The first step to a national LTE deployment in Brazil began yesterday with the beginning of spectrum auctions conducted by government regulator Anatel. There were few surprises among first-day winners – the country’s big-four carriers, but the results pave the way for the start of the next generation of telecommunication for the country. That roll out will likely begin as a soft deployment, with carriers focusing on meeting build out requirements. Large-scale adoption of LTE services should come only after a reduction in device prices.
Analysts’ noted that Vivo, owned by Spain’s Telefónica, might lead the coverage roll out in order not to lose its current No. 1 position in market share.
“It was expected the four incumbents to secure spectrum, because they cannot risk to be out. But it does not translate in a quick deployment,” noted Jose Otero, president at Signals Telecom Consulting. “They will follow Anatel’s minimum requirements, and Vivo can deploy faster, in order to maintain its leader position.”
Vivo currently provides the country’s largest 3G coverage, reaching 2,727 municipalities at the end of first quarter, which is more than other three nationwide carriers combined. Claro covers 866 municipalities; TIM covers 512 and Oi 308. According to a recent survey from Teleco and sponsored by Huawei, 51.9% of municipalities and 85.3% of Brazil’z general population are covered by 3G service.
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Marceli Passoni, research analyst at Informa Telecoms & Media, told RCR Wireless News that Vivo would likely lead LTE deployments. “They have already HSPA+ and they have been preparing their network,” she said.
Analysts noted that they do not expect carriers to expand coverage beyond requirements. Among Anatel’s rules there are the immediate requirements for coverage of municipalities where the 2013 Confederations Cup and 2014 FIFA World Cup are scheduled to take place; commitments for coverage that prioritizes major construction network infrastructure; and the encouragement of competition in operating services with the participation of small, medium and large companies.
“It will be a soft LTE deployment, mostly due to the high device prices,” explained Eduardo Tude, Teleco’s president. “I believe it will still take three or four years until we see a fall among smartphones costs. Until then carriers will focus on providing dongles.”
One big concern is if carriers will have enough investment capabilities to deploy LTE, as they are still waiting for the 3G deployment payback. This has been the crucial question leading up to the LTE auction. Passoni noted it was too early to start LTE deployments across the country, arguing incumbents paid a high premium of about 87% to get 3G licenses and they did not yet have a return on that investment.
“They need to monetize 3G,” she said. Passoni also noted that 3G rules were difficult to meet and carriers were still trying to accomplish those goals.
Tude did say that the premiums paid for LTE licenses were about what was expected. “The minimum prices were very reasonable,” Tude said.
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