SAO PAULO (WiMAX Day) by Joachim Bamrud. The lack of competition among existing broadband providers is a drag on production in Brazil and can only be fixed by letting new entrants provide WiMAX at the cost of the traditional fixed line operators, according to a local industry association.

“For Brazil to move ahead in its economy, it needs better quality digital services,” says Luis Cuza, president of TelComp (the Brazilian Association of Competitive Telecom Service Providers). “The role of broadband is essential for the economy and social inclusion.”

However, the current broadband offerings by the top fixed-line operators is both too expensive and of poor quality and needs to be complemented by new entrants, he argues. Only a small part of broadband clients have speeds of 2.5 mg or higher, with typical speeds instead at 128 kilobytes, he says. “We call it narrowband, not broadband,” Cuza says.

Telcomp therefore supports the efforts by telecom regulator Anatel to exclude the fixed line operators from an upcoming auction. After a federal judge recently overruled Anatel, Telcomb has filed a counter-motion in Brazilian courts in support of Anatel. Cuza expects the court process to be quick and if favourable would enable Anatel to move quickly in processing the bids from new entrants.

Independent analysts also complain about insufficient broadband competition in Brazil. ”There’s a lack of competition,” says Adlane Fellah, a senior analyst at US consulting firm Maravedis. “That tells us that the introduction of a third player into the market would be of great benefit.”

The top fixed-line operators typically control 95 percent of the fixed-line services and 80 percent of broadband services in the regions they operate, Cuza says. By prohibiting them from entering the WiMAX auction, new entrants would be able to provide real competition, he argues.

While some analysts say the advantage of having the big operators participate is their deep pockets, Cuza says there are already significant investment commitments among the new entrants.

“There are investors, mostly national, that are willing to invest to improve broadband services in those areas,” he says.

Anatel received 100 bids for the WiMAX auction, of which nine came from the big operators. The remaining 91 are new players that represent many smaller cities. Cuza said the interest was higher than originally expected. Telcomp, for example, had predicted not more than 60 bids.

As for the potential for WiMAX in Brazil, Cuza has no doubt. “Within a year and a half there will be an explosion of offers of WiMAX throughout Brazil,” he says.