Brazil: Satellite TV Opportunities
May 18, 2012 By Carl Kandutsch Law Office
I spent three weeks in Brazil at the end of 2011, traveling in Campinas, Sao Paulo, Rio de Janeiro and the upscale resort town of Buzios in RJ State. One way in which Brazilian urban and suburban landscapes differ from those in the United States is that almost everywhere you look, you see new multi-family construction projects being built, mostly high-rises.
DirecTV is not the only company in the sector that sees great promise in Latin America markets. Netflix last year jumped into the region, which has a major advantage for new entrants in that it is not a region deeply penetrated by traditional cable TV offerings.
Latin America also could be a market where DirecTV could make some immediate impact with a mobile broadband play. The company's TD-LTE offering in Brazil was the first such offering in the region. For a while, it seemed like DirecTV had a 4G partnership with Verizon Communications for the U.S. market, but the telco's pending cable TV spectrum deal appeared to push that partnership aside. Maybe, DirecTV can turn its attention to growing in a wide open market.
I spent three weeks in Brazil at the end of 2011, traveling in Campinas, Sao Paulo, Rio de Janeiro and the upscale resort town of Buzios in RJ State. One way in which Brazilian urban and suburban landscapes differ from those in the United States is that almost everywhere you look, you see new multi-family construction projects being built, mostly high-rises. Just traveling from the international airport to downtown Sao Paulo I saw dozens of new high-rise buildings in various stages of completion. The pace of change is stunning, and Brazilians are full of hope that the future may actually arrive.
Brazil has not been immune to the impact of the global financial crisis, but this has not stopped it from overtaking the UK as the sixth largest economy in the world and remaining a favored destination for international investors. In the process, it is becoming an engine of growth for other countries in South America. Unemployment is at its lowest levels on record, and standards of living have improved markedly. Over the year, family consumption expanded by 4.1 percent and government consumption by 1.9 percent.
In only the last seven years Brazil has added 40 million people as middle-class consumers – an enormous and growing migration of “Ds” into the “C” demographic. And the vast majority of these new middle-class earners are hungry consumers; finally, for the first time, millions of families can afford to enjoy middle-class goods and services such as consumer electronics (cell phones are huge) , pay TV and high-speed Internet access.
Therefore, it makes sense that DirecTV sees Brazil as a huge opportunity.
But does DirecTV see the MDU space as an important part of that opportunity? After all, the new Brazilian middle class aren’t building single-family homes for the most part; they are moving into often very large apartment and condominium complexes in the expanding suburbs of Sao Paulo, Rio de Janeiro, Belo Horizonte and other major cities. And in Brazil, high-rise MDUs are the architecture of choice.
DirecTV’s MFH2 system is the state-of-the-art video programming distribution system for high-rise MDU buildings: it’s cheap to build (no head-end is required) and basically consists of a single small dish antenna on the building’s roof connected to in-unit digital set-top-boxes by mostly vertical wiring that can easily be snaked through duct located in the hollow cinder block used to construct these buildings. Here in the United States, MFH2 has proven to be a reliable, cost-effective solution, especially for high-rise buildings, so isn’t this technology being deployed in Brazil?
One subject I have not yet researched concerns the status of inside wiring in Brazil – access to in-building infrastructure is essential to competition in MDU markets. Is the wiring owned by the incumbent cable company, and if so, is there any convention, legal or otherwise, that would allow a satellite provider to access and utilize the wiring alongside the cable company? Are buildings constructed with sufficient vertical and horizontal conduit to facilitate the post-wiring of high-rise MDU buildings?
On the surface, it’s a no-brainer: a multitude of new high-rise residential construction, occupied by a huge influx of a newly arrived consumer-hungry middle class, many of them sports fanatics (futebol), dissatisfied with the products and services (Brazilian soap operas called “novellas”) offered by cable incumbent that seem largely static and indifferent to the desires of the new younger class.
We know that DirecTV is not focused on MDU markets in the United States for a variety of reasons. Is the satellite company overlooking an opportunity south of the border?
AUTHOR: Texas Telecommunications Attorney
Copyright Carl Kandutsch Law Office
More information about Carl Kandutsch Law Office
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Latin America also could be a market where DirecTV could make some immediate impact with a mobile broadband play. The company's TD-LTE offering in Brazil was the first such offering in the region. For a while, it seemed like DirecTV had a 4G partnership with Verizon Communications for the U.S. market, but the telco's pending cable TV spectrum deal appeared to push that partnership aside. Maybe, DirecTV can turn its attention to growing in a wide open market.
I spent three weeks in Brazil at the end of 2011, traveling in Campinas, Sao Paulo, Rio de Janeiro and the upscale resort town of Buzios in RJ State. One way in which Brazilian urban and suburban landscapes differ from those in the United States is that almost everywhere you look, you see new multi-family construction projects being built, mostly high-rises. Just traveling from the international airport to downtown Sao Paulo I saw dozens of new high-rise buildings in various stages of completion. The pace of change is stunning, and Brazilians are full of hope that the future may actually arrive.
Brazil has not been immune to the impact of the global financial crisis, but this has not stopped it from overtaking the UK as the sixth largest economy in the world and remaining a favored destination for international investors. In the process, it is becoming an engine of growth for other countries in South America. Unemployment is at its lowest levels on record, and standards of living have improved markedly. Over the year, family consumption expanded by 4.1 percent and government consumption by 1.9 percent.
In only the last seven years Brazil has added 40 million people as middle-class consumers – an enormous and growing migration of “Ds” into the “C” demographic. And the vast majority of these new middle-class earners are hungry consumers; finally, for the first time, millions of families can afford to enjoy middle-class goods and services such as consumer electronics (cell phones are huge) , pay TV and high-speed Internet access.
Therefore, it makes sense that DirecTV sees Brazil as a huge opportunity.
But does DirecTV see the MDU space as an important part of that opportunity? After all, the new Brazilian middle class aren’t building single-family homes for the most part; they are moving into often very large apartment and condominium complexes in the expanding suburbs of Sao Paulo, Rio de Janeiro, Belo Horizonte and other major cities. And in Brazil, high-rise MDUs are the architecture of choice.
DirecTV’s MFH2 system is the state-of-the-art video programming distribution system for high-rise MDU buildings: it’s cheap to build (no head-end is required) and basically consists of a single small dish antenna on the building’s roof connected to in-unit digital set-top-boxes by mostly vertical wiring that can easily be snaked through duct located in the hollow cinder block used to construct these buildings. Here in the United States, MFH2 has proven to be a reliable, cost-effective solution, especially for high-rise buildings, so isn’t this technology being deployed in Brazil?
One subject I have not yet researched concerns the status of inside wiring in Brazil – access to in-building infrastructure is essential to competition in MDU markets. Is the wiring owned by the incumbent cable company, and if so, is there any convention, legal or otherwise, that would allow a satellite provider to access and utilize the wiring alongside the cable company? Are buildings constructed with sufficient vertical and horizontal conduit to facilitate the post-wiring of high-rise MDU buildings?
On the surface, it’s a no-brainer: a multitude of new high-rise residential construction, occupied by a huge influx of a newly arrived consumer-hungry middle class, many of them sports fanatics (futebol), dissatisfied with the products and services (Brazilian soap operas called “novellas”) offered by cable incumbent that seem largely static and indifferent to the desires of the new younger class.
We know that DirecTV is not focused on MDU markets in the United States for a variety of reasons. Is the satellite company overlooking an opportunity south of the border?
AUTHOR: Texas Telecommunications Attorney
Copyright Carl Kandutsch Law Office
More information about Carl Kandutsch Law Office
View all articles published by Carl Kandutsch Law Office
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
