Mobile-Cellular Usage Pattern

in Brazil
Mobile-Cellular Usage
Pattern in Brazil
National Agency of Telecommunications

SAUS Quadra 06 Blocos C, E, F e H

CEP 70070-940
Brasília/DF
Phone: +55-(61)-2312-2000

Coordinated by the TECHNICAL ADVISORY (ATC)

This document aims to provides insights on mobile-cellular usage

pattern in Brazil with the purposed to provide elements to the revision
of the International Telecommunication Union (ITU) “ICT price data
methodology”, input of the “Measuring the Information Society
Report”, published annually by the ITU.
Special Report
2016

PRODUCED BY Technical
Advisory to the board
(ATC), International
Advisory (AIN),
Superintendency of
Competition (SCP) and
Superintendency of
Planning and Regulation
(SPR)
Figures
Figure 1– Areas of Registration of Mobile-Cellular in Brazil ........................................................ 3
Figure 2– Distribution of voice traffic in 2015: local and long distance .................................. 4
Figure 3– Evolution market share, prepaid and postpaid, 2008 to 2016................................ 4
Figure 4– Distribution of voice traffic in 2015: prepaid and postpaid plans ......................... 5
Figure 5– Average monthly voice traffic per user in minutes in 2015 ..................................... 5
Figure 6– Distribution of local voice traffic in 2015: prepaid and postpaid plans .............. 6
Figure 7 – Average monthly local voice traffic per user in minutes in 2015 ......................... 6
Figure 8 – Average and Distribution of Mobile Local Voice .......................................................... 7
Figure 9 – Distribution of local voice traffic in 2015: on-net, off-net and to fixed calls .... 7
Figure 10 – Distribution of prepaid local voice traffic in 2015: on-net, off-net and to
fixed calls ............................................................................................................................................................ 8
Figure 11 – Distribution of postpaid local voice traffic in 2015: on-net, off-net and to
fixed calls ............................................................................................................................................................ 8
Figure 12– Mobile Termination Rate (MTR) glide-path, Brazil, 2009 to 2020 ..................... 9
Figure 13– Number of SMS per user by quarter, Brazil, 2015 ..................................................... 9
Figure 14– Number of SMS per user by quarter, Brazil (prepaid vs postpaid), 2015 ......10
Figure 15– Evolution of mobile data traffic and SMS traffic, Brazil, 2012 to 2015 ...........10
Figure 16– Average monthly data traffic per user in MB in 2015 ............................................11
Figure 17– Number of mobile subscriptions per technology .....................................................12
Figure 18– Market share of mobile-cellular data usage in 2015 ..............................................12
Figure 19– Percentage of accesses by technology, Brazil, December-2015 .........................13
Figure 20– Average monthly data traffic per user in MB, 2015 ................................................13
Figure 21– Prepaid and postpaid share of the four major companies, Brazil, 2016 (2ºQ)
..............................................................................................................................................................................14
Figure 22– Average monthly data traffic per user in MB, 2015: prepaid and postpaid ..14
 Introduction

This report provides insights on mobile-cellular usage pattern in Brazil. The

main purpose of the document is to offer inputs to International Telecommunications
Union (ITU) about the Brazilian mobile usage context in order to subsidize the
debate related to the revising of the mobile-cellular sub-basket, which is a component
of the ICT Price Basket (IPB). Considerations about ITU’s “ICT price data
methodology” and inputs to the “Measuring the Information Society Report” have
been made in a specific document.1
Mobile-Cellular Usage Pattern in Brazil

2
1Report published online on:
http://www.anatel.gov.br/Portal/documentos/sala_imprensa/28-10-2015--12h4min26s-
Brazil_Propostal_UIT_ICT_Report_final.pdf
Brazilian Context: A Mobile-Cellular Overview

In Brazil there are about 258 (two hundred and fifty and eight) million mobile-
cellular subscribers. Four companies account for more than 98% (ninety eight per cent)
of the market-share. On August 2016, Vivo (Telefônica) accounted for 29% of the
market; both Claro (América Móvil) and TIM for approximately 25%; and Oi for 19%.

For this reason, data presented in this report includes only those four (4)
companies.

The Brazilian regulatory framework has designed 67 (sixty seven) areas within
Brazil, each of them refereed as Areas of Registration ARs2. Figure 1 represents these
67 ARs.

Figure 1– Areas of Registration of Mobile-Cellular in Brazil

2 In portuguese , Área de Registro (AR).

 Mobile-Cellular Pattern

As shown in Figure 2, 79% (seventy nine per cent) of the mobile voice traffic
consumption is intra AR (mobile calls within the same AR).

Distribution of voice traffic: local and long distance (2015)

21%

Local ≈ Intra AR

Long distance ≈ Inter AR

79%

Source: ATC/ANATEL
Mobile-Cellular Usage Pattern in Brazil

Figure 2– Distribution of voice traffic in 2015: local and long distance

It should be noted that about 30% (thirty per cent) of mobile subscriptions are
postpaid and 70% (seventy per cent) are prepaid. This ratio has changed significantly
since 2010 as shown in the Figure 3.

Market Share, Brazil, Prepaid x Postpaid, 2010 to 2016

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
1T10

2T10

3T10

4T10

1T11

2T11

3T11

4T11

1T12

2T12

3T12

4T12

1T13

2T13

3T13

4T13

1T14

2T14

3T14

4T14

1T15

2T15

3T15

4T15

1T16

2T16

4
Sorce: ANATEL Prepaid Postpaid

Figure 3– Evolution market share, prepaid and postpaid, 2008 to 2016

 Accordingly, prepaid subscriptions also represent almost 70% (sixty seven per
cent) of mobile voice traffic, as it be may be seen in Figure 4.

Distribution of voice traffic: prepaid and postpaid (2015)

33%

Prepaid
Postpaid

67%

Source: ATC/ANATEL

Figure 4– Distribution of voice traffic in 2015: prepaid and postpaid plans

Prepaid subscribers consume about 94 (ninety four) minutes monthly on

average, while postpaid subscribers consume 118 minutes monthly on average, as
shown in Figure 5.

Average monthly voice traffic per user in minutes (2015)

140,0

120,0
118,5
100,0
101,3
94,4
80,0

60,0

40,0

20,0

0,0

Source: ATC/ANATEL Prepaid Postpaid Total

Figure 5– Average monthly voice traffic per user in minutes in 2015

 When we look only at local mobile traffic consumption (only intra AR traffic),
proportions stay roughly the same, withprepaid subscriptions accounting for almost
69% (sixty nine per cent) of the total mobile voice traffic.

Distribution of local voice traffic: prepaid and postpaid (2015)

31%

Prepaid
Postpaid

69%

Source: ATC/ANATEL

Figure 6– Distribution of local voice traffic in 2015: prepaid and postpaid plans
Mobile-Cellular Usage Pattern in Brazil

This implies that total consumption of prepaid subscribers is not too different
from the total consumption of postpaid subscribers on average. However, this is due to
the relevance of the on-net calls that, in many cases, does not affect the call credit of a
prepaid subscriber. Figure 5 below shows how similar, in absolute numbers, are the
consumptions patterns.

Average monthly local voice traffic per user in minutes (2015)

100

90

87,6
80

79,5
70
76,3

60

50

40

30

20

10
6
0

Source: ATC/ANATEL Prepaid Postpaid Total

Figure 7 – Average monthly local voice traffic per user in minutes in 2015
 Figure 6 reveals the average and distribution of the average consumption by
subscriber segment.

Average and Distribution of Mobile Local Traffic Voice (minutes per month)
100

90 87,6

10,9 79,5
80 76,3
7,2
5,7
70 1,0 16,5 5,4

60
to fixed
50 off-net
on-net
40
Total
69,6 66,9
30 60,1

20

10

0
Source:
Prepaid Postpaid Total
ATC/ANATEL

Figure 8 – Average and Distribution of Mobile Local Voice

Figures 9, 10and 11 provide the same information, but in percentage terms.

Distribution of local voice traffic: on-net, off-net, to fixed

9%
7%

On-net
Off-net
To fixed

84%

Source: ATC/ANATEL

Figure 9 – Distribution of local voice traffic in 2015: on-net, off-net and to fixed calls
 Distribution of local prepaid voice traffic: on-net, off-net, to fixed

1%
8%

On-net
Off-net
To fixed

91%

Source: ATC/ANATEL

Figure 10 – Distribution of prepaid local voice traffic in 2015: on-net, off-net and to fixed
calls

Distribution of local postpaid voice traffic: on-net, off-net, to fixed

Mobile-Cellular Usage Pattern in Brazil

12%

19% On-net
Off-net
To fixed

69%

Source: ATC/ANATEL

Figure 11 – Distribution of postpaid local voice traffic in 2015: on-net, off-net and to fixed
calls

The relative importance of the on-net mobile-cellular calls is clear. This aspect
stems largely from the interconnection fees, in particular, from the Mobile Terminate
Rates (MTR), which represents and additional cost for off-net calls. Nevertheless, the
8 implementation of a glide-path for MTRs reductions, it is expected that this scenario
should change in the near future. Figure 12 presents this glide-path strategy used in
MTR reductions.
 Mobile Termination Rate, Brazil, 2009 to 2020
R$0,45

R$0,40
Resolution nº 576/2011
R$0,35

R$0,30
Reductions predicted on the
R$0,25 General Plan for
Competition Targets
R$0,20

R$0,15 Cost Models

results

R$0,10

R$0,05

R$-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Figure 12– Mobile Termination Rate (MTR) glide-path, Brazil, 2009 to 2020

Regarding the average number of SMS (the traditional text messages), Figure 13
reveals an average of 92 (ninety two) messages per user in 2015’s last quarter or
approximately 30 SMS monthly messages per user for the last three (3) months of
2015, while this number is dropping significantly

Nº of SMS/Per User by quarter, total of Brazil, 2015

110
107

105
103
Nº of SMS per user by quarter

100

95
93
92

90

85

80
1ºQ/15 2ºQ/15 3ºQ/15 4ºQ/15

Source: ATC/ANATEL
SMS/Per User

Figure 13– Number of SMS per user by quarter, Brazil, 2015

The data presented in Figure 14 is segmented by user type. On average, the

number of traditional text messages sent by prepaid users is higher than the number
sent by postpaid subscribers. This may be related to the fact that the postpaid
 subscribers, through mobile broadband, make more use of Over the Tops (OTTs)
services (WhatsApp, for example) to sent text messages.

Nº of SMS/Per User by quarter, total of Brazil, 2015 (Prepaid x Postpaid)

140

123
120 117

104 103
100
Nº of SMS per user by quarter

80

59 61 61
60 56

40

20

0
1ºQ/15 2ºQ/15 3ºQ/15 4ºQ/15

Source: ATC/ANATEL
SMS/Per User (Prepaid) SMS/Per User (Postpaid)

Figure 14– Number of SMS per user by quarter, Brazil (prepaid vs postpaid), 2015
Mobile-Cellular Usage Pattern in Brazil

It is important to recognize that mobile data traffic grows exponentially and

traffic related to the SMS has decreased significantly. Figure 15 attests such fact.

Mobile Data and SMS traffic, Brazil, 2012 to 2015

180
Bilions of Megabytes

402%
170 growth
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10 60%
reduction
-

10 1T12 2T12 3T12 4T12

Mobile data traffic
1T13 2T13
SMS Traffic
3T13 4T13 1T14 2T14
Data traffic tendency
3T14 4T14 1T15 2T15
SMS traffic tendency
3T15

Source: ATC/CPAE-ANATEL

Figure 15– Evolution of mobile data traffic and SMS traffic, Brazil, 2012 to 2015
 At last, in regards to Mobile-Cellular Data Traffic, on average, a mobile
subscription consumes 220 (two hundred and twenty) Megabite monthly. The postpaid
subscriber consumes about 470 (four hundred and seventy) Megabite. On the other
hand, a prepaid subscriber uses much less (about one hundred and twenty Megabite).
Figure 16 presents this difference.

Average monthly data traffic per user in MB (2015)

500

450 471

400

350

300

250

200 220

150

100 120

50

Source: ATC/ANATEL Prepaid Pospaid Total

Figure 16– Average monthly data traffic per user in MB in 2015

The average monthly data usage (the usage pattern in a broader way) is
certainly related to the adoption of new technologies. In Figure 17, the red line reveals
the amount of 2G active subscriptions in Brazil. The green line represents the 3G
subscriptions. The rising purple line represents the number of 4G subscribers.
 Number of mobile subscriptions per tecnology, Brazil, 2009 to 2016
300.000

Thousands
275.000

250.000

225.000

200.000

175.000

150.000

125.000

100.000

75.000

50.000

25.000

4t15
1T09
2T09
3T09
4T09
1T10
2T10
3T10
4T10
1T11
2T11
3T11
4T11
1T12
2T12
3T12
4T12
1T13
2T13
3T13
4T13
1T14
2T14
3T14
4T14
1T15
2T15
3T15

1T16
2T16
2G 3G Dongle/tablet 4G Total
Source: ANATEL Dados/ATC

Figure 17– Number of mobile subscriptions per technology

We can also obtain evidences for this statement from the pattern of mobile
usage segmented by operator. Figure 18 shows the market-share of mobile-cellular
data usage in 2015.
Mobile-Cellular Usage Pattern in Brazil

Market share of data traffic (2015)

31%

42% Vivo
Oi
Claro
Tim

21%
6%

Source: ATC/ANATEL

Figure 18– Market share of mobile-cellular data usage in 2015

12
One way to better understand the ratios in Figure 18 is to observe the
technological accesses distribution among operators listed above, which have, as
shown earlier, symmetrical market-share in terms of active subscriptions. Figure 19
presents these distributions.

Percentage of accesses by technology (December/2015) - Claro Percentage of accesses by technology (December/2015) - OI

7,5% 12,6% 7,5%

38,2%

54,3%

79,9%

2G 3G LTE 2G 3G LTE

Percentage of accesses by technology (December/2015) - VIVO Percentage of accesses by technology (December/2015) - TIM

14,5% 11,0%

31,0% 30,9%

58,1%
54,5%

2G 3G LTE 2G 3G LTE

Figure 19– Percentage of accesses by technology, Brazil, December-2015

From such considerations it is easier to understand why the average monthly

data usage per user notably varies among the 4 major carriers, as shown in Figure 20.

Average monthly data traffic per user in MB (2015)

350

327
300

250 265

200

176
150

100

50
73

0
Source:
ATC/ANATEL
Vivo Oi Claro Tim

Figure 20– Average monthly data traffic per user in MB, 2015
 Other possible explanation for this variation is the difference between prepaid
and postpaid subscriptions and data usage among the 4 (four) major operators as
shown in Figures 21 and 22.

Prepaid x Postpaid for the major companies, Brazil, 2016 (2º quarter)
90%

80%

70%

60%

50%

40%

30%

20%

10%

0%
Claro OI VIVO TIM

Source: ATC-ANATEL
Prepaid Postpaid Prepaid average Postpaid average
Mobile-Cellular Usage Pattern in Brazil

Figure 21– Prepaid and postpaid share of the four major companies, Brazil, 2016 (2ºQ)

Average monthly data traffic per user in MB: prepaid and postpaid (2015)
700

600 580

500 469 475

400
Prepaid
300 Postpaid
257
211
200
140
100 77
32
0
Source: ATC/ANATEL Vivo Oi Claro Tim
14
Figure 22– Average monthly data traffic per user in MB, 2015: prepaid and postpaid
 Oppose to the voice traffic analysis earlier, Figure 22 suggests there is a
significant difference on the data consumption pattern between prepaid and postpaid
subscribers.

Conclusion
It’s recognized that the task of renewing indicators and the composition of the
ICT Price Basket (IPB) is not simple.

IPB is a composite basket that includes three price sets, referred to as sub-
baskets: the fixed-telephone, mobile-cellular and fixed-broadband sub-baskets. In
summary, IPB is the sum of the price of each sub-basket as a percentage of a country ś
monthly GNI per capita, divided by three.

This document outlines the suggestions already sent by Brazil for the
improvement of IPB basket methodology, particularly the mobile-cellular sub-basket
and the rules applied in collecting mobile-cellular prices.

As final key messages we state the following:

 First: The improvement of IPB methodology, particularly the mobile-cellular

sub-basket, is necessary;
 It is not up to date, nor it’s representative of the global context.
 As known by ITU Expert Group on Telecommunication/ICT
Indicators (EGTI), the current sub-basket is highly inspired in a
OECD 2009 methodology for comparability purposes.
 It is necessary to think over if the possible best representative
consumer of ITU countries is the same considered in 2009 for
OECD countries members.
 Second: To consider post-paid plans in the mobile-cellular sub-basket, taking
into account the ITU experience related to the evaluation of the mobile-
broadband prices;
 According to the current rules only prepaid plans may be informed for
ITU questionnaire purposes.
 Prepaid subscriptions have a very particular appeal in developing
economies, but this cannot be considered an absolute and inflexible
truth, ignoring the context of other relevant variables to national
regulatory contexts.
 Brazil, as many other countries, has a significant ratio of postpaid
subscribers and normally a postpaid plan better fit the sub-basket
composition in terms of price.
 Assuming consumers are rational, the representative consumer would
choose a postpaid plan whenever it’s cheaper.
 Nevertheless, according to the methodology, the consumer would
always choose a pre-paid plan, it being advantageous or not and despite
having access to a diversity of plans and payment options.
 Third: To consider the mobile-broadband as a component of the IPB taking into
account its increasing importance in terms of usage pattern;
  Fourth: Promotional plans with a minimum duration of 12 (twelve) months
should be allowed to be presented for the questionnaire purposes. This
proposal was better explained in the previous report already sent for EGTI.
 Fifth: It should be possible to report a benchmark of operators that includes not
only the market-share leader but also the second largest competitor if this
operator has a share not too different from the leader.
 Not considering any diversity in mobile plans, it’s a discredit to all the
effort taken by the national regulatory authorities to improve
competition, which is the most effective vector to drive a market
towards efficient operation.
 In a competitive environment, whether or not an operator has the
biggest market share will not influence the decision of a rational
consumer, represented by the basket, as much as price or other factors
when choosing which plan to subscribe.
 It could be up to the subgroup responsible on debating this topic to
define criteria for a threshold on market share in order to consider an
alternative operator.
Mobile-Cellular Usage Pattern in Brazil

16