Brazil Seeks Larger Place In Global Space Industry
With a budget surplus and roaring economic growth, Brazil has set it sights on some significant new satellite and space initiative. The South American giant has recorded some moderate success throughout its space history, but the country’s latest efforts, spread across several fronts, are intended to put Brazil on a more equal footing with the world’s space superpowers.
Brazil has owned and operated telecom satellites for the past two decades. While the country has yet to develop an indigenous communication satellite manufacturing industry, the country’s “Brazil’s ambitions are much broader and date back many years, with its plans to develop scientific satellite manufacturing, test and tracking capabilities, and an indigenous launch vehicle contained in its complete space plan announced in 1981,” says John Logsdon, director of the Space Policy Institute at George Washington University.
There have been many delays and setbacks along the way, including changes in government, severe budget problems and a 2003 launch pad accident during preparations for the launch of a VLS-1 rocket that killed 21 people, but “there have also been significant successes,” Logsdon says. “Brazil has developed and operated several of its own satellites, although it had to turn to the United States for launch services. It has been a leader in space collaboration with China, as the two countries have jointly developed the CBERS (China-Brazil Earth Resources Satellite) series and has also cooperated with Russia and Ukraine.”
Aggressive Government Plans
Early in 2006, Brazil’s government launched a public relations initiative aimed at showcasing the benefits the country’s space program provides to society and industry, and also began a new push in space led by the Brazilian National Space Agency and the National Institute for Space Research (INPE), a unit of the Brazilian Ministry of Science and Technology that is the country’s lead technical center for space. The main focus of Brazil’s space program will be Earth observation and the launching of five new satellites throughout the next nine years, says Gilberto Câmara, a scientist who became director of INPE in December 2005.
In 2005, Brazil‘s aerospace industry had the best year in its history, with sales of $4.2 billion, but 90 percent of those revenues were derived from the export of regional and business jets produced by Embraer, Brazil’s second largest exporter. While aircraft technology has been developed indigenously, international cooperation will be required for space technology development, “mainly because Brazilian government space funding remains limited, even if growing ($97 million in 2005),” says Rachel Villain, director of space & communications at Euroconsult in Paris. Investment with China for the development of Earth observation satellites and with Russia for launch vehicle development make up about 87 percent of the civil space budget. “Cooperation with Russia will increase to include geo-satellite technology, with a government plan to develop a domestic satcom system of three small geo-satellites based on the Yamal bus of RKK Energia,” she says. Cooperation with China is likely to decrease as the second-generation of CBERS satellites will be developed with more Brazilian content — ultimately more than 80 percent — as compared to the first three of the first generation satellites. “Brazil intends to become ultimately autonomous for satellite and launch vehicle technology as Japan and India did in the 1980s and 1990s, respectively,” she says.
The re-election of President Luiz Inacio Lula da Silva in October to another four-year term could affect the country’s space plans, says Maria Velez de Berliner, president of Latin Trade Solutions. “His administration will continue to be besieged by congressional investigations and judicial prosecutions. Lula might not escape them, as the corruption scandals reached ever closer to him, although his culpability, or lack thereof, has not yet been proven. Given that margins are becoming lower and lower in the satellite and telecommunications industry, a Lula government, constrained by scandal-management, is likely to tinker with rates and licenses to assuage political pressures. This forebodes an unstable regulatory environment for telecommunications and satellites and, possibly lower profits.”
Commercial Efforts Expanding
Brazil also has the largest telecommunications sector in Latin America. In 2005, the sector generated revenues of about $35.6 billion, a 23 percent increase over 2004. Services, including carriers, accounted for $27.8 billion of net revenue, while hardware and software suppliers contributed $6.8 billion. The broadcasting market represents about 10 percent of the total telecommunications market, and Telemar, Telefónica and Brasil Telecom so far have benefited from inflation-based price adjustments and deployment of new product lines to create revenue growth. But 2006 was a turning point for the industry, as previously marginal growth in some sectors turned negative, long-distance revenues fell sharply and incumbents began to feel the effects of mobile substitution. According to the Brazilian Ministry of Telecommunications, 2007 is expected to bring little relief, as the mobile base will continue its brisk growth and a new tariff-adjustment mechanism will keep price changes below the inflation rate. Convergence is dramatically changing the broadcasting industry, making it difficult to distinguish precise boundaries between broadcasting and non-broadcasting related business sectors.
Telecoms specialist Rafael Fanchini, Pricewaterhousecoopers’ Brazil manager, thinks that the most important step going forward is that “Brazil’s government is currently acting to modernize its geo-satellite network.” The Brazilian government has opened a new tender, inviting the country’s private sector to exploit three of Brazil’s nine geostationary orbital positions. In November 2005, the Brazilian National Telecommunications Agency issued a note expressing its intention to grant licenses for the operation of what it called a new Brazilian Satellite Network. “Within the tender’s own definitions, the companies will have up to four years to launch their satellites and occupy the desired orbit, with 100 percent coverage of Brazilian national territory,” Fanchini says. “Brazil is counting on these three new satellites to provide new telecom services for TV, telephone, data communication, multimedia and Internet.”
Commercial companies around the globe also are expanding their activities in Brazil. Early in 2006, ViaSat extended the COC Education Network, which provides interactive educational services to about 250,000 students in more than 120 locations throughout the country. By mid-2006, ViaSat also was in full-scale deployment of 4,400 sites with partner Comsat-Brasil for GESAC, an e-government project driven by the Ministry of Communications. On the corporate front, ViaSat has rolled out more than 1,300 sites with Telespazio-Brasil for applications such as corporate virtual private networks, Internet access and Voice over Internet Protocol (VoIP) telephony.
“The Brazilian market has been especially buoyant, driven in large part by the institutional sector,” says Robert Feierbach, ViaSat’s managing director for Latin America and EMEA. “Funding for these projects is provided by the Brazilian administration for large-scale, country-wide projects, with the aim of improving access to technology and information within the government agencies, rendering them more efficient.” ViaSat sees the prospect for additional medium- and large-scale satellite projects materializing in Brazil throughout the next few years. “Those prospects are predicated on the present administration’s continuing desire to improve access to information and real-time communication among its various institutional entities, spread-out across the vast territory of South America’s largest country,” he says.
Russell Ribeiro, general manager of Gilat do Brasil Ltd., believes Brazil’s public institutions have a great deal of confidence in VSAT technology. In July, Comsat selected Gilat Skyedge satellite hub stations and nearly 5,000 VSATs to provide broadband connectivity services for Caixa Econômica Federal in Brazil. Caixa is one of Brazil’s largest public banks and is the institution responsible for managing the country’s federal lottery. The network is linking Caixa’s sites for both lottery transactions and general banking, including bill-paying services. When deployment is completed, this will be one of Brazil’s largest VSAT networks.
Brazilian retailers are certainly getting interested. Ribeiro says that “like many of their counterparts worldwide, these retailers have come to trust VSAT networks for a wide range of business-critical applications.” In January 2006, Gilat partnered with Embratel and Starone, the largest provider of satellite capacity in Brazil, to deploy a 2,400-site VSAT network for O Boticário, Brazil’s largest cosmetics chain. The remote sites are being deployed throughout O Boticário stores in airports, supermarkets and shopping centers. The VSAT system supports credit card authorization, Internet access, VoIP, video, audio and IP multicast used for distance learning, and music clips distribution.
Intelsat has been one of Brazil’s largest providers of Fixed Satellite Services, and customers include: the country’s largest broadcaster, TV Globo; major corporate service providers such as Hughes do Brasil, Telespazio Brazil, Primesys, Comsat and Impsat; and major telecommunications carriers Embratel and Intelig Telecom. “Intelsat’s dedicated video solutions include broadcast and cable head-end distribution, niche programming and full-time contribution,” says Carmen Gonzalez-Sanfeliu, Intelsat’s vice president, Latin America operations. “… Intelsat is ideally positioned to support the next phase of Brazilian telecom expansion,” she says. “The broad coverage offered by Intelsat’s IA-8 satellite is ideal to help mobile telecom operators build out their networks into new areas using cellular backhaul. It can also help those operators bring voice, broadband data and Internet to businesses and consumers in the region’s most remote locations.”
In September, Intelsat expanded its offering to Brazilian operators and corporations with the introduction of its Globalconnex Managed Solutions. “These solutions bundle space segment with teleports, points of presence and ground network infrastructure and are intended to complement the infrastructure of the operators on our system,” says Gonzalez-Sanfeliu. “They provide end-to-end support for media, trunking, broadband Internet, VoIP, Wi-Fi hotspots, distance learning, and point-of-sale transactions. Other components of this offering include connection to Tier 1 backbone, satellite hub station, VSAT terminals, and 24/7 network service support.” Intelsat thinks that in the near future, its’ satellites can serve as a platform for multimedia content distribution “to support the evolution of video applications that include HDTV, IPTV, store-and-forward platforms and private video networks,” she says.
Commitment Going Forward
Looking ahead, the role of the private sector in Brazil’s satellite programs will loom large. Despite the Brazilian economy’s current state of health, and despite the tax revenues enjoyed by the national budget, many experts are asking one crucial question: How hard is the national government pushing to engage the private sector?
In October 2005, Brazil’s government brought into force the first national innovation law in Latin America. The law’s three main components are incentives for partnerships linking universities, research institutes and private companies; incentives to encourage the participation of universities and research institutes in the innovation process; and incentives for promoting innovation within private companies. As a result of the new law, Brazil now encourages both public and private companies to share research staff, funding and facilities, including scientific laboratories. This was previously forbidden — since public funds would be subsidizing private businesses. Another piece of legislation enacted June 2005 created fiscal incentives designed to promote technology innovation.
Some Brazilian industrialists criticize the government for not allocating the resources necessary to put the new legislation into practice, and Sergio Rezende, minister of Science and Technology, says that an extra $90 million will be spent on innovation in the private sector above the normal allocation. This new increase represents about one-sixth of the Ministry’s total annual budget.
How is the country’s space-related research being targeted? Instead of conducting generic research, at INPE, investments flow into projects which respond to well-defined Brazilian demands.
One initiative has been the free distribution of satellite images that encourage the creation of new medium-sized companies working in the geo-information sector. New remote sensing applications developed at INPE have focused on the marketing of free satellite data. Information related to weather and climate and the evolution of forecasting tools has been an important factor for the hyper-growth now underway within the country’s agribusiness development. “The value comes from the use. What is the point of having the best orbital data or on climate if they are neither available, nor being used”, says Câmara. With a growth in demand for its services from customers in the telecommunications, automotive, informatics and medical fields, among others, INPE’s Integration and Test Laboratory is undergoing further expansion.
“Brazil’s accomplishments in space to date are less than might be expected of a country which wants to be seen as the leader in Latin America, which has many technically expert scientists and engineers, and could benefit from a variety of space applications,” but here is a sense that Brazil’s best days in space are still to come,” says Logsdon.