Brazil to announce PCS telecom frequency Jun 23
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Bridge Information Systems, Inc. via NewsEdge Corporation : Sao Paulo--June 9--
Brazil's drawn-out process for choosing a frequency for Personal Communications Services (PCS) on C-band mobile phones should be brought to an end by June 23, when telecom regulator Anatel will decide which technology, and therefore which companies, dominate a market estimated at $10 billion.
Despite political pressure in favor of the 1,800 Mhz frequency, which would generate jobs because of the arrival of new companies, analysts believe a decision made by the International Telecommunications Union (ITU) in May about additional frequencies for third generation telecom technology may sway the government in favor of 1,900 Mhz.
THIRD NEW MOBILE CONCESSION
Brazil's mobile phone market is headed for a shake up. This year the government will auction a third concession, to be known as the C-band, in order to provide increased competition for the two existing operators in each region. The new competitor will offer PCS services, allowing users to send messages from their phones and view specially formatted Web pages.
The controversy is about which of two frequencies, 1,800 MHz or 1,900 MHz, will be chosen for the new service. Hardware companies are divided into two opposing camps, with Siemens, Nokia and Alcatel stacked up on one side, and Ericsson, Nortel and Lucent on the other.
Siemens et al are advocating the 1,800 MHz frequency, which supports only GSM technology, the mobile standard used in Europe, Africa and Asia. These groups do not yet have a foothold in Brazil's hardware market, and see the introduction of GSM as their best chance to set up shop in Latin America's largest economy.
Meanwhile, the Ericsson-led group already provides equipment for Brazil's mobile phone market, which is based on TDMA/CDMA technology, the dominant system in the Americas. The 1,900 MHz frequency supports both the GSM and TDMA/CDMA mobile standards, although the presence of TDMA/CDMA in Brazil would leave little opportunity for competition using GSM.
The choice of frequency is an extremely thorny topic, and Anatel has already suspended its decision twice. The latest suspension was announced to allow time to digest a decision from the ITU's meeting in May regarding third generation (3G) technology, which will allow cellular phones to access the Internet at high speeds, opening the way for top-end mobile graphics and video content.
Now that the ITU meeting is over, the time has come for Anatel to make its choice.
MORE COMPANIES, MORE JOBS WITH 1,800 MHz
One of the most persuasive arguments for the 1,800 MHz frequency is that it would open the door to many international groups. GSM is an open standard technology, meaning all hardware companies are able to develop and sell it. This contrasts with TDMA/CDMA, a proprietary technology only a handful of companies have the license to produce.
The choice of 1,800 MHz is perceived as stimulating more employment in Brazil, thanks to fewer barriers to entry for new companies, and has garnered support among Brazil's leftwing parties in Congress.
What's more, some believe that a decision in favor of 1,800 MHz would maximize revenues when Brazil auctions 3G concessions. Recent auctions in England netted some $35 billion dollars for the U.K. government.
"Global telecom companies will be willing to pay higher sums for Brazil's 3G licenses if they can use the same technology they use in the rest of the world," said Yuri Sanches, general manager for Siemens wireless area.
Another pro-1,800 MHz argument is the roaming aspect. Proponents of GSM contend that the introduction of the world's most popular mobile technology would permit roaming in a much larger number of countries than with the Americas-bound TDMA/CDMA standard.
But rival 1,900 MHz supporters note that the Americas are the most popular travel destination for most Brazilians. Moreover, they say that the introduction of a new and incompatible mobile technology to Brazil would rule out national roaming in the short term, since PCS phones would not function on existing networks.
ITU RULING SEEN FAVORING 1,900 MHz
However, the decision from the ITU regarding 3G technology has strengthened the case for choosing 1,900 MHz in Brazil. One of the issues under consideration by Anatel is which frequency to use for 3G services.
Prior to the ITU meeting, it had been thought that only 1,900 MHz could be used for 3G communications, and that the PCS auction was the government's only opportunity to profit from the 1,800 MHz frequency before it became obsolete. The ITU's decision changes that.
In 1992, the ITU defined 1,900 MHz as the frequency for 3G technology, and the current meeting was held to define which additional frequencies could be used. The Union decided on three additional bandwidths, one of which being 1,800 MHz, which would allow Brazil to use 1,900 MHz for PCS, and 1,800 MHz for 3G.
"The chances of using 1,800 MHz for PCS have been greatly reduced after the ITU's decision," said Dario Dal Piaz, Brazilian Director General at the Yankee Group, a technology consulting firm.
Brazilian mobile operators evidently favor the choice of 1,900 MHz since it would allow them to take advantage of existing TDMA/CDMA technology, and would provide existing operators with an advantage over new market entrants.
"The roaming issue, and the question of handset availability, make 1,900 MHz the logical choice for Brazil," said Antonio dos Santos, director of regulatory matters for the Brazilian Cellular Phone Operators Association (ACEL). They claim the introduction of GSM would be problematic, since handsets would have to be developed to work with both Brazil's analog and digital networks, technology that very few companies possess.
The complexity of the arguments involved has clouded the issue, and despite views that 1,900 MHz may be gaining strength, the decision could go either way. End
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David Warwick, BridgeNews, Tel: 55 11 3171 1403
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