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Leal et al. ICT and Telecommunications: Sectoral Transformation and Public Policy Agenda Proceedings of the 4 th ACORN-REDECOM Conference Brasilia, D.F., May 14-15 th , 2010 21 ICT and Telecommunications: Sectoral Transformation and Public Policy Agenda Rodrigo Lima Verde Leal Fundação CPqD [email protected] Claudio de Almeida Loural Fundação CPqD [email protected] BIOGRAPHIES Rodrigo Lima Verde Leal is Bachelor in Electrical Engineering with MSc in Science and Technology Policy. Currently he is a Researcher at Fundação CPqD, with experience in Information and Communication Technology, innovation management and public policy. Claudio de Almeida Loural has a B.Sc. in Physics and M.Sc. in Materials Science. He came to Fundação CPqD as a Researcher in 1981. Since 2001 he is Innovation Planning Manager, responsible for prospective studies and R&D projects evaluation. ABSTRACT This paper offers insights for the elaboration of public policy to promote the development of telecommunications services in Brazil, by means of a broad summary of where it interfaces with different sectoral dimensions and a discussion at what level it is aligned to the evolution of telecommunications services. The analysis is based on the sectoral system of innovation approach, with the sector decomposed in three dimensions that coevolve: (i) science and technology fields; (ii) users, demand and applications; and (iii) actors, networks and institutions. It begins with an analysis of technological convergence and institutional commercial and regulatory liberalization transformations and its impacts on the public policy framework developed then. Following that, the analysis turns to forecasting each dimension, in order to identify future evolution perspectives for a set of variables. Finally, the prospective vision is compared to the current public policy framework. It is expected from this analysis the verification of at what level this agenda is aligned to what it is foreseen as the future of this sector and in which points tensions arise. Keywords ICT, telecommunications, public policy, sectoral system of innovation. INTRODUCTION The Brazilian telecommunications sector has undergone deep technological and institutional transformations in the last decades. Some of these digitalization and liberalization led to the development of a new public policy framework in the 1990s, but many of its elements have not changed since, despite further transformations that took place afterwards. Convergence between information technology (IT), network computing and telecommunications led to the definition of a new sector called Information and Telecommunications Technology (ICT). Its boundaries are also blurred by further convergence between its products and services and those of digital content related sectors, such as mass media and consumer electronics. This raises questions regarding whether or not that framework is still aligned to the evolution of telecommunications services. The first section analyses two sets of transformations and its impacts on the public policy framework developed then. The second section identifies current and future evolution perspectives for a set of qualitative variables. Finally, the third section compares the findings from each previous section in order to verify alignment and tensions. SECTORAL TRANSFORMATION AND CURRENT PUBLIC POLICY FRAMEWORK This section shows how the current framework was shaped by those early transformations in telecommunications, starting with a brief explanation of the first step of the convergence between ICT digitalization moving on to the impact of commercial and regulatory liberalization on market structure and ending with the main features of the current public policy framework.

Ict and telecommunications sectoral transformation and public policy agenda - Rodrigo Lima Verde Leal, Claudio de Almeida Loural (2010)

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This paper offers insights for the elaboration of public policy to promote the development of telecommunications services in Brazil, by means of a broad summary of where it interfaces with different sectoral dimensions and a discussion at what level it is aligned to the evolution of telecommunications services. The analysis is based on the sectoral system of innovation approach, with the sector decomposed in three dimensions that coevolve: (i) science and technology fields; (ii) users, demand and applications; and (iii) actors, networks and institutions. It begins with an analysis of technological – convergence – and institutional – commercial and regulatory liberalization – transformations and its impacts on the public policy framework developed then. Following that, the analysis turns to forecasting each dimension, in order to identify future evolution perspectives for a set of variables. Finally, the prospective vision is compared to the current public policy framework. It is expected from this analysis the verification of at what level this agenda is aligned to what it is foreseen as the future of this sector and in which points tensions arise.

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Page 1: Ict and telecommunications sectoral transformation and public policy agenda - Rodrigo Lima Verde Leal, Claudio de Almeida Loural (2010)

Leal et al. ICT and Telecommunications: Sectoral Transformation and Public Policy Agenda

Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 21

ICT and Telecommunications: Sectoral Transformation and Public Policy Agenda

Rodrigo Lima Verde Leal

Fundação CPqD

[email protected]

Claudio de Almeida Loural

Fundação CPqD

[email protected]

BIOGRAPHIES

Rodrigo Lima Verde Leal is Bachelor in Electrical Engineering with MSc in Science and Technology Policy. Currently he is

a Researcher at Fundação CPqD, with experience in Information and Communication Technology, innovation management

and public policy.

Claudio de Almeida Loural has a B.Sc. in Physics and M.Sc. in Materials Science. He came to Fundação CPqD as a

Researcher in 1981. Since 2001 he is Innovation Planning Manager, responsible for prospective studies and R&D projects

evaluation.

ABSTRACT

This paper offers insights for the elaboration of public policy to promote the development of telecommunications services in

Brazil, by means of a broad summary of where it interfaces with different sectoral dimensions and a discussion at what level

it is aligned to the evolution of telecommunications services. The analysis is based on the sectoral system of innovation

approach, with the sector decomposed in three dimensions that coevolve: (i) science and technology fields; (ii) users, demand

and applications; and (iii) actors, networks and institutions. It begins with an analysis of technological – convergence – and

institutional – commercial and regulatory liberalization – transformations and its impacts on the public policy framework

developed then. Following that, the analysis turns to forecasting each dimension, in order to identify future evolution perspectives for a set of variables. Finally, the prospective vision is compared to the current public policy framework. It is

expected from this analysis the verification of at what level this agenda is aligned to what it is foreseen as the future of this

sector and in which points tensions arise.

Keywords

ICT, telecommunications, public policy, sectoral system of innovation.

INTRODUCTION

The Brazilian telecommunications sector has undergone deep technological and institutional transformations in the last

decades. Some of these – digitalization and liberalization – led to the development of a new public policy framework in the

1990s, but many of its elements have not changed since, despite further transformations that took place afterwards.

Convergence between information technology (IT), network computing and telecommunications led to the definition of a

new sector called Information and Telecommunications Technology (ICT). Its boundaries are also blurred by further

convergence between its products and services and those of digital content related sectors, such as mass media and consumer

electronics. This raises questions regarding whether or not that framework is still aligned to the evolution of

telecommunications services.

The first section analyses two sets of transformations and its impacts on the public policy framework developed then. The

second section identifies current and future evolution perspectives for a set of qualitative variables. Finally, the third section compares the findings from each previous section in order to verify alignment and tensions.

SECTORAL TRANSFORMATION AND CURRENT PUBLIC POLICY FRAMEWORK

This section shows how the current framework was shaped by those early transformations in telecommunications, starting with a brief explanation of the first step of the convergence between ICT – digitalization – moving on to the impact of

commercial and regulatory liberalization on market structure and ending with the main features of the current public policy

framework.

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Leal et al. ICT and Telecommunications: Sectoral Transformation and Public Policy Agenda

Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 22

Convergence can be understood as a process that brings together technologies involved in the development and production of

the equipment needed to build the physical infrastructure used to provide telecommunications services and technologies that

traditionally belong to IT, network computing and consumer electronics.

The first step of this convergence began to take place in the 1970s, when microelectronics dissemination and mass production

of microprocessors led the following decades to enjoy the benefits of cost reductions through telecommunications network

digitalization (Furtado, Rego and Loural, 2005a and 2005b; Loural, Furtado, Rego and Ogushi, 2005). Telecommunications equipment, then, started incorporating computer technology into several functions needed for voice signals

transmission/reception, among other signals (Leal, 2008). More and more the infrastructure became software intensive (Rao,

1999; TNO/IDATE, 2005; ONU, 2005), relying on embedded software (Lee, 2002), programmable networks (Zuidweg,

2002) and operation and business support IT systems (Oliveira, 2004; Triple Tree, 2001).

Despite this initial convergence, there was still no large intersection between telecommunications technologies and IT,

considered at that time as fairly distinct economical sectors. Radio and TV broadcasting technologies still relied on analog

technology and had no close relation to telecommunications; their corresponding services were from a different sector too –

mass media. An important fact to be highlighted is that telecommunications sector infrastructure itself was, at that time,

comprised of many different infrastructures, one for each given service. This meant there was a specific infrastructure needed

to provide fixed telephony services, another for mobile communications, another for data and so on, each with its own set of

corresponding technologies and market dynamics.

Concerning institutional transformations, the last two decades of the 20th

century were notorious for the growing liberalization of commerce between nations, of international financial flows and of investment in developing countries,

reflecting not only on economics, but on cultural values, politics (ECLAC, 2002) and organizational models in firms.

An important consequence of this liberalization process on the telecommunications sector was the transition from monopoly

to regulated competition (CPqD, 2006). By the end of the 1990s, regulatory frameworks in most nations had turned to

competition stimulation, privatizing and opening markets to new competitors (Fransman, 2002a and 2002b). The

proliferation of new service providers operating with flexible technologies and under less regulated environments weakened

the belief in natural monopoly (Maeda, Amar and Gibson, 2006).

Brazil adopted a competition model based on parallel infrastructures, similar to the North-American model, in which each

network operator should possess its own equipment to support the services it provides. In 1997, a new bill became effective –

Law no. 9.472 – “Telecommunications General Law”, which set the rules for telecommunications services commercial

exploration in a regulated competition regime, allowing new entrants to compete with privatized TELEBRAS, the former monopolistic state-owned holding that was split into a dozen of companies. This law also provided the basis for the

development of a new public policy framework for telecommunications.

This new framework can be summarized in a few important points. Firstly, private sector became the main responsible for

telecommunications services exploration and investment. The State should assure open, broad and fair competition, with the

Communications Ministry as the policy maker and Telecommunications Regulatory Agency – ANATEL – as the public

agency responsible for implementing policies.

Secondly, different telecommunications service categories or “regimes” were created. Fixed telephony was set as the only

one to be explored in a so-called “public regime”. Under this regime, Brazil was divided into markets, each with one

incumbent operator (recipient of a “concession”) competing with new entrants, which had “permissions” or “authorizations”

to build their own parallel networks. Concessions were granted for a 25-year period and brought along universal service

obligations, the assurance by the State that the service would not cease to exist and the reversibility of the infrastructure to the

State after the concession’s expiration date. On the other hand, “permissions” and “authorizations” had less regulatory burdens. All other telecommunications services, such as mobile telephony, fit into the “private regime”, with “permissions”

and “authorizations”, but no “concessions” – except cable TV.

Free-to-air TV and radio and pay-TV still kept legal idiosyncrasies. Licenses for free-to-air TV and radio exploration are not

under ANATEL’s rule and its markets were still kept under a regulatory framework developed in the early 1960s. Pay-TV is

another special case. Its exploration was regulated in 1995 with the “Cable TV Law”, when only this type of technology –

coaxial cable – was taken into consideration. Cable TV license holders are not allowed to own another telecommunications

service license. Afterwards, other pay-TV technologies – microwave, satellite and codified ultra high frequencies (UHF) –

have had specific regulations developed for each.

These different regimes reflect a view at the time that fixed telephony was the most important telecommunications service for

society and should be offered in every single location in the nation’s territory under a special “regime”. To accomplish that

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goal, incumbent operators had to comply with universalization and digitalization requirements. Regulation also created the

Universalization Fund (FUST) to foster universalization of fixed telephony where its exploration was not economically

profitable.

Next, Internet access was not considered a telecommunications service as such, but a value-added service, limited to dial-up

technology. On the other hand, broadband access has its own nuances in the current framework. In order to explore fixed

broadband access a company needs a Multimedia Communication Service license and has to comply with its specific regulation, but mobile broadband access is still considered a value-added service on top of a mobile telephony network,

therefore excluded from the ordinary regulatory rules of its corresponding license.

Along with this institutional framework, complementary federal government policies kept telecommunications apart from

other increasingly overlapping sectors, such as IT and network computing, radio and TV and consumer electronics. Fiscal

incentives, for example, are granted to certain goods but not to others with increasingly similar functionalities due to

convergence. Additionally, IT has a public fund to foster its R&D initiatives, while telecommunications has another one, with

its own set of rules. These and other examples are indications of the difficulties telecommunications policies may face in

order to take into account elements from other sectors to build a consistent ICT sector.

In summary, technological convergence led to digitalization, cost reduction and dissemination of telecommunications

services throughout the last decades of the 20th century. In Brazil, this convergence still kept much of telecommunications

technological and business dynamics apart from IT, network computing, radio and TV and consumer electronics. This was

also the case of telecommunications services themselves, each developing their own infrastructures and markets. This picture can be attributed to a legal and political process that failed to grasp the fast and intense dynamics brought by ICT

convergence. Such convergence has been intensified after the late 1990s, as explained in the next section.

CURRENT AND FUTURE PERSPECTIVES

During and after the development of the current public policy framework, the Brazilian telecommunications sector has gone

through further transformations that were not taken into account and many others are envisaged by literature, creating even

more pressure for change. This section offers a collection of recent and prospective trends depicted with the help of the

sectoral system of innovation approach (Malerba, 2004): (i) science and technology fields specific to the knowledge base

used in innovative activities; (ii) users, demand and application of sectoral products and services and their interaction with

relevant technologies; and (iii) actors, networks and institutions.

Science and technology fields

The expansion of IT, Internet and corporate data networks in the 1990s consolidated the Internet Protocol (IP) family of

technologies, which reached such a level of maturity that made possible their application into telecommunications. Due to its

more efficient use of network resources, IP packet switching technologies – originated in network computing – gained

ground over circuit switching technologies – historically used in telecommunications for voice and fax applications. This

intensified the convergence between ICTs. On one hand, digitalization of any signal allows universal representation of

information, since any media can be codified into a bit sequence. On the other hand, these bits can all be manipulated in the same way by means of IP family communication protocols. Therefore, the need for dedicated networks to each information

mode or service disappears (CPqD, 2006). In other words, an infrastructure used to provide traditional telecommunications

services – such as fixed telephony – also has the potential to be used to offer other digital communication services, such as

Internet navigation, e-mail and TV, and vice-versa. This creates room for the convergence of different services into the same

technological platform.

Users, demand and applications

A decade of privatized telecommunications leveraged service access (Figure 1). Fixed telephony reached its saturation

around 2001, and mobile telephony became the main form of telecommunication in Brazil, although around 80% of

subscriptions are prepaid (Teleco, 2010). More recently, third generation (3G) mobile telephony have developed, driven by

Internet access enabled handsets and data cards. In parallel, pay-TV and fixed broadband access have developed as new

telecommunications services, but still restricted to a much smaller share of the population.

However, when on looks into the future, convergence (and broadband) will become an important element of the services

basket evolution demanded by society. Previously non existent in the telecommunications sector, new functionalities allowed

by updated infrastructures are tied to content, applications, services, platforms, navigation, search and connectivity (Fransman, 2007), such as e-commerce, social networks and music and video sharing.

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Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 24

Figure 1. Past evolution of telecommunication services (Teleco, 2010; Controle de Acessos do

Serviço Móvel Pessoal - ANATEL)

Many technological roadmaps and experts share a vision that services in the future will be available to users anywhere and

anytime, choosing their device of preference (Alahuhta, Jurvansuu and Pentikäinen, 2004). A recent study (Leal, 2009)

identified market trends in terms of mobility, ubiquity, capacity, cost, quality, security, interactivity and simplicity. Along

with the growing importance of mobility, ubiquity and broadband, the other five trends are specially important because they

can be translated to user-centricity as an aspect that will grow in importance in the future evolution of telecommunications

services and its applications. On one hand, all those trends may be incorporated in innovative activities to develop a new service basket, which will not be limited to traditional telecommunications services, such as telephony, but will encompass a

plethora of new communication modes – voice, data and video – enjoyed anywhere, anytime and making use of a variety of

access means, in terms of devices and infrastructures. On the other hand, the evolution of a new service basket in Brazil is

constrained by other factors (IPEA, 2010).

Firstly, the size of telecommunications services mass market and their scope are restricted by the available household

income, since it limits the capability of a large piece of the Brazilian society to bear with the cost of services and devices

associated to them. Internet access and PCs are present in only 1% of minimum wage households, a number that rises to

around 90% for households with over 20 minimum wages (CETIC.BR, 2009). Secondly, the capability of individual citizens

to enjoy those new services is limited by low levels in basic education and ICT proficiency. Around 90% of functional

illiterates – which are 32% of the Brazilian population in 2007 – do not know how to use a computer or to access the Internet

(ibid; Instituto Paulo Montenegro, 2007). Finally, demand is modulated by a yet relatively low percentage of digitally included citizens and by service penetration disparities between geographical regions and urban and rural locations. For

example, only 17% of households in the Northeast have fixed telephones, a number that rises to 49% in the Southeast.

Moreover, nationwide, 40% of urban households have fixed telephones, dropping to only 15% on rural regions (ibid).

Actors, networks and institutions

Investment and exploration

As stated earlier, private sector became prime responsible for exploring and investing on telecommunications services after

late 1990s. R$ 148 billion were invested from 1999 to 2008, with peaks in 2001 and 2008 (Figure 2). These two peaks were

related to contractual service obligations derived from fixed and mobile telephony licenses, respectively, which required high

levels of capital investment from private service providers. More recently, fixed telephony license contracts were modified to

replace service obligations with investment in network capacity to offer broadband access to all municipalities, which is not a

fixed telephony service. Moreover, it is expected that in following years, private investment will keep the same levels

observed recently, with some possible growth derived from investment in technologies required for new services, such as

0

10

20

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60

70

80

90

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Tele

den

sit

y (

su

bscri

bers

/100 i

nh

ab

itan

t.)

Fixed telephony

1G/2G mobile telephony

Pay-TV

Fixed broadband

3G mobile telephony

(handset and data card)

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Leal et al. ICT and Telecommunications: Sectoral Transformation and Public Policy Agenda

Proceedings of the 4th ACORN-REDECOM Conference Brasilia, D.F., May 14-15th, 2010 25

optical fiber and advanced wireless networks (Teixeira Filho, Puga, Borça Junior and Nascimento, 2009). These elements

show a relative decline in fixed telephony as an investment driver by service providers and its replacement by wireless

communication and broadband access.

Figure 2. Telecommunication services investment (Telebrasil and Teleco, 2009;

BNDES)

Federal government’s role in investment is a secondary one: (i) it finances the expansion and modernization of telecommunications infrastructure through its development bank, BNDES, which accounts for 18% of the amount invested

by the private sector between 1999 and 2008 (Figure 2); (ii) it modulates private investment by means of service obligations

stipulated in licensing contracts, more specifically in fixed and mobile telephony; and (iii) it is responsible for managing the

universalization fund (FUST) and some public broadband access projects.

Competition

Mobile telephony, the most diffused telecommunications service in Brazil, shows relative balance between service providers

in terms of number of subscribers. After a decade of mergers and acquisitions, there are still seven service providers, but four

of these can be considered the big players, each with 20-30% market-share (Teleco, 2010). Although around 30% of

Brazilian municipalities have only one service provider, approximately 81% of the Brazilian population lives in

municipalities in which there are four or five service providers (ibid).

Fixed telephony reached its saturation in 2001, with a teledensity in the lower 20s since then. The two remaining local

incumbent service providers have regional monopoly over their respective markets (Souto, Cavalcanti, Filho, Esteves,

Carmesini and Ferreira Junior, 2009) and their presence in each other’s market is almost nonexistent. These regional

monopolies were larger in the past, however: in 2005, incumbents had around 94% market-share, a number that dropped to 80% in 2009 (Teleco, 2010), due to stiffer competition in dense urban regions.

80% of pay-TV subscriptions belong to two players: a satellite operator and a cable operator (ibid). According to ANATEL,

almost every municipality is served by that satellite operator, but only 467 out of over 5.000 municipalities have the option of

cable and/or MMDS competing operators. Despite that, these 467 municipalities account for half of the Brazilian population,

showing that competition is in place only in dense urban regions.

Despite the fact that there are over 1.300 licensees throughout Brazil, fixed Internet access is dominated by the two fixed

telephony incumbents, which compete with the same cable TV operator in their respective markets and only in densely

populated regions. The other players account for only 14% market share (ibid).

Originally incumbent fixed telephony service providers have successfully gained market dominance in fixed broadband

access by means of technological complementarities between the infrastructures needed for both services. They are also

intensifying diversification strategies to explore pay-TV services. Their main competitor is a merge of a long distance carrier, a mobile telephony operator and a cable company. Other companies have lower market share and usually do not operate in

more than one or two service markets.

In summary, Brazilian telecommunications market structure as a whole is an oligopoly, with regional oligopolies and

monopolies depending on the specific service and region in question. Competition level is dependent on diversification

strategies of large private groups and population density of each market.

0

5

10

15

20

25

30

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

R$ (

bil

lio

n)

Private investment BNDES financing

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Universal service

Universal service obligations are imposed only to licenses exploited under the “public regime”, so, in practice, only the two

incumbent service providers have to comply with universalization goals. Important to notice is the fact that even though the

universalization fund (FUST) was created in 2000, it cannot be considered operational due to a set of regulatory constraints.

Firstly, it can only be applied to a service in “public regime”, so it can only be used in fixed telephony projects. FUST is

supposed to cover only the costs that cannot be recuperated commercially, but ANATEL has not yet defined how these costs

are calculated. Besides that, FUST’s regulation already established a limited set of possible applications, such as in locations

with less than 100 inhabitants, shortening the range of its use. Finally, telecommunications legislation forbids direct subsidies

or differentiated offerings, such as those aiming only low income households.

In mobile telephony, service coverage obligations were imposed recently to license winners of the 3G spectrum auction, but

no similar features are currently in place in pay-TV or fixed broadband access licenses. Despite that, ANATEL negotiated

service obligations for fixed broadband access capacity in all municipalities with the two fixed telephony incumbents, but the

Agency has not made clear whether this investment is part of the “private regime” ruling.

DISCUSSION

Current telecommunications public policy framework can face challenges that were not meant to exist when it was created.

These challenges may come from current and future trends in different dimensions and its variables: science and technology

fields; user, demand and applications; investment and exploration regimes; competitive landscape; and universal service

obligations. Table 1 summarizes the main elements of the two previous sections and can be used as a tool to provide insights

on what level this agenda is aligned to what it is foreseen as the future of this sector and in which points tensions may arise.

Any combination of two or more of those elements can be explored with the goal of finding alignment and tension.

Current public policy framework x Current and future perspectives for the sector

Privatization: investment and exploration are done primarily by private sector; government’s role is

secondary.

Regulated competition.

Different services, different regulatory regimes and

markets.

Fixed telephony as the service to become universal

and a special regulatory regime for it.

Parallel infrastructures, one for each service provider.

Free-to-air TV and radio have its own legal

framework.

Pay-TV and Internet access regulation is tied to

specific technologies.

Difficulties for public policy to take into account the

convergence between telecommunications and other overlapping sectors.

Any communication service in any technological platform.

Saturation of fixed telephony.

Mobility, ubiquity, broadband and user-centricity are

becoming new imperatives.

Market size and scope restrained by (i) income level

and distribution, (ii) deficiencies in basic education

and proficiency in ICT and (iii) digital divide and

regional disparities.

Wireless communications and broadband access as

investment drivers.

Market concentration in few players.

Competition in one service is driven by diversification

strategies of players originally exploring other

services and population density.

Service coverage obligations are moving towards

mobility and broadband access.

Table 1. Framework versus current and future perspectives

As an example of tension, service coverage obligations moving towards mobility and broadband access challenges the

principle of fixed telephony as the main telecommunications service to be provided universally. On the other hand, regulated

competition is a principle aligned to a perspective of market concentration in only a few players.

Due to paper length limitation, only one source of tensions is analyzed in more depth: the rise of broadband access as an

essential service, as perceived by the population, and the proliferation of Internet-based applications. Broadband access

networks allow users to enjoy Internet-based applications beyond traditional voice applications offered on top of a telephony service. The importance of those new applications are growing in such a pace that many nations are creating federal programs

to expand the dissemination of broadband access (Qiang, 2009). In Brazil, this trend faces some challenges.

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Firstly, broadband networks could be potentially used as the mean to offer, with any given digital platform, all the major

telecommunications services exploited today under specific regulatory regimes – fixed and mobile telephony and pay-TV –

and, why not, free-to-air TV and radio. This raises two sets of discussions. One is related to whether a single license is better

than the current licensing model, in which different services have different regulatory regimes and markets, as a way to foster

a convergent future when any communication service will be provided through any technological platform. The other refers

to how the features of each regulatory regime are adequate to this future scenario, for example, in terms of license eligibility, service requirements and universal service obligations, specially when one take into consideration that the current framework

focus only on fixed telephony. For instance, fixed telephony license holders are not allowed to have cable TV or free-to-air

TV concessions, but can have satellite TV operations. Fixed broadband access is a telecommunications service, but mobile

broadband access is a value-added service offered using mobile telephony licenses. Universal service obligations are imposed

only to fixed telephony incumbents. These are only few examples to demonstrate there is an open debate in many different

aspects.

Secondly, broadband access is demanded by a growing share of the population and becomes an investment driver, but at

same time its market is oligopolistic and a large share of the population has no access to this service. Thus, political pressure

is put on the government to decide whether or not the regulated competition framework in place today will be effective in

driving private investment and service offerings in geographically distant or low income markets. Questions arise regarding

how to foster broadband access dissemination. Should public investment be used to foster this service, universal service

obligations be imposed on license holders and the current universalization fund legislation be changed to allow its use for broadband access? Should the focus be on fixed networks, as today, or should it include or be replaced by wireless networks?

Questions also come forth regarding strategies from service providers. Will incumbent fixed telephony service providers keep

investing in an infrastructure that will be given back to the government at the end of the concession? Since this infrastructure

is also used to offer broadband access service – a telecommunications service provided under the “private regime”, therefore

with no such obligations – how will this service be affected by incumbents’ investment strategies near the end of their fixed

telephony concessions?

Previous discussion around “any communication service in any technological platform” can be expanded to “any content in

any media”. As services and applications offered on top of a broadband access service becomes very similar to those offered

by other increasingly overlapping sectors, such as mass media and digital entertainment in general, little integration between

telecommunications and audiovisual content legal and regulatory regimes becomes a source of tensions. On one hand,

telecommunication services – fixed and mobile telephony, pay-TV and fixed broadband access – and free-to-air TV and radio have their own legal framework and actors, despite the fact audiovisual content offered by them are becoming even more

similar in their essence. For instance, players from telecommunications sector are not allowed to broadcast radio and TV, but

are more than willing too, considering most of them have pay-TV operations, but players from radio and TV broadcasting

sector fear competition coming from players many times larger in terms of revenue and rely on current legislation to fight

convergence. On the other hand, mass media communication has its own legal and regulatory regime. Digital content

provided by Internet-based applications enjoyed using an Internet access connection is not a telecommunications service, but

a value-added service therefore it is not under ANATEL or the Communications Ministry jurisdiction. Tensions arise around

two questions: (i) whether the value-added service concept is still adequate, considering its limiting effects regarding the

possibility of government regulation; and (ii) what effects are created regarding the legal postulate of considering Internet as

essentially free and unregulated (Wimmer, Pieranti and Aranha, 2009).

CONCLUSION

Two results were derived from this research. Firstly, the paper offers a set of challenges Brazilian policy makers will face in

order comply with those trends: how broadband networks will be able to offer any service, considering each service has its

own legal and regulatory regimes; how to foster broadband access dissemination, taking into account the competitive landscape and digital divide; how to regulate increasingly overlapping sectors, specially when mass media and digital

entertainment are not part of the telecommunications sector.

A framework was also presented for researchers and policy makers to identify sources of alignment and tensions between

current and future agendas in terms of science and technology fields, users, demand and applications, actors, networks and

institutions. Further research can be done by combing any two or more of the variables presented in that framework and,

therefore, discussing the sources of tensions.

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ACKNOWLEDGMENTS

This paper made use of research conducted the authors under FUNTTEL project “Cenários Tecnológicos de

Telecomunicações” and contributions to CEPAL’s consulting studies to IPEA project “Perspectivas do Desenvolvimento

Brasileiro”.

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