In an exclusive interview with TowerXchange, Mr Artur Coimbra de Oliveira, Director of the Department of Broadband within the Ministry of Communications of Brazil, shares his views on the current and future status of the Brazilian tower industry.
Mr Coimbra de Oliveira’s background includes experience within the Brazilian telecommunication agency, Anatel, as Regulatory Specialist, and within the Personal Cabinet of the President of Brazil as Digital Inclusion Advisor.
TowerXchange: Could you please introduce the activities that the Ministry is currently overseeing and developing to ensure 4G coverage in the country?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
The Ministry of Communications is currently developing a series of activities to foster 4G in the country. The first and key aspect is the radio frequency auctions our regulator is holding.
The 2.5 GHz auction took place in June 2012 and its target is to guarantee 4G coverage to all Brazilian municipalities with a minimum of 30,000 residents. In 2014, we are planning a 700 MHz auction with the goal to enable 4G coverage in all municipalities under 30,000 residents.
With the completion of these auctions, we aim at extending 4G coverage to all 5,570 municipalities in Brazil.
Moreover, the 2012 auction included the 450 MHz spectrum for rural access. The aim is to enable the 4G technology for this specific radiofrequency band, which may allow an almost full LTE coverage in Brazil by the end of 2015 - the 450 MHz coverage obligations reach 91% of all Brazilian rural population.
With the support of Brazilian government, 3GPP has just concluded the standardization process of the LTE 450. Now we are working with a handful of manufacturers which are able to provide this highly advanced equipment.
4G coverage should be provided throughout the nation, in both urban and rural areas, by 2020. However, we think that urban areas could already be covered by the end of 2015 as established by the auction
TowerXchange: What is the carriers’ deadline to ensure 4G coverage?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
Each bid is different and the national telecommunication agency, Anatel, sets the rules for each auction. With regards to the 450 MHz auction, the obligation is to ensure coverage in all municipalities by 2015.
4G coverage should be provided throughout the nation, in both urban and rural areas, by 2020. However, we think that urban areas could already be covered by the end of 2015 as established by the auction.
TowerXchange: How is the Ministry supporting telecom companies and tower operators to work towards achieving the coverage goals ahead of the 2014 World Cup?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
While the Congress is currently working towards the approval of the Lei das Antenas, we appreciate that this process can take quite some time and we need to work towards our coverage milestones ahead of the 2014 World Cup.
Therefore, we are in the process of consulting with each municipality that will be hosting the games to ensure they accelerate the local permitting process and contribute to a swift deployment of much needed infrastructure.
Most of these municipalities are already changing their local legislation to allow quicker processes for greenfield projects to be approved and developed.
Moreover, we are working with 3G and 4G carriers that want to deploy connectivity inside the World Cup’s arenas to make it easier for them to develop these projects.
TowerXchange: Tell us about the 2014 4G auction: what expectations does the Ministry have with regards to the companies bidding, the outcome and the switch off of the analogue signal?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
With regards to the analogue signal, our goal is to firstly switch it off in the biggest cities such as Sao Paulo, Rio de Janeiro, Brasilia and Belo Horizonte. These are also the richest cities in the country so we believe the switch off process will be fairly quick as digital television sets are becoming very popular already. Also, we will try to include some switch off incentives in the 2014 700 MHz auction.
Anatel is designing the auction with the specific goal to entice new players - new carriers - to bid. In fact, the most established carriers in Brazil do bid at auctions because they already have a network deployed in the country, they have an established presence and an interest to expand their footprint.
However, it is harder to attract new companies and new investments during these bids and Anatel is working on the 700 MHz bid with that in mind. Finding the right answer to allow new entrants into Brazil is a key target for us at the moment.
from our side, we are looking at extending a series of benefits currently available to telecom companies to tower companies. I am referring to tax benefits for new entrants as well as the special tax regime for companies involved in the national broadband deployment
TowerXchange: Is the Ministry involved in the development of the passive infrastructure sector - hence in the further expansion of tower companies in the country? If so, how are you working with them?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
We have been observing the growth of the tower industry very closely in the past few years. Tower companies are becoming very strong players and we believe this can only be a positive factor to ease the process of infrastructure sharing. Moreover, with carriers focusing solely on their network and with capital to be invested thanks to the sale of their passive infrastructure, coverage expansion should become a quicker process too.
From our side, we are looking at extending a series of benefits currently available to telecom companies to tower companies. I am referring to tax benefits for new entrants as well as the special tax regime for companies involved in the national broadband plan deployment.
These are just examples of our activities but in summary, we aim at making it easier for tower companies to operate in the country.
TowerXchange: Can you introduce us to the proposed Lei das Antenas and your views on it?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
The Ministry is working very hard to promote new legislation in favour of passive infrastructure sharing.
Last year, Anatel published the General Plan for Competition (PGMC) aimed at encouraging and promoting free competition in the telecommunications industry, as well improving regulation. Infrastructure sharing is a key component of a free and competitive telecom sector and with the Plan, Anatel will enhance transparency and access to market for both carriers and tower companies.
At the same time, the proposed Lei das Antenas would further contribute to the development of the sector.
Municipalities have jurisdiction over new tower deployment and each local law is different. We are trying to solve this issue by Federal Law - specifically through a homogeneous law such as the proposed Lei das Antenas which is currently being discussed in Congress.
The proposed law was first presented and approved by the Senate. Then it moved to the House of Representatives where it’s currently being voted. We think the text will be amended and go back to the Senate for the final vote but we don’t think that the amends will be too radical.
My view is that the law could get approved in the first half of 2014. The goal was for it to pass by the end of 2013 but I think my projection is more realistic in light of the current stage of the discussion.
The aim of the Lei das Antenas is to create a harmonised procedure for tower deployment and we think that tower companies can actually be ally of municipalities - rather than the opposite.
In fact, municipalities’ main concern with regards to tower deployment is related to the conservation of landscapes and historical sites which can be compromised in the case of too many projects being developed in the same area.
Tower companies’ core business is co-location and sharing, hence creating the perfect environment for carriers to deploy their network by using the same tower and with fewer new towers being built.
From a different perspective, there is a Federal Law which makes infrastructure sharing mandatory for radio stations closer than 500 meters to each other. So the sharing trend is ongoing and is becoming widely accepted and even protected at a legislation level.
TowerXchange: The majority of telecom towers in North America, and other mature tower industries like India and Europe, are owned by specialist towercos rather than by carriers. Would you anticipate a similar trend in Brazil?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
Definitely so. We are seeing it happening in Brazil right now. In the past few years, there have been a sharp increase in the number of tower companies that have been created and personally, I think this is a positive development for the country and for the telecommunication industry as a whole.
In fact, it’s no secret that profit margins in the telecommunication sector are constantly shrinking while larger investments are needed to develop new technologies and networks.
As mentioned before, carriers are selling their tower portfolio to become nimble and to be able to compete in their core business. This industry wouldn’t expand without investments and tower companies are facilitating the process.
This is a global trend and it’s happening in Brazil, too.
the tower market is and will remain a local game. Therefore, its forex risk will be somehow larger. However, I think this concern is somehow mitigated in Brazil as we see more and more international companies looking at us as a good place where to invest capital
TowerXchange: What’s your view of the capital and expertise available in Brazil to foster a local-owned tower industry, given that international towercos investing in Brazil are exposed to forex risk?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
I think Brazil has plenty of local capital and expertise to develop a national tower market. However, this is mainly a commercial issue. We are very interested in the establishment of local companies while we also welcome foreign investments in the local tower sector.
We are seeing that local banks and investments firms have a growing interest in the national tower sector and are more aware of its potential. This will surely foster the development of local tower companies.
With regards to forex risk, it must be said that the risk exists in every market. Obviously there are some markets, such as commodity, which are inherently global and therefore, have reduced forex risks.
The tower market is and will remain a local game. Therefore, its forex risk will be somehow larger. However, I think this concern is somehow mitigated in Brazil as we see more and more international companies looking at us as a good place where to invest capital.
That said, we have a solid capital and expertise basis that is allowing us to expand at a local level through the establishment of national tower companies.
TowerXchange: Which other plans are being developed in Brazil to modernise its telecommunication and internet sector?
Artur Coimbra de Oliveira, Director of the Department of Broadband, Ministry of Communications, Brazil:
We are very involved in the fibre-optic network expansion which will enable greater and faster internet access.
Mobile technologies are greatly contributing to the growth of internet usage in the country. People that never had access to internet suddenly have a smartphone and can quickly learn how to connect, browse and even work.
In Brazil, we are experiencing an exceptional growth in data traffic. Therefore, we will soon need more speed. Fibre-optic network will be key to achieve our speed goals.
Additional articles in our Brazil case study:
The Mott MacDonald Share Square for Brazil
SBA Communications’ expansion into Central and South America
Over 9,000 towers needed ahead of the Brazil World Cup
