Specialists call for calm in Brazil’s 5G auction

. Feb 11, 2020
5g auction brazil Photo: P. Kruger/Shutterstock

At the beginning of February, Brazil’s telecom regulator Anatel took the first step toward the much-awaited 5G auction in the country, by approving the bidding proposal for the high-speed mobile communications frequencies.

According to the chosen proposal, the auction will include the 700 MHz, 2.3 GHz, 3.5 GHz, and 26 GHz frequency bands. With regards to the 3.5 GHz band—the most commonly used for 5G frequencies—the total bandwidth was increased from 300 MHz to 400 MHz, which could make Brazil’s 5G spectrum auction the largest in the world.

</p> <p>The bidding will also dedicate some frequency bands for the nationwide operation of 5G, and others for regional operation. The much sought after 3.5 GHz band will be auctioned off in blocks, combining profitable areas such as the state of São Paulo with less attractive regions, as is the case of Brazil&#8217;s northern states.</p> <p>For the 700 MHz, 2.3 GHz, and 3.5 GHz bands, the Anatel bidding notice includes compensation for companies that supply coverage in cities which do not yet have 4G, or for the installation of infrastructure for fiber optic internet.</p> <p>One of the major changes in the auction will be the preferential treatment given to small companies and those without a presence in Brazil for the assignment of the 3.5 GHz frequency band. This bidding notice has not been finalized yet, however, and will undergo a <a href="">45-day public consultation period</a> before it may be definitively ratified.</p> <h2>Good things come to those who wait</h2> <p>The 5G auction was initially scheduled to take place in the first quarter of 2020, but the government is already working with the possibility that it will take place at the end of the year, due to the demands of the telecoms sector.&nbsp;</p> <p>According to experts, though <a href="">technology manufacturers such as Huawei</a> and Ericsson are lobbying to hasten the auction, it is recommended that Brazil take as much time as it needs to define the terms of the bidding process.&nbsp;</p> <p>&#8220;For a subject as complex as 5G, it is essential to be a little careful. It&#8217;s not a simple software update, rather the creation of new infrastructure,&#8221; said Luca Belli, an expert in governance and regulation of internet access from the Fundação Getúlio Vargas (FGV) in Rio de Janeiro.&nbsp;</p> <p>&#8220;That the auction may be delayed for a few months could be a positive sign, because it is better to delay and do things the right way, than to act in a hurry and have several problems later,&#8221; he said.</p> <p>According to the specialist, the implementation of 5G technology requires a significant investment in infrastructure, and operators are still enjoying the fruits of their investments made in the 4G network over recent years.</p> <p>&#8220;No operator in Brazil, perhaps not even in the world, has the capacity to make a 5G network alone. Even in China they created a consortium for that. 5G is a very different kind of technology. It&#8217;s not simply an upgrade of 4G,&#8221; the professor said.&nbsp;</p> <p>&#8220;The fifth-generation allows for industrial internet applications, the <a href="">Internet of Things</a> (IoT), connected objects, <a href="">automation of factories</a>, and connected cars. But in a country such as Brazil, where high-income consumers are in the minority and the majority use prepaid phone plans, who will pay for the more expensive services of 5G? Who will pay for the investments in infrastructure?&#8221; Mr. Belli stressed.&nbsp;</p> <h2>Five sticking points for 5G</h2> <p>In the words of Marcos Ferrari, president of the National Union of Telephone and Cellphone Service Companies (SindiTelebrasil), at least five points need to be considered before the auction rules are established.&nbsp;</p> <p>The first is legislation on new antennas in Brazil. &#8220;There&#8217;s no point in having 5G if <a href="">we can&#8217;t install the antennas</a>. This is already a problem today, as there are more or less 4,000 license applications stalled so far,&#8221; said Mr. Ferrari, pointing out that each municipality has its own legislation and 5G technology would increase the number of antennas needed for coverage fivefold.&nbsp;</p> <p>The other issue, according to Mr. Ferrari, is the so-called &#8220;right of way.&#8221;&nbsp; He points out that there are consolidated legal precedents in Brazil saying that public roads are under the public domain. However, some companies charge for alterations made to them. &#8220;The companies responsible for managing highways, for example, continue to charge for the use of their lanes, which affects the investment. If I put up fiber optic cables on a highway, but the company that manages the highway charges something for that, that entails costs,&#8221; he said.&nbsp;</p> <p>The third point listed by SindiTelebrasil concerns taxation, specifically of the SIM cards used in cellphone handsets. According to Mr. Ferrari, the average annual revenue of each card is BRL 12.00, while the tax cost is around BRL 15.00.</p> <p>&#8220;Today we only use SIM cards in cellphones, or in some devices such as card machines. 5G will multiply the use of SIM cards because each device will have one, like your refrigerator, television, stove, hospitals, and cars. With current taxation, it would be impossible to increase the number of SIM cards,&#8221; he said. </p> <p>Also according to SindiTelebrasil, the auction should not be carried out to create revenue so that companies may have bigger margins for investment. &#8220;Countries such as Italy and [the UK] are not managing to do 5G because the auctions that governments have adopted are too high. We understand the current fiscal situation of the Brazilian government, but we defend that the auction [not be based on increasing revenue]. We believe that 5G will have an impact on productivity, which will reflect on future GDP, with a gain in productivity,&#8221; Mr. Ferrari said.&nbsp;</p> <p>The final issue is the matter of Brazil&#8217;s satellite dishes. As the 3.5 GHz band is the same as the one used by these parabolic antennas, there is a risk of signal interference.</p> <p>&#8220;We are in favor of the resolution to be made [prioritizing] mitigation. 5G and satellite dishes can coexist on the same [frequency] band, because the satellite dish industry has evolved and built some filters that mitigate this interference. Simply change the filter and install a more modern one and the difference will be solved,&#8221; said Mr. Ferrari, noting that with the arrival of 4G, it was also necessary to make adaptations on the frequency band used for TV and radio broadcasting. </p> <p>&#8220;Therefore, we had the change [of television signals] from analog to digital,&#8221; he said.

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Beatriz Farrugia

Beatriz Farrugia has ten years of experience working for international news agencies. She is a former editor at ANSA and holds a post-graduate degree in International Relations from Fundação Getulio Vargas

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