VZCZCXRO3662
PP RUEHRG
DE RUEHBR #1870/01 2741919
ZNR UUUUU ZZH
P 011919Z OCT 07
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC PRIORITY 0082
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 5186
RUEHSO/AMCONSUL SAO PAULO 0892
RUEHRG/AMCONSUL RECIFE 7181
RUEHBR/ALL WHANET COLLECTIVE
RUEAFCC/FCC WASHDC
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREAS WASH DC

UNCLAS SECTION 01 OF 04 BRASILIA 001870 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/CIP AMB DGROSS, NFETCHKO, TFINTON 
FCC FOR DTATE, HDOMENICI, BLERNER 
COMMERCE PASS TO NTIA FOR MBAKER, JCOFFIN 
 
TAGS: ECON ECPS TINT TSPA BR
SUBJECT:  AMB. GROSS LEADS INTERAGENCY DELEGATION TO BRAZIL FOR 
TELECOMMUNICATIONS BILATERAL DISCUSSIONS 
 
¶1. Summary: Ambassador David A. Gross, U.S. Coordinator for 
International Communications and Information Policy (EEB/CIP) led a 
senior-level U.S. delegation to Brazil for meetings with the 
Brazilian Ministry of Communications and the telecommunications 
regulator, the National Telecommunications Agency (ANATEL) August 
14-16, 2007.  The delegation, which included Federal Communications 
Commission (FCC) Commissioner Deborah Tate and National 
Telecommunications and Information Administration (NTIA) Deputy 
Assistant Secretary (DAS) Meredith Baker, secured a commitment from 
ANATEL to move toward establishing a mutual recognition agreement 
with the United States for importation of telecommunications and 
information technology (IT) equipment.  The Ministry of 
Communications also expressed interest in working with the U.S. in 
its Digital Freedom Initiative (DFI) efforts in Africa.  End 
Summary. 
 
---------------------------- 
Mutual Recognition Agreement 
---------------------------- 
 
¶2.  Prior to meeting with the Ministry of Communications and ANATEL, 
the telecommunications regulator, in Brasilia, the delegation 
traveled first to Sao Paulo to meet with U.S. telecommunications and 
IT companies operating in Brazil.  During the course of a two-hour 
roundtable discussion, U.S. companies (including Intel, Cisco, and 
Nextel) described market access difficulties faced by 
telecommunications and IT companies trying to do business in Brazil 
and issues related to Brazil's Universal Service Fund (USF).  In 
addition to criticizing Brazil's complicated tax and tariff policies 
(that have an impact on all industries), industry representatives 
singled out the need for a mutual recognition agreement between the 
United States and Brazil in order to speed the introduction of new 
equipment/technologies to the Brazilian market.  Industry 
representatives described how approval of a recent application to 
the FCC for a particular piece of equipment took only three weeks 
while a similar application to ANATEL has been pending for three 
months.  (Note: Mutual recognition agreements are negotiated by USTR 
with technical assistance from the FCC.  Post will work with 
EEB/CIP, FCC and USTR to follow up.  End Note.) 
 
--------------------- 
Cooperation in Africa 
--------------------- 
 
¶3.  In a private meeting with the delegation, Minister of 
Communications Helio Costa noted that while the Brazilian Ministry 
of Foreign Affairs coordinates a number of projects (primarily 
language exchange) with countries in Africa, he would like his 
Ministry to cooperate with the U.S. on DFI projects in Africa.  Amb. 
Gross noted that the State Department was developing a conference in 
West Africa for early 2008 with the U.S. Trade and Development 
Agency (USTDA) that would be similar to EEB/CIP's 2007 East Africa 
conference that took place in Kigali, Rwanda, and that we would 
welcome Brazil's participation.  EEB/CIP has offered to follow up 
with the Embassy as planning for this conference progresses. 
 
--------------------------------------------- --------- 
Other Industry Concerns/Independence of Regulatory Agencies 
--------------------------------------------- --------- 
 
¶4.  Representatives of the industry also encouraged the U.S. 
Delegation to share its procedures and experiences for managing 
spectrum and other telecom issues with the Brazilian government. 
Noting that convergence of services across platforms (cable, fixed 
and mobile telephone companies, satellites) is flourishing in the 
United States, the facilities-based competition in Brazil is slow to 
develop (although companies are just beginning to offer "triple 
play" services - Internet, Telephone, and Television - in Brazil) 
because of conflicting legislation that regulates the media, 
telephony, and the Internet.  The delegation also noted that the 
U.S. government (NTIA) would be more than happy to share additional 
information about digital television (DTV) transition in the United 
States, as appropriate, as this issue was raised by industry. 
 
¶5.  Industry sources also noted their growing concern over what they 
see as increasing Brazilian government criticism and interference in 
Brazil's independent regulatory agencies - primarily through 
withholding of budgetary resources.  Independent regulatory agencies 
have come under heavy criticism for their competency following the 
recent plane crash in Sao Paulo.  The day the delegation met with 
ANATEL, Minister of Communications Costa participated in a 
 
BRASILIA 00001870  002 OF 004 
 
 
Congressional debate on the role of independent regulatory agencies 
and argued that such organizations should not be "untouchable." 
Privately, Costa told the delegation that the Ministry was only 
seeking to reclaim powers that had been taken away from it when 
Brazil privatized its telecommunications industry in 1997.  At that 
time, Costa explained, ANATEL was created by the 1997 Telecom Act 
and the Ministry of Communications was abolished.  The Lula 
administration has since reestablished the Ministry to set 
telecommunications policy, so the 1997 law needs to be amended to 
reapportion certain powers back to the Ministry. 
 
------------------- 
Internet Governance 
------------------- 
 
¶6.  Both ANATEL and the Ministry of Communications expressed a 
desire for internationalization of the International Corporation for 
Assigned Names and Numbers (ICANN), the entity charged with 
assigning domain names for the Internet, and Brazil's plans to raise 
this issue at the Internet Governance Forum (IGF) to be held in Rio 
de Janeiro on November 12-15, 2007.  The delegation noted the 
importance of ICANN being transparent and accountable to the 
international community, stressed the importance of more countries 
participating in ICANN's Government Advisory Committee (GAC), 
highlighted the importance of scholarships for developing countries 
to attend ICANN meetings, and noted that ICANN's Board of Directors 
was becoming more international and that this is a welcome 
development.  The delegation pointed out that ICANN is only 
responsible for a small part of management of the Internet and that 
the IGF is not a forum for negotiation, but rather a forum for 
discussion. 
 
¶7.  The delegation also stressed that the United States supports 
expanding the number of languages supported by the Internet (e.g., 
the internationalized domain names (IDN) issue), but that critical 
and lengthy tests need to be undertaken to ensure that technical 
risks to the network are avoided.  Note:  ICANN will be testing 
eleven (11) new languages very soon.  End Note.  The delegation 
pointed out that cybersecurity is a critical area for collaboration 
and that the U.S. would be happy to hold a dialogue with Brazil on 
this issue.  The delegation noted that the U.S. objective for the 
IGF will be to address the central and critical issues of increasing 
Internet access around the world and promoting the free flow of 
information and freedom of expression on the Internet. 
 
---------------------- 
Digital Radio Standard 
---------------------- 
 
¶8.  Costa said Brazil was very near selection of the U.S. In Band On 
Channel (IBOC) Digital Radio broadcast standard (designed by U.S. 
company IBIQUITY).  In order to be able to reach the most remote 
parts of the country and meet its goal of 100% radio coverage for 
the country by the end of President Lula's term of office, Costa 
indicated that Brazil is also looking to the European digital radio 
standard for short wave radio.  The delegation addressed the 
proliferation of Digital Radio in the United States, noting that as 
of August 2007, the FCC has authorized 1,276 stations (213 AM and 
1,063 FM) to broadcast using the IBOC system, and approximately 700 
FM stations have requested and received special temporary authority 
for multicasting.  The FCC will follow-up with the Ministry and 
ANATEL regarding technical questions on aspects of how IBOC is 
working in the United States. 
 
--------------------------------------------- --- 
Spectrum Policy and DTV/700 MHz and AWS Auctions 
--------------------------------------------- --- 
 
¶9.  The delegation provided both ANATEL and the Ministry with a 
presentation on "US Telecom and Regulation and Market Developments." 
 Among the topics discussed was the FCC's recent auction of Advanced 
Wireless Service (AWS) spectrum licenses, where more than 100 
companies won licenses in the auction, at a price of almost $14 
billion.  The delegation emphasized that this auction should 
dramatically increase the availability of next generation mobile 
services, including mobile broadband.  Following a discussion of 
auction issues with U.S. Ambassador Sobel, the delegation invited 
Brazilian government officials to observe an FCC auction either 
virtually or in person. 
 
¶10.  Moreover, the delegation addressed the FCC's role in furthering 
 
BRASILIA 00001870  003 OF 004 
 
 
the United States mandate to convert to digital television.  Federal 
law requires that all full-power television broadcast stations stop 
broadcasting in analog format and broadcast in digital only by 
February 18, 2009. The FCC recently adopted rules with respect to 
reclaimed 700 MHz spectrum from the broadcasters that the Commission 
will auction on January 16, 2008, to providers planning to provide 
innovative new services like WiMax.  The delegation noted that some 
of the reclaimed spectrum will be used for providing 
interoperability between first responders. Costa noted that Brazil 
had last year chosen the Japanese Digital Television (DTV) standard 
(over the two espoused by the United States and Europe respectively) 
and that their transition date is June 20, 2016. 
 
¶11.  The delegation also noted that the FCC will help facilitate 
this transition for millions of Americans by setting technical rules 
and policies, ensuring vigorous enforcement of those rules, and 
promoting consumer awareness. 
 
¶12.  Costa explained that Brazil has modified the DTV standard to 
enable better mobile reception while using less power for 
transmission.  Based on these modifications, he indicated that 
Brazil and Japan would soon be sending a joint delegation to other 
Latin American countries to urge them to adopt the hybrid 
Japanese/Brazilian standard. 
 
--------- 
Broadband 
--------- 
 
¶13.  Minister Costa described a number of innovative programs aimed 
at increasing Internet broadband penetration in Brazil, including a 
project to connect 18,000 schools by the end of 2007 and 142,000 
schools by the end of Lula's term.  The Ministry is not applying a 
one-size-fits-all method to increase access to the Internet.  Costa 
described projects that employ wireless and satellite technologies 
as well as more traditional methods such as through television cable 
(Triple Play - voice, Internet and Television - services are now 
available in Sao Paulo and on a more limited basis in Rio de 
Janeiro).  Costa also said that his Ministry is exploring the 
possibility of employing Broadband over Power Lines (BPL) 
technology, which would reduce the cost of having to lay new cable 
to many locations.  In several of the projects, U.S. companies such 
as Cisco, Motorola, and Intel are actively partnering with Brazil. 
 
¶14.  Costa added that an important legislative obstacle that is 
inhibiting further spending on these sorts of projects will soon be 
overcome.  Brazil's 1997 Telecom Act established a Universal Service 
Fund to help connect remote and poor locations of the country. 
According to Costa, the Act stipulates that Universal Service Funds 
are to be spent on traditional wireline telephony, which is more 
costly and economically less attractive than wireless services as 
has been demonstrated in Brazil and many other developing countries. 
 Costa said that there is currently about U.S. $2.5 billion in the 
fund that will be available for broadband deployment projects once 
the law is modified. 
 
¶15.  The delegation discussed with both ANATEL and the Ministry the 
FCC's commitment to achieving ubiquitous broadband deployment in the 
United States.  The delegation noted that inter-modal competition 
has developed due to the FCC's efforts to remove regulatory hurdles 
and promote infrastructure investment and that competition in 
broadband has spurred a dramatic increase in deployment across the 
country. 
 
---------------- 
Public Diplomacy 
---------------- 
 
¶16.  The U.S. Delegation also undertook several significant public 
diplomacy activities, including an exclusive interview with 
important business periodical Valor Economico.  The resulting 
article highlighted the U.S. interest in deepening its relationship 
with Brazil while stressing the importance of the private sector and 
the critical role of independent regulatory agencies, which have 
come under heavy criticism for their competency following the recent 
plane crash in Sao Paulo.  The delegation also held an outreach 
event with business and law students at the prominent Getulio Vargas 
Foundation in Sao Paulo and participated in a press conference with 
Minister Costa at the conclusion of the meetings with the government 
in Brasilia. 
 
 
BRASILIA 00001870  004 OF 004 
 
 
¶17. This cable was cleared by Amb. Gross and other delegation 
members in Washington. 
 
SOBEL