VZCZCXRO9084
PP RUEHRG
DE RUEHBR #0587/01 0821056
ZNR UUUUU ZZH
P 231056Z MAR 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 4910
RUCPDO/USDOC WASHDC PRIORITY
INFO RUEHRG/AMCONSUL RECIFE 4503
RUEHRI/AMCONSUL RIO DE JANEIRO 1747
RUEHSO/AMCONSUL SAO PAULO 6610
RUEHBU/AMEMBASSY BUENOS AIRES 3877
RUEHAC/AMEMBASSY ASUNCION 5299
RUEHMN/AMEMBASSY MONTEVIDEO 6125
RUEHSG/AMEMBASSY SANTIAGO 5392
RUEHPE/AMEMBASSY LIMA 2896
RUEHCV/AMEMBASSY CARACAS 3162
RUEHQT/AMEMBASSY QUITO 1753
RUEHLP/AMEMBASSY LA PAZ 4441
RUEHBO/AMEMBASSY BOGOTA 3648
RUCPDO/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 000587 
 
SIPDIS 
 
DEPT FOR EB/CIP/MA 
USDOC FOR NTIA 
STATE PASS OPIC 
STATE PASS EXIM 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECPS EIND OPRC BR
SUBJECT: BRAZIL - DIGITAL TELEVISION: NEXT STEPS AFTER THE MARCH 17 
DVC 
 
 
¶1. (SBU) Summary. Reporting on Ambassador Gross' Digital Video 
Conference (DVC) advocating adoption of the ATSC digital television 
standard focused primarily on the questions raised regarding the 
reliability of the European and Japanese "offers" to build a 
semiconductor factory in Brazil and highlighted the idea that 
construction of factories ought to follow market forces and not the 
edicts of government. The media viewed our message as a critique of 
the European and Japanese standards. News articles also noted the 
constant evolution of digital technology, and that the ATSC Forum is 
looking for partners. In addition, some editorials criticized 
Minster of Communications Helio Costa's vocal advocacy for the 
Japanese standard. While Minister Costa probably has had too much 
press exposure on the issue, the ATSC Forum has had too little. 
Brazilian journalists and the GOB as well simply refuse to accept 
the premise that the choice of the new standard shall be based on 
its merits--not the number of free trinkets thrown in. End Summary. 
 
 
BRAZILIAN HYPERSENSITIVITY 
-------------------------- 
 
¶2. (U) Media reporting of Ambassador David Gross' March 17 Digital 
Video Conference (DVC) with the Brazilian journalists focused on the 
Ambassador's doubts about European and Japanese "promises" to invest 
in a semiconductor plant.  Most outlets interpreted this skepticism 
as implicit criticism of the Brazilian government's decision making 
process, which for better or worse, centers around gaining a 
commitment to construct a USD 2-3 billion semiconductor factory in 
Brazil. 
 
MARKET FORCES 
------------- 
 
¶3. (U) The media reflected the Ambassador's message that economic 
development -- in this case in the form of building factories -- 
must be market-driven. Most papers highlighted Ambassador Gross' 
pointed comment that the adoption of a hemispheric-wide standard 
would be the best way to make television and equipment manufacturing 
installations in Brazil viable, adding that Canada and Mexico have 
already adopted the ATSC standard.  The media also noted Ambassador 
Gross' statement that constant evolution of the digital television 
technology means the ATSC companies are looking for partnerships in 
the region, which could provide opportunities for Brazilian 
technological development. Finally, the media understood that U.S. 
engagement on the issue has also been market-driven and that USG 
involvement is ongoing. 
 
COSTA SUPPORT HURTING THE JAPANESE 
---------------------------------- 
 
¶4. (SBU) Minister Costa's continued and vocal support for the 
Japanese standard is one of the reasons the ATSC tandard has been 
portrayed as being in a distantthird place. However, according to a 
March 18 edtorial in the conservative daily, "O Estado de Sao 
Paulo," Costa's support for the Japanese has become a liability for 
the Japanese companies involved. The editorial linked Costa's 
support of the Japanese to his failed political ambitions, stating, 
"Considering that his chances are slim to run for governor of Minas 
Gerais, he needs to use a Plan B, which is to remain in the ministry 
to become the Minister of digital television."  It quoted a Japanese 
company representative as saying, "The worst thing is that we have 
nothing to do with the Minister's attitude. His defense of ISDB (the 
Japanese standard) is so passionate that it ends up hurting us. He 
could be a little more discreet." The press also linked Costa's 
support for the standard to his former employer, TV Globo, which 
favors the ISDB. However, Costa defended his position, noting that 
TV Globo needs no sponsor and that the "Brazilian standard will not 
be simply European, American or Japanese. We are using different 
components of the three standards." Finally, Costa criticized the 
U.S. for "spending USD 1.5 billion on subsidies" for decoders, 
something the GoB would not do. 
 
BRASILIA 00000587  002 OF 002 
 
 
 
COMMENT 
------- 
 
¶5. (SBU) The recognition that industrial development is 
market-driven is definitely a step in the right direction for the 
media in Brazil, which still embraces the concept of government-led 
development. However, the portrayal of our message as an attack on 
Brazil's selection process, and implicitly on the GoB, with the USG 
offering nothing new, is a concern.  More worrisome still, however, 
is the portrayal of the ATSC financing package. The media here 
simply refuses to understand that the USD 150 million in OPIC 
loans/guarantees is only part of a possible finance package. 
 
¶6. (SBU) In our view, the effective game-playing on this issue by 
Brazilian officials has been ongoing and, although the exact 
timetable for decision remains unknown, it more than likely will 
continue until mid-year, and perhaps later.  The longer 
deliberations take, the better off ATSC will be. Now is not the time 
for the ATSC forum to be reticent. A comprehensive media campaign by 
the ATSC Forum will have to be a necessary complement to USG 
advocacy. End Comment. 
 
¶7. (U) Charge would like to express his appreciation to Ambassador 
Gross, his staff and USDOC for their continuing efforts on this 
difficult issue. 
 
Linehan