Vivo is contemplating the use of its dormant 450MHz spectrum to deliver affordable mobile broadband services in rural and underserved areas of the country. The operator would partner with AINMT Holdings to implement the new LTE-based service, leveraging the Scandinavian operator's expertise in using the lower frequencies to deliver wireless voice and broadband services in sparsely populated areas. BMI believes that, by sweating these under-utilised resources, Vivo will be able to cost effectively expand its footprint and bring more rural Brazilians into the digital economy.
Vivo and AINMT Holdings signed a formal memorandum of understanding (MoU) aimed at exploring the potential of establishing a partnership that would build and operate this network. No further details have been disclosed other than that Vivo's dormant 450MHz spectrum - which was formerly used to provide first-generation analogue cellular telephony services in selected areas of Brazil - will be used to offer voice and broadband services.
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Vivo will be able to install new LTE transceiver modules on its existing towers and cell sites in rural areas and, as the 450MHz spectrum is conducive to long-range wide-area coverage, only a small number of new installations will be required to ensure effective coverage. The most significant outlay is likely to be focused on the procurement and distribution of end-user terminals. F ew modern handsets and wireless modems are designed to tap the 450MHz band and these may have to be sourced from specialist vendors. BMI believes dedicated public access terminals will be set up in key towns and villages, rather than putting handsets and computers in the hands of end-users, in much the same way that 1G and 2G services were originally extended into rural areas of Asia and Africa.
AINMT provides mobile voice and broadband services to rural communities and individuals in Sweden and Denmark, where it operates under the Net1 brand, and in Norway, where it trades as ice.net . The company does not disclose subscriber figures, but market data from the national regulatory authorities suggests it serves several tens of thousands of users in total across these countries.
Brazil's mobile operators are racing to build out their 4G LTE networks ahead of the 2014 FIFA World Cup and the 2016 Olympic Games, both of which are being held in Brazil and which are expected to generate a significant uptick in demand for streaming live video by the country's fixed and mobile broadband user base, as well as digital media content creators and distributors. However, as their core revenues are falling due to intense price competition, so investment budgets have been hit. Inter-operator agreements to share LTE infrastructure will help, but BMI believes there will still be little financial incentive for them to address rural consumers' broadband needs. In this context, we welcome Vivo's proposal to reuse its vacant spectrum to make affordable broadband services available outside the major business and population centres.