NEW YORK-After many delays, Brazil’s B-band cellular license auctions, which will be open to foreign bidders, are likely to begin early next year.
The Brazil Senate last month ratified telecommunications deregulation legislation already approved by the House, thereby opening satellite and cellular services to outside ownership. By mid-September, the Brazil Ministry of Communications (MINICOM) is expected, although not required, to present to Congress its draft of a law defining the responsibilities of the National Commission of Communications, a new regulatory body created by the passage of the telecommunications deregulation law.
Since the law was adopted, MINICOM has published a draft of “licensing norms,” or qualifications specifications, for B-block cellular bidders. A comment period that will last from 30 to 60 days is under way. Final rules are likely to be published in September or October, and bidding probably will occur by the end of first quarter 1997, according to Linda Barrabee, research director of Pyramid Research Inc., Cambridge, Mass.
“Brazil is the big opportunity in Latin America because of its enormous population,” Barrabee said in a presentation at a recent conference titled, “Navigating the New World: How You Can Profit from the Latin American Telecom Revolutions,” sponsored by the International Institute of Wireless Communications, Washington, D.C. “Currently, Brazil’s market is dominated by state-operated companies holding a monopoly over all services except paging and value-added services.”
It is expected that 10 B-band cellular licenses will be auctioned early next year, each covering areas with populations totaling between 10 million and 20 million people. Bid winners will be required to pay half of their bid upon winning a license, with the balance due within two years. No single bidding consortium will be permitted to win more than two licenses.
The consortia lined up for the B-block bidding include AT&T Corp., BellSouth Corp., AirTouch Communications Inc., Nynex Corp., GTE Corp., Motorola Inc., SBC Communications Inc. and Millicom International Cellular S.A., according to Barrabee.
“In Brazil, we expect cellular tariffs to fall,” Barrabee said. “Connection fees were in the thousands of dollars. They’re now in the hundreds of dollars. With deregulation, they will get cheaper.”
Brazil’s Ministry of Communications also announced that by year end it plans to open up the satellite sector to competition.
“Where mobile satellite services are priced today, we see them skimming a certain amount from cellular-I’m not certain how much-from people who are global roamers and don’t worry about their bills,” Barrabbee said, speaking of all of Latin America. “MSS also may serve as cellular fill-ins in rural areas unreachable by traditional landline service.”
In more populous areas, Barrabee added, personal communications services “may even evolve as the predominant technology in local loop.”
