Consultancy: Fixed line revenues set for 15-20% increase

Brazil's largest fixed line operators Telefônica, Telemar and Brasil Telecom should see their revenues rise 15-20% in 2005, surpassing the 10-15% annual increases seen over the last three years, local daily Estado de São Paulo reported, citing a study by consultancy Lafis Consultoria. The extra growth expected this year is primarily due to 2004 price hikes as companies applied an annual readjustment along with an additional rate rise pending from 2003. "Local competition is limited which permits operators to have greater increases in monthly subscription," says Lafis analyst Eliana Silveira. These companies currently dominate 95% of their markets, but their client bases have remained stagnant since 2002 and technological advances such as internet telephony or the convergence of fixed and mobile services are beginning to threaten their rule, the report said. "In 2005, companies' main objectives should be regulatory change," said Silveira. The pressure for change will be felt in two areas: in protecting the market from competitors with less regulatory demands and in being able to launch new services. With voice over IP technology, for example, the cost of telephone calls is almost zero with the client possibly paying only for broadband internet access. "These are recent issues but it is necessary to point out that the time has come to deal with them," Telefônica president Fernando Xavier Ferreira was quoted as saying during Futurecom telecom event in October last year. Brasil Telecom and Telemar, which have fixed and mobile operations, have already announced the launch of convergent services including a hybrid mobile phone that charges a fixed line rate when used from the client's home.