The Brazilian government's plan to provide cheap broadband Internet across the country will shake up the big five providers, forcing them to offer a more competitive service, said Rogerio Santanna, the president of Telecomunicacoes Brasileiras SA, or Telebras, Friday.
The head of the former government monopoly revived to run the plan said that the service would allow smaller providers to compete and ultimately allow for a better service for the consumer.
"Telebras is set to shake up this market and break the current oligopoly," Santanna told Dow Jones Newswires.
The executive said Telebras is awaiting federal government approval for a change in its statutes that would allow it to start implementing the government's plan, which involves a 3.2 billion Brazilian real ($1.8 billion) capitalization of Telebras over the next two years and the extension of broadband Internet to 22 cities.
Santanna said that the company statutes could be changed in 30 days and the company could start organizing to implement the plan in 60 days.
The government has an informal goal of starting to provide Internet services by the end of the year. Telebras will run the backbone, while service to the final consumer will be offered by small providers.
The plan is designed to extend broadband services to all parts of Brazil-- the long term goal is to reach 4,278 cities--and provide cheaper internet access for poorer Brazilians.
Local providers, including Telecomunicacoes de Sao Paulo SA , known as Telesp, Net Servicos de Comunicacao/Embratel, Tele Norte Leste Participacoes SA, known as Oi, CTBC and GVT Holding SA, have questioned whether the government should be spending money on duplicating existing broadband backbones. Santanna retorted that the only reason they complain is to protect margins and to stop broadband from further eroding voice revenues.
"Our plan costs BRL5.7 billion. I don't believe that is much to spread broadband across Brazil," he said.