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Brazilian Wireless Telephony - The Eclipse of Competition
Unformatted Document Text:  14 bidders). The increased supply of wireless concessions did not reduce the market share advantage that incumbent wireless operators enjoy. Nationally, 63 percent of wireless subscribers use operators in the incumbent A band, while 32 percent of subscribers use B band operators, and 5 percent use operators in the PCS spectrum (“Brazil: Competitive environment,” 2003, p. 10). Market structure consolidated rapidly, and then was congealed by regulations, as a five-year prohibition on ownership changes and sectoral cross-ownership was in place between 1998 and 2003. Designed to stabilize and grow the infrastructure of the newly privatized network (Moffett & Ramaswamy, 2001), the prohibition postponed carrier acquisitions by foreign firms or by Globo, the domestic terrestrial television hegemon, and added incentives for first-movers and early entrants to build new infrastructure. “Companies who met deployment targets ahead of schedule were granted the opportunity to compete in other regions” (Kramer, 2003). In their eagerness to begin operations, the new wireless concessionaires beat year 2000 build-out targets set by Anatel (Moffett & Ramaswamy, 2001, p. 7). Lessons learned An original tension between the reformers’ early desire to boost the value of Telebras at auction and to provide ongoing consumer benefits through more choices among carriers expressed itself as ownership concentration in the sector over the course of over five years, with an initial contraction after privatization. Factors contributing to concentration included permissive cross-ownership rules, which predisposed the new market to rapid consolidation and thwarted a diversity of providers, and also exogenous

Authors: Burkart, Patrick.
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bidders). The increased supply of wireless concessions did not reduce the market share
advantage that incumbent wireless operators enjoy. Nationally, 63 percent of wireless
subscribers use operators in the incumbent A band, while 32 percent of subscribers use B
band operators, and 5 percent use operators in the PCS spectrum (“Brazil: Competitive
environment,” 2003, p. 10).
Market structure consolidated rapidly, and then was congealed by regulations, as
a five-year prohibition on ownership changes and sectoral cross-ownership was in place
between 1998 and 2003. Designed to stabilize and grow the infrastructure of the newly
privatized network (Moffett & Ramaswamy, 2001), the prohibition postponed carrier
acquisitions by foreign firms or by Globo, the domestic terrestrial television hegemon,
and added incentives for first-movers and early entrants to build new infrastructure.
“Companies who met deployment targets ahead of schedule were granted the opportunity
to compete in other regions” (Kramer, 2003). In their eagerness to begin operations, the
new wireless concessionaires beat year 2000 build-out targets set by Anatel (Moffett &
Ramaswamy, 2001, p. 7).
Lessons learned
An original tension between the reformers’ early desire to boost the value of
Telebras at auction and to provide ongoing consumer benefits through more choices
among carriers expressed itself as ownership concentration in the sector over the course
of over five years, with an initial contraction after privatization. Factors contributing to
concentration included permissive cross-ownership rules, which predisposed the new
market to rapid consolidation and thwarted a diversity of providers, and also exogenous


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