DirecTV Latin America Postpones 4G LTE Wireless Broadband Service in Brazil

DLA planned to introduce a time division duplex long-term evolution (TD-LTE) SE service mid-year in Brasilia and expand by year-end to three to four other cities where it has licenses to operate data communications businesses, Churchill said. But DLA “has struggled a bit getting the software” for TD-LTE “up and running” and the proposed service didn’t work as designed, Churchill said.

Second-generation software is being developed that will enable DLA to introduce an LTE service in 2013, he said. Nokia Siemens Networks is supplying Sky Brazil’s TD-LTE equipment under a three-year contract based on its flexi multiradio base station and flexipacket microwave transport platform. With TD-LTE, DTV has proposed providing 2- and 4-Mbps services, company officials have said.

Seeking to build a wireless broadband business in Brazil, DLA last week got approval from the Brazilian telecom agency Anatel to buy multichannel multipoint distribution service (MMDS) provider Acom Comunicacoes, Churchill told us. DLA will convert Acom video customers in 2013 to its own Sky Brazil service, which has five million subscribers, Churchill said. And it will switch Acom’s MMDS service to LTE in the 2.5 GHz spectrum band where DLA has a 50 MHZ block. Acom is largely in second tier markets in Brazil, Churchill said.

DLA has been moving to expand beyond video, largely because of low broadband penetration rates in Latin and South America, DTV officials have said. The penetration for broadband residential services is 29 percent in Brazil, where DTV has five million subscribers, and 21 percent in Venezuela, with two million subscribers, company officials said. About 70 percent of South America’s broadband services deliver data transmission speeds of less than 2 Mbps, DTV officials have said. DirecTV launched the DirecTV Net WiMAX wireless service in Mendoza, Argentina, in 2010 and has achieved a 30 percent install among its customers there, DTV officials have said. DLA has gained a “few thousand” subscribers to WiMAX service in Mendoza, but will begin next year converting it to LTE, Churchill said. The 3 Mbps service carries a $25 monthly fee. DLA has two million subscribers in Argentina.

In building out its wireless business, DTV will spend about $150 million over three years to create a network that can support $150 million in annual revenue, Evan Grayer, DLA senior vice president-broadband, said at an investor conference earlier this year. The annual revenue is based on having 500,000 subscribers and passing 7 million to 7.5 million homes, Grayer has said.

DTV has 9.7 million video subscribers in Mexico and Latin and South America, including 2.3 million in Mexico, where its owns 41 percent of Sky Mexico. It owns 93 percent of Sky Brazil, with Globo controlling the remainder. DLA will spend $100 million annually through 2015 on two new satellites as part of a deal with Intelsat, one of which will be a back up, Churchill said. The first of the satellites, which will serve DLA’s PanAmericana markets, will launch in 2015 to replace another satellite at 45 degrees west, Churchill said.

DLA also remains interested in buying the Brazilian telecom firm GVT from “a strategic point of view,” Churchill said. But DLA views the potential purchase as a “nice to have, but not have to have” acquisition, Churchill said. DLA is among four bidders for GVT, which sells wireline phone, broadband and pay TV in Brazil. GVT, which was put up for sale by Vivendi could fetch $7 billion in bidding that also includes bidders America Movil, Liberty Global and a group of private equity firms. GVT would be “complementary” to DLA’s business in Brazil and “we'll see where” the bidding goes, Churchill said.

DLA, which is targeting having 16 million subscribers by 2017, is pushing to expand penetration of HD and DVR services. DLA has about 1.2 million HD customers in Brazil, up from 850,000 in March, representing 27 percent of total customers, Churchill said. It has a 33 percent share of pay TV market in Brazil. Total pay TV install rates are low in Latin and South America, ranging from 65 percent in Argentina to 25 percent in Brazil and 30 percent in Colombia. DirecTV has about 600,000 subscribers in Colombia. And it has about 160,000 customers in Central America, DLA officials have said.