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To: iod_sherwood who wrote (18793)	12/10/2001 5:21:15 AM
From: elmatador	Respond to of 21876

Hi iod! Overcapacity in Brazil is a special case. The regulator mandated -in very specific technical detail how much infrastructure they had to build, in its area- once they bought a concession. Once they had built this infrastructure requirements, they would could invade each other's areas and get business form the competitors. The operators scrambled to build this as soon as they could because they eyed profitable places -like S. Paulo and Rio- to offer services to corporate users or compete in long distance business. But you have to note that the plan -named PASTE- while having competition fostering in mind, was based on old assumptions and technologies. It also was drawn up by people who were not as much business oriented as were technology minded. So the plan ended up looking like the 5 year GOSPLAN of the former Soviet Union (hope you recall what they were like). Saying by 2001 you must have (in total) 29 million mobile subscribers and 50 million fixed-line subscribers. You must be offering ISDN services in all cities with more than 200.000 inhabitants. That was the incumbent tasks. Then they set up provisions for CLECs -called Mirror Operators. As the name implies their networks were a mirrored copy of the incumbents' described above. So the mirrors CLECs -not to go out and skim the cream of the market were forced to offer services in all cities above 200.000 inhabitants in the region in question. Brazil is not exactly the US -where gov mandated competition was a total fiasco as the failure of the Telecom Act of 1996 showed us with the CLEC mowed down by the ILECs. It is a tenth of the US economy. It is also subject to rollercoaster up and downward swings in the economic growth. Like you start the year expecting 4% and by last quarter you have to revise it to 1.7%. Like this year. It appears that one can draw a plan in a piece of paper but some people seem not to read this script. This maladjustments, very common in a central planned economy, that never works in practice -had it worked, the USSR and its satellite economies were still standing- caused the overcapacity in the long distance sector. As a result much investments in long distance in Brazil is going to be written down: UK, Energis and now Lockheed is just the beginning.