Telecommunications Regulations
Before 1997, telecommunication services in Brazil were supplied by the State and legally monopolized. The Brazilian Ministry of Communications governed policy formulation and telecommunications regulation. The Telebrás System, a state holding company, was the largest telecommunications company in Latin America, employing 88,000 employees across 28 operators. Demands for more competition in the Brazilian telecommunications market led to regulation reform.
From 1995-1998, privatization and the liberalization of the telecommunications market was formally introduced by the Brazilian Ministry of Communications. The goal was to privatize telecom operators while maintaining government control on telecom services through regulation. The Minimum Law of 1996 liberalized mobile services and the General Telecommunications Law of 1997 established the Agência Nacional de Telecomunicações (ANATEL), a new regulatory agency. This agency organized telecommunications services via the principles of universalization and competition and privatizing the Telebrás System [1]. This law ended Brazil’s role in the provision of telecommunication services, changing their role from supplier to regulator of services. The Telebrás System was broken up into twelve holding companies (8 mobile and 4 fixed-line companies) and in 1998 the government sold of 100% of its interests in the Telebrás System [2].
In the wake of Brazil’s telecom regulations, the availability of telecommunication services has increased dramatically. Before the regulation reform, the demand for telephones was estimated at 25 million terminals, in contrast to the 14.7 million access lines in service in 1997. From July 1998 to June 2002, installed fixed telephone lines increased from 20.2 million to 45.1 million, the number of mobile phones in operation increased from 5.6 million to 35.2 million, and the percentage of low-income families that had phones increased from 7% to 53%[3].
While the telecommunications sector has been liberalized, with a regulatory regime in place to promote open competition, Brazil is still implementing programs to bring telecommunication and data services to the majority of the population. Due to this gap, Brazil earns a rating of 3.5 in Telecommunications Regulation.
ICT Trade Policy
In the early 1980s, Brazil was in the wake of a debt crisis and, wishing to become a major player in the IT production market, created heavy import barriers. Brazil raised tariffs over 100%, reducing imports and expanding and diversifying the country’s industrial bases. This policy created an environment that nurtured locally-owned companies and protected them from competition from world industry leaders. Local firms utilized in-house design or reverse engineering for production and, by the end of the 1980s, IT corporations had brought local market presence and job opportunities to Brazil [4].
In 1985, the Ministry of Science and Technology was established to open a dialogue between the government and the science and technology community and assist the technological advancement of the country [5]. This demonstrated Brazil’s commitment to research and development as well as the implementation of policies based on strategic technological initiatives addressing the needs of Brazilian society. Brazil wanted to create a competitive advantage in a changing global economy.
With the liberalization of telecommunications services in the 1990s, the expansion of the computer industry was more viable. Hardware production expanded with the support of industry leaders like Compaq, Itautec (a national company) and IBM. The PC industry produced 1.2 million systems worth US$2.5 billion in 1997, 37% of the Latin American market [6]. The expansion of the PC market in Brazil led to the production outsourcing of integrated circuit boards to Brazil by Compaq, Epson, and Hewlett Packard. Software production also flourished during this time, experiencing a growth from 15.7% in 1991 to 21.3% in 1997 [7]. Software production accounts for over 10,000 firms and 200,000 jobs. Blusoft, a software incubator program in Blumenau, provides an environment for IT entrepreneurs to develop innovative technological ideas and establish new businesses in order to commercialize them.
Tariffs on foreign products have decreased in recent years and are closer to the rates of the United States and the European Union. Foreign IT investment in Brazil has increased with companies like T-Systems, a division of Deutsche Telekom, Accenture, and HSBC having a strong presence, earning Brazil an ICT Trade Policy rating of 4.
[1] Piragibe, Clelia. "Competition and Globalization: Brazilian Telecommunications Policy at Crossroads". Online. Available from Internet, http://arxiv.org/ftp/cs/papers/0109/0109094.pdf. Accessed February 18, 2008.
[2] Wikipedia. On-line. Available from the Internet. http://en.wikipedia.org/wiki/Telebras#References. Accessed February 18, 2008.
[3] De Oliveira, Andre Rossi. "Future of privatization and regulation in Brazil – What can be learned from the recent reforms". Online. Available from Internet, http://www.up.edu.pe/ciup/AER/textos/Brasil_Andre_Rossi_de%20Oliveira.ppt. Accessed February 18, 2008.
[4] Accenture, Markle Foundation, United Nations Development Programme. 2001. Create A Development Dynamic. "Appendix 3 Nation ICT Approaches: Selected Case Studies". Online. Available from the Internet, http://www.opt-init.org/framework/pages/appendix3Case1.html. Accessed February 18, 2008.
[5] Yates, Ann. "Brazil: National ICT Policy". Online. Available from the Internet. http://www.american.edu/initeb/ay5376a/nationalpolicy.htm. Accessed February 18, 2008.
[6] Accenture, Markle Foundation, United Nations Development Programme. 2001. Creating a Development Dynamic. "2.3.1 ICT as a Production Sector". Available from the Internet, http://www.opt-init.org/framework/pages/2.3.1.html. Accessed February 18, 2008.
[7] Accenture, Markle Foundation, United Nations Development Programme. 2001. Creating a Development Dynamic: Final Report of the Digital Opportunity. Available from the Internet, http://www.opt-init.org/framework/pages/2.3.1.html. Accessed February 18, 2008.