A Rocky Evolution
Brazil's telecom operators both big and small have clashed with regulators as the post-privatization landscape continues to evolve.
This year's developments
in the Brazilian telecom industry have played out like a steamy
novela, with political wrangling and struggling
companies starring in the leading roles. The issues at stake -
competition, government interference and ambiguous regulations
- remain hotly contested, particularly since more than half of
the population still lacks basic phone service.
In June, the four incumbent
fixed-line companies - Telemar, Brasil Telecom,
Telefônica, and long-distance carrier Embratel - agreed
to sign contracts with the government extending their operating
licenses until 2026. All four companies bought control of their
respective region and industry (see map) during Brazil's 1998
telecom privatization, a $19 billion program aimed at opening
the market to competition, lowering the costs for consumers and
increasing the availability of phone service. Prior to 1998,
only 11% of the population even had a phone. There are now 40
million lines in service.
When the negotiations for the new contracts began,...
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