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Brazil encourages new bidders in 700MHz 4G auction

Paulo Bernardo, Brazilian Minister of Communications, left, and João Batista de Rezende, President of ANATEL, right

The top brass of Brazilian communications regulation gathered at the Institute of Directors in central London today for the latest leg in the 700MHz 4G auction roadshow, with the apparent aim of opening up the process to new bidders outside of the four national incumbents.

A likely consequence of new bidders entering the process would be an increase in the total revenues generated for the Brazilian state, which presumably would not be unwelcome.

The presentation was opened by the Brazilian Minister of Communications – Paulo Bernardo – who was keen to stress how much progress Brazil has made in general in recent years, both socially and economically. He pointed to improvements in the GINI coefficient, which measures income equality, something Brazil doesn’t have a great reputation for, and increases in infrastructure investment.

Next up was João Batista de Rezende, President of ANATEL, the Brazilian telecoms agency/regulator. He recapped that Brazil has already had a 2.5GHz auction as that spectrum was more readily available, but that there were distinct advantages to 700MHz, including range. The 700MHz band is the result of the ‘digital divident’ from switching off the analogue TV signal, and the winners of the auction, which will be held in August, will also be responsible for the “clean up” of whatever legacy radio flotsam is still floating around.

Batista de Rezende said he expects national access to 3G to overtake that of 2G at around the time of the auction, and was keen to stress what a good commercial opportunity this auction presents. Having said that, he also stressed that there will be some advantages to those companies that have already won 2.5GHz spectrum, including the possible conclusion of some of the coverage responsibilities they signed up to merely by doubling-down on spectrum.

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Brazil has four main telco players: Vivo, TIM, Claro and Oi (which has got to be the best name we’ve seen for a telecommunications company). Only four chunks of spectrum are on offer: 10MHz for uplink and 10MHz for downlink, although one of those chinks may be geographically spit as indicated in the diagram below. So if new players enter the bidding process and win, then one or more of the Brazilian incumbents will be left with no 700MHz allocation.

It’s good to see how much effort Brazil is making to open up its market and to reduce some of the tax and regulatory burden on doing business there. Brazil is by far the largest market in a Latin America region that is one of the fastest growing smartphone markets in the world. By opening up this bidding process Brazil is sending out a positive business message and, by pure coincidence, potentially increasing its revenue from the auction.

The blocks of spectum on offer in the Brazilian 700MHz 4G auction in August

The blocks of spectum on offer in the Brazilian 700MHz 4G auction in August

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