Don't Change SMP Rules to Suit One Company - Says the GSM Association

The GSM Association (GSMA) has called upon Brazil to safeguard current and future foreign investments in the country's mobile communications sector by agreeing not to change the SMP (also known as Personal Communications Services) regulatory framework to suit the demands of one single company. Global investors have made critical decisions to invest in Brazil fundamentally because of this regulatory stability to date, says the Association. A delegation from the GSM Association, the world's largest and most representative wireless industry body is in Brazil this week to argue against compromising the rules at the behest of a single corporation.

"Confidence is the lifeblood of the Brazilian economy," said Rob Conway, CEO of the GSMA and Member of its Board. "In a turbulent global economy it is equally a critical factor in determining investment risk. If what is being proposed today regarding changing the SMP rules is allowed to gain credence, it would unquestionably discourage further investment and as a result deal a blow to Brazil's role as a player in the new age of third generation -- globally compatible -- wireless communications services."

The Association said that the rules which governed the 1800 MHz auction process and resulting contracts needed to remain in place for the benefit of all the players in the Brazilian market, though more importantly for Brazil's fast-growing community of mobile phone users. Speaking before meetings this week with Brazilian Government officials, regulators, network operators and their suppliers, Conway said: "The GSMA's Board of leading multinational companies is seriously concerned as to the far reaching implications for Brazil of this proposal, that would suit one company that is lobbying forcibly for favoured terms."

"This is not a technology battle," said Conway. "This is about fairness and stability of the game for all players in the market. We are here to argue the case for fair competition among the current network operators, for continued investment in the country and to protect Brazil's future prosperity.

It is difficult to understand why this situation has arisen because the clarity of Brazil's regulatory framework is admired the world over. It was made crystal clear that the 1800MHz frequency band was for SMP and that the 1900MHz band be exclusively reserved for next generation services. That was a catalyst and critical foundation for substantial and widespread investment in Brazil by many of the world's leading communications companies.

Since the original framework was set out and agreed, Brazil's network operators, Telemar-Oi, TIM, Telecom Americas along with global mobile communications equipment suppliers have invested an initial US$2 billion to deploy and roll out new mobile networks on a "level playing field" and on the basis of a stability. Brazil has become one of the most competitive telecommunications environments in the world -- with at least four network operators active or deploying networks across most of country.

"This is a direct cause of investor confidence -- which takes years to build and just a day to undermine if the rules of the game change," said Conway.

"To Brazil's ultimate credit, it has been a leading light in bringing this level of regulatory stability to bear. Through careful planning and a thoughtful process Brazil is seen as a model to follow," said Conway. "All that has been achieved in this regard is now at considerable risk of being undermined," he added.

"The stability of the current framework is directly responsible for many millions of dollars of income from Brazilian customers, and from visiting business people and tourists. Stability and a reinforcement of the rules will protect that income and create new jobs for the future -- Brazil would be putting all it has achieved to date at risk to serve a single player with a short-term commercial objective," he concluded."

Posted to the site on 20th March 2003