Fixed broadband market in Brazil shows substantial regional imbalances

London, 11  February, 2015 - Competition in Brazil’s fixed broadband market is concentrated in a small number of cities: 57% of Brazilian cities have just one operator either commanding the majority of connections or as the sole provider in the city, according to global analyst firm Ovum.

Additionaly, this analysis shows that fixed broadband has not penetrated in large areas in Brazil. The latest report* identifies that more than half of Brazilian cities with a combined population of 42 million inhabitants – close to the population of Argentina or Colombia – that have only 500,000 broadband subscriptions, a penetration level similar to the Brazilian average about 10 years ago.

According to Ari Lopes, principal analyst for Latin America at Ovum, “part of the demand is met via mobile broadband, but it is clear that the country would benefit from a coordinated effort from public and private sectors to expand fixed broadband infrastructure to the whole country.”

Ovum’s research sheds light on the distribution of broadband connections in Brazil. The report classified cities in three categories, according to fixed broadband penetration rate, the first category consists of cities with penetration rates above the countries average, these cities gather 53% of the population, accounts for 71% of GDP and 85% of broadband connections, on the other hand, another category gathers the cities with the lowest penetration rate, these cities account for 22% of the population but only 2% of the connections. In other words, the fixed broadband market is even more concentrated than income.

Lopes commented: “The two main challenges in the Brazilian broadband market are: first, expanding fixed broadband coverage to the vast areas outside the big urban centers, and secondly, update the existing infrastructure in the well served areas to allow faster speeds.”

According to Lopes, “ Mobile broadband is experiencing strong growth in the country and certainly is the only connection most of this population uses, however, the areas with low fixed broadband penetration are the same with the lowest mobile penetration as well. But these connections typically reach speeds of 1Mbps or less, so it limits customer experience. All in all, this analysis shows that a new National Broadband Plan that expands and improves the existing infrastructure would have an important impact on the broadband market in Brazil.”

Another challenge is the small footprint of advanced technologies such as FTTx, which account for just 3% of Brazilian connections. Despite growing at a fast rate, these technologies are only slowly improving the speed profile of the Brazilian market, and only 15% of connections are above 12Mbps.

Ovum has used city-level data to provide an in-depth analysis of the different regions of the Brazilian market, giving results that are far more detailed than the country-level statistics.

The study shows that Brazil still has a lot to do to increase its fixed broadband penetration outside most populous areas. “The size of the challenge is illustrated by the city-level analysis, which shows that Brazil’s fixed broadband market is even more concentrated than the Brazilian GDP. Cities that account for 22% of the population and 8% of the GDP have only 2% of the fixed broadband connections”, concludes Lopes.