Brazil has made significant progress in Internet access, digital security and regulation, but much remains to be done to reduce the digital divide in the country and expand the adoption of digital technologies. In the work to contain the COVID-19 crisis, for Brazil, as for the rest of the world, intensifying the pace of digital transformation can accelerate and reinforce the recovery, according to the OECD.
"Digital technologies are the foundation of today's economies, and digital tools and connectivity have proven essential to help businesses and people withstand the COVID-19 crisis," said OECD Secretary-General Angel Gurría, who discloses two simultaneous Assessments on the digital transformation in Brazil and its telecommunications and broadcasting sectors. "While Brazil and the world work to face this devastating crisis, everything must be done to take advantage of the opportunities offered by digitization in order to strengthen the recovery and build a resilient and inclusive future economy."
The Assessment of digital transformation in the country, entitled Towards the Digital Age in Brazil, concludes that, despite recent advances, Brazil is lagging behind in investing in digital innovation and in the level of digital workforce training. The Assessment recommends ways to increase the adoption of digital technologies among individuals and businesses, strengthen digital security and privacy and encourage innovation. She recommends better coordination of digital transformation policies between government ministries and agencies and greater resources for the Brazilian Digital Transformation Strategy (E-Digital).
A parallel report, entitled OECD Evaluation on Telecommunications and Broadcasting in Brazil 2020, shows how Brazil can achieve developed economies in access to high quality communication services, which are fundamental for an inclusive and successful digital transformation. The Assessment suggests actions in the areas of communication and broadcasting to improve market conditions, competition and the public policy and regulation framework. The Assessment also recommends a fundamental reform of the tax structure, which both limit the investment and innovation potential of operators in these sectors.
In view of the growing convergence of communication and broadcasting services, the creation of an independent unified regulatory agency for these sectors, as so many other countries have done, would help to lower prices and improve the quality of services, says the Evaluation. Likewise, introducing a simplified licensing regime, based on a single license for both sectors, would reduce legal costs and administrative burden for operators. In addition, the future 5G spectrum auction must be carefully designed to ensure optimal network coverage and competitive conditions.
The successful implementation of a digital policy is vital in all countries to ensure that the benefits of digital transformation, such as increased productivity and improved well-being, are shared in an inclusive manner between economies and societies. Digital tools can also help to target social policies efficiently. On the other hand, the unsuccessful implementation of digital policy can aggravate the existing inequalities between highly and low-skilled individuals, large and small companies, and urban and rural regions.
Among the advances made in Brazil in recent years, communication service subscriptions have been increasing steadily, thanks to the triplication of mobile service subscriptions from 2012 to 2019, and the relatively affordable prices of mobile voice and data plans. The proportion of households with Internet access increased from 40% in 2013 to 67% in 2018 and the proportion of adult Internet users increased from 50% to 72%. New laws have reinforced digital security, consumer and personal data protection. Brazil has created an exemplary institutional structure for Internet governance, the Internet Steering Committee, and has taken steps to promote competition in the markets for mobile services and strengthen the independence of the telecommunications regulatory agency.
Despite this progress, challenges remain. For example, almost a quarter of Brazilian adults had never used the Internet until 2018. The data also shows that Internet use is strongly related to levels of education, income and age. There is a persistent digital divide between urban and rural populations, with 75% of the adult population in urban areas using the Internet against only 49% in rural areas.
Fixed broadband is less accessible in Brazil than mobile. While Brazil had 90 mobile broadband subscriptions per 100 inhabitants in June 2019, not far behind the OECD average of 113, the fixed broadband penetration of 16% constitutes only half of the OECD average of 31%. Only 54% of companies with 10 or more employees had a website in 2019, compared to the OECD average of 78%. In addition, even though e-commerce has been growing, only 21% of companies made sales online in 2019.
Summary of the main recommendations of the two Assessments:
- Continue to improve digital empowerment, especially among microenterprises and people with low levels of education. Offer companies tax incentives to invest in upgrades and digital technology training. Allocate more resources for research and development in ICT (information and communication technologies) services and for innovative startups. Increase funding for students in STEM subjects (science, technology, engineering and mathematics). Eliminate regulatory barriers to the development of electronic commerce.
- Improve high-quality, stable connection at competitive prices. To this end, the deployment of fiber optic infrastructure in rural and remote areas should be encouraged and competition in communication services encouraged. In broadcasting, where the concentration is higher, one must reduce barriers to entry and remove legal restrictions that prohibit the vertical integration of the pay-TV value chain. Formulate the next 5G spectrum auction in order to guarantee a competitive market, especially in light of the new legislation that allows the successive renewal of spectrum licenses.
Create a unified and independent regulatory agency for the communication and broadcasting sectors and replace the current dual licensing system with a regime based on a single license for communication and broadcasting services. Harmonize rates and taxes in the communication sector between states and reduce them whenever possible. In the long run, seek to reform the indirect tax structure to reduce distortions.
