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ARTICLE
By Eduardo Prado, Senior Analyst - Brazilian Market
The Brazilian Public Auction for new licenses in the 3.5 GHz band for WiMAX has been on hold since September 2006, when the Federal Auditing Court (TCU) suspended the auction process on technical grounds. Government delays and legal injunctions continue to stymie the process. In September 2006 the courts ordered a halt to the auction because of disputes surrounding the exchange rate used to calculate prices. The court was to vote on a new date for the auction; however, this was deferred due to legal disputes from fixed-line operators excluded from the auction. The public auction process prohibits the participation of the wireline telcos in their current areas of concession. Some telcos (including Oi and CTBC) and the Wireline Telco Association (ABRAFIX) have filed suit over that restriction. Another issue is that the Communications Ministry (MiniCom) has shown interest in using a portion of the 3.5 GHz spectrum to provide services under digital inclusion. The main 3.5 GHz license holders in Brazil are (a) EMBRATEL (a TELMEX carrier), which has licenses for the whole country; (b) Brasil Telecom (a Brazilian wireline company), which has licenses in the main state capitals from the Northeast to the South of the country; and (c) Neovia (a WISP with investment from Intel Capital), which has licenses for São Paulo state. The 3.5 GHz licenses already auctioned represent 30% of the spectrum. The future public auction is going to sell the remaining 70% of the spectrum. In July 2007, the impasse over the public auction of WiMAX frequencies seems to be yielding. In a recent meeting of the MiniCom that involved all the interested parties from the telecommunications sector, a consensus was reached on at least one point: the current RFP has to be withdrawn because it has lost its validity. The MiniCom and ANATEL (Brazilian Telecommunications Regulating Agency) will convene to consider diverse positions in formulating an alternative, which will be brought to the Board of Directors at ANATEL. This process aims to achieve during August 2007 a common understanding that will shape the future RFP. Some areas needing clarification in the RFP have been identified. These include the time limit for the telecommunications concessionaires to provide WiMAX service; the allocation of investment among cities of various sizes; and limitations on how much bandwidth may be won by any particular bidder. The current objective is to define rules that provide small investors and competing carriers a fair chance at bandwidth, without unduly hindering the large companies. The federal telco authorities need to expedite the awarding of licenses for the 3.5 GHz spectrum. The three-year delay has deprived subscribers and service providers of differentiated services. For more information you can contact the author: eprado@brasilecia.com
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