Brazil World Cup and Olympics: Opportunities lost & gained, part I

Being named to host the 2014 FIFA World Cup and the 2016 Summer Olympic Games was widely regarded both as acknowledgement of Brazil’s booming economy and an additional boost for it.

The influx of millions of people to view these events was also seen as a chance for the country to address some of its pressing problems, such as lagging wireless infrastructure and the infamous traffic congestion in major cities.

Providers of mapping, navigation and traffic data telematics services stood to particularly benefit, especially in view of the country’s standing as the world’s fourth largest automobile market and the impending implementation of Contran 245, Brazil’s ambitious plan to provide every new vehicle with a telematics tracking device.

But because of repeated delays, it now appears that Contran 245’s implementation will come too late for the World Cup, and whether it can do much for the 2016 Summer Olympic Games remains to be seen.

(For the latest on Contran 245, see Contran 245 (finally) ready to go? Part I and Contran 245 (finally) ready to go? Part II.)

Double trouble

According to the latest fitment rollout schedule, announced at the end of June, full implementation of the resolution is now set for December 31, 2014, with an added cushion of six months, if necessary. What’s more, Brazil’s serious connectivity issues may hold things back even further.

According to Roger Lanctot, associate director, automotive multimedia & communications services, Strategy Analytics, because of the country’s weak wireless infrastructure, the potential opportunities provided by the sports mega-events will almost certainly go begging. “The opportunity is there for Brazil to shine,” he says, “but I’m afraid it will only be the athletes who will shine.”

The problems are many and difficult to surmount, and the authorities empowered to resolve the problems are not yet aware of what awaits them. “The wireless network is overburdened; the highways are overburdened,” Lanctot says. “They are only beginning to understand the scope of the problem, let alone the solution.”

He notes that there are also far from sufficient underground fiber-optics, and this shortfall will not be rectified in time for either the World Cup or the Olympics.

Frederico Hohagen, co-founder and head of sales for MapLink, Brazil’s leading provider of traffic and location-based services, agrees. “Our offices are in the district of Villa Olympia, which is the Silicon Valley of Sao Paolo,” he says. “Lots of hi-tech companies have their offices here, and there are many people with wireless devices. But it’s impossible to use them without Wi-Fi. Our 3G network is just not working. Even 2G in Norway is better than 3G here.”

(For more on telematics opportunities in LATAM, see Telematics opportunities in Brazil and LATAM, part I and Telematics opportunities in Brazil and LATAM, part II.)

Coping with the networks

The expected spike in connected devices during the World Cup may tax some networks to the breaking point, Lanctot and Hohagen fear.

Lanctot says that, in 2012, the government publicly criticized wireless carriers for failing to invest sufficiently in their networks, going so far as to briefly suspend new activations for some carriers. This has inspired telecoms to begin necessary upgrades. “Wireless networks are going to get better,” Lanctot says. “We’ll see progress in three to five years.”

Hohagen says that all 12 cities that will be hosting the World Cup games are now obligated, by congressional resolution, to upgrade their networks to 4G by May 2014. But that may be too late to kick-start the eventual telematics boom in the country. “I’m not sure what the quality of the 4G will be,” he says. “People coming from countries with proper 4G networks may be disappointed.”

Hohagen says only a few manufacturers, such as Motorola and Samsung, have introduced 4G devices in Brazil because the country uses a 4G band, 2.5GHz, that is not standard in Europe or the United States. He says this is one reason Apple has yet to launch its 4G iPhone in Brazil. And the current fee for 4G service is high, up to $100 per month.

In addition, while connectivity in the country’s major cities is just barely adequate, there are large stretches of the country where there is no wireless service at all. The government has become aware of these deficiencies and is moving to address them.

Government to the rescue, or not

In March, Communications Minister Paulo Bernardo announced an ambitious plan to extend the country’s fiber-optics network to rural areas. The web site BNamericas reported the government had allocated an initial amount of 100 billion reals ($44.1 billion dollars) for the project, which would include private-sector partnerships and investment by the state-owned telecommunications company Telebras.

But the initiative is still under study. And it may yet be compromised by political instability resulting from growing demands to shift the government’s spending focus, and President Dilma Rousseff’s plummeting popularity. The next general elections are scheduled for Oct. 5, 2014. If a populist administration comes to power, it may signal a shift in spending priorities that could affect state investments in telecommunications.

The communications ministry has also accelerated its schedule for rollout of the less expensive, higher-penetration 700MHz spectrum for 4G, with auctions set to be held early next year. But the plan only concerns some of the country’s larger cities in the near and medium term. 

Will that be enough to convince more manufacturers to launch new devices in Brazil?

(Return next Thursday for part II of the series.)

Siegfried Mortkowitz is a regular contributor to TU.

For all the latest telematics trends, check out Insurance Telematics USA 2013 on Sept. 4-5 in Chicago, Telematics Brazil & LATAM 2013 on Sept. 11-12 in Sao Paulo, Brazil, Telematics Japan/China 2013 on Oct. 8-10 in Tokyo, Telematics Munich 2013 on Nov. 11-12 in Munich, Germany, Telematics for Fleet Management USA 2013 on Nov. 20-21 in Atlanta, Georgia, and Content and Apps for Automotive USA 2013 on Dec. 11-12 in San Francisco.

For exclusive telematics business analysis and insight, check out TU’s reports: Telematics Connectivity Strategies Report 2013, The Automotive HMI Report 2013, Insurance Telematics Report 2013 and Fleet & Asset Management Report 2012.