DEVELOPMENT-BRAZIL: Boom for Telephones – and Complaints

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE Janeiro, Aug 3 1999 (IPS) - The one year since the privatisation of Brazil’s telecommunications system has seen an explosion in the number of telephones, and in the number of complaints about phone services.

Approximately 10 million new telephones were installed since the government sold the 27 companies that made up the national telecommunications system on July 29, 1998.

Brazil’s phone total is now nearly 34 million, according to the Communications Ministry. The number has doubled since the end of 1997, meaning there are now 20 telephones for every 100 Brazilians. The ministry predicts an additional increase of up to 80 percent over the next two and one half years.

Mobile telephone services – or cellular phones, an industry which grew much more than predicted, currently has over 10 million phones in the system, marking a near 70 percent growth in just one year.

The electronics industry expected to sell 4.5 million cellular phones this year, but the jump in demand led it to surpass its goal by at least 50 percent.

The unexpected demand for cell phones was created for the most part by pre-paid phone services, where the user pays for a set number of minutes of phone use, which the customer can renew as needed.

Pre-payment allows cell phone users to set their monthly maximum phone budget. This works well for the low-income customers, workers and micro-businesses, which can receive product orders wherever they happen to be. Cell phones have also proven useful in helping parents keep track of their children.

The telephone revolution, however, is in many ways limited to the increasing number of phones because service can be unreliable. Telephone companies have not maintained their already questionable quality of service and have become the main targets for customer complaints.

Phone companies took the brunt with 51.3 percent of the complaints made to official consumer protection agencies in the first five months of this year. Group medical services placed second in racking up complaints with 4.6 percent of the total.

Privatisation became even more unpopular in early July, when changes made in the long distance calling system wreaked havoc in the national telephone system for an entire week. The goal had been to take the final step in breaking up the industry monopoly, which was the responsibility of several competing companies.

The institutional model for telecommunications implanted in Brazil with privatisation, which imposed competition in all areas and types of service, is one of the best in the world, says Ethevaldo Siqueira, editor of the National Telecommunications Journal for over two decades.

But the model did not include a mechanism to co-ordinate the workings of the complex telephone network, an oversight that led to the chaos brought on by the imposed competition in long distance services, evaluated Siqueira.

Brazil has been divided into eight zones for the cellular phone system, each one serviced by two different companies. For home phones, there are four companies that will begin competing at the end of the year. There are 25 telephone companies operating in various territories.

The National Agency for Telecommunications (ANATEL) was created to regulate phone activity, establish regulations, ensure compliance and impose santions if necessary. It was not created to co-ordinate telecommunications operations.

ANATEL president, Renato Guerreiro, played down the drama of the transition problems, and underscored instead the advances made in the democratisation of Brazil’s telephone systems.

In December 1994, 98 percent of residential telephones were concentrated among the wealthiest 43 percent of Brazilian households. In other words, for the majority 57 percent of the population, just two percent of phone lines were available, stated Guerreiro.

The confusion occurring in the transition process, such as late installation of lines that have already been paid for, assignment of wrong telephone numbers, difficulty in completing calls, and improper phone charges, all affected the image of privatisation – despite its benefits.

A survey by “O Estado de Sao Paulo” newspaper released Sunday showed that 82 percent of poll participants in Sao Paulo state believe that privatised telephone services are worse than the previous government-run system. Just 11.2 percent of those polled said it had improved.