The three Brazilian telecom operators suspended from selling new mobile services by telecom regulator Anatel have to present action plans within 30 days detailing future investments to improve their services. Once the plans are approved, Anatel will authorize the resumption of sales.
While the telecom operators’ plans have not been released yet, the question remains how they could impact telecom vendors. And, if necessary, are they prepared to meet urgent demands?
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Wagner Ferreira, Alcatel-Lucent’s director for commercial and government relations, said that although it is too early to evaluate, certainly operators are reviewing their investment plans, and new investments should focus mainly on voice networks and management of call centers.
“What we can say is that it is time to start looking at the market for mobile communication networks in a different way. Alcatel-Lucent believes that in the near future, demand can only be met by using a network composed of macro, metro and small cell, leaving behind the model of 100% macro. In addition, a call center with more dynamic and intelligent routing to improve customer service is paramount,” Ferreira said.
Improving contact center services is the easiest part of the problem to solve in the opinion of several observers. “It is about investing money and training people,” said João Paulo Bruder, IDC telecom market analyst.
Renato Pasquini, an industry analyst for Latin America at Frost & Sullivan, said there should be further investment in call centers and other means of customer service, such as stores and self-service websites. “Operators should make a great effort to solve customer problems at the earliest opportunity in order to avoid claims at consumer protection agencies or Anatel,” Pasquini said.
Bruder also noted that action plans could drive more investment, though nothing will be really huge. He pointed to two big areas where investment might be concentrated: improving cell sites (antenna equipment) and the wireline connection between them.
“I believe backbone and backhaul infrastructure are good, but they could improve their equipment for cell sites and antennas, as well as how cell sites are connected: terrestrial wirelines such as fiber and twisted pair, and border equipment, such as label edge routers,” explained Bruder.
In terms of network and equipment, Pasquini believes that investment budgets are already defined, but he pointed out that there may be an investment priority on mobile infrastructure, such as upgrades, capacity building and implementation of IT solutions to improve the quality of services.
As carriers release their plans, Yankee Group SVP Wally Swain said that operators will have to accelerate, and in some cases, start new projects to get quality up to politically-acceptable levels. However, “acceleration may have limited benefits for vendors,” he cautioned.
“Acceleration will mean working harder, but Oi and especially Claro have sufficient clout so that it will mean more cost and probably limited or no revenue for vendors,” Swain said. “TIM will definitely see a rise in its [capital expenditures] with 19 of 26 states requiring action. Significant new equipment sales will come from TIM.”
Alcatel-Lucent’s Ferreira said that network solutions require different types of equipment, such as femtocells and metrocells, “which can be deployed quickly as they are more flexible of the necessary infrastructure to be installed, for example, in a building facade.”
Legislation collision
One big barrier for improving service quality is the difficulty of installing new antenna towers, since there are about 250 different municipal laws (some of them bizarre—read more here) which regulate them.
“We are seeing a huge strength in the economy with rising social classes that demand more telecommunication services. Operators are investing as never before, but the bureaucracy around installing infrastructure in Brazil is huge, and it makes it very difficult to do business in the country,” said Eduardo Levy, president of SindiTelebrasil, the National Union of Telephone Companies and Service Mobile Phones and Personnel.
The coverage goals required by Anatel when auctioning spectrum frequency bands were achieved, Levy noted, but there are gaps in wireless coverage even in the law. “For instance, there is no requirement to cover roads,” he said.
Levy, whose orgainization represents carriers, argues that presenting an action plan will not be hard, since operators already have their investment plans. “Carriers know they need to install more infrastructure to improve service quality, but they can’t because of the bureaucracy,” he said.
As for the impact on vendors, Levy noted that the first reaction might be positive, but he pointed out that carriers would prefer to share the investment cost.
Ericsson said it is evaluating the situation, while Huawei declined to comment.
Be sure not to miss:
- As Brazil suspensions begin, analysts question severity of Anatel’s action
- Fallout begins for Brazilian operators after sales suspension
- Brazil suspends some TIM, Oi and Claro sales due to customer complaints
- NSN to invest up to $5M to manufacture in Brazil, targeting 35% of LTE market
- Huawei predicts Brazilian revenues will reach $5B by 2016
