General Background:

Brazil has went through some regime changes in the past few decades. They have now started to recover and are well on their way to becoming as up-to-date, with regard to telecom, as most developed nations. Today it would be unlikely to visit a business that does not have a telephone, fax, and internet access. (5) This is a long way from where Brazil was only ten years ago. From the early to mid 1990s, Brazil has increased the number of available telephone lines from 10 million to over 15 million. With this also came significantly improved the quality of service to both business and private users. (1)

History: Telecom Policy Timeline

1962 - Brazil's Telecom Code granted national government a monopoly in both the operation and the regulation of telecom activities.

1962 - The National Telecom Council (CONTEL) was founded to develop a National Telecommunications plan.

1965 - The Brazilian Telecom Enterprise (Embratel) was established to regulate telecom services, and develop phone links.

1968 - the federal government acquired the largest foreign telephone provider, Companhia Telefonica Brasileina to control telecom operators.

1972 - TELEBRAS was established to control the national telephone and telex systems and all regional telephone companies. TELEBRAS provided telecommunications services to over 95 percent of Brazilians. Infrastructure grew, but prices remained high. Embratel soon became the domestic and international long distance, maritime, data, telegraphy provider.

1980's - TELEBRAS was unable to meet the demands of communication needs of the business community, and Brazil's telecommunications industry needed help.

1995 - PASTE (Plan for Expanding and Recovering the Telecommunications and Postal systems) was the beginning of foreign business in Brazil.

1997 - The General Telecom Law was approved and laid the groundwork for privatization and liberalization, the establishment of an independent regulatory body, and for greater competition in communications.

2000 - foreign investors have been allowed to invest in Brazilian financial and capital markets.

This information was gathered from (5).

Brazilian Development Bank:

BNDS, the Brazilian Development Bank, has worked very hard to lobby the Brazilian government with regard to their telecommunications policies. Historically like many developing and emerging nations, Brazil was a supplier of telecommunications services to the country. For many years now, BNDS has been working with the Brazilian government to remove the supplier policies and instead transition to be a regulator. As of April 2002 there is work still being done. The ideology behind such lobbying efforts is to divert government funds from the telecommunications infrastructure and move them to one of the areas where development is needed. Examples of issues to be resolved are: health care, research and development, housing, education, public safety, and other public works. Brazil is a nation with many problems to tackle. The government could be benefiting the people in other ways. BNDS also understands that it is important to have competition to lower prices. Without competition in the telecommunications market, the people of Brazil would not be able to afford telephone lines and internet access. With increased privatization the quality of services is also increased. (2)

I had the opportunity to visit BNDS during my stay in Brazil. BNDS is a very interesting organization. Besides being located in beautiful Rio de Janiero, the building itself has wonderful architecture. I was however, surprised to see the figures with regard to their budget. BNDS is a very small organization in comparison to most firms in the United States. Their budget is around $1 US billion (3). Although this is not a tiny sum of money it is a small amount when you look at the size of Brazil and the lack of other similar organizations in the country.

The World Trade Organization has done an analysis of Brazil's trade policy and has come to the conclusion, that as of 1996, Brazil had many things that still needed to be changed. “The recent elimination of the state value added tax (ICMS) for primary and semi-manufactured goods should increase the competitiveness of Brazilian exports." By 1996, the privatization programs had extended into infrastructure, transport, electricity and telecommunications. However, there is no single trade law to cover all industries. The elaboration of such a law was still being discussed by the Government. (4)

Major telecom developments in South America's largest country are attracting big business. Since Brazil's deregulation was put into effect in 1997, the market for telecommunications has risen along with the growth of Brazil's infrastructure. This is not surprising considering Brazil's population of 177 million people, spanning over five time zones. Strong governmental efforts have been made to build a strong infrastructure throughout Brazil's regions, including the Amazon. Anatel, Brazil's National Telecommunications Agency, acts as Brazil's regulatory agency similar to the FCC in the US, has directed Brazil's telecommunications market from a monopoly to an open and competitive market.

Sources:

(1) “Telecom 96 at a Glance”, Americans Telecom , http://www.itu.int/TELECOM/amt96/amt96.glance.html. 

(2) “Privatization in Brazil: Results and Agenda”, BNDS, http://www.bndes.gov.br/english/bndes/brazpriv.pdf. April 2002.

(3) "Annual Report", BNDS, http://www.bndes.gov.br/english/bndes/1201e.pdf 

(4) “Trade Policy Review Body”, SINCE Foreign Trade System, http://www.sice.oas.org/ctyindex/wto/tprbr47.asp. November 1, 1996.

(5) McNiff, Jackie. “Blame it on Rio”, The Pre Paid Press, http://www.prepaidpress.com/archive/02-14-03/article05.htm 

Image: Digital photo from my visit May 2003 trip to Brazil.