Brazil’s four dominant carriers are pairing off to share their networks, in the light of pressure from the government to roll out 4G.
Telefonica’s local operator Vivo and America Movil’s Claro have signed a memorandum of understanding as they look…
Brazil’s four dominant carriers are pairing off to share their networks, in the light of pressure from the government to roll out 4G.
Telefonica’s local operator Vivo and America Movil’s Claro have signed a memorandum of understanding as they look to share their infrastructure and backhaul for the next three years
Meanwhile, Telecom Italia controlled TIM Brasil and local operator Oi are also reported to be in advanced discussions, and both operators have expressed their interest in sharing.
“The main idea of network sharing is to decrease 4G network deployment costs ahead of the government imposed coverage requirements,” said Jose Otero, president of Signals Telecom Consulting. He explained that Brazil’s government has always encouraged network sharing and pushed for it in the tower space.
But while tower deals usually focus on passive infrastructure sharing, the latest development is about active sharing, which would be new territory for Brazil’s operators. “We don’t have a huge demand for 4G services right now and operators have targets to deploy LTE,” said Informa analyst Marceli Passoni, who points out how expensive the technology is to roll out.
Wally Swain, vice-president of research at Yankee Group, explained that the catalyst for the move towards network sharing is the upcoming sporting events in the country.
“It is this external force of the World Cup, and later the Olympics, which is driving sharing in Brazil at this time,” he said. “Only extreme government pressure makes this happen in Brazil”.
While the government hasn’t forced operators to share networks, it has certainly encouraged them to do so by setting strict targets for 4G coverage.
According to Passoni the new trend for infrastructure sharing has to do with the nature of the spectrum band as well.
“In Brazil LTE was auctioned [last year] in the 2.5GHz [band], and that higher frequency demands a higher number of base stations compared to the 700MHz, which the operators wanted the regulator to auction,” she told TelecomFinance.
Licences in that lower band will be auctioned off at some point as part of the digital dividend. But it is unlikely telcos will get to use the frequency in the short term as it is still being used for television.
Operators in Brazil have not been willing to share their networks in the past, seeing coverage as a way to differentiate themselves and their networks as their most valuable asset. Even on this occasion Claro initially said it did not want to share its network, but in the end it had to go with it or face having to fund 4G upgrades alone.
The advance in Brazil follows the decision of Telefonica and Iusacell to share their networks in Mexico last year in a bid to combat America Movil’s Telcel. Across the Atlantic in Europe sharing has become more common in some countries, with operators keen to cut their capital expenditure.
Whether it will catch on in the rest of Latin America is yet to be seen, but Swain remained sceptical.
“All governments would like to see fewer towers and fewer base stations and lower prices for consumers from more efficient networks structures like sharing,” he says. “An inability to trust keeps this from happening outside Brazil.”
