Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Brazilian telecom regulator Anatel has stopped three of the four biggest mobile operators from selling new mobile lines in an attempt to improve the country’s network infrastructure. Telecom Italia’s subsidiary TIM Brasil, América Móvil’s Claro and local operator Oi have been banned from acquiring new clients in select states across the country. Anatel took action in response to the growing number of complaints it has received in the past year.
This is not the first time the regulator has taken drastic measures to penalize poor quality service. In 2009, Anatel banned Telefónica from offering new contracts for its fixed-broadband service, Speedy. Telefónica was allowed to resume selling new services after two months when it had taken steps to ensure network stability and improve customer service.
The telecom sector is regularly cited giving rise to the most complaints in Brazil. On the other hand, it is the country’s biggest industry, accounting for nearly 260 million users in May. This figure has risen 67% over the past three years, according to Informa Telecoms & Media.
Use of mobile services is expanding rapidly in Brazil, and spectrum plays a key role in this development. Operators have been asking Anatel to increase the 80 megahertz spectrum cap for a long time, but they have been ignored. The Brazilian market has changed significantly in the past few years, and there has been high adoption of data services. Spectrum and network investments are fundamental to satisfying rising demand.
Anatel will give TIM, Claro and Oi 30 days to submit action plans to convince the authorities to lift the suspensions, which began on July 23. Market leader Vivo, as well as Sercomtel and CTBC, which were not prevented from selling new lines, will also have to tell Anatel how they intend to improve service quality.
TIM Brasil is the hardest hit by Anatel’s action. It has been banned from 19 states, including Rio de Janeiro and Minas Gerais, where 54% of its subscribers are located. According to Informa, TIM has had the fastest growth in subscription numbers since 2009 — 86% — adding 31 million new customers.
The operator has adopted aggressive pricing for its new packages. TIM has increased its minute-use by 80% in the past three years, while its Infinity Web plans are attracting millions of prepaid customers to mobile broadband services. The operator did not invest sufficiently in its network to cope with this dramatic growth in traffic, however, and the network collapsed. TIM’s network problems were behind Anatel’s draconian measures, but since the regulator wanted to be seen as fair, it punished the operators equally.
Claro has been banned from offering new contracts in three states. Although few in number, the states account for 29% of Claro’s subscriptions. The operator was banned from São Paulo, which is the most important region, particularly in the corporate market. Claro could be particularly hard hit by the regulator’s action.
Oi was banned from offering new contracts in five states, including Rio Grande do Sul. It is the least affected of the three operators, however, because these states represent only 7% of its subscriptions.
But mobile operators’ major problems are not just about network quality. The largest number of complaints to Anatel are about billing, call centers and the time it takes to resolve problems. Anatel is undoubtedly a hero to customers for punishing the operators, but it has not necessarily addressed the right issues.
Brazil has a highly competitive mobile sector, with operators launching aggressive promotions and price plans to attract new clients. But the quality of the overall service offered is far below customer expectations. Now, instead of just acting to increase their revenues, mobile operators will have to be concerned about providing high-quality services as well.
Marceli Passoni is research analyst at Informa Telecoms & Media.
Be sure not to miss:
- As Brazil suspensions begin, analysts question severity of Anatel’s action
- Fallout begins for Brazilian operators after sales suspension
- Brazil suspends some TIM, Oi and Claro sales due to customer complaints
