 | Issue: | Latin America IV 1998 |
| Article no.: | 9 | |
| Topic: | The Brazilian Privatisation Process | |
| Author: | Maurilio Rene Palmieri | |
| Title: | Sales Manager, Wireless Business Unit | |
| Organisation: | NEC DO BRASIL | |
| PDF size: | 20KB |
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Article abstract
To provide concrete and dedicated support to the Mirror Companies that represent the ‘last mile’ in the’ process of privatisation, NEC, with its experience, has developed mirror network models that can assist these companies in their business plan analysis as well as working out a realistic network implementation. Also, its leadership in the Brazilian telecommunications market has also contributed to the expansion and enhancement of its own portfolio of products, which in turn, becomes more attractive to these companies.
Full Article
The Telebras privatisation process was successfully completed in August 1998. There are now two operators of cellular service per region: the ‘A Band Operator’ (the former Telebras group operator) and its competitor the ‘B Band Operator’, whose networks have been deployed and are already up and running. In total there are 19 cellular operators in Brazil. These consist of nine ‘A Band Operators’ and ten ‘B Band Operators’. Areas 1 and 2 of A Band belong to the same operator, while for the B Band they are run by different operators: one for Sao Paulo Metro (Area 1) and another for Sao Paulo Interior (Area 2). There are now a total of 13 telecommunications operator companies: nine for cellular service as above mentioned, plus three regional fixed service operators, also called ‘Baby-bras’, and one long distance carrier. The new scenario for the fixed service operators is presented (see Statistically Speaking on Page 58) with a total of four companies. The original configuration used to be one operator for each state of the country, and the task of getting together these companies into this new geographic division was also done in advance as preparation for privatisation. Although the Telebras privatisation has been successfully accomplished with the cellullar service already competing in a duopoly market, the fixed service operators are not facing any competition yet. They have only been privatised from being a state-owned monopoly to a private monopoly, which is not the desired situation. In order to assure competition for the fixed service operators, the Brazilian government, through its regulation authority, National Telecommunications Regulatory Authority (ANATEL), is now moving one step ahead regarding the privatisation process. Competition has been introduced through the authorisation for a fixed switch service operation in four regions of the country. This consists of three regional and one long distance service, corresponding to the current fixed service operators (see Statistically Speaking on Page 58). The Mirror Companies Process In September, ANATEL issued the tender and the proposals were submitted in December. These new companies are known as ‘Mirror Companies’ since their geographic area of coverage are identical to those of the existing companies. The proposals to be submitted will consist of two parts: · Pricing – comprises the value to be paid for the license; · Technical – the degree of service to be deployed in the corresponding region. The first part is assigned a weight of 3 and the second part a weight of 7. This combination shows clearly the importance of knowledge for the network’s project to be deployed in that region. In this way, besides the price to be offered for the license, the tender’s evaluation rule for the technical part was defined in such way as to take into consideration the main parameters concerning the service deployment in each region. Generally speaking, the score in the technical part will be higher as follows: · the higher is the number of cities to be served; · the higher is the penetration ratio in each city; and, · the sooner is the service deployed. The service deployment above mentioned means the score improves as far as it can in a short term period, in this case in the first two years of operation (1999 and 2000) for a four year period of evaluation. From all the above statements it is clear that such commitments must be well based on an accurate knowledge of the region, the network to be deployed, the potential market and the strategic targets from the business point of view. The support of a supplier with a strong local presence and long experience in Brazil plays a very important role for the success of such business development. NEC’s Mirrors Approach NEC realised the importance and the key role of a supplier since the very beginning and started developing the idea even before the tender had been released. Due to our large experience deploying full turn-key projects for local long distance and cellular networks, this proved to be a relatively easy task. Besides that, NEC’s leadership in the Brazilian telecommunications market contributes to the expansion and enhancement of our portfolio of products that are more attractive due to a full line of local manufacturing. Based on all this know-how, we developed realistic models for all the four regions and designed for each of them, a full digital network with 100% NEC equipment to be deployed on a turnkey basis. These models took into consideration the most suitable solution for each region and compatible deployment timeframe according to its size. It is also very important to ensure that all of this equipment fully complies with the Brazilian technical specifications, assuring the interconnection capability with other existing networks. The mirror network models that we have generated are fully compatible with the tender rules and greatly exceed its minimum requirements. The main philosophy adopted was the formation of ‘clusters’, where a number of small cities surrounding a main city are served by a regional network and all these ‘clusters’ are linked through a powerful digital backbone interconnecting digital switching supernodes with high voice and data handling capability. Year by year the number of cities and the penetration ratio have increased. This entails expanding the service to other cities and adding more subscribers to the already existing ‘clusters’ and cities, as well as the addition of more’ clusters’. This process of network expansion was considered for each region in the tour-year period. The models were conceived in such a way to allow the basic service to be provided in the cities of all population ranges, while broadband multi-services are a must at the big business centres. The CDMA-WLL performs a key role in such a scenario, where the deployment speed and flexibility is critical to reach the servicing levels of a large volume of lines with a high voice quality. At the same time versatile optical cabinet solutions allow the deployment of small to high bit rate services according to the final user needs. Special care was also taken concerning protection for voice and data as well as signalling networks in order to have a performance of highest quality as is expected of such a network. The widest and most advanced package of services has been considered to be deployed together with this network, as well as new releases along its operation. From the point of view of running costs, a centralised operation and maintenance structure was planned in order to simplify all the jobs related to the network administration, including new services release and its expansions. As a result and as a reference for the network to be built by the Mirror Companies, table 1 presents some significant data related to the projects and each region. It gives an idea of their size and shows at the same time the great opportunities and challenges for successfully developing such a business. The Real Implementation For the time being these models are very helpful in supporting the business plan analysis of any company that intends to compete for these licenses. Another advantage is that it has been considered a complete construction of the network. This means that no assumption is made at this point regarding the usage of available resources in the future, even those related to the infrastructure. It is therefore suitable to any company approach, for further considerations to be made from the business point of view, such as leasing or renting a number of different infrastructure resources in order to customise the solution and improve the deployment investments. This can then be optimised and adjusted to the real situation. The overall study shows that the lessons learned through this exercise can help when faced with the real situation. Also, a number of technical specialists took part in this project development. A dedicated team with long experience in the Brazilian telecommunications network and turn-key deployments planned and designed all the networks in a realistic way. The advantages of being a new network were kept in mind for the best approach from its initial conception towards its future evolutions. Conclusion NEC is ready to support the Mirror Companies that represent the ‘last mile’ in this process of privatisation in the environment of new competition that is being consolidated in Brazil. Because of NEC’s experience and local knowledge in this market, it started early to be ready at the right time to provide concrete and dedicated support to the Mirror Companies. This is only made possible because of NEC’s local presence, which assures the most complete support comprising design, development, manufacturing, installation, tests, network optimisation, training, documentation, technical assistance, as well as the tailored operation, maintenance and administration of the deployed network according to an operator’s requirements for its business purposes.
