VZCZCXRO6354
RR RUEHRG
DE RUEHBR #1080/01 1531527
ZNR UUUUU ZZH
R 021527Z JUN 06
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 5564
INFO RUEHSO/AMCONSUL SAO PAULO 7081
RUEHRG/AMCONSUL RECIFE 4881
RUEHRI/AMCONSUL RIO DE JANEIRO 2187
RUEHAC/AMEMBASSY ASUNCION 5477
RUEHBU/AMEMBASSY BUENOS AIRES 4062
RUEHMN/AMEMBASSY MONTEVIDEO 6291
RUCPDO/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BRASILIA 001080 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECPS PGOV ECON EINT XM BR
 
SUBJECT: PROFILE OF BRAZILIAN INTERNET MARKET 2006 - USAGE EXPANDS, 
COMMUNITIES GROW; MEDIA CONVERGE 
 
REFS: (A) SAO PAULO 216, (B) SAO PAULO 245 
 
¶1. SUMMARY: While overall usage rates remain relatively low - only 
14 percent of the population use the internet - Brazilians are 
increasingly active online, in terms of the total internet user 
base, and how much time each of these users spends online. Social 
networking has become the most popular internet-based activity in 
Brazil but news content is also in increasing demand. Large media 
providers are responding with mature online products, and the U.S. 
Mission is enhancing its online presence. For its part, the 
Brazilian government is actively participating in the debate about 
global administration of the internet, including active advocacy of 
transferring control of dimain name issuange to an international 
body linked with the UN. The GOB is also taking an interest in 
issues related to the convergence of internet, broadcast and 
telecommunications media. END SUMMARY 
 
Background 
---------- 
¶2. As of December 2005 Brazil had 25,900,000 Internet users, or 
14.1% of the population, according to IT market research company 
eTForecasts. Internet usage in Brazil has increased 346% over the 
past three years. The broadband internet audience is estimated at 
66% of the total, most of whom are on ADSL lines. Cable broadband is 
available, but market penetration remains very low. Some 64% of 
internet users are in the middle and upper classes. Brazilian 
internet users spend on average 17 hours online each month, with 
some 65% of residential users surfing during TV prime time. Evidence 
suggests that the internet is replacing or augmenting TV as an 
entertainment medium. Broadband users are viewing videos, listening 
to music, playing online games and engaging in what has become a 
Brazilian cultural phenomenon - online communities. 
 
Online Social Networking Experiences Organic Growth 
--------------------------------------------- ------ 
¶3. Social networking communities such as Orkut and Myspace.com have 
captured the imagination of Brazilian internet users over the past 
few years. According to IBOPE's NetRatings survey released in July 
2005, such communities surpass e-mail as the most popular 
internet-based activity, with the average Brazilian internet user 
spending 20.5% of their online time on this activity - almost twice 
the amount of time they spend e-mailing. As a comparison, 
communities do not figure in the top five activities of the average 
U.S. internet user. 
 
¶4. With such an active user base, social networking communities have 
grown organically in Brazil as members invite their friends and user 
networks expand dramatically. This phenomenon is most effectively 
demonstrated by the domination of Brazilian users of Google's online 
community Orkut. According to online encyclopedia Wikipedia, 
Brazilians now account for over 75% of Orkut users (U.S. users 
amount to less than 6%) - which has caused some in the U.S. to 
complain of a Portuguese language domination of the 
American-developed service. 
 
Domestic Portals Grow, while AOL stumbles 
----------------------------------------- 
¶5. The top portal in Brazil is Universo Online (UOL), which was 
accessed by 63.7% of internet users aged 15-plus in August 2005. UOL 
reported 1.45 million paid subscribers in February 2006, of which 
586 million are broadband users. UOL recorded a profit of R$266 
million in 2005 - 875% higher than the year prior. In December 2005 
UOL offered 20% of the company's stock on the Sao Paulo stock 
exchange, which was sold for R$555 million, suggesting a company 
value of over R$2.7 billion. 
 
¶6. The second ranking portal in Brazil is Terra, which was accessed 
by 55.2% of internet users aged 15-plus in August 2005. U.S. company 
Yahoo!'s Portuguese language Brazil portal ranked third with 53% of 
users. Other U.S. content providers have not been so successful. 
AOL's Portuguese language Brazil service was closed March 17 after 
seven years of operation. The service had only 150,000 subscribers. 
Ref A. 
 
Brazilians seek news online in increasing numbers 
--------------------------------------------- ---- 
¶7. As the Brazilian internet audience increases, demand for online 
news is expanding. A March 2006 Ibope/NetRatings survey revealed 
that online news websites are registering growth at twice the rate 
of the total internet audience in Brazil, with home-based internet 
users spending 56% of their time online accessing news websites. 
News outlets have been debating the role of the internet, and it now 
appears that Brazilian print media are largely adopting what they 
term the "hybrid model"; free-access, real-time, news service, but 
 
BRASILIA 00001080  002 OF 002 
 
 
with paid access to the online version of the print product. Sao 
Paulo-based leading national dailies Folha and O Estado are already 
doing this, and leading Rio de Janeiro-based national Daily O Globo 
is expected to follow suit shortly. 
 
U.S. Government online presence 
------------------------------- 
¶8. There is significant demand in Brazil for Portuguese language 
information from U.S. government sources. Mission Brazil's websites 
registered over 1.3 million visits in 2005. During the same period 
45% of visits to the VOA Portuguese to Africa website originated 
from Brazil. 
 
¶9. The Mission has leveraged the internet in order to increase its 
visibility and outreach across the continent-sized landmass of 
Brazil. Mission Brazil was the first in WHA to establish Virtual 
Presence Posts (VPPs). VPPs are designed to increase the frequency 
and effectiveness of engagement with regions where the USG does not 
maintain a traditional diplomatic presence. VPPs combine 
on-the-ground activities and media engagement with a branded web 
site that provides customized content about U.S. government 
activities in the region. Mission Brazil has five such VPPs, with 
plans to establish two more. As a measure of their effectiveness, 
visits to VPP websites have grown dramatically, with an average of 
over 4,000 monthly website visits in the first four months of 2006, 
compared to an average of 1,800 in the same period in 2005. 
 
¶10. In response to the internet preferences of Brazilians, the 
Mission has developed several online community initiatives, the best 
example of which is for the Youth Ambassadors youth exchange 
program. In order to facilitate dialogue between program 
participants and alumni, the embassy established an online 
networking community. Mirroring the experience of larger networks 
such as Orkut, the service has proven to be extremely popular, and 
has taken a direction of its own. For instance, program alumni have 
recently started an online mentoring initiative for new grantees. 
 
¶11. The Mission has also initiated an "Ask The Consul" feature which 
allows visitors to the Mission consular pages to submit questions. 
Initially the idea was to select one question each month for 
publication on the "Ask The Consul" page, with a response from the 
Consul. However, due to the immense popularity of the service, the 
consular section has taken to directly answering as many as 30 
e-mails per day. 
 
Brazilian government and the internet 
------------------------------------- 
¶12. The Brazilian government has been at the forefront of efforts to 
reform control of the internet, currently managed by U.S. government 
entity ICANN (Internet Corporation for Assigned Names and Numbers). 
Brazil has proposed the creation of an autonomous, independent 
organization, affiliated to the United Nations and created by 
international treaty that would become responsible for, among other 
things, issuing top-level domains (.com, .net, .br, etc) and 
developing common standards for future web services as they evolve. 
 
Media Convergence 
----------------- 
¶13. Another important area where the Brazilian government is 
involved is in the convergence of cell phone service with both the 
internet and digital TV. There are more than 80 million mobile 
phones activated in Brazil - a country where many communities are 
not served by land lines, and growing numbers of Brazilians are 
accessing news websites via these cellular phones. Additionally, 
telecom companies have been actively lobbying the Brazilian 
government as Brazil deliberates which of three competing digital TV 
standards to adopt, all of which offer some degree of mobility, or 
content delivery to mobile phones. Ref B. 
 
¶14. COMMENT: Due to various geographical and societal factors, 
Brazil has widely embraced the internet. It has become a world 
leader in community-based online activities, and looks 
well-positioned to continue in audience growth and the convergence 
of broadcast, print and online media. END COMMENT. 
 
¶15. In line with the Department's focus on transformational 
diplomacy and expanded outreach to key audiences, post will continue 
to monitor these trends, and will respond with post developed online 
communications products that cater to an ever expanding and 
increasingly sophisticated internet audience. 
 
CHICOLA