Prime 5G goes live in Brazil - what comes next?

5G technology in the prime 3.5GHz band was launched in Brazil on Wednesday with the activation of hundreds of antennas by three national operators in capital Brasília. 

The activation of a 5G 3.5GHz standalone (SA) network, that is, not relying on existing bands or transmission equipment, was made possible after the technical liberation of the frequency in the capital. 

Brasília has thus become the first city in the country with “pure” 5G because the process to install equipment to avoid interference with satellite services was done more rapidly than in other cities.

“We should now see gradual adoption of the service, starting with higher value-added customers and with wealthier and more populous areas in the cities,” Márcio Kanamaru, KPMG’s senior partner for Tech, Media & Telecom, told BNamericas.

Under regulator Anatel's rules, all 26 state capitals must have commercial 5G in the 3.5GHz band activated by the end of September. 

In addition to Brasília, at least three other state capitals are also carrying out expedited technical processes to liberate the spectrum and should activate the service in the coming weeks.

The big question about 5G right now is the pace of adoption and how soon operators will be able to monetize the investments being made. Overall, carriers have spent some 40bn reais (US$7.4bn) on 5G spectrum alone.

"Despite issues such as cell phone prices, FX fluctuations and the rising cost of living for families, everything indicates that the technology is advancing faster than previous ones," said Kanamaru.

In Chile, which was the first country in Latin America to auction 5G frequencies, with services activated in mid-December 2021, 5G accesses grew by almost 2,000% between January and April, reaching half a million users in four months and easily surpassing the rate of adoption of 4G when it was launched.

KPMG's Kanamaru said operators are expected to run extensive campaigns to sell compatible smartphones at key retail events in the coming months, while offering attractive data packages and value-added services along with 5G to ramp up adoption in the first few months of the technology being available.

Despite the initial focus on end users, the B2B segment is considered to be the main opportunity for 5G, due to the high transmission capacity and low latency of its mid-bands (such as 3.5GHz) and high bands.

Operators are betting heavily on corporate business, but first need to gain scale through B2C to leverage the return on network investments.

Thoran Rodrigues, founder and CEO of big data and analytics company BigDataCorp, said that gradual growth is expected in corporate and industrial applications using the technology, both via private and public networks.

“These changes are always gradual. The expectation is that in the next six months to one year we’ll start to see some of these applications gaining more traction. Sensing, cameras, industrial processes, smart cities, all of that,” Rodrigues told BNamericas.

The stakes are high for companies providing tech-based services and applications.

“5G arrives with novelty and a lot of expectation. In regions with high demographic density, we should see a lot of improvement in different services relying on technology, which is the case of those we offer to power distributors,” Octavio Brasil, general manager of IoT group CAS Tecnologia, told BNamericas.

According to Brasil, over half of the country's electric power revenues are leveraged on CAS Tecnologia’s solutions. The company's meters are used by 28 of the 42 biggest power distributors in the country, including in Brasília and other state capitals. 

“5G will allow us to transmit an even greater volume of data through the smart meters,” the executive said.

From a macroeconomic point of view, the impact of 5G adoption on Brazil’s economy also depends on the speed of implementation of the technology. 

According to projections released on Tuesday by national industry federation CNI, the difference between rapid or slow 5G adoption could be 0.2 percentage points of the country's GDP per capita by 2030.

In the most optimistic scenario projected by the entity, 5G would reach 81% penetration in Brazil by 2030, adding 81.3bn reais to the country’s GDP by then.

In the most pessimistic scenario, penetration only gets to 40.5%, with significantly lower economic gains.

The difference between the two scenarios involves the “opportunity cost” of not taking the necessary measures for widespread 5G adoption, according to CNI.

These measures are:

– Update of municipal legislation to allow installation of antennas,

– Reduction of legal uncertainty associated with network infrastructure sharing,

– Regulation of private networks,

– Use of public telecommunications funds in a more effective and transparent manner,

– Approval of a tax reform to reduce the burden of indirect taxes on telecommunications services.

NEXT CITIES

The next cities to receive 5G in the 3.5GHz band are expected to be Belo Horizonte, São Paulo and Porto Alegre, and possibly João Pessoa, where the process to liberate spectrum has advanced most.

In Belo Horizonte, TIM said that it is progressing with the densification of signals in places with high concentrations of people, using small “camouflaged” antennas in newsstands, bus stops, light poles and traffic signs.

“The Street Level Solution (SLS), in addition to increasing the quality of service provided by TIM to its customers, is one of several actions underway as part of our path to 5G, which will deliver much faster mobile internet speeds,” Homero Salum, TIM’s head of mobile access & backhaul engineering, said in a statement.

In Brasília, TIM activated 100 5G antennas, equivalent to 2.5 times the minimum required (39 antennas) by Anatel for this phase of deployment. 

TIM's initial deployment covers 50% of the city.

To use the service, TIM’s customers must purchase an additional 50GB package, which is free for the first year. After this period, they will be charged 20 reais per month.

Around 80% of smartphones being sold by TIM are compatible with Brazil’s 5G frequencies. TIM said 1.4mn of its current clients already have 5G-compatible handsets.

Telefônica Brasil (Vivo) claims to have more than 2.5mn customers with a mobile plan and 5G-compatible phones. According to the operator, this base is increasing “significantly”.

Customers with Vivo's 4G SIM cards and 5G- compatible phones will not be required to replace their SIM cards to use 5G, as connection will be automatic in areas with coverage, the company said. 

Vivo has 47 devices compatible with Brazil's 5G frequencies in its portfolio.

Claro reports having around 2mn customers with devices ready for the technology, considering dynamic spectrum-sharing (DSS), non-standalone (NSA) and standalone (SA) 5G technologies.

Around 70% of handsets sold by Claro are compatible with 5G frequencies.

According to regulator Anatel, 67 mobile phone models have been certified to use the 5G frequencies awarded in November.