Robert Conway*
Reforming telecommunications is not an easy task. In all countries of the world, with no exceptions, the transition from state-owned monopolies to a competitive marketplace has been very challenging. Brazilians have experienced some of those challenges already. They are about to experience another one.
There is no doubt that one of the important achievements of President Fernando Henrique Cardoso's telecommunications reforms is the creation of an independent body to regulate telecommunications?the National Telecommunications Agency (ANATEL).
With the clear policy guidance of Communications Minister JoÆo Pimenta da Veiga, the independent regulators at ANATEL are, at the moment, reflecting on the most important decisions they have faced since the agency's inception in 1997. The one of which frequency to choose for the 'C' band of cellular telephony operations - either 1.8 GHz or 1.9 GHz ? is in the hands of ANATEL's five counselors: Renato Navarro Guerreiro, Jos‚ Leite Pereira Filho, Luis Francisco Ten¢rio Perrone, Ant“nio Carlos Valente da Silva and Luiz Tito Cerasoli.
But this is not merely a technical issue. The decision that ANATEL is about to make will test the very direction of telecommunications reforms in Brazil. It will determine whether or not to continue the focus on increasing competition and expansion of benefits to consumers. The decision will also have an impact on jobs, on foreign investments and even on the balance of trade. In short, it will help shape the future direction of the nation's economy.
Since 1995, the government of Brazil has pursued a clear path towards reforming and improving its telecommunications networks. Throughout the last six years, President Cardoso has provided the strong leadership necessary not only to privatize but also to bring competition and benefits to consumers of telecommunications services. The message has been very clear: a modern, competitive telecommunications sector is fundamental to bring all Brazilians into the communications and information age.
I believe that the best wireless solution to continue Brazil's telecommunications policy is GSM ? Global System for Mobile communications technology. There are several reasons to select GSM.
First of all, it is the accepted wireless standard around the world, used by more than 280 million people in 144 countries. These tremendous numbers make it possible to manufacture a variety of handsets and a choice of compatible infrastructure products for a very low cost. Hence, consumers benefit immediately.
Second, this technology will serve Brazil's diverse economy. GSM operators are experienced in providing services to upper income subscribers (such as in the United States and Western Europe) as well as to middle and low income customers (such as in Asia, Africa and Latin America).
Brazil presents a market with all of those characteristics. Cosmopolitan upper, middle and business classes will benefit from GSM features and national and international roaming, allowing users to receive and make calls with the same phone number and features in all parts of Brazil and around the world. This is going to be a big step forward in facilitating how Brazilians deal with globalization in a very practical way, as well as how foreigners do business in Brazil.
The lower income classes will benefit from GSM lower prices of handsets and services, bringing significant increases in cellular telephone penetration and facilitating the access to basic telephone services for all Brazilians. These customers have the most need for cellular telephones.
The introduction of GSM in Brazil will create industrial and services jobs for Brazilians. The deployment of GSM in the 'C' band will also bring GSM manufacturing and systems integrators into Brazil. Giving the worldwide scale of this technology, Brazil will become part of a global production chain. Over time, Brazil could make progress by increasing the local value-added. Moreover, as the region's leader in GSM, Brazil will look to the rest of Latin America as a market for its GSM products and services. The Brazilian balance of trade and capital will benefit from this choice.
Siemens has already announced that........
Existing telecommunications networks were technically designed for monopoly, not for competition. The difficulty for overcoming this obstacle, inherent in that monopolistic legacy, requires great strength and resolve.
Minister Pimenta da Veiga is providing this sense of strength and resolve to keep Brazil on the right road toward telecommunications reform. His commitment to continue expanding modern telecommunications services to the entire population of Brazil, especially to the poorer Brazilians, has been notable. As Brazil prepares to make important decisions regarding the transition to further competition in wireless telecommunications, Minister Pimenta da Veiga has appropriately defined the new Personal Communications Services (PCS) networks to be auctioned later this year as the 'C' band of cellular telephony.
The way to spread the benefits of telecommunications reforms to consumers is to increase competition and provide clear rules that allow private markets to expand services at lower costs. GSM operators are anxious to move into Brazil to invest and develop Brazil's national PCS network. GSM equipment vendors are only waiting for the decision of ANATEL to announce significant investments in Brazil.
The best way to ensure the entry of GSM into Brazil is by choosing 1.8 GHz for the 'C' band.
GSM will benefit consumers by increasing competition and lowering prices of cellular telephony services. In Brazil, 1.8 GHz will assure the entry into the market of GSM, while maintaining the other digital standards (such as TDMA and CDMA) already operating in the market. In 1.9 GHz, current TDMA and CDMA operators will only expand their coverage areas without bringing a strong third entrant on a national basis.
Introducing competition with GSM in the 'C' band via 1.8 GHz will lower prices and provide better services than the existing cellular carriers operating in the 'A' and 'B' bands. In the face of such competition, the existing operators will be encouraged to decrease prices as well as to improve the quality and penetration of their operations. Everyone will benefit.
Importantly, the choice of 1.8 GHz for the 'C' band in Brazil will keep clear the path to the third generation of cellular systems, allowing the expansion of Internet usage well beyond today's computer owners. Use of 1.8 GHz will be consistent with the IMT-2000 designation for the third generation of cellular telephony ? which will bring total access to the Internet through cellular handsets. Countries that are moving faster on this road (such as Japan, Spain, Finland, Germany, the U.K, China and Thailand) have reserved 1.9 GHz as the expansion band for 3G services. By contrast, choosing 1.9 GHz for PCS would run contrary to where the ITU and global markets are moving in the best use of spectrum for 3G.
We believe that a decision in favor of 1.8 GHz ? and thus, GSM ? for Brazil's 'C' band is the only one consistent with the overall movement of telecommunications reform that started in Brazil a decade ago. This choice is simple, rational and imperative.
*Robert Conway is CEO of the GSM Association, a coalition of more than 400 GSM operators and equipment vendors |
