Brazilian Phone Companies - HISTORY
HISTORY: Until 1998, all the telecommunication services in Brazil were provided by State owned companies; on 1998, all the companies were sold, in the biggest privatization auction to ever happen in Brazil.
Before privatization, all the long distance and international calls were operated by
Embratel; Embratel was bought by US based MCI and continued operating under the same name.
Telebras was the national holding for several local phone companies, one in each state; so, TELESP operated in the State of Sao Paulo, TELERJ in Rio de Janeiro, TELEMIG in Minas Gerais and so on.
The mobile phones were also operated by the Telebras subsidiaries; each of the Teles had a department dedicated to operating cellular phones.
All the companies were clearly uncapable of meeting the consumer's demands.
Buying a phone line was a nightmare to consumers. The phone companies, based on their expansion plannings, decided when, and how many, new lines would be available for sale. To buy one of the lines, consumers had to become share holders of the company: each line was considered property of the company, and each line owner was also owner of shares of the company; this is how the companies found capitals for their expansions. These shares were paid for in advance, but the actual delivery of the line was at an unknown date; it was not uncommon to wait for a few years before a line was installed. As a consequence, there was a black market of telephone lines in Brazil.
To buy a mobile line, candidates had to be lucky enough to win a draw; the process was: go to the phone company office (run by civil servants), queue up, fill forms, wait for the drawings (lottery numbers), and, if lucky, go back to the office, bring your own cellular, fill more forms, queue up again to pay the invoices, and you're free to try to use your (often busy) cell phone.
Besides technical issues, the phone companies were also subject to bad political influences.
The board of directors was defined by the federal government, and it was not a secret that these positions were subject of political negotiations. Directors had no compromises with profits, performance, standards, etc; while they were allies, they would keep their jobs.
The cost of calls was controlled by the government. To keep inflation down, prices were kept artificially low (causing financial losses to companies, and, by extension, losses in the investment capacity).
There was not an independent agency to regulate telecommunications. All policy was defined by the Ministry of Communications or, even worse, by the policy executors themselves (Telebras, Embratel, etc). Right before the privatization,
- National Agency of Telecommunications, an agency similar to FDDC, was created.
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