Brazil woos new telecom players
Published Thursday, June 29, 2000, in the San Jose Mercury News
mercurycenter.com
Reuters
SAO PAULO -- Brazil's burgeoning
telecommunications industry, already a
patchwork of European and U.S.
competitors, is wooing fresh players this
year as the government auctions off the
latest set of wireless licenses.
Brazil plans to sell PCS (Personal
Communications Services) licenses, a
technology that analysts say could power a
third of all wireless phones in Brazil by
2005 and bring in as much as $5 billion in
fresh investment.
But Brazil's choice last week for a PCS
frequency band widely used in Europe --
1.8 GHz -- and one that's virtually
incompatible with existing networks in
Brazil will prompt new competitors to
enter the game, particularly Europeans,
industry experts said.
``The 1.8 GHz option is favorable to those
who don't already have operations in
Brazil,'' said Luis Carvalho, a telecom
analyst at Morgan Stanley Dean Witter in
New York. ``This is good for new
entrants.''
The sale of PCS licenses, scheduled for
the end of this year, should add more
nationalities to an already multi-cultural
industry where the likes of Spain's
Telefonica, Portugal Telecom and Bell
Canada International Inc. rub shoulders.
Brazilian mobile carriers use technologies
called TDMA or CDMA. As yet, mobile
phones can't roam from those
technologies to 1.8 GHz, meaning
existing carriers would have to build new
networks that wouldn't be compatible with
their existing ones.
But the PCS auction could catch the eye
of companies like Vodafone PLC, British
Telecommunications PLC and Deutsche
Telekom. They're familiar with the
technology known as GSM, used at 1.8
GHz, and have yet to enter Brazil, analysts
said.
``It's probable that operators will prefer to
stick to one type of technology,'' said Alex
Waisberg, special projects manager at
Algar Telecom Leste, or ATL, a Rio de
Janeiro-based wireless operator.
PCS technology is designed to transmit
voice and data and allow Internet access
over mobile phones at a faster pace.
Still, some established carriers in Brazil
could be reluctant to cede ground to fresh
competitors. For Spain's Telefonica,
currently with CDMA and TDMA wireless
networks in Brazil, PCS licenses would
permit it to extend its footprint into other
areas of Brazil.
And the fruits are attractive. The Yankee
Group research organization estimates the
number of PCS users in Brazil will hit 15.7
million by 2005, up from zero now,
compared with 31.6 million users of other
cellular technologies.
Intelig, a long-distance fixed phone
company 50-percent owned by Britain's
National Grid Group PLC, said Tuesday it
was looking for partners to bid for the PCS
licenses to offer wireless services.
Companies like the Sprint PCS Group
component of Sprint Corp. and Bell
Atlantic Corp. may also be eager to take
the bait, analysts said.
Still, the participation of new and existing
companies will depend on the game rules.
Brazil's telecom regulator, the National
Telecommunications Agency, or Anatel,
has yet to decide how many licenses will
be sold and for what regions. Anatel may
also limit existing wireless operators from
bidding for PCS licenses in their own
regions, analysts said.
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Eric, Brazil doesn't seem to have slammed the door shut on CDMA on 1800 Mhz. Would Sprint PCS and Bell Atlantic build a GSM network in Brazil if they are allowed to bid. Would the incumbent carriers using CDMA build a GSM network that is incompatible with their existing networks if they are allowed PCS licenses? |
