Introduction
2021 has proved to be an important year for 5G in Brazil. In February, Anatel (the Brazilian telecoms regulator) published the rules for the first 5G auction and confirmed that Huawei technology would not be excluded from the process. Since then, it has been confirmed that the auction notice (an important step before bidding can commence) will be voted on by the TCU (the Federal Audit Court) on the 18 August. Following this, if the notice is approved, Anatel will have up to 12 days to publish the full terms of the auction process, after which operators will be able to start bidding, with the auction being held within 30 to 45 days of the publication of the terms.
Current Status
According to a recent study by Nokia and Omida, rolling out 5G in Brazil could benefit the economy by as much as $1.216trn, and increase productivity by $3.08trn. As such, the government and Anatel have been keen to rollout 5G across Brazil as efficiently as possible. However, the process has been the subject of delays, with the auction date slipping from July or August to some point in the second half of 2021. Part of the reason for this delay was the political question of whether to allow Huawei and its 5G technology to be used in the new network. Despite it being confirmed in February that Huawei were not going to be excluded, the US is continuing to lobby Brazil for their exclusion and recently proposed US-backed Open RAN technologies as an alternative.
Given Brazil’s desire to have 5G in all state capitals by July 2022, it is important that the auction takes place as quickly as possible. It is therefore welcome news that the notice will be voted on in the meeting on the 18th.
The Auction Rules and Projected Costs
In the rules published in February, Anatel made a number of important clarifications regarding how the 5G network will be run in Brazil.
A significant clarification that Anatel made was to prohibit operators from using Dynamic Spectrum Sharing (DSS) technology in their 5G networks. DSS technology allows operators to deliver both 4G and 5G services via a single frequency band, resulting in a cost saving to operators. Some operators, such as Claro Brasil and Vivo had previously announced in mid-2020 that they would deploy 5G in certain areas using DSS technology. However, Anatel believe that prohibiting the use of DSS technology in the network will benefit and encourage smaller players in the market by stopping pre-existing operators from leveraging their existing networks. This is in line with Anatel’s drive to promote competition and increase coverage across the country and is also evident in their decision to auction the various spectrums in both national and regional lots, allowing for smaller players to potentially purchase a smaller area to cover where they do not want to bid for national coverage.
Another important factor is cost. Anatel have stated that they expect the initial cost to operators for the 3.5GHz frequency band (deemed the “gateway” for the 5G rollout due to its proximity to other bands already in use) to be roughly 35 billion reais (approx. $6.3 billion), alongside an additional investment of 80 billion reis in 5G during the next 20 years.
Conclusion
Given 5G’s potential to benefit the economy and increase connectivity across the country it is good news that, despite recent delays, following the vote on the notice, the auction should soon be taking place. If the proposed timeframes are met, Brazil will be experiencing the economic and social benefits of 5G as early as 2022.
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