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Maravedis: cell and 3G great for Brazil but WiMAX...

Maravedis has released its Brazil wireless broadband and WiMAX market analysis for 2010. Initial enthusiasm and success for WiMAX have cooled somewhat but 3G and cell have great futures. What follows is the Maravedis report’s executive summary...

Brazil represents a huge potential market for the fixed and mobile wireless access industry in the opinion of Maravedis, which has just published Brazil wireless broadband and WiMAX market analysis for 2010. Cable penetration is low and ADSL has well-known physical distance limitations. The country has the highest population in Latin America – with over 190 million as of October 2009 - one of the lowest broadband penetrations at 5.6%, and many rural and underserved areas (110 million people still do not have broadband access).

 As such, there are attractive opportunities for service providers to address this broadband-hungry nation. There are over 130,000 WiMAX subscribers today in Brazil, using a combination of 16d and 16e equipment.

Four years ago, many saw Brazil as a country with a promising future for WiMAX. However, given the unfavourable regulatory environment and the continuous delays of WiMAX spectrum auctions, this perspective has changed, leaving room for question as to whether or not WiMAX mass adoption will ever come to fruition.

On the other hand, cellular and 3G services have gained tremendous success in the country; with 168 million mobile subscribers reported in October 2009, the country now has a mobile penetration rate of 89%.

Demand for wireless broadband access is intensifying in the country but the lack of sufficient spectrum has delayed the commercial network deployment plans of many players. Of the 3.5 GHz band, 75% remains tied up in government red tape, as the auction of this spectrum has been postponed several times over the past four years.

The 2.5 GHz spectrum band is in the hands of MMDS operators, who have been impeded from deploying mobile WiMAX networks to avoid competition with 3G players. 3G players need more spectrum to expand and upgrade their networks to newer technologies such as LTE, and hope that Brazilian regulator Anatel will release some 2.5 GHz spectrum for 4G.

The 700 MHz band is currently being used for broadcasting services, while the 450 MHz spectrum has not been auctioned. Demand is high but spectrum is a limited resource: only 25% of the available spectrum in the 3.5 GHz band was allocated in 2003, and the remainder was to be awarded in a second auction planned for 2006, but numerous irregularities and scandals have postponed this auction several times since then.

Of the five 3.5 GHz license holders, only two – Neovia and Embratel – have commercially deployed WiMAX networks. In November 2008, Anatel held a public consultation (N°54) on the attribution of the remaining 75% of spectrum in the 3.5 GHz band. The regulator proposed to make this band available to: mobile operators, wireline providers of fixed commutated telephone service (STFC), and providers of multimedia communication services (SCM). Anatel also proposed the allowing of mobile services in this band, and the allocation of one portion for the public sector for government, municipal and federal use.

Anatel then launched another public consultation (N°31) in March 2009 to consider changes to the 2.5 GHz band regulation. This  proposed a 2.5 GHz band plan with FDD 2x70 MHz for MPS and the 50 MHz centre for fixed applications. Anatel also proposed  taking a big chunk of spectrum from MMDS operators and allocating it to mobile services.

The use of the spectrum under this new allocation will be technology-neutral, meaning it could be used either for mobile WiMAX or LTE. Brazilian mobile operators don’t have enough 3G spectrum to satisfy the increasing demand for mobile services, nor to deploy 4G; they are pressuring Anatel to open up spectrum for 4G services (3G networks are unable to provide sufficient performance and enough bandwidth for laptop users). Therefore a good opportunity lies in venturing into nomadic services using WiMAX 802.16e-2005.

WiMAX 802.16e-2005 will become a serious contender against 3G services in Brazil. However if 3G operators manage to launch LTE within the next couple of years, those with deep enough pockets will be offered a great opportunity to provide mobile broadband in dense areas.

Brazil wireless broadband and WiMAX market analysis for 2010 analyses the present regulatory situation for WiMAX, including the 2.5 GHz, 3.5 GHz  and 10.5 MHz bands, as well as for 3G, including the 850 MHz, 1.8 GHz and 1.9/2.1 GHz bands. It provides detailed profiles of Brazilian WiMAX players, including their deployment status and their reaction to the recent public consultations N°31 and N°54. It also synthesises the participation of mobile players and the spectrum that they have each been allocated. Finally, it provides Maravedis’ assessment of future prospects for the Brazilian telecom market.

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