Charting Broadband and Economic Growth in Brazil
By Jason Kohn, Contributing Columnist
With the news headlines lately about Brazil, it’s easy for those of us outside the region to get caught up in the image of a country going through a difficult, turbulent period. But it’s important to consider that what’s happening now in Brazil is ultimately a sign of positive change: an expanding middle class with higher expectations about the rewards they should reap from the country’s growing economy.
And in fact, that story—the tremendous economic growth happening in Brazil—is one of the more amazing pieces of good news from around the globe.
Huge Broadband Growth
Brazil recently surpassed 25 million broadband connections according to an IDC study conducted for the Cisco Broadband Barometer. The study forecasts more than 39 million broadband connections in the country by 2016, nearly a third of which will be mobile.
A recent eMarketer report echoes this theme, concluding that price-conscious middle-class users are driving down mobile broadband prices as they ramp up the country’s connections:
eMarketer estimates 53.5% of Brazil’s online population—53.1 million people—will be mobile phone internet users this year. Based on current trends, by 2017 almost all internet users in Brazil, and close to 60% of the country, are expected to go online through mobile phones.
May 2013 data from Navegg, a Brazilian web analytics company, reported that middle-class consumers accounted for 63% of feature phone and smartphone internet users in Brazil. This is almost twice as many as the share from the wealthier classes.
Average speeds rose 148 Kbps between January and June 2012 to an average 4.88 Mbps. The main reason behind this increase was changes in speeds brought in by service providers to cope with changes in Internet user profiles in Brazil, to focus on streaming, collaboration and social media….
In terms of pricing, Brazilian service providers are concentrating offerings on intermediate speeds (2 Mbps) and higher (5 Mbps or more), with an average access price of 63 BRL in the first half of 2012. This trend is expected to significantly increase average speeds, improving the user experience. Social media, content and B2C are areas set to gain increasing attention.
It’s all about Social Networking
Among the more fascinating trends we’re seeing in Brazil are the factors that are driving this growth, chiefly, the huge popularity of social media in the country. Cisco contributing writer Mary Ann Azevedo dug into the numbers:
In 2011, the number of people accessing the mobile internet in Brazil actually exceeded those with fixed household access – a first for Brazil, said eMarketer. One factor that could be contributing to the increases is that Latin Americans, including Brazilians in particular, have been shown to be voracious consumers of social media, according to Forrester Research Inc…
Facebook Inc. confirms that the number of monthly active users in Brazil surged to 61 million in October 2012 compared to 25 million in August 2011. And a ComScore/Facebook survey found that more than one-third of Facebook users – about 37 percent – were accessing the site via their smartphones as of August 2012.
Good News for Brazilian Citizens and Businesses
While it will be fascinating to see how millions of middle-class Brazilians help reshape the social media landscape, the most profound effects of this growth are likely to be felt in Brazil itself, and throughout the region. As broadband infrastructure grows in Latin America, jobs and investment are growing as well.
Ovum research’s Observatory of Telecoms Indicators in Latin America reported that the number of jobs created by the telecommunications industry in Latin America has grown by 60 percent since 2008, totaling nearly a quarter million employees:
The number of workers in the sector has more than doubled in Brazil and Nicaragua, and almost doubled in Guatemala. Meanwhile, capital investment by telecoms companies has increased by more than 28 percent as telcos focus on the deployment of access infrastructure to meet demand for services and digital inclusion…
Capital expenditure by telecoms companies in eight countries included in the Observatory grew by an average of 28 percent to more than US$22 trillion in 2011. This increased contribution of telecoms to national economies is helping to bridge the digital divide.
Cisco Increasing Investment and Focus
All of this growth has not gone unnoticed by the world’s leading technology providers. Cisco in particular is ramping up several major initiatives in Brazil to help support and extend Brazil’s growing economic dynamism in broadband technology.
Cisco’s far-reaching plans for investment in Brazil include:
- Opening a “Cisco Center of Innovation” in Rio de Janeiro to develop new technology solutions specifically tailored for the Brazilian market. The center will serve as a hub for a number of initiatives, including Cisco’s Smart+Connected Communities platform to spur urban development, developing new technology and entertainment experiences as Brazil hosts the World Cup and Olympic Games, developing advanced public safety and security systems, and developing solutions to help Brazilians capitalize on new education and healthcare technology innovations.
- Developing a new ICT venture capital fund to invest in emerging technology innovations in the country
- Expanding Cisco’s manufacturing presence in Brazil
- Establishing closer partnerships with local Brazilian companies
- Fostering important research and development work in the country with the Planetary Skin Institute
- Expanding the Cisco Networking Academy in Brazil to train the next generation of highly skilled technology employees
In all, Cisco will invest nearly $550 million in the country in the next few years. Keep an eye on this space in the coming months for updates on how these projects are unfolding.