Identifier
Created
Classification
Origin
09BRASILIA615
2009-05-15 17:34:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Brasilia
Cable title:  

Brazil's Broad Band Initiatives

Tags:  ECON ECPS EINT TINT BR 
pdf how-to read a cable
VZCZCXRO5767
RR RUEHRG
DE RUEHBR #0615/01 1351734
ZNR UUUUU ZZH
R 151734Z MAY 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 4302
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAFCC/FCC WASHDC
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 7731
RUEHSO/AMCONSUL SAO PAULO 4042
RUEHRG/AMCONSUL RECIFE 9534
UNCLAS SECTION 01 OF 03 BRASILIA 000615 

SIPDIS
SENSITIVE

STATE FOR EEB/CIP/BA TFINTON
STATE PASS USTDA FOR GMANDEL
FCC FOR RTANNER
DOC/ITA/OTEC FOR ABENNETT

E.O. 12958: N/A
TAGS: ECON ECPS EINT TINT BR
SUBJECT: Brazil's Broad Band Initiatives

SENSITIVE BUT UNCLASSIFIED

REF: 08 BRASILIA 1332

UNCLAS SECTION 01 OF 03 BRASILIA 000615

SIPDIS
SENSITIVE

STATE FOR EEB/CIP/BA TFINTON
STATE PASS USTDA FOR GMANDEL
FCC FOR RTANNER
DOC/ITA/OTEC FOR ABENNETT

E.O. 12958: N/A
TAGS: ECON ECPS EINT TINT BR
SUBJECT: Brazil's Broad Band Initiatives

SENSITIVE BUT UNCLASSIFIED

REF: 08 BRASILIA 1332


1. (SBU) Summary: Internet broadband use in Brazil has soared
dramatically over the past year, reflecting an increased interest in
navigating sites that require greater connectivity speed such as
socialization sites (facebook, myspace etc.),entertainment sites
for streaming videos and music, business application websites,
surveillance functions, and voice over internet protocol(VOIP) use.
Brazil's Ministry of Communications (MOC) estimates that broadband
use in Brazil for February 2009 increased by almost 25% over
February 2008 to over 21 million users, presenting the MOC with
unique challenges in dealing with what is expected to be even
greater growth rates in the future. Officials from the Ministry of
Development, Industry, and Commerce (MDIC),MOC, and Brazil's
telecommunications regulator (ANATEL) discussed various
public/private partnership approaches with Mission, aimed at
addressing this demand. Options range from an expansion of current
fiber optic networks and enhanced mobile technology, to powerline
communications systems (PLC) that transmit internet broadband
service and digital cable TV through existing electric powerline
infrastructure. Broadband over powerline technology (BPL) may
represent the most promising option in addressing future demand and
fulfilling MOC's goal of universal access to the internet. End
Summary.


BRAZIL'S BROAD BAND USE GROWING
--------------


2. (SBU) Henrique Badaro, MOC's director of international affairs
told Econoff that almost 64 million Brazilians have internet access,
either at home, at work, or at public facilities such as libraries;
yet only 38% or 24.8 million are active users. Of the active users,
21.5 million or 87% utilized broad band services, an important
factor that the MOC will consider when implementing its universal
access plan that prioritizes internet access for all Brazilians,
especially those in rural, underdeveloped areas. Badaro commented
that increased demand for broadband services was a direct result of
users wanting greater access speeds to preferred internet sites and

for use of VOIP services. In highlighting the infrastructure
challenge of installing fixed lines in remote areas of Brazil,
Bandaro stressed the importance of GoB's continued development and
regulation of PLC and wireless technologies, and of focusing the
plan's expansion in this direction.


MOC BROAD BAND INITIATIVES
--------------


3. (SBU) As part of MOC's universal access plan, Badaro highlighted
the expansion of GoB-financed information technology centers (ITC)
throughout Brazil. MOC installed 6,000 ITCs in 2008, and plans to
open an additional 6,000 ITCs in 2009 and 3,000 in 2010. Each ITC
has 10 desktop computers with broadband access, headphones and
microphones for VOIP use, a central printer and fax, and a systems
manager. The plan targets rural areas with no internet or computer
access and, due to the difficulties of installing fixed lines into
remotes areas of Brazil, relies on wireless broadband technologies.
By offering a high speed, efficient internet access option, Badaro
reasoned that public-use ITCs could cater to a greater part of the
population by reducing their navigation times and freeing up
existing resources for use by more members of the community. In
highlighting another important initiative, Badaro commented that
Brazil's census results from 2010 are expected to confirm that only
70,000 of the 150,000 schools in Brazil have broadband access
available for their students, something that the MOC will be working
with State governors to address through public/private partnerships
that expand existing fiber optic infrastructure and examine wireless
connectivity options.


ACRE STATEWIDE BROADBAND PROJECT
--------------

4. (SBU) Trade analyst Jose Vieira from the Secretariat of
Production Development within MDIC described the Acre statewide
broadband project initiative as a perfect example of a
private/public partnership in the IT field. The State of Acre is
located in the northwest Amazon region of Brazil and it is estimated
that less than ten percent of the homes located there have a
computer with access to the internet. Vieira told Econoff that Acre
state officials are committed to the development of a statewide

BRASILIA 00000615 002 OF 003


broadband project that links its capital city Rio Branco with its
second largest city, Cruzeiro do Sul, via high-speed internet to
eliminate redundancies and reduce overall operating costs in
government communications. Vieira mentioned that the state also
wants to place broadband public internet access points in schools
and health posts and to provide connections to the general public as
a public service. A fourth objective of the project is to provide
commercial high-speed internet access for businesses and homes
seeking higher bandwidth. The State of Acre, working through MDIC,
was awarded a USTDA US$573K grant to fund a feasibility study of the
project and develop its organizational structure, functional
specifications, and infrastructure. The study will also include a
review of legal and regulatory issues related to public-private
partnerships and assess the project's environmental impact.

INTERNET MOBILITY GROWTH
--------------


5. (SBU) With the introduction of 3G wireless internet connectivity
in Brazil in 2008, Brazilian mobile telephone operators are
scrambling to position themselves to cater to an expected steep
increase in demand. In a recent article in Brazil's leading
economic newspaper Valor, Joao Cox, president of mobile operator
Claro, stated that the introduction of 3G connectivity will have the
same effect on wireless broadband demand as the introduction of
pre-paid cellular phone cards in 1998 had on cellular phone demand,
where the industry experienced unprecedented growth rates. MOC's
Badaro confirmed that Claro is currently negotiating with several
Brazilian state governors to obtain a value added tax (ICMS)
exemption on personal broadband accounts and on the purchase of
broadband modems. Currently, user accounts under R$30 are exempt
from the ICMS and modem purchases are not exempt from the ICMS.


BROADBAND OVER POWERLINE TECHNOLOGY (BPL)/POWERLINE COMMUNICATIONS
SYSTEMS (PLC)
-------------- --------------


6. (SBU) Perhaps the most promising initiative in Brazil aimed at
providing universal broadband service to its citizens is BPL
technology that delivers high-speed internet service through PLC
systems. PLC provides high-speed data transmission over medium and
low voltage electric lines to end users' homes and businesses by
transmitting data within specifically established power line
frequencies without interfering with normal electric transmissions.
A specialized modem is then plugged into an electrical outlet and an
Ethernet cable links the modem to the user's computer for broadband
internet access, or to a TV for digital cable access. Wireless
modem versions are also available for broadband use. Given that
Brazil's electronic transmission system integrates 98% of the
country into one electronic grid and that the remaining two percent
are expected to be integrated into the grid within the next year and
a half, Jeferson Nacif, Director of International Affairs at
Brazil's telecommunications regulation agency (ANATEL),in a recent
meeting with Econoff, commented that BPL represents possibly the
best option to service remote areas of Brazil without incurring
significant infrastructure costs associated with laying cable.
Nacif expects broadband delivery speeds of 200 megabits through BPL
technology. Nacif stated that Japanese electronics company
Panasonic partnered with Brazil's Telecommunications Systems and
Infrastructure Business Association (APTEL) in Barreirinhas, a
remote city located in northern Brazil, in late 2008 to test BPL's
data transmission technology by providing digital TV services to 50
of the city's users. ANATEL provided technical oversight during the
test and concluded that the trial was successful and that ANATEL's
initial concerns of data transmission interference with
electromagnetic transmissions operating in the same frequency range
were addressed through the installation of frequency mitigation
equipment that diminished BPL's interference capacities.


BPL REGULATION DETAILS
--------------


7. (SBU) ANATEL published resolution 527 on April 8, 2009 outlining
the technical criteria by which data transmission will be delivered
through Brazil's electricity grid. The resolution authorizes PLC
within radio frequencies 1.705MHz to 50MHz and requires that the
service providers register their company, equipment details,
operational frequency, and start-up date with ANATEL at least 30
days prior to initiating service. This database should be amendable
and available to ANATEL for periodic reviews. Nacif explained that
ANATEL will be able to issue PLC licenses under resolution 527 once

BRASILIA 00000615 003 OF 003


ANEEL, Brazil's National Electricity Agency, publishes its own
regulation governing data transmissions over their powerlines.
Andre Nobrega, ANEEL's Advisor to the Board of Directors, advised
that ANEEL completed their public comment period on May 11 and held
a public audience on May 13, per regulatory transparency
requirements, to discus the findings and incorporate them into the
resolution's final draft. Nobrega estimated that ANEEL would
publish a final resolution by the end of June and does not expect
any delays or significant alterations to the original draft based on
the public comments received and the technical nature of the
subject.


U.S. BASED BPL ONE OF THE FIRST ON LINE
--------------


8. (SBU) BPL Global, a Pittsburgh-based smart grid technology
company announced in September 2008 that the company had signed a
contract with Brazilian energy company COPEL Telecommunications to
implement phase one of a pilot program using BPL technology in Santo
Antonio da Platina, located in the southern Brazilian state of
Parana. Badaro hailed this development as an important step in
realizing MOC's universal access goal. Phase one of the pilot
project, whose 6 month trial period began in March 2009, provides
broadband services to 300 of COPEL's end users and includes
deployment, full testing, and operation of BPL equipment and PLC
systems. The project also plans to offer its customers access to
VoIP, video surveillance, and smart grid management capabilities
that consolidate multiple domestic or commercial functions under a
single network. Badaro believes that COPEL plans to serve their
entire customer base through a multi-phase approach. Once the first
phase is completed, a second, citywide deployment is expected that
would service 3,000 to 10,000 COPEL customers. COPEL then would
decide on a large scale deployment that would provide full coverage
to the company's 3.5 million customers.


9. (SBU) Comment: As the demand for connectivity in the Brazilian
IT market increases and new technologies are introduced,
infrastructural challenges associated with expanding Brazil's fiber
optic infrastructure and pressures on its regulatory oversight to
embrace new technologies aimed at accelerating universal access,
also increase. The goal of connecting the rural areas of Brazil and
incorporating them into mainstream Brazilian society is an important
GoB objective. Although recent introductions of the iPhone and 3G
wireless connectivity are transforming Brazilian society, these
innovations have yet to reach all segments of Brazil's society.
Broadband access and digital TV transmission through PLC, however,
do present real opportunities to connect rural areas of Brazilian
society without prohibitive infrastructure costs and significant
implementation delays, offering consumers an affordable and
realistic option. End comment.

SOBEL