 | Issue: | Latin America I 2000 |
| Article no.: | 14 | |
| Topic: | Broadband Networks in Brazil – Growth and The Shared Use of Right of Way and Infrastructure | |
| Author: | Salomão Wajnberg | |
| Title: | President | |
| Organisation: | TELECOM, Brasilian Telecommunications Association | |
| PDF size: | 20KB |
About author
Not available
Article abstract
Broadband networks are a reality in most of the developed countries. The demand for great volumes of information, delivered at great speed, is a recognised need of the business world, the media, governments, scientific networks and the Internet. This has stimulated the development of a variety of technologies to meet the need. As a result, a great number of networks, using a variety of technologies -MMDS/LMDS, DSL, fibre-optic, satellite, coaxial cable for TV, etc.
Full Article
In Brazil, the widespread use of broadband is just starting. The growth of broadband is stimulating partnerships between high velocity access providers and content providers and stimulate the growth of business networks of all sizes. Short to medium term, in addition to the traditional users of broadband such as subscriber TV and corporate networks, the greatest growth in broadband will come from Internet related demand. Since this is a new market, it is expected to take at least two years to build up a reasonable infrastructure and consolidate a solid users base. The broadband networks in Brazil are either high capacity wireless systems or fixed networks. The wireless systems use either microwave or satellite transponders for transmission and MMDS and LMDS (in tests) or Direct To Home satellites for distribution. The wireless networks will tend to grow rapidly at the start, but have limited potential for expansion. Despite the recent opening of new transmission channels in the highest ranges of the radio frequency spectrum, as well as considerable increase in channel capacity made possible by digital TV technology, there is a natural, physical, limit to the number of bands and channels in the radio spectrum. Physical transmission and distribution networks consisting of fibre optic, for example, do not suffer from the same limitation. As technology develops, the tendency is to increase the capacity of the medium. New wavelength division multiplexing (DWDM) manages to separate the frequencies in the light signal passing through the fibre and use each wavelength as a separate channel. In a sense, each wavelength becomes a virtual fibre. In this way, technology is increasing the capacity of fibre optics. The ultimate capacity, the broadband transmission capacity that can be coaxed out of fibres is still unknown. Advances in technology are constantly providing astounding increases in capacity. In practice, the capacity of a fibre optic network is determined more by the transmission equipment, the terminals and the repeaters than by the fibre itself. By installing higher capacity terminals, transmitters and repeaters, the capacity of the network can be multiplied without any changes to the cable network itself. Companies in a hurry to enter the market can start their broadband network using rapidly deployable wireless systems, but, in parallel, to guarantee expansion capacity they build optical fibre backbones to guarantee the availability of capacity in the future. The two technologies can be integrated, at their convenience, to service the market according to the needs of the moment. The speed with which extensive fibre networks can be built often depends more upon obtaining the needed right of way than upon the actual construction time. If permission can be obtained to use the most direct and efficient routing the costs of building a network can be greatly reduced. Likewise, by obtaining permission to use existing infrastructure facilities, light poles or underground passages for instance, the cost and the time needed to build can be reduced enormously. Until three years ago, the government owned utilities, including the telephone companies, obtained right of way either by buying it or, when not possible, by having the government expropriate it. When the right of way, or necessary infrastructure, belonged to another government controlled company the question was resolved rapidly by a simple agreement between the companies. After the state-owned companies were privatised, the new owners, have been working to maximise the utilisation of their infrastructure by renting, at times, their infrastructure and excess capacity whenever possible. They have also invested in building up their networks and other infrastructure assets in preparation for the expected opening of the telecommunications sector to full competition starting in 2001. The telecommunications legislation is clear. Subsidiaries of these companies, not only the telecommunications companies, but also the power companies, gas companies or any company that builds a network and requests a license from ANATEL, can enter the telecommunications market. At times, companies planning on entering the market in 2001 have refused to grant right of way and denied usage of existing infrastructure to potential, future, competitors. Owners of infrastructure and holders of right of way have a considerable advantage. Power companies, for example, have right of way and in-place infrastructure connecting them to their customers. For every US$1 million spent on building a network only US$300 thousand is spent on cables. The rest is spent on right of way and infrastructure. Companies who do not have this sort of an infrastructure consider the power companies to be unfair competition. Of course, the power companies do not quite see it the same way. As demand for right of way and infrastructure increases the prices charged to use them increases accordingly. Hidden restrictions hinder access by “newcomers” and conflicts, still somewhat undercover, are beginning to emerge. As the conflicts increase, the velocity of network construction is slowing. The growth of these conflicts forced Brazils regulatory agencies to combine forces to battle the problem. In November of 1999, ANATEL (the telecommunications regulatory agency), ANEEL (the national electrical energy regulatory agency) and ANP (the national petroleum industry regulatory agency), together, issued a regulation which defined the rules for infrastructure sharing among the participants in the telecommunications, electrical and petroleum sectors. The purpose of the regulation is to guarantee telecommunications operators equal, fairly priced, access to poles, towers ducts and transmission facilities. Nonetheless, getting all involved to co-operate has proved difficult. The electrical, gas and petroleum companies with infrastructure all have their own plans and strategies to enter the telecommunications market. Often, these companies will do their best to absorb any extra capacity they might have, before others get there, so that they will be able to meet future demand with their own networks. The infrastructure sharing regulation defines the items that can be shared in three classes: public passage through private property; towers and ducts; and coaxial cables and unused fibres in cables. Sharing rules are defined, and should take place, for the unused infrastructure capacity, public passage rights and rights of way controlled by public service concession holders. Sharing, according to the regulations, can only be denied due to capacity limitations, security considerations, engineering problems, due to prior agreements or other conditions of like nature. The regulations specify certain items that the contracts between the parties to a sharing agreement must include: conditions of usage; prohibition against sub-letting the infrastructure or its use for activities not covered by the contract without prior consent; as well as the technical conditions for implementation, security and quality of the covered services. The prices charged and the commercial conditions are freely negotiable, but the principles of equal treatment and free competition must be observed. The costs of any modification to the infrastructure are the responsibility of the party or parties that benefit by the change. Road authorities and municipalities, until recently little concerned with the question but generally granting with goodwill their use of their infrastructure or rights of way, have also begun to issue regulations concerning the commercialisation, granting or renting of their property. Brazils National Department of Roads and Highways (DNER) issued regulations in 1999 that provisionally exempt the grant holders of other public services from having to pay for the right of certain types of networks to cross federal highways. Another 1999 regulation, however, established a table of payments to license telecommunications concession holders for the right to use (not cross) the strip of land alongside the roadways for their networks. Some states, Sao Paulo and Parana, for example, are following the same practice as DNER and have established similar regulations for their roads and highways. The City of Sao Paulo is the pioneer among the cities of Brazil. In 1999, they followed the lead of DNER and regulated the use of public streets and works within the city regarding the implementation, installation of equipment and right of passage of networks and equipment destined for public service infrastructure. The regulation establishes conditions of payment proportional to the space used (either buried or overhead), the value of the equipment employed, the public usefulness of the service to be provided and the value of the real estate through being made use of. Conclusion In order for broadband networks to grow and develop with a minimum investment in a country, like Brazil, with continental dimensions existing infrastructure must be shared. It is reasonable to defend the right of a concession holder, which controls rights of way or infrastructure; they have the right to benefit from the use of their property, their rights and other assets. On the other hand, when we are dealing with two companies that are holders of public concessions it is reasonable, in this case, to assume the first concession holder has an obligation to authorise the passage of the other, provided appropriate compensation is agreed to between the parties, since both are providing services of equal interest to the public. As much as the government tries to intervene, to reduce conflicts and speed broadband network construction, the question will only be resolved by direct negotiation between the interested parties. The resolution of these right of way questions has assumed such importance in major telecommunications companies that they have even named vice presidents for right of way for whom dealing with such questions is their principle, indeed only, official preoccupation.
