Brazil Catalyst Project/Brazilian Digital Landscape/Contents

Internet Access in Brazil

• Population: 201 million CIA World Factbook and IBGE
• Internet Users/Penetration 2009: 72 million/ 36.2 percent
• Broadband Users/Penetration: 10 million/ 5.1 percent
• Mobile Phone Users/Penetration 2009: 174 million
• GNI Per Capita (PPP): $9,400

For a country with large social and economic disparities, Brazil has made significant gains in expanding internet access and mobile-telephone usage in recent years. It is now home to the largest population of internet users in Latin America and the fifth largest in the world. The country first connected to the internet in the late 1980s, and connectivity is now available in most areas through a variety of technologies, though some infrastructural limitations remain.

General Data on Internet Access in Brazil

According to the International Telecommunication Union (ITU), Brazil had 72 million internet users as of December 2009, accounting for 36.2 percent of the population. However, penetration varies greatly among regions due to a lack of infrastructure that affects large segments of the population in rural areas (IBGE Synthesis of 2008 Indicators). For instance, while the household penetration rate is 31.5 percent in the southeast, it is only 10.6 percent in the north. In addition, the cost of broadband access is prohibitively expensive for many Brazilians, amounting to about 5 percent of per capita income (Comunicados do Ipea No. 46). Broadband access is increasing as prices fall, reaching 7 percent of the population in 2009.

Great improvements have been made in recent years as the government has initiated dozens of programs to connect the population to the internet, including investment in WiMax networks (mainly 3,5 GHz), Digital Cities projects, and a series of regional projects focused on media literacy and digital inclusion. Many of these programs employ broadband technology, and in 2010 the government launched the National Broadband Plan, which aims to triple broadband access by 2014 (Br Ministry of Communications, 2010). Internet access has also been boosted by a proliferation of privately owned “LAN (local area network) houses,” in which small entrepreneurs have purchased multiple computers via a government loan program, then offered access at reasonable prices for users. In many regions, these sites have become the primary means of internet access. Research published by the Brazilian Internet Steering Committee in 2008 showed that nearly 80 percent of the people from the lowest income brackets who access the internet do so via commercial venues such as LAN houses, a dramatic increase from 48.08 percent in 2006.

Brazil is currently the largest mobile-phone market in Latin America, and penetration is rapidly increasing. Statistics show an average annual increase of 18 percent in the rate of mobile-phone use over the last five years, with approximately 174 million mobile phones in use by December 2009. (Teleco, 2010)

Future Trends

Studies forecasting broadband in Brazil by 2020 have concluded that there will be large increase of penetration due to the reduction of costs of computers and connections. The two most important benefits coming from increased broadband are the improvement of professional productivity and of quality of life [1]. (Wright, Silva and Spers 2010)

Booz and Company (2009) noted that the increase of broadband penetration began as early as 2001, and that by December of 2008 it was already 5.2% per 100 inhabitants.

To cultivate this growth, the Brazilian government adopted a National Broadband Plan (2009). The definition of broadband in the NBP is broad, and is related to the capacity of Internet and Mobile users, at their homes or companies, to access and use services and multimedia applications with quality. Under this expansive concept a group of technologies is accepted as broadband - if the technology provides a "quality" connection. Thus, the plan does not distinguish or prioritize broadband technologies: DSL, cable, optical fiber, WLAN, 3G/UMTS, PCL, FWA, satellite and WiMax.

However, according to Wright, Silva and Spers (2010), cable and WiMAX technologies will be the top two technologies by 2020 and broadband penetration will be on the order of 99% for the Brazilian Economic Brazilian Economic Class "A", 90% for class "B" and 60% for class "C". Cellphone connections will also rise with the increasing adoption of 3G and 4G technologies, and internet connection through this technology will be mainly seen in representatives of class "C".

Internet Access in Schools

Specifically regarding the use of ICTs and access to internet in schools, 40,000 schools have computer labs and almost 20,000 have broadband connections. The governmental plan is to connect, by 2010, all urban schools in Brazil (~55,000), while the remaining public schools in rural area (~87,000) are to be connected by 2018. The fulfillment of such a policy is conditioned on the accomplishment of universal access obligations assigned to telecommunications companies in Brazil and provision of computers through programs lead by MEC.

Ritla’s 2007 study Pencil, Eraser and Keyboard (Lapis, Borracha e Teclado) also notes that the availability of Internet access in public spaces, such as school or hot spots of digital inclusion, reinforces the divide that is observed in the rates of access to Internet from private spaces, such as homes. The study calls for plans that prioritize the access for sectors excluded from Internet - democratization of access – rather than the reinforcement of the economic divide via Internet access points. The fear is that the wealthy will be able to use the network ubiquitously but the poor only at school or other public spaces. However, it is important to recognize here that this pattern is probably partially explained by the broadband network reach provided by the telecom companies and also the high costs of other kinds of access, such as satellite for rural areas.

Ritla’s 2007 study, based on the PNAD data, found that in 2005 Brazil had 3,200,000 teachers. More than half (54%) had used the Internet in the 3 months before the census was done. However, the internal divide is enormous when comparing internet use of professors of higher education (93%) with the rest of the sample (29.4%). Also, regional variances are high: while 65% of educators from the south and southeast used the Internet, just 35% used in the north and northeast. 48% of Brazilian educators have computers in their homes, while 37% have Internet connectivity. The three main reasons that educators use Internet are: activities related to education, communication and reading of news.

Governmental Programs to provide Computers and Internet access

A series of National Initiatives are under developed in parallel to improve the country broadband infrastructure and access. Among those, there are three that caught our immediate attention: the “One laptop per Student” (proUCA - Programa Um computadore por Aluno), the “Computers for All” (Programa Computador para Todos) and the “Laptops for Teachers” (Programa Computador Portatil para Professores).

A more detailed analysis of these programs – which core goal is to provide free or cheap access to computers – will be provided in the next project report. An interesting fact is that many of these initiatives come with digital literacies strategies and programs lead by the government or its partners. Thus the deeper analysis of such initiatives will be focused on identifying the actors (government, foundations and private sector) involved and their roles. This analysis aims to identify opportunities for future partnerships or programs that the WMF could be involved with or could support the Brazilian community to get involved with.

National Initiatives

• One laptop per Student (proUCA - Programa Um computadore por Aluno)
  • Program description
  • Program goals
  • Companies involved

• Computers for All (Programa Computador para Todos)
  • Program description
  • Program goals
  • Companies involved

• Laptops for teachers (Programa Computador Portatil para Professores)
  • Program description
  • Program goals
  • Companies involved

Mobile Landscape in Brazil

	2008*	2009*	2010
Internet
Internet users (million)	50.2*	60	75.9*
Penetration rate	28.7%	30.7%	37.8 %**
Annual change	12%	20%
Broadband
Total subscribers (million)	10.01	11.45
Penetration rate	5.2%	5.9%
Annual change	30%	14%
Fixed-lines in service
Total subscribers (million)	41.02	42.5
Penetration rate	21.2%	21.2%
Annual change	30%	14%
Mobile telephony subscribers
Total subscribers (million)	150.64	173.20
Penetration rate	78%	88.5%	104%
Annual change	25%	15%

(Source: *BuddeComm based on industry data, **[2] and ***[3])

Introduction

Mobile communication is deeply transforming economic and social activities in Brazil: from the street hot dog vendor who can offer phone delivery services to the freelance professional who has a mobile office. Several roles in the informal economy were born from the advent of mobile, which have become a significant portion of the Brazilian economy.

As of the Q410, there are 203 million of cellphones in Brazil, which represents a density of 104% of cellphone penetration – more mobile phones than there are people. 82.34% of these phones are pre-paid, being GSM the predominant technology (87.76% of cellphones)[4]. The country’s total telecom revenue was U$49.5bn in 2009, down U$6.3bn from 2008. Market experts project revenue grow at a CAGR of 5.9% through 2014, fueled by expansion in mobile data services and broadband Internet access.

Such numbers make Brazil the largest market in Latin America and the region’s leading investment destination for international operators and device and network suppliers. Brazil is home to almost one third of all mobile subscribers in Latin America, and the country’s mobile penetration is about average for the region, but varies considerably from state to state. Number portability is helping to increase competition in an already highly competitive market.

Voice was an essential element in the beginning of mobile communication in Brazil, as it enabled a new means of communication between different areas in a city (and given the traffic in Brazilian cities, this was a huge step, allowing conversations during traffic and away from home). However, text messages, or SMS, have rapidly become the new language of this technology, influencing new generations. With the onset of audio, video and photo sharing services, other means of communication arise from these possibilities. Access to the Internet becomes the next channel promoting the expansion of mobile communication in the coun¬try, as telephony networks expand and costs drop, due to the increasing number of users. (Survey on the use of Information and Communication Technologies in Brazil 2005 – 2009)

Specifically, 3G technology (mobile broadband) was widely launched in Brazil in 2008 and is rapidly expanding. All capitals and main urban centers have access to the technology and, by means of an agreement with the National Telecommunications Agency (ANATEL), mobile telephony companies must extend coverage to the whole country by 2014.

There are 18.9 million [5] 3G cellphones in Brazil as of December 2010. In terms of revenue, 3G reached U$4.3bn in 2009 and market analysts foresee revenues tripling to U$12.7bn in 2014. The mobile sector as a whole will continue growing thanks to an 11-point advance in mobile penetration of the population.[6]

To provide some international context, Brazil is projected to one of the fastest growing smartphones markets over the next five years with a CAGR of 43 percent. This places Brazil second, in front of India, Turkey, and Nigeria (with CAGRs of 39 percent, 37 percent, and 34 percent respectively) and behind only China. Latin America will be the fastest growing region at a compound annual growth rate of 48 percent, followed by Africa and the Middle East with a 39 percent CAGR. [7]

With the country’s economic recovery from the global recession well under way, the spending power of Brazilian consumers is on the rise. As in the rest of the world, fixed-mobile substitution is a prominent phenomenon in Brazil, with an increasing proportion of the population using mobile rather than conventional telephones. Thus, demand should remain strong for telecom services, especially broadband and mobile telephony. Brazil’s regulator Anatel has an ambitious agenda to overhaul the country’s regulatory framework to facilitate that process.

Demand for broadband in Brazil is expected to soar. Broadband operators have been struggling to keep up, and there have been problems of system overload. The government has plans to spread broadband across the vast country in one of the world’s largest infrastructure projects. Two major factors have inhibited the growth of broadband in Brazil: shortage of fixed-line infrastructure, and broadband prices. On the other hand, the growth of mobile broadband in Brazil has been nothing short of spectacular, attracting more than four million subscribers. [8]

Specifically in regard to mobile broadband, there are three factors that need to change in order to allow growth: better and cheaper 3G connections, the market entry of smartphone devices, and better content and “killer” applications. However, an interesting “social response” to the lack of 3G infrastructure is the use of open WiFi. A study by AdMo (Google) found that 56% of mobile internet navigation come from WiFi use and not from the operator’s networks. Much of such use is actually not “legal” and is known as “gato digital” – a great example of user-driven innovation, but one that complicates matters in terms of predicting usage on operator networks. The number of mobile page views of the most viewed internet websites is still very low, representing 0.001% of the internet page views of such sites. WAP [9] remains the biggest data technology in use, but this will change with the growth of 3G and the introduction of faster, cheaper smartphones.[10]

Market

Source: Operators market share in Brazil. [11]

Source: Number of Cellphones in millions in Brazil. [12]

Carriers and their market share

VIVO	Market Share	Cellphones
Region/State	Nov 2010	Nov 2010
SP	34,3%	16.942
RJ/ES	39,4%	8.468
MG	33,9%	6.73
PR/SC	22,1%	3.875
RS	43,0%	5.152
Centro Oeste	31,7%	6.602
BA/SE	29,8%	4.229
Nordeste	5,9%	1.671
Norte	37,6%	5.188

Source: Vivo

CLARO	Market Share	Cellphones
Region/State	Nov 2010	Nov 2010
SP	28.8%	14.227
RJ/ES	28.6%	6.146
MG	13.8%	2.736
PR/SC	20.2%	3.535
RS	32.1%	3.845
Centro Oeste	34.1%	7.103
BA/SE	27.9%	3.951
Nordeste	28.1%	8.001
Norte	6.7%	920

Source:Claro

TIM	Market Share	Cellphones
Region/State	Nov 2010	Nov 2010
SP	22.9%	11.313
RJ/ES	15%	3.227
MG	24%	4.768
PR/SC	43.4%	7.601
RS	13.3%	1.594
Centro Oeste	15.8%	3.301
BA/SE	20.5%	2.907
Nordeste	34.5%	9.820
Norte	33.9%	4.676

Source:TIM

OI	Market Share	Cellphones
Region/State	Nov 2010	Nov 2010
SP	13.8%	6.819
RJ/ES	17.1%	3.677
MG	26.6%	6.73
PR/SC	18.8%	2.423
RS	11.6%	1.385
Centro Oeste	18.3%	3.819
BA/SE	21.8%	3.089
Nordeste	31.5%	8.951
Norte	21.9%	3.030

Source: OI,

Brazil is a very competitive market, with 7 major operators. 4 of those control more that 95% of the market: Vivo (controlled by: Telefonica and Portugal Telecom), Claro (Controlled by: America Movil), Tim (controlled by Telecom Italia) and Oi (controlled by Telemar). For an interactive map representing the regions and bands of operators check “Teleco Interactive Map” [13]

As the statistics above show, Vivo is first based on the total of products and services it provides. However, when we observe mobile Internet numbers (see below), Claro appears as an important competitor (although they offer WDCMA technology, while Vivo offers modem technology). Thus they serve very different sectors and niches.

Technologies: Devices and Operating Systems

The main mobile phone technology in Brazil is GSM. Nokia, Samsung, LG and Motorola are the biggest device providers in Brazil. However, with the improvement of 3G technology and possibly the entry of 4G, we can observe an expansion of sales of iPhones (Apple) and BlackBerrys (RIM) in Brazil. Currently, 1 in every 5 cell phones sold in the world are smartphones. RIM announced in 2010 that it will start producing BlackBerrys in Brazil – the first model which will be nationally produced will be the BlackBerry Curve 8520. For a complete list of approved devices in Brazil see [14]

Mobile Internet and Mobile Data

Brazilian mobile subscribers with access to data communication (Internet) in broadband (speeds > 256 kbit/s – one or two ways) uses typically 3G and 3.5G technologies such as WCDMA, HSPA, WIMAX or EV‐DO. Mobile broadband connection is available for 65.2% of the population and in 13.3% of the cities.

Brazilian mobile broadband received 13.9 million accesses in Q2T10; 3.5 million of those were with modems. Data revenue represents around 16% of the operators’ revenue in Brazil and is increasing quickly: 37% in 12 months and 10% in the last quarter. The trend of fall in voice revenue means that data services become an important revenue source and focus for carriers.

Technologies: 3G and 4G

As of December 2010, 3G cellphones in Brazil represented 9.3% of all existing cellphones. [15] From the WDCMA technology market (14.6 million devices) [16] Claro leads with 46.72% of market share, followed by Vivo with 28.95%. [17]. In the modem technology (data terminals with velocity > 256kbit/s, representing 4 million devices), Vivo leads the market with 46.72% followed by TIM with 29.11% and Claro with 23.85%. [18] Ericsson is the leading 3G mobile core broadband network provider for the Brazilian operators. Nokia-Siemens and Huawei are also in the market.

Brazil’s regulator Anatel has an agenda to overhaul the country’s regulatory framework. Known as the General Plan for Updating Telecom Regulations, or PGR, the plan includes lists of actions to be carried out in the short, medium, and long term. Among others, there are plans to develop Open Networks in the country through local loop unbundling and through structural or functional separation regulations.

The regulator planned several public consultations and new spectrum auctions for 2010, involving, among others, frequencies relinquished by Oi (Band A), spectrum never allocated (Bands D and E), the last remaining 3G license (Band H), spectrum in lower frequencies such as 450MHz-470MHz, and spectrum for mobile operators in the 2.5GHz band. Nextel was the main purchaser of Band H and represents a new competitor in the Brazilian 3G market. [19]

The demand for mobile broadband and the success of 3G in Brazil augurs well for Long-term Evolution (LTE), also known as 4G mobile. The 2.5GHz frequency band to be auctioned in 2010 could be used for LTE. Telefónica is conducting LTE field tests in Brazil, and the country’s four major mobile operators (Vivo, Claro, TIM Brasil, and Oi) may be ready to launch LTE services commercially by end-2012. [20] For instance, Vivo intends to expand the reach of its 3G network to 51% of the brazilian cities by 2011 and Nextel will also enter the 3G market. [21]. The forecast is that the expansion of the carrier’s 3G networks will allow the expansion of the smartphones and tables market.

The expansion of 3G mobile broadband access represents an important step toward the inclusion of the population in digital communication, as it also provides coverage to areas where broadband access is not otherwise viable. The demand for modems to connect laptops to the 3G network was so high in 2008-2009 that supplies were exhausted, which vividly demonstrates the need for mobile broadband.

Price

Brazil has one of the most competitive mobile markets in Latin America, but it is constantly criticized by international studies in terms of high prices of its services. However, the opinion of national experts is that, actually, those prices are not that high if you take into consideration the prices are for a series of bundle services (“service packages”). [22]

The average monthly spent with cellphone services in Brazil (ARPU plus taxes) is R$ 34.70 (approximately, U$ 16). The current trend is the decrease of price per minute, which has allowed the increase of minutes from an average of 88 to 113 (3QT9 > 3QT10).

In Brazil, the prices of mobile broadband are higher than the prices charged in Latin America and Europe. Prices are affected by tax and network scale, especially because of the capacity of transmission networks. Mobile operators are abandoning service plans by speed, and the price of 3G devices is still a barrier. The prices are stable, but the minimum price for modem reached R$ 170.00 in Q210. [23]

Smartphones are rapidly gaining popularity in Brazil as recent price reductions have made these devices more accessible to people of all economic levels. Sales of smartphones were up 128% in the first half of 2010 compared to the same period in 2009, and up 17% versus the first half of 2008, the period prior to the global recession. The volume of handsets sold increased by 31%. Overall, smartphones make up about 10% of mobile phones owned in Brazil. The average price of smartphones dropped 2% in the first six months of the year compared to the same period in 2009 and by 5% versus 2008.

Users Profile and Behavior

The example set by Brazil is unique because it has similar characteristics to those perceived in Africa, where the lack of fixed telephony also forced countries to go straight into mobile technology, but, at the same time, technologies are used in ways comparable to the most advanced urban centers of developed countries. The millions of Brazilian users are rapidly migrating from voice services to a diversity of data services and these are in turn transforming the way business and entertainment are done.

Here are just a few examples of how mobile telephony is rewiring the way Brazilians live:

• Farmers from the state of Paraná receive frost forecasts on their mobile phones, which enable them to prepare in advance to protect their crops.
• During carnival, tourists in Salvador use their mobile phones to track the activities taking place in the parade circuits.
• Parents of students in Rio de Janeiro receive messages on their mobile phones when their children are having attendance problems.
• Policemen from the state of Pará check details of suspicious vehicles by typing their license plate number into mobile phones.
• Native Brazilians from the state of Bahia use their mobile phones to determine seawater conditions for oyster farming (Eduardo Diniz, 2009) Survey on the use of Information and Communication Technologies in Brazil

The dissemination of mobile phones was particularly surprising among the lower-income population in the country. A large part of its success is due to the use of pre-paid plans, which enable devices to receive calls at no cost and account for 80% of all devices. Charging only the caller was a good strategic decision towards extending mobile phone access to lower income populations. This enabled classes C and D to receive calls even when they could not afford credits. (Eduardo Diniz, 2009) Survey on the use of Information and Communication Technologies in Brazil

The Survey on the Use of ICTs in Brazil, by the Center of Studies on Information and Communication Technologies, collected data between September and November 2009 on the penetration and use of the Internet, and includes a special section in the penetration and use of Cellphones. It also has the advantage of separating data by region, sex, education, age and social class. For the complete survey see [24]

In Brazil, 75% of the population used a cellphone during the 3 months sampled, the clear majority (78%) from urban areas. 90% of those cellphones were pre-paid, and 35% allowed Internet access. These numbers represent the country average, but it is interesting to notice that they may vary a lot by region, age or social class, for example.

For instance, 41% of the cellphones from the southeast region allow internet access, while just 23% in the northeast do the same. 54% are in the hands of people with college or post-college education. 50% of cellphones in the hands of people between age 16 and 24 allow Internet, compared to 43% of those in the hands of people between 25 and 34. Finally, 60% of phones in the hands of the richest (class A) have Internet access.

Those users with mobile internet use the cellphone for a variety of activities, like making or receiving calls – 99%, sending or receiving SMS – 58%, accessing music (which does not include ringtones) – 25%, sending or receiving files and images – 24%, and accessing the Internet – 5%. Thus, it is clear that communication, and not mobile internet, is the main activity characterizing the profile of the mobile owner in Brazil.

A survey done by Nielsen Mobile of 5000 people in 2008 notes that the sites that received more access were those providing emails, followed by sites that provide music (27%), entertainment (25%), games (18%), films (12%) and political news (12%). The 2010 version of this survey reaffirm that cellphones are still mostly used as communication medium in Brazil, and this is also true for the youth. 60% of Brazilians between 15 and 24 years-old just use the cellphone for calls and messaging (sms), a very different situation in comparison to countries like USA, where 83% from this young population use the cellphone to access internet, email, download games, music and ringtones. Such difference is probably correlated to the fact that the majority of Brazilian phones, even those in the hands of the richest, are still prepaid (around 90%), while in the USA this number is approximately 24%.[25]

Almost all of this data change with the expected growth of smartphones in the Brazilian market which offer a wider variety of functions than existing phone stock. Nielsen Mobile 2010 survey respondents said that cameras, FM tuners and MP3 players were the most sought after features. Sales of phones featuring cameras increased 33% in the first half of the year, while those featuring FM tuners jumped 76%. Sales of phones featuring MP3 players grew 74%, while those with GPS products went up 52%. Looking to the future, smartphones featuring digital TV – which currently account for 2% of the category’s sales – will be the goal for many Brazilian consumers. More than 50% said that they intend to have such a feature on their next mobile handset. [26]

Regulation/Regulacao

Actors

• ANATEL - National Telecommunications Agency: sets the general regulation for the telecommunication sector, and consider Internet as a value added service of telecommunication.
• CADE - Administrative Council for Economic Defense: has the final word when dealing with antitrust issues, such as market concentration and price setting.
• CGI.Br - Brazilian Internet Steering Committee: a multi-stakeholder organization, was created in 1995 to guarantee transparency and social participation in decisions related to internet governance. Committee members come from the government, the private sector, academia, and nongovernmental organizations, with the last group chosen since 2004 in relatively democratic and open elections. New elections are under way during 2010.

Legislation/Legislacao

ISP responsibility

• take-down notice

Upon receipt of a take-down notice, ISPs and other companies in Brazil are expected to remove the content, but the affected user may then challenge the removal in court. This system effectively places the legal burden on the owner or producer or host of the censored content and allows only after-the-fact remedies. The current practice has developed somewhat informally and is not established by law, but Br Congress is currently considering legislation that would codify it under the debates of the Civil Rights Framework for the Internet. Under the proposed bill - which received brother attention from civil society - renders web hosts liable only if they fail to comply with a direct court order to remove content, rather than requiring them to preemptively self-censor. The bill was still awaiting passage as of October 2010.

Policy Debate/Debate de Politicas Publicas

Civil Rights Framework for the Internet in Brazil

http://www.dnt.adv.br/noticias/entenda-porque-o-futuro-da-internet-no-brasil-depende-do-marco-civil/

Wikimedia Projects in Brazil

Wikipedia

Wikipedia and the Midia

• Positive mentions:
  • http://www.cartacapital.com.br/tecnologia/a-hidra-online-na-batalha-pela-wikileaks
• Negative Mentions:
• Neutral Mentions:
• Hard to say:
  • http://www1.folha.uol.com.br/tec/822574-vandalismo-na-wikipedia-leva-a-bloqueio-de-artigos.shtml
• To be classified

http://br.wikimedia.org/wiki/Wikimedia:Imprensa

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