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Brazil's Lagging Performance in Broadband Spurs Government to Action

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Brazil's initiative to boost broadband availability will significantly improve access to broadband service over the next four years, but it is likely to fall short of the government's aggressive goal of 40 million broadband households by 2014, according to a new report from Pyramid Research.

Broadband network expansion to date has focused on urban centers and in the southeast region of Brazil, where operators see a clear business case. Few operators have announced plans to extend their networks into rural or remote areas, making clear the need for government action. The PNBL promises to extend Brazil's fiber backbone to nearly all Brazilian states, and also addresses the affordability challenge by lowering backbone costs for carriers and addressing the sizable tax burden associated with broadband subscribership.

"After accounting for business accounts and dual broadband account ownership, Pyramid predicts there will be 27 million total broadband households in Brazil at year-end 2014, amounting to approximately 48 percent of households, not the 72 percent intended," says Luis Portela, Analyst at Large for Pyramid. "Though the plan is aimed primarily at expanding traditional fixed last-mile access, Pyramid believes that mobile operators and pay-TV operators have as much, if not more, to gain from the buildout of a nationwide fiber-optic backbone."

Although Pyramid Research believes that the plan will help boost overall broadband penetration, it questions the efficacy of having the plan spearheaded by a government-owned institution. "For example, the government is to blame for the affordability problem in Brazil," explains Portela. "Taxes are a significant problem, but will be addressed by the National Broadband Plan, which will waive taxes on some of the least expensive offerings targeted at lower-income customers. There is a clear role for the government to play, but we believe the pendulum may have swung too far toward the interventionist approach," he adds.

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Tags: broadband  fiber-optic  taxes  Brazil