The GSM community, which has struggled to make inroads in Latin America, was ensured access to an important market as the Brazilian government granted personal communications services licenses in the 1800 MHz band.
Last week’s decision caught many mobile-phone carriers and infrastructure providers off guard. In choosing the 1800 MHz band, Anatel, the Brazilian telecom regulatory authority, made Global System for Mobile communications the mandatory technology for the PCS market.
Code Division Multiple Access and Time Division Multiple Access technologies are essentially locked out of the market since equipment is not available at 1800 MHz. Backers of both technologies wanted Anatel to allocate spectrum in the 1900 MHz band to allow carriers to choose from all three digital technologies.
“It’s a sad day for the consumers in Brazil as well as for proponents for fair and open competition in the telecom arena around the world,” said Chris Pearson, vice president of marketing with the Universal Wireless Communications Consortium. “At 1.9, we could have had TDMA, GSM and CDMA compete in a fair and open atmosphere. They’ve created an island … It’s very difficult to understand fully what happened.”
Jim Takach, director of advanced programs with the CDMA Development Group, said his group is studying Anatel’s decision, but he noted the CDG was surprised the announcement came this week, since it was the CDG’s understanding that Anatel was still discussing and evaluating the frequency allocation.
“Our indications were that 1900 (MHz) was looking favorable and that there would be some type of compromise,” said Takach. “PCS at 1800 (MHz) is not ideal. The ideal decision would have been to give all technologies equal opportunity. There are benefits in terms of roaming in the Americas.”
Both the UWCC and the CDG stressed, however, that their technologies still will have significant inroads and growth potential in Brazil and Latin America.
“The decision will pay off big,” insists Terry Phillips, a consultant for the GSM community on the issue. “They’ll be aligned on 3G and will have a lot more investment from Europe and Asia. The Americans will come in too.”
Jim Healy, chairman of the GSM Association, praised Anatel’s decision, saying the 1900 MHz band will allow full-scale evolution of the wireless Internet.
“Anatel has said that this decision would allow Brazil to adopt 3G technology within two to three years via a smooth evolutionary path from GSM today, into wireless multimedia networks of the future,” said Healy.
Anatel’s decision comes after almost a year of intense lobbying and spending from proponents on both sides of the issue. The GSM Association and European vendors Nokia, Siemens and Alcatel were the most vocal proponents of the 1800 MHz band, while L.M. Ericsson, one of the largest vendors in Latin America, and North American manufacturers and carriers fought for the 1900 MHz band. The issue dominated the International Telecommunication Union’s Telecom Americas show in Rio de Janiero. Hearings on the issues earlier this year were heavily attended and included representatives from the U.S. and European governments.
The 1900 MHz band to many analysts and vendors looked like the logical choice. All other Latin American countries, expect for Venezuela, chose the 1900 MHz band for PCS, aligning with the United States and Canada. TDMA is the dominant technology in Latin America, while CDMA is making strides. GSM technology is the world’s dominant digital technology, but has made minimal Latin American inroads. However, Nuevatel PCS in Bolivia and Peruvian operator Telecom Italia Group recently decided to adopt the technology in the 1900 MHz band.
Unlike the rest of Latin America, Anatel chose to align itself with the European and Asian markets, which are saving the 1900 MHz band for third-generation services. Anatel President Renato Guerreiro made his announcement in New York last week, saying the choice was based on issues of competition, quality and prices. GSM technology is more broadly deployed around the world, he noted.
“It’s hard to say why it went that way,” said Michael Krier, vice president of the Americas with consulting group Strategis Group. “Now there is more European influence there … European operators have holdings in Brazil and vendors have the economy of scale in the 1.8 market.”
Many incumbent operators had favored the 1900 MHz band allocation, believing their investments in today’s TDMA and CDMA systems would best be protected. Anatel received 53 suggestions on the frequency allocation during the public hearing earlier this year. Most of them (25) were in favor of allocating the 1900 MHz band frequency. Nine of them recommended the 1800 MHz band, while the remaining suggestions were either indifferent to the frequency or didn’t apply to the subject.
“GSM 1800 will be an interesting fit,” said Bryan Prohm, analyst with Dataquest. “They’ll have to have new handsets if they want to do any kind of roaming in the Americas. There will be a need for regional roaming looking at the big players today.”
GSM vendors say they can solve technology and frequency differences via dual-mode and dual-band handsets, but opponents have argued that the cost will be higher and time to market will be slower.
Initially, carriers will have to rely on roaming to fill out their networks. TDMA/GSM handsets could become available by next year, when Anatel expects the new operators to launch service.
For its part, Siemens plans to invest about $50 million in Brazil during the next two years and expects annual revenue of about $600 million.
Global Wireless writer Fabio Barros contributed to this report.
