

Telecommunications in Brazil

The next big blackout?

A swamped mobile-phone network could choke Latin America’s biggest economy

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Readers' comments



High taxes and over regulation discourage companies from investing in crucial infrastructure projects. Companies, of course, are in business to make money and if they are not unduly hampered, they will invest where they think they can profit. Unfortunately, too many countries in Latin America developed initially along less than democratic lines. The result today is too much poverty, limited opportunity, inadequate educational systems and on and on. This enables socialist leaders to rise when they promise to address all these ills. Trying to do so requires a lot of money and that is reflected in things like oppressive tax rates. Complex and difficult to be sure to find the right balance, but necessary...after all, as Teddy Roosevelt once remarked, "reform is the antidote to revolution."

Michael F. Kastre
author of Walking in the Clouds - Colombia through the eyes of a gringo

Hank Chinaski

Why have decent phone infrastructure or infrastructure in general?

I mean, the phone revolution is dead. Apps? IT? Information technology? Who needs that?

The new big thing is iron ore and oil.

After all, we have so many examples of countries becoming rich by selling commodities and so few examples of countries investing their hopes in the technologies of the future.

You guys at The Economist just "dont get" Brasil! Wise up!

We in Brasil know it better!

That's why "our" economy is bigger than "yours".

It doesn't matter that you can't drink water from the tap in Brazil.

PS: we have 5 world cups and pixinguinha too! Take that!

Ronbraz in reply to Hank Chinaski

I hope your joking,

Nobody is argueing about the profitability of commodities, or Brazil's footballing excellence.

However there is no point in having the 5th or the biggest economy in the world if the day to day life within that country is terrible.

Apart from the fact that bad infrastructure reduces the profitabilty of Brazil's commondities, you need roads to get iron ore to ports and ports, without striking workers to get the iron ore to the location demanding it otherwise you might as well not have iron ore.

What I have said so obvious I am sorry if you were being sarcastic and you already knew.

Hank Chinaski in reply to Ronbraz

Sarcasm doesnt translate well online, I was definitely joking :)

The point on worldcups and pixinguinha was a dig at how some people here justify brazil's obvious limitations: "yes we do suck but we have pixinguinha and 5 world cups, hence we are great, even if we cant drink water from the tap without incurring in waterfalls of diarrhea, who cares about that".

Quite sad actually.


5uhG7pSkUb in reply to Hank Chinaski

No one actually says any of that pixinguinha nonsense, Troll. What you are doing is the equivalent of believing that the rooster’s crowing causes the sun to rise. It's a logical fallacy, like the rest of your nonsense. Not that I didn't expect it, coming from you.


Poor Brasil, so far from God, Britain and the USA, and so close to basket case Argentina and the rest of the Hispanics.

Abraham Paul

In every business, there are certain straightforward, genuinely rightful rules of money making. Ignoring these will be suicidal. As in every business, GSM Telecom business also thrives by playing with volume. However, giving away the legitimate revenue earning avenues to attain volume is suicidal.
For example during the early days of GSM, when operators started giving SMS free of charge, I advised them not to do it as it will kill the voice call revenue. It is more so with transition of telephone usage from Voice call to short duration data & multi-media access, the average effective usage time will become less and less and unless there is suitable provision to redeem revenue, it will kill the Industry.

Please read my blogs; Impact of transition from Voice to Data and Multimedia. http://wp.me/p1ZsI2-23
Telecom Industrialists need to tread with caution on broadband business ideas. http://wp.me/p1ZsI2-4s
PROS AND CONS competitive marketing like One second and per usage charging http://wp.me/p1ZsI2-6S


A shocking problem for commercial enterprises: Too Many Costumers.

Realizing the problem is of course a bit more complex than this, I find the humour worthwhile nonetheless. Carry on.


The problem with the ohone service, unfoutunately, is the problem with any service in Brazil: roads, trains, phones, water supply, and even cinemas are all funnctioning, or not functioning, above capacity.

Brazil's economy out grew its infrastructure a long time ago and I can't even go to the cinema without booking in adavance. The whole place is coming to a standstill. The over-regualated economy, high taxes and curruption mean that any project for improving infrastructure takes years costs a fortune and is abdly executed.

I have no figues to hand but I have lived in Recife for 4 years, during that time the local economy has grown by an average of 10% anually. During that time I have seen the construction of one viaduct, and a 2 lane extention of another, and they wonder why there are traffic jams.

Endless government conversations don't help, at the end nothing is done, the private sector is corrupt, inept and handcuft, the public sector is corrupt and and inept.

I have almost lost hope, but one has to stay positive, or so the government keeps telling me.


Brazil is the second largest market now for Telefonica/Movistar/Vivo, and the most profitable one.

Thanks to its expansion in Latinamerica during the last two decades, Telefonica is a much larger operator than Telecom Italia or Deutsche Telekom, and much more profitable than them.

Fabio Nog in reply to enriquecost

Brazil alone generates 60% of Telefonica worldwide profits (US$ 1 billion here, US$ 1,6 billion worldwide). Most of the local profits was supposed to be reinvested in Brazil but the money is flowing back to Spain. The same is valid for TIM. The shortage of investments comes at no surprise

enriquecost in reply to Fabio Nog

You are wrong. Telefónica got profits of US$ 8 billion worlwide in 2011 (€ 6.1 billion), so US$ 1 billion is just 12% of Telefónica´s worldwide profits.

Anyway, in a market economy, companies invest their money where they think it is better for their future, and if they don´t do so, they will lose market share to other private companies.

Fabio Nog in reply to enriquecost

No, I am not wrong. The figures I mentioned are related to first semester 2012, as released by Telefonica few weeks ago. They can invest wherever they want, of course. But they are doing something different. When Telefonica, Tim and others bought the right to explore the communication system, they also pledged to the minimum level of investments to meet pre-defined performance levels (a kind of sla). Most Europeans multinationals are draining their Brazilian operations to support losses in their headquarters. Fine for Santander, for instance, which is not commited to any sla. Not so fine for phone companies.

Fabio Nog in reply to enriquecost

Yes, theoretically. But all 4 players in the market are doing the same. That´s the reason why the government is so upset. Of course, elections in October are stimulating some people to move out of their comfortable chairs in the regulation agency


Anatel, the brazilian telecom regulator, is a mere e-mail transfer agency(from customer to companies), and don't care about consumer's complaints; now, near elections,it was invited by the government to show it's existance, absolutely useless for those who pays the most expensive bill for the worst service in the planet.




If there's a purpose of improving the infrastructure in telecommunications, one has first to lower the high amount of taxes in Brazil. Moreover, The attendance service (via call center) has no any qualities (mostly because brazilian ones spend hours and hours to solve simple problems about their operators, which constantly ends up with no solutions), lots of promotions that have only the aim to take out more and more credits from people, combined to telecom networks that do not work well in long distances away from the city. Ultimately, the service is really bad, indeed. It's no wonder there can be a blackout, as it's very difficult to find someone satisfied with this service.


94% of the brazilian public universities are on strike for three months. The government hasn't done anything! The professors want to cancel all the first semester, so will not need to reset the classes. The students are losing so many things with this situation. Telecommunications is not the only thing that's forgotten by the government...

Live United

It's funny really when you look at the the Global Information Technology Index Report from the World Economic Forum (page 191):


Brazil is ranked in joint 1st position of 142 countries in the world for "Internet and Telephony Competition", but on price, it's ranked 133st place out of the 142 countries.

Not only are the telecoms companies getting away with activities they (or their parent companies) are prohibited from getting away with in Europe, they are overcharging and under-investing at the same time.

What wonderful governance we have here in Brazil eh?

AtlantisKing in reply to Live United

Great insight.

The problem is regulatory capture - happens everywhere in the world, but is more damaging in Brazil because the government insists on giving regulatory agencies god-like powers, but no independent overaight. That force companies to do whatever they can to "control" their regulator.

Ullisses Salles

This is just one of our many infrastructural issues that tend to be ignored and pushed under the carpet. Brazilians are iliterate and have been manipulated by heavy propaganda in the last 10 years.

All they can say is that god is Brazilian, and that Rio is the most beautiful city in the world, or that Brazil is the 6th Economy and Europe and USA are bankrupt.

Every main system is outdated in Brazil; some will affect the poor tourists that will have the courage to go there 2014 and 2016.

Telecommunications, transportation, roads, and airports in Brazil are disgraceful. Only death penalty to politicians can save Brazil from the actual situation, otherwise they will never do anything to the public services, as their relatives go to private schools and hospitals and drive expensive cars or fly helicopters and private jets.

GPCarvalho in reply to Ullisses Salles

Good comment. I would only add that 10% of Brazilians are considered absolutely illiterate (analfabetos plenos, or Analplens, according to the local cryptographic bureaucratese). The Analfuns (functional illiterates) total 40% of the adult population. The low educational level of the Brazilian workforce is, of course, taking a heavy toll on the country's productivity. If you add to this dismal situation the collapsing infrastructure, and an even worse political system, miracles - instead of urgent but unappetizing reforms - may be required to keep Brazil afloat.

BR-NZ in reply to Ullisses Salles

Are you seriously saying that the government of the past 10 years is to blame?

I can tell you what is to blame, over 500 years of criminal misrule by Brasil's so called "elites".

The governments of FHC, Lula and Dilma have run nearly the exact same programmes with a great deal of success in spite of having to form coalitions with the northern Coronelismo and the minor parties that caused the Mensalão - which was going on during FHC's mandate as well. In fact the most sensible political decision that could be made in Brasil would be a grand coalition between the PSDB and the PT to clear out all the idiots in the DEM, PMDB, PP and yes, the hard left of the PT etc. and run the country on a clear, pragmatic Social Democratic programme.

What has been holding Brasil back is a political system that was designed to prevent strong governance, in reaction to 24 years of Military Dictatorship that almost destroyed the country. Brasil is a Federal Republic with a lot of power held at State level. - this is a prime reason why Brasilians are just as sceptical about the PSDB as every other party... been to São Paulo lately? Not exactly Munich and they've had 20 years to sort the city out.

I get bored with this childish complaining from a certain groups within Brasil. Fortunately they are a minority without the military to force their 19th century attitudes on a country that has been trying to modernise despite the reactionary fools of the past.

Brasil has a mountain to climb and massive problem to resolve. But sitting on your culo and complaining and pretending everything used to be great and now is being ruined is just embarrassing.

AtlantisKing in reply to BR-NZ

"Strong governance" meaning "shut up and do what I tell you"? No, thanks. The last thing we want is a Stalinist party like PT running the country without checks and balances - and it has already defanged some of those guarantees in the past decade.

Dumontsnts in reply to BR-NZ

Honestly I think that one of our (Brazilians) problems is that we waste our precious time seeking someone to blame about the shortcomings we see. And there are plenty of them, really.
But the real thing is not the past, in the sense that analysing the past won't solve nothing. We must do something here and now. The culprits of all the problems we have can be found looking at the mirror (yes, I include myself). The reality is: we Brazilians are very good to criticize, very good to talk about our rights, but very very bad when it is about doing something or fulfill our duties.
Let's face it: while people abroad do something about a grave problem, we waste our time discussing it and seeking culprits. And so the time goes on, and our country continues to be what it have always been: a second-class country, waiting for a future that never comes.

Valter W

Just a quick suggestion: Instead of Apagão, “big black out,” a better term would Caladão or “big shut up”.


Just to add a little to the article, the government applies near to 50% taxes on all phone calls. To add insult to injury, in Brazil roaming rates apply within the country and within states. If I wander some 8 miles east of home I pay a roaming rate. Mobile usage in Brazil is one of the most inefficient in the world and at some of the highest rates.


"Anatel has not escaped criticism for its part in the mess"

Anatel CANNOT escape criticism. It has applied sanctions on the companie sdespite the fact that its own service indicators were within the parameters agreed with them. Instead, the agency relied on phone complaints, without much understanding of what the complaints were about. As for the investment, new plans were drafted presented and approved within 3 weeks, which strongly suggests they were alteady done but Anatel never bothered to discuss them with the companies.

No question that those companies have to do a lot better - service is terible, etc - but what we see here is a case of regulatory failure. And it is not the only one. Those agencies were created as technical planners, relatively indepedendent of the government, which could rationally direct the development of a sector without political interference. That model was an anathema to the Workers Party, which believes that the political control of State mechanisms is the only control worth having (a practice known in Portuguese as "aparelhamento"). Thus, those agencies were gutted so that populist presidents can play the champion of the people role. Bad theather - and, now, transparent to all.


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