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### Viewing cable 04BRASILIA2905, AMBASSADOR AND MINISTER OF COMMUNICATIONS DISCUSS

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04BRASILIA2905 | 2004-11-24 16:47 | 2011-07-11 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Brasilia

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 02 BRASILIA 002905

    SIPDIS

    SENSITIVE

    NSC FOR MIKE DEMPSEY
    STATE PLEASE PASS TO USTR FOR SCRONIN
    DEPT OF TREASURY FOR FPARODI
    USDOC FOR 4332/ITA/MAC/WH/OLAC/SHIELDS
    USDOC ALSO FOR 3134/ITA/USCS/OIO/WH/RD/CREATORE
    USDA FOR FAS/ITP AND FAS/FAA/WH
    DOE FOR SARAH MARQUIS
    STATE PASS OPIC FOR MORONESE, RIVERA, MERVENNE
    STATE PASS EXIM FOR NATALIE WEISS, COCONNER
    STATE PASS USTDA FOR AMCKINNEY

    E.O. 12958: N/A
    TAGS: ECPS EINV BEXP PGOV ETRD BR
    SUBJECT:  AMBASSADOR AND MINISTER OF COMMUNICATIONS DISCUSS
    THE GOB'S DIGITAL FUTURE

    ¶1. (SBU) SUMMARY AND INTRODUCTION.  ON NOVEMBER 4,
    AMBASSADOR PAID A COURTESY CALL ON MINISTER OF
    COMMUNICATIONS EUNICIO OLIVEIRA.  IN RESPONSE TO THE
    AMBASSADOR'S PITCH FOR THE GOB TO CONSIDER FAVORABLY THE US
    STANDARD FOR DIGITAL TELEVISION, THE MINISTER REPLIED THAT
    BRAZIL WAS KEEPING ITS OPTIONS OPEN.  THE GOB WOULD BE
    DISPOSED TO ADOPT A FOREIGN-DEVELOPED DIGITAL TV STANDARD,
    OLIVEIRA OBSERVED, IF: A) THAT STANDARD SUPPORTED GOB
    EFFORTS TO ESTABLISH A DIGITAL BACKBONE LINKING FEDERAL
    GOVERNMENT AGENCIES, SCHOOLS, AND LIBRARIES, AND B) A
    PORTION OF THE NECESSARY HARDWARE/SOFTWARE COULD BE
    MANUFACTURED/DEVELOPED IN BRAZIL.  MEANWHILE, RUMORS
    CONTINUE TO CIRCULATE THAT OLIVEIRA, A FEDERAL DEPUTY WHO
    PREVIOUSLY SERVED AS LEADER OF THE PMDB PARTY IN THE
    CHAMBER, WOULD STEP DOWN IF THE PMDB PARTY LEAVES THE
    RULING COALITION.  SEPARATELY, OFFICIALS AT ANATEL, THE
    GOB'S TELECOM REGULATORY AGENCY, STRESS THAT WHILE THEY
    TAKE PART IN INTER-AGENCY DISCUSSIONS ON DIGITAL ISSUES,
    THE MINISTRY HAS THE LEAD ON THESE MATTERS.  END SUMMARY
    AND INTRODUCTION.

    DIGITAL TV STANDARD
    -------------------

    ¶2. (SBU) ON NOVEMBER 4, AMBASSADOR, ACCOMPANIED BY
    ECONCOUNS AND FCS DEPUTY SENIOR COMMERICAL OFFICER, MET
    WITH MINISTER OF COMMUNICATIONS EUNICIO OLIVEIRA AND HIS
    INTERNATIONAL ADVISOR CLAUDIO NASCIMENTO.  THE CORDIAL 45-
    MINUTE CONVERSATION FOCUSED ON THE STATUS OF THE GOB'S
    DELIBERATIONS REGARDING THE ADOPTION OF A NEW DIGITAL
    TELEVISION STANDARD.  (BRAZIL IS CURRENTLY IN THE PROCESS
    OF CHOOSING FROM ONE OF POTENTIAL THREE DTV STANDARDS:  THE
    ATSC - I.E., AMERICAN), THE DVB - I.E., EUROPEAN), AND THE
    ISDB - I.E., JAPANESE).  THE MINISTER NOTED THAT THE
    GOVERNMENT'S INTERNAL DECISIONMAKING ON THIS ISSUE HAS BEEN
    ONGOING SINCE 2000, AND THAT ONE OF THE REASONS PROGRESS
    HAS BEEN SLOW IS THAT THE GOB WANTED TO ENSURE THAT
    WHATEVER STANDARD WAS ADOPTED ALSO SUPPORTED THE
    ADMINISTRATION'S PLANNED DIGITAL INCLUSION EFFORTS.
    CURRENT PLANNING WAS TO LINK LIBRARIES, SCHOOLS, AND
    SIMILAR TYPE FACILITES TOGETHER VIA A DIGITAL BACKBONE,
    OLIVEIRA SAID, AND IT ONLY SEEMED NATURAL THAT THE
    GOVERNMENT SEEK AS MUCH SYNERGY AS POSSIBLE WITH RESPECT TO
    DTV.

    ¶3. (SBU) A FURTHER COMPLICATED FACTOR, OLIVEIRA ADDED, WAS
    THE LINE OF THOUGHT THAT BRAZIL SHOULD ADOPT ITS OWN ONE-
    COUNTRY STANDARD, WHICH WOULD ALLOW THE GOVERNMENT TO
    ENSURE THAT THE STANDARD CHOSEN WAS CONSISTENT WITH THE
    DIGITAL INCLUSION PROJECT.  HOWEVER, THE MINISTER CONTINUED
    (CHOOSING HIS WORDS CAREFULLY), SHOULD TECHNICAL STUDY
    REVEAL THAT THE ATSC STANDARD SATISFIED GOB CONCERNS
    REGARDING SUPPORT FOR DIGITAL INCLUSION, THERE WOULD BE A
    GOOD CASE FOR CHOOSING THAT STANDARD.  HE COMMENTED THAT IT
    WOULD BE EVEN MORE HELPFUL TO US LOBBYING IF U.S. FIRMS
    COULD SHOW THAT THEY PLANNED TO MANUFACTURE AND/OR DEVELOP
    SOME OF THE NECESSARY HARDWARE/SOFTWARE FOR DTV IN BRAZIL.
    OLIVEIRA SAID THAT THE GOB WAS OPEN TO RECEIVING WHATEVER
    TECHNICAL INFORMATION THAT THE USG OR SPECIFIC U.S. FIRMS
    WANTED TO OFFER REGARDING THE ASTC STANDARD.

    ¶4. (SBU) COMMENT.  WHILE THE MINISTER'S STATEMENTS ABOUT
    BRAZIL HAVING AN OPEN MIND ON THIS ISSUE WERE GOOD NEWS,
    THE PICTURE IS A BIT MORE COMPLICATED.  ACCORDING TO THE
    LOCAL RUMOR MILL, OLIVEIRA - WHO PREVIOUSLY WAS THE CHAMBER
    OF DEPUTIES' FLOOR LEADER FOR THE PMDB PARTY (ONE OF THE
    LULA GOVERNMENT'S COALITION PARTNERS) - WOULD STEP DOWN AS
    MINISTER SHOULD THE PMDB DESERT THE GOVERNING COALITION.
    THE PRESS REPORTS THAT WHILE WITHIN PARTY STRATEGY SESSIONS
    HE IS AMONG THOSE ARGUING IN FAVOR OF CONTINUED PMDB
    PARTICIPATION IN THE GOVERNMENT, SHOULD HIS ARGUMENTS FAIL
    TO CARRY THE DAY THERE IS NO GUARANTEE THAT ANY SUCCESSOR
    WOULD HAVE THE SAME ATTITUDE ON THE DTV ISSUE.  INDEED,
    BOTH OLIVEIRA AND OUR CONTACTS AT ANATEL (THE GOB TELECOM
    REGULATORY AGENCY) NOTED THAT THERE ARE SOME WITHIN THE PT
    (THE PRESIDENT'S PARTY) WHO STRONGLY FAVOR A HOME-GROWN
    BRAZIL STANDARD.  END COMMENT.

    ¶5. (SBU) MEANWHILE, IN A SEPARATE MEETING THE SAME DAY WITH
    ANATEL CHIEF PRESIDENT ZILLER, EMBOFFS TOUCHED UPON THE
    SAME ISSUE.  ZILLER SAID THAT THE GOB'S DECISION REGARDING
    THE CHOICE OF A DTV STANDARD WAS BEING MADE BY AN
    INTERAGENCY COMMITTEE (HEADED BY THE MINISTER OF
    COMMUNICATIONS) AND THAT IT WAS CONTEMPLATED THAT THE
    MATTER WOULD BE RESOLVED IN 2005.  NOTE:  U.S. FIRMS
    INTERESTED IN THE BRAZILIAN DTV MARKET HAVE TOLD US THAT
    THE LOCAL BROADCAST INDUSTRY IS PRESSURING THE GOB TO MEET
    THIS 2005 DEADLINE.  BRAZILIAN BROADCASTERS ARE FACING
    INCREASING COMPETITION FOR SCARCE ADVERTISING REVENUE FROM
    CELLULAR PHONE COMPANIES -- WHO ARE NOW CAPABLE OF
    PROVIDING TELEVISION SIGNALS TO THEIR CUSTOMERS.

    THE FIXED LINE MARKET
    ---------------------

    ¶6. (SBU) ANATEL PRESIDENT ZILLER ALSO PROVIDED THE CURRENT
    STATE-OF-PLAY FOR EMBOFFS ON VARIOUS OTHER TELECOM ISSUES.
    WITH RESPECT TO WIRED TELEPHONY, HE NOTED THAT A NUMBER OF
    CURRENT CONCESSIONS WOULD EXPIRE NEXT YEAR.  THE GOB, HE
    SAID, HOPED TO THEN RENEW THEM FROM 2006 TO 2025, WITH
    ANATEL ITSELF WORKING TO INCREASE PORTABILITY OF FIXED
    LINES, ESTABLISH A PRICING MODEL FOR INTERCONNECTIVITY, PUT
    IN PLACE TELEPHONE METERS FOR RESIDENTIAL LINES, AND
    ESTABLISH A NEW AND SEPARATE PRICE INDEX (I.E., OTHER THAN
    THE CURRENT IPCA OR IGI-P) FOR THE TELECOMMUNICATIONS
    SECTOR.  ZILLER DID NOT SEE VOICE OVER INTERNET PROTOCOL
    (VOIP) AS AN IMMEDIATE THREAT TO THE FIXED LINE COMPANIES
    THOUGH HE ADMITTED THAT A NUMBER OF COMPANIES WHICH HAD
    THEIR OWN DATA LINKS WERE MOVING TO THIS TECHNOLOGY.  WHILE
    ANATEL HAD NOT FULLY THOUGHT THROUGH HOW IT WOULD APPROACH
    VOIP - I.E., WAS IT A TECHNOLOGY OR A SERVICE - CURRENT LAW
    PROHIBITS USE OF VOIP ON GOVERNMENT TRANSMISSION LINES, HE
    OBSERVED.  COMMENT.  NOTWITHSTANDING THIS LEGAL
    PROHIBITION, SEVERAL COMPANIES PUBLICLY ADVERTISE CUT-RATE
    INTERNATIONAL AND LONG-DISTANCE PRICES BASED ON THEIR USE
    OF VOIP.  END COMMENT.

    MOBILE TELEPHONY
    ----------------

    ¶7. (SBU) FINALLY, ZILLER STATED THAT ANATEL WAS WORKING ON
    A STUDY OF THIRD GENERATION MOBILE TELEPHONY THAT SHOULD BE
    READY BY THE FIRST SEMESTER OF 2005.  CURRENTLY, ABOUT 50
    PERCENT OF THE WIRELESS PHONES IN BRAZIL USED TDMA
    TECHNOLOGY, THOUGH OVER THE NEXT FEW YEARS IT WAS EXPECTED
    THAT CELLULAR PROVIDERS WOULD MIGRATE TO CDMA AND GSM
    TECHNOLOGY.  WHILE ANATEL, WHICH SAW ITS REGULATORY ROLE AS
    THAT OF A NEUTRAL REFEREE, WAS NOT ENCOURAGING THIS
    MOVEMENT, BASED UPON CURRENT TRENDS HE FELT THAT SUCH
    MIGRATION WAS INEVITABLE.

    CHICOLA

`