insufficient sunlight to power the base station. The impact of the internet on such an isolated community—with all the positive and negative experiences it can bring—is a far more subtle and complex issue to address.
Eugenio Scannavino, who heads up a Brazilian NGO, Projet Sáudi e Alegria, that partners with Vivo and Ericsson on a number of projects in Brazil, said that some time after the Suruacá site went live and the village got its first glimpse of the internet, he found the village’s female elders huddled in a group. When he asked them what they were doing they told him they were holding a discussion about the problems of the world—the wars, famines and social issues that they had discovered online—and what might be done to solve them. For those of us who have grown up with ready access to information from around the world it is impossible to imagine what it must be like to go from almost complete information isolation to a window on the world with the switch of a button. For this reason, said Scannavino, it was very important that internet access arrived in Suruacá before television.
Television would have offered the community visibility of the outside world with no opportunity to participate. It is very important, Scannavino said, that the people of these communities are empowered to share their own views as well as absorbing those of the outside world.
“Connectivity gives [the villagers] visibility,” he said. “They can understand what’s happening outside but they also have a voice to be able to let other people know that they exist. They can become citizens and get respect from the rest of the world. Our biggest aim is to empower them to become citizens. “
He continued: “With the internet they discover that they have just as much culture to offer other people as other people have to offer them. They can connect with people globally but they don’t lose their identity. Now they are proud of themselves and their culture and they can communicate that to other people.”
An impulse to travel outside of the community is bound to result from a sudden awareness of the wider world, but Scannavino said this is not something that the NGO necessarily wants to encourage. Wherever there are communities living in the rainforest, he said, the ecosystem is more likely to remain healthy. “They are the guardians of the forest,” he said. Instead one of the aims is to foster a manageable level of eco-tourism that will generate further economic benefits to the locals. It is unsurprising that a group of international journalists visiting the community of Suruacá should, en masse, produce smartphones and begin filming the welcome ceremony laid on by the locals. But the fact that the villagers were filming us arriving on their own handsets was truly unexpected. That footage is now on their blogs and social network profiles; the visitors to their community a part of their story as well as the other way around.