VZCZCXRO5767
RR RUEHRG
DE RUEHBR #0615/01 1351734
ZNR UUUUU ZZH
R 151734Z MAY 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 4302
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAFCC/FCC WASHDC
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 7731
RUEHSO/AMCONSUL SAO PAULO 4042
RUEHRG/AMCONSUL RECIFE 9534

UNCLAS SECTION 01 OF 03 BRASILIA 000615 
 
SIPDIS 
SENSITIVE 
 
STATE FOR EEB/CIP/BA TFINTON 
STATE PASS USTDA FOR GMANDEL 
FCC FOR RTANNER 
DOC/ITA/OTEC FOR ABENNETT 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EINT TINT BR
SUBJECT:  Brazil's Broad Band Initiatives 
 
SENSITIVE BUT UNCLASSIFIED 
 
REF:  08 BRASILIA 1332 
 
¶1. (SBU) Summary:  Internet broadband use in Brazil has soared 
dramatically over the past year, reflecting an increased interest in 
navigating sites that require greater connectivity speed such as 
socialization sites (facebook, myspace etc.), entertainment sites 
for streaming videos and music, business application websites, 
surveillance functions, and voice over internet protocol(VOIP) use. 
Brazil's Ministry of Communications (MOC) estimates that broadband 
use in Brazil for February 2009 increased by almost 25% over 
February 2008 to over 21 million users, presenting the MOC with 
unique challenges in dealing with what is expected to be even 
greater growth rates in the future.  Officials from the Ministry of 
Development, Industry, and Commerce (MDIC), MOC, and Brazil's 
telecommunications regulator (ANATEL) discussed various 
public/private partnership approaches with Mission, aimed at 
addressing this demand.  Options range from an expansion of current 
fiber optic networks and enhanced mobile technology, to powerline 
communications systems (PLC) that transmit internet broadband 
service and digital cable TV through existing electric powerline 
infrastructure.  Broadband over powerline technology (BPL) may 
represent the most promising option in addressing future demand and 
fulfilling MOC's goal of universal access to the internet.  End 
Summary. 
 
 
BRAZIL'S BROAD BAND USE GROWING 
------------------------------- 
 
¶2.  (SBU) Henrique Badaro, MOC's director of international affairs 
told Econoff that almost 64 million Brazilians have internet access, 
either at home, at work, or at public facilities such as libraries; 
yet only 38% or 24.8 million are active users.  Of the active users, 
21.5 million or 87% utilized broad band services, an important 
factor that the MOC will consider when implementing its universal 
access plan that prioritizes internet access for all Brazilians, 
especially those in rural, underdeveloped areas.  Badaro commented 
that increased demand for broadband services was a direct result of 
users wanting greater access speeds to preferred internet sites and 
for use of VOIP services.  In highlighting the infrastructure 
challenge of installing fixed lines in remote areas of Brazil, 
Bandaro stressed the importance of GoB's continued development and 
regulation of PLC and wireless technologies, and of focusing the 
plan's expansion in this direction. 
 
 
MOC BROAD BAND INITIATIVES 
-------------------------- 
 
¶3.  (SBU) As part of MOC's universal access plan, Badaro highlighted 
the expansion of GoB-financed information technology centers (ITC) 
throughout Brazil.  MOC installed 6,000 ITCs in 2008, and plans to 
open an additional 6,000 ITCs in 2009 and 3,000 in 2010.  Each ITC 
has 10 desktop computers with broadband access, headphones and 
microphones for VOIP use, a central printer and fax, and a systems 
manager.  The plan targets rural areas with no internet or computer 
access and, due to the difficulties of installing fixed lines into 
remotes areas of Brazil, relies on wireless broadband technologies. 
By offering a high speed, efficient internet access option, Badaro 
reasoned that public-use ITCs could cater to a greater part of the 
population by reducing their navigation times and freeing up 
existing resources for use by more members of the community.  In 
highlighting another important initiative, Badaro commented that 
Brazil's census results from 2010 are expected to confirm that only 
70,000 of the 150,000 schools in Brazil have broadband access 
available for their students, something that the MOC will be working 
with State governors to address through public/private partnerships 
that expand existing fiber optic infrastructure and examine wireless 
connectivity options. 
 
 
ACRE STATEWIDE BROADBAND PROJECT 
-------------------------------- 
¶4.  (SBU) Trade analyst Jose Vieira from the Secretariat of 
Production Development within MDIC described the Acre statewide 
broadband project initiative as a perfect example of a 
private/public partnership in the IT field.  The State of Acre is 
located in the northwest Amazon region of Brazil and it is estimated 
that less than ten percent of the homes located there have a 
computer with access to the internet.  Vieira told Econoff that Acre 
state officials are committed to the development of a statewide 
 
BRASILIA 00000615  002 OF 003 
 
 
broadband project that links its capital city Rio Branco with its 
second largest city, Cruzeiro do Sul, via high-speed internet to 
eliminate redundancies and reduce overall operating costs in 
government communications. Vieira mentioned that the state also 
wants to place broadband public internet access points in schools 
and health posts and to provide connections to the general public as 
a public service. A fourth objective of the project is to provide 
commercial high-speed internet access for businesses and homes 
seeking higher bandwidth.  The State of Acre, working through MDIC, 
was awarded a USTDA US$573K grant to fund a feasibility study of the 
project and develop its organizational structure, functional 
specifications, and infrastructure.  The study will also include a 
review of legal and regulatory issues related to public-private 
partnerships and assess the project's environmental impact. 
 
INTERNET MOBILITY GROWTH 
------------------------ 
 
¶5.  (SBU) With the introduction of 3G wireless internet connectivity 
in Brazil in 2008, Brazilian mobile telephone operators are 
scrambling to position themselves to cater to an expected steep 
increase in demand.  In a recent article in Brazil's leading 
economic newspaper Valor, Joao Cox, president of mobile operator 
Claro, stated that the introduction of 3G connectivity will have the 
same effect on wireless broadband demand as the introduction of 
pre-paid cellular phone cards in 1998 had on cellular phone demand, 
where the industry experienced unprecedented growth rates.  MOC's 
Badaro confirmed that Claro is currently negotiating with several 
Brazilian state governors to obtain a value added tax (ICMS) 
exemption on personal broadband accounts and on the purchase of 
broadband modems. Currently, user accounts under R$30 are exempt 
from the ICMS and modem purchases are not exempt from the ICMS. 
 
 
BROADBAND OVER POWERLINE TECHNOLOGY (BPL)/POWERLINE COMMUNICATIONS 
SYSTEMS (PLC) 
--------------------------------------------- ------ 
 
¶6.  (SBU) Perhaps the most promising initiative in Brazil aimed at 
providing universal broadband service to its citizens is BPL 
technology that delivers high-speed internet service through PLC 
systems.  PLC provides high-speed data transmission over medium and 
low voltage electric lines to end users' homes and businesses by 
transmitting data within specifically established power line 
frequencies without interfering with normal electric transmissions. 
A specialized modem is then plugged into an electrical outlet and an 
Ethernet cable links the modem to the user's computer for broadband 
internet access, or to a TV for digital cable access.  Wireless 
modem versions are also available for broadband use.  Given that 
Brazil's electronic transmission system integrates 98% of the 
country into one electronic grid and that the remaining two percent 
are expected to be integrated into the grid within the next year and 
a half, Jeferson Nacif, Director of International Affairs at 
Brazil's telecommunications regulation agency (ANATEL), in a recent 
meeting with Econoff, commented that BPL represents possibly the 
best option to service remote areas of Brazil without incurring 
significant infrastructure costs associated with laying cable. 
Nacif expects broadband delivery speeds of 200 megabits through BPL 
technology.  Nacif stated that Japanese electronics company 
Panasonic partnered with Brazil's Telecommunications Systems and 
Infrastructure Business Association (APTEL) in Barreirinhas, a 
remote city located in northern Brazil, in late 2008 to test BPL's 
data transmission technology by providing digital TV services to 50 
of the city's users.  ANATEL provided technical oversight during the 
test and concluded that the trial was successful and that ANATEL's 
initial concerns of data transmission interference with 
electromagnetic transmissions operating in the same frequency range 
were addressed through the installation of frequency mitigation 
equipment that diminished BPL's interference capacities. 
 
 
BPL REGULATION DETAILS 
---------------------- 
 
¶7.  (SBU) ANATEL published resolution 527 on April 8, 2009 outlining 
the technical criteria by which data transmission will be delivered 
through Brazil's electricity grid.  The resolution authorizes PLC 
within radio frequencies 1.705MHz to 50MHz and requires that the 
service providers register their company, equipment details, 
operational frequency, and start-up date with ANATEL at least 30 
days prior to initiating service.  This database should be amendable 
and available to ANATEL for periodic reviews.  Nacif explained that 
ANATEL will be able to issue PLC licenses under resolution 527 once 
 
BRASILIA 00000615  003 OF 003 
 
 
ANEEL, Brazil's National Electricity Agency, publishes its own 
regulation governing data transmissions over their powerlines. 
Andre Nobrega, ANEEL's Advisor to the Board of Directors, advised 
that ANEEL completed their public comment period on May 11 and held 
a public audience on May 13, per regulatory transparency 
requirements, to discus the findings and incorporate them into the 
resolution's final draft.  Nobrega estimated that ANEEL would 
publish a final resolution by the end of June and does not expect 
any delays or significant alterations to the original draft based on 
the public comments received and the technical nature of the 
subject. 
 
 
U.S. BASED BPL ONE OF THE FIRST ON LINE 
--------------------------------------- 
 
¶8.  (SBU) BPL Global, a Pittsburgh-based smart grid technology 
company announced in September 2008 that the company had signed a 
contract with Brazilian energy company COPEL Telecommunications to 
implement phase one of a pilot program using BPL technology in Santo 
Antonio da Platina, located in the southern Brazilian state of 
Parana.  Badaro hailed this development as an important step in 
realizing MOC's universal access goal.  Phase one of the pilot 
project, whose 6 month trial period began in March 2009, provides 
broadband services to 300 of COPEL's end users and includes 
deployment, full testing, and operation of BPL equipment and PLC 
systems.  The project also plans to offer its customers access to 
VoIP, video surveillance, and smart grid management capabilities 
that consolidate multiple domestic or commercial functions under a 
single network.  Badaro believes that COPEL plans to serve their 
entire customer base through a multi-phase approach.  Once the first 
phase is completed, a second, citywide deployment is expected that 
would service 3,000 to 10,000 COPEL customers.  COPEL then would 
decide on a large scale deployment that would provide full coverage 
to the company's 3.5 million customers. 
 
¶9.  (SBU) Comment:  As the demand for connectivity in the Brazilian 
IT market increases and new technologies are introduced, 
infrastructural challenges associated with expanding Brazil's fiber 
optic infrastructure and pressures on its regulatory oversight to 
embrace new technologies aimed at accelerating universal access, 
also increase.  The goal of connecting the rural areas of Brazil and 
incorporating them into mainstream Brazilian society is an important 
GoB objective.  Although recent introductions of the iPhone and 3G 
wireless connectivity are transforming Brazilian society, these 
innovations have yet to reach all segments of Brazil's society. 
Broadband access and digital TV transmission through PLC, however, 
do present real opportunities to connect rural areas of Brazilian 
society without prohibitive infrastructure costs and significant 
implementation delays, offering consumers an affordable and 
realistic option. End comment. 
 
SOBEL