Industry observers are questioning whether Brazilian telecom regulator Anatel was too severe when it prohibited three of the nation’s largest wireless carriers from selling new lines. Starting today, July 23, Telecom Italia’s Brazilain unit TIM, América Móvil-controlled Claro and Oi will have their sales suspended in some Brazilian states due to the volume of customer complaints about poor service quality. They are also suspended from using number portability.
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TIM won’t be allowed to sell in 19 states, including Rio de Janeiro; Claro in three states, including the most populous state São Paulo, and Oi in five states. Together, the three carriers account for around 70% of the Brazilian mobile phone market.
Last week, the telecom operators had meetings with Anatel. They have 30 days to present action plans detailing future investments to improve their services. Until these plans are approved by Anatel, the wireless carriers cannot sell new services. Claro was the first to present an action plan for improving service quality, which Anatel has considered a draft.
While wireless carriers complain that they face bureaucratic impediments to installing infrastructure, such as antennas, the Brazilian government argues that they are providing poor service. Indeed, telecom operators are high in the various rankings of consumer complaints, and many Brazilian people are not happy with the poor quality of mobile broadband, calls that cut off or the times when they cannot even make a call.
“It is undeniable that people were at consumer protection agencies and made formal complaints. And this is not something that is easy to do. But the question is if Anatel’s answer to these complaints was too much, or if the agency could issue warnings before, or prohibit carriers from selling during a specific period of time,” João Paulo Bruder, IDC telecom market analyst, told RCR Wireless News.
Several analysts agree that Anatel could have given formal warnings before prohibiting sales. “I understand that Anatel has taken this precautionary measure in order to have a short term solution to the problem and avoid time-consuming administrative processes. However, I believe it was an extreme measure. The monitoring of investment, quality of service, offerings and possible adjustments due to shifts in indicators, could have occurred without the need to halt sales,” said Renato Pasquini, an industry analyst for Latin America at Frost & Sullivan.
As pointed out by Wally Swain, SVP at Yankee Group, while Anatel picked the guilty by taking the lowest rated operator in each state, somebody always has to be at the bottom. “Does Anatel plan to continually shut off the bottom operator for a period of time until some other poor soul drops behind? This is insane! Worse, Brazil once again looks like a country which makes up the rules as it goes along to suit short-term political considerations with little or no consideration of the big picture,” Swain told RCR Wireless News.
Eduardo Levy, president of SindiTelebrasil, the National Union of Telephone Companies and Service Mobile Phones and Personnel, agreed that Anatel’s decision could be bad for the country and inhibit new entrants in the market. “This decision does not contribute to companies feeling more secure about investing in the country,” Levy said.
Across Brazil, people expect telecom services to improve, as they pay higher prices. But there are doubts that Anatel’s punishments can solve the problems immediately. “I believe there may be an improvement in the short term. But in the long term, what would help the overall quality of service is the allocation of more spectrum for mobile broadband, by enlarging the spectrum cap and auctioning surplus and the frequency range of 700 MHz for LTE services,” said Pasquini from Frost & Sullivan.
Moreover, as observers and carriers have noted, it would help to have a regulatory framework conducive to installing infrastructure backbone and backhaul, as well as antenna regulation, since there are 250 different laws that limit and delay the expansion of services.
The Brazilian Federal Prosecutor said that Anatel’s decision is extreme but legally valid and provided in the general law of telecommunications. For the institution, cellular service is essential and relevant to the economic and social development of the country, and consumers cannot be undercut by failures in communication transmission. The network must be sized to serve customers as expected and appropriate, the Federal Prosecutor said.
Carriers to present action plans
Anatel announced on July 18 that the providers who had the worst performance by state would be prohibited from selling new lines—(check complains ranking here (in Portuguese). In its decision, Anatel considered the increasing rate of user complaints regarding the quality of service provision recorded at Anatel’s call center as well as at other consumer protection agencies.
TIM entered an injunction against its suspension from making sales and activating new SIM cards, but afterward, TIM said that it will fulfill Anatel’s requirements, and the company is preparing an action plan to present to the regulator.
Oi said that it has appointed a team fully dedicated to the construction of its action plan to “confirm the commitments Oi has already made to ensure quality in the provision of mobile phone service.” In a statement, the carrier said it will deliver a draft action plan next week.
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