With more computers on the Internet than in all the rest of Latin America, Brazil is adding to the infrastructure to woo users, despite high access cost

T HAS BEEN HYPED TO SUCH A DEGREE in Brazil that many consider the Internet the key to an ideal, and profitable, world. According to journalists, television anchors, media moguls, and

public figures, the Internet places at the user's fingertips all the knowledge of the universe. Individuals with Internet access need only reach out for the worldi treasures to have them drop in their laps. It is no surprise, then, that a connection to the Internet, even more than the possession of a cellular telephone, has become the status symbol among the middle and upper classes in Brazil, those who can afford to buy PCs and pay the dues for access.

The reality is, of course, quite different. Even as the Govemment invests scarce public money in Internet infrastructure, numerous hurdles remain before the network will be available at a cost that much of the population can afford. Among the obstacles: 0 The cost of access is high for a country where the minimum wage is only US $1 12 per month, and, according to World Bank figures, average per capita income was $2930 in 1993. Embratel, the federally owned interstate and overseas monopoly carrier, provides the only primary access to the Internet, so that local access charges depend on Embratel's rates.

Some 130 local access providers charge a one-time registra- tion fee that averages about $38, plus $38 a month for 22 hours of use. Thereafter, the rate goes to $2.40 per hour. In comparison, direct Internet service in New York City goes for as little as $15 a month, with unlimited use. Unlimited use is important, for any Internet user knows how time can fly while browsing the Net. High costs will make their weight felt on both business and indi- vidual users; as a result, the rate of increase in the number of new users is likely to decline from its present height.

Few Brazilians will find immediate use for the vast amount of com- mercial data-such as company sales figures, new filings for the issuance of stock, or the technical specifications of products unavail- able in Brazil-that is, indeed, available on the Net. Most of it is use-

AMITAVA DUTTA-ROY Optimarc

& NELSON M. SECOSHl CESP

ful only in the developed economies, principally the United States. 0 Most Brazilians will be disappointed to find probably 90 per- cent of the information in English, a language with which they are uncomfortable, especially for long stretches of time.

There is little evidence of any effort yet in either the public or private sector to create content in Portuguese that may help aver- age Internet users run their lives or businesses a bit more effi- ciently, though there are many Brazilian Web sites with hundreds of very colorful and creative pages. But there are no airline, rail- road, or bus schedules or weather forecasts.

Few universities have home pages to describe their academic programs, such as courses offered and their prerequisites, and fees charged. (In fact, Web sites of some universities contain a host of students' personal home pages.) No pages describe what's playing at cinemas, theaters, or concert halls, nor is there infor- mation about new decrees and regulations issued by the federal and state governments. But the home page of a leading newspa- per, Foiba de Sno Paulo, to cite one example, has many sex-related ads in its classified section. Without prejudice, it should be not- ed that such postings hog bandwidth that could otherwise dis- pense far more useful information.

Few Brazilians seem anxious to spend hours on the Internet, as many do in the United States, northern Europe, and Japan, espe- cially during long and cold winter evenings. The climatic and geographic peculiarities of Brazil, such as shorter and far warmer winter evenings, could affect use.

Many Brazilian hosts or Web site links are not yet maintained according to the professional standards seen on Internet hosts else- where. Many links become congested or go down because wide enough bandwidths are not yet available across the country. Downloading those colorful Web pages so pleasing to the eye could tax anyone's patience. Even Web sites maintained by the main Internet structure, the National Research Network (its initials in Portuguese are RNP), are often inaccessible.

Unless these issues are addressed, the novelty may wear off after an initial period of enthusiasm-a couple of years, say- and the crest of interest in the Internet in Brazil may fall. Most of the future user population could comprise well-off adoles- cents and young people interested in playing computer games

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against remote challengers, and personal chats. These observa- tions, naturally, do not apply to the scientific, technical, and aca- demic communities who browse for information in aid of their own research. For them, connection costs are usually borne by the universities or other entities to which they belong.

But with more than 3 1 000 host computers accessing the Inter- net as of the middle of May, Brazil has as many as all the rest of Latin America. According to recent statistics posted by the adniin- istrative committee (comitigestor) for the RNP, the number of com- mercial hosts increased by a hefty 171 percent in February alone. In the same period, the increase in educational servers was about 28 percent, while the overall growth in the country was 49 percent.

More than 500 academic institutions and an estimated 150 000 users in every state and the Federal District are connected to the Internet through two principal gateways. The interstate backbone for Internet access is the National Research Network [Fig. 11, which was put in place in mid- 1989 by Brazil's National Research Council (referred to as CNPq).

The RNP connects to U.S. Internet nodes through SZo Paulo State's Foundation for Supporting Research (Fapesp) in the city of S%o Paulo and the Federal University of Rio de Janeiro (UFRJ). The initial links for the backbone network in the state of Sao Paulo, the Academic Network of Szo Paul0 (ANSP), managed by Fapesp, were installed in 1988. It is the largest network in any state in Brazil, and as of December 1993, 5000 of Brazil's Internet hosts were directly connected to it, according to Demi Cetschko, RNPs operations coordinator.

[I] Brazil's National Research Network, whose acronym is RNP in Portuguese, serves as the nation's interstate backbone for the Internet. By mid-May, the Internet WBS being accessed by more than 31 000 host computers, as many as in all the rest of Latin America.

Brazil's second largest statewide backbone is in the state of Rio de Janeiro, managed by UFRJ. Brasilia also has an optical-fiber network linking the ministries, government agencies, some for- eign embassies, and the Federal University of Brasilia. The rela- tionship among these four networks loosely resembles that be- tween the US. National Science Foundation's network and, for example, the NyserNet or Cerfnet networks in the states of New York and California, respectively.

The node at Fapesp is common to both ANSP and RNP and serves as an international gateway. Similarly, the UFRJ node is com- mon to both the network in Rio delaneiro State and RNP, and also serves as an international gateway. Each can cornmunicate with the others, though they are funded by different agencies. As of March 1996, the academic community in Brazil had two connections to international networks. The first link, at 128 kb/s, goes to the Euro- pean Academic Research Network through the Fermi Accelerator Laboratory in Batavia, 111. The second is a 2-Mb/s line to an MCI node in the United States.

A planned third 2-Mb/s link will go from the Federal Uni- versity of Rio de Janeiro to the United States. Being phased out is a 64-kb/s Bitnet link from the National Laboratory of Com- puter Science (LNCC), also in the city of Rio de Janeiro.

In early 1995, with high-volume commercial use of the Inter- net looming, a power struggle seemed to break out for control of the international gateway nodes. The main issue was the right to provide Internet access and administer the Internet Protocol (IP) addresses that are administered globally by the Internet

DUTTA ROY & SECOSHI - GOING ON-LINE WITH THE INTERNET 5 5

Network Information Center (InterNIC). Under an earlier agree- ment between the Ministry of Science and Technology and InterNIC, the Brazilian addresses were being administered by Fapesp in S%o Paulo. But Embratel, the Government monopoly under the Ministry of Communications, wanted control.

Rumors abounded about who would provide primary access, the National Research Network or Embratel, and the rates to be charged. This ended in May 1995, when SCrgio Motta, Brazil's Minister of Communications, allowed the Ministry of Science and Technology not only to administer the nodes on the Inter- net but also to be the primary access provider. Embratel's role was constrained merely to that of a common carrier.

In other words, as a common carrier, Embratel would provide only the communications channels. The Ministry of Science and Technology would provide and regulate access by the academic and business communities, In turn, many new kinds of business- es would be created: access providers, creators and designers of w e b pages, on-line vendors of con- sumer products, vendors of network- related equipment and software, and content providers.

To outside observers, the handling of Internet access by the two agencies is still confusing, although a recent Embratel home page declared that it and RNP are now working together in offering Internet. The statement in- dicated some sort of political truce. However, the growth and increased usefulness of the Internet can come only through the participation of the private sector in everything from managing the Web sites to connect- ing with international gateway nodes in the United States. Government control and interference should be reduced to a minimum. After all, in the United States, use of the Intemet really took off only after the National Science Foundation withdrew its sup- port and control.

Man in charge Point man for Internet matters at the Ministry of Science and

Technology in Brasflia is Ivan Moura Campos, the secretary for pol- icy in the informatics and automation department [IEEE Spectrum, June, pp. 22-28]. In June 1995, Campos unveiled plans for widen- ing the bandwidth of existing links and expanding the RNP back- bone to smaller cities and remote communities that as yet had no links to the Intemet. For example, he intends to fund three 2-Mb/s international links from the cities of Sao Paulo, Rio de Janeiro, and Brasflia. Funds will be provided by federal and state governments.

Campos has emphasized the urgent need for such expansion and upgrading because he views this as the seed for enhancing Brazil's scientific capabilities. He estimates that the cost of upgrad- ing and maintaining the National Research Network alone would be at least $ t 1 .7 million for the first year. He noted that the widespread use of the U.S. National Science Foundation's NSFnet by academia and government researchers became the driving force behind the evolution of the network into the Internet. The Internet is no longer subsidized by the U.S. govemment; it is self-sustaining.

Campos wants to follow the example of NSFnet but with a difference. He wanted business to have open, or free, access to Brazil's National Research Network from the very start, and with the Federal government subsidizing the cost for the first year or two. In August 1995, the office of Brazil's president earmarked

$20 7 million for the expansion of the RNP backbone alone. Half of this money will be used for upgrading the links.

Campos sees great things coming from the Internet. By the end of this decade, he predicts that 1 .3 million small and medi- um-sized firms, 220 000 secondary schools, and 35 000 health- related organizations might enter the Internet market as either users or providers of access and other services, including the cre- ~

ation of home pages for clients. He expects this would create ~

many new jobs, while commerce over the Internet would have a ~

positive impact on the nation's economy. In theory, the plan appears laudable-it should benefit Braz- ,

ilian society, including businesses and individuals. However, the basically inadequate telephone and communications infrastmc- ture that exists in most parts of the country will certainly have to be upgraded. The technology here is not yet compatible with the high-tech culture of the Internet. And only a small percent- age of the population can afford a computer, let alone Internet

access at the rates stipulated by RNP and Embratel.

And despite the ministerial deci- sion that Embratel be merely a com- mon carrier for the Internet, the com- pany continues to provide access to a Sprint Internet node in the United States for both individual and busi- ness users. As a consequence, anyone wanting to open an access account is perplexed as to whom to contact- RNP or Embratel. Certainly, the pres- ence of the two is not aimed at gem erating competition, for Campos said that RNPs rates would be on the same order as Embratel's.

It is also unclear if the Internet market will repay the investments of small and intermediate-size access providers. Take, for example, the ac- cess fee. A 1 -Mb/s port on the Nat- ional Research Network, according to Campos, will cost, when available, a monthly $12 900, not including telephone company line charges. By way of comparison, in the United

States, BBN Planet of Cambridge, Mass., one of the original con- tract developers of the NFSNet, charges a $7000 monthly fee for access to a T1 node (1.44 Mb/s).

On-line services Brazil also has both videotex service and electronic bulletin

boards. Videotex began first when, around 1987, the management of Telesp, the local telephone company serving S%o Paul0 State, wanted to encourage subscribers to use the phone lines during off- peak hours. But in those pre-PC days, the technologies for using the lines for anything but plain old conversation were limited.

Reviewing the services then offered in more technologically advanced countries, Telesp concluded that a videotex service somewhat along the lines of Minitel, which was then becoming increasingly popular in France, might prove attractive to Braz- ilians [for a recent look at Minitel, see IEEE Spectrum, November 1995, pp. 71-77]. Thus, in 1988 a service deploying the Minitel technology, which displayed text on a monitor, was offered in Sao Paulo. Called Videotexto, the service was later offered in several other states as well.

The service bombed for several reasons, mostly to do with cost and the meager amount of information made available. First, the initial investment demanded of users was high-a couple of thousand dollars for a terminal, made by the French company,

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Matra. This was almost four times the price of the terminals in France. Users could save money by using an ordinary TV set to display text alone. But this was tiring on the eyes because of the screen's inherently low resolution. In case the cost of the termi- nal wasn't a stopper, Telesp tacked on a registration fee.

In addition, interactivity was fairly slow because data transfer rates topped out at a mere 1200 baud. Then, the material being offered was spotty. Whereas the French put a nationwide tele- phone information directory on Minitel, Telesp provided only account statements from a handful of banks, some interactive games, and news on sports, a few cultural events, and general subjects supplied by media organizations.

Last but not least, the Brazilian phone companies expended next to no money or effort on marketing the service. They built it, no one knew about it, and no one came. Videotex providers were (and still are) government controlled. Success and pro- fitability provide little input to their calculations.

Nevertheless. noticing increasing public interest in computer- based bulletin board services (BBSs) and the Internet, Telesp dusted off its videotex service in June 1995, after it had lain prac- tically dormant for seven years. The company also adopted a new marketing strategy: no registration fee.

Now, anyone with a PC can connect to the phone line, and ac- cess the videotex service. Alternatively, they may rent a simple videotex-only apparatus for the equivalent of US $166 per month from one of several Brazilian information providers offering plat- forms of their own. Data transfer rates to 14.4 kb/s are achievable.

Telesp bases its charges for the use of videotex on elapsed time. Typical charges for sports news, weather reports, bank account balances, and so on are 8 cents per minute. Telephone calls are extra, but access from anywhere within the state of S%o Paulo is by a local call, with charges varying with the time of day. Long- distance charges, if any, are absorbed by Telesp. Videotex charges appear on the monthly telephone bills.

This time around, Telesp solicited the participation of com- mercial information providers. By late April, about 60 had signed on. They offered 200 kinds of information-including general and sports news, stock market information, and foreign rates of exchange-through eight access numbers. If the provider adds some value to the information, it adds a fee of its own to the Telesp access charge, boosting a typical charge to US $0. 1 8 per minute. Some providers of information, such as financial news or news clips, charge an extra access fee, which is typically $25 per month. The provider also receives fees from advertisers.

Merchants can also use the videotex service for account deb- iting, relying on special leased $200-per-month terminals and magnetic card readers. Most major Brazilian banks participate in this offering and bear the line charges.

Telesp provides free links between its videotex central office and third-party providers. By April 1996, calls from an estimat- ed 100 000 users were averaging 900 000 per month, with some two million accesses to service providers. A typical call took about five minutes. Though the information is purely text-based, Telesp is also studying the possibility of offering graphics simi- lar to those made available more recently by Minitel.

Bulletin board services ulletin board services (BBSs) began in Brazil on a significant B scale only in 199 1 . Most operators at that time were young

entrepreneurs who started with only three to five telephone lines. (Note that telephone lines, scarce in Brazil, are transferable prop- erties that may cost their owners US $3000 to $5000 each.) Clients signing up were usually computer aficionados or interactive game addicts. At first, the providers were concentrated in the city of Sao Paulo, the industrial and commercial engine of the nation.

Now, however, BBS fever of a sort has spread to other parts of the country, and an estimated 150 000 customers use the boards.

Dozens of BBS providers around the country offer a diverse menu of services such as e-mail, financial news, stock market quotations, legal news (governmental decrees and legislation), news clips, newspaper articles (full text is available, for example, for 0 Globo, a Rio de Janeiro newspaper), chat lines, news post- ed by commercial firms, and electronic shopping.

The capabilities of service providers are mixed. Some just about scrape through financially, some are not very competent technically, and some just do not have the essential resources, such as an adequate number of telephone lines or fast enough servers. Probably about five BBSs in the country have the finan- cial and technical resources to offer decent services: Mandic, Dialdata, Canal Vip, Online, and Centroln. (So far, no provider has had to deal with antisocial postings on its boards.)

The first three are based in S%o Paulo, the last two in Rio de Janeiro, Brazil's two most populous cities. They operate seven days a week, 24 hours a day. The two largest are probably Dial- data, with 38 000 customers, and Mandic, with 42 000. These operators each provide access through 100 sequential telephone lines. This means a capital of $300 000-$500 000.

The average access rate charged by the BBS operators is $20 per month with 60 free minutes each day. Unused time may be deposited in a bank for use during the same month. The customer pays telephone line charges. An average call lasts about 12 minutes.

BBS operators are trying to expand their menus of offerings, and third-party information and service providers are showing re- newed interest. The major BBSs offer international e-mail through gateways to the Internet. All of them are likely soon to offer full Internet gateway services as soon as the rules for using the Braz- ilian backbone are in place.

One of Dialdata's clients, Home Box Office, the U.S. cable TV programmer, uses the BBS for communicating with cus- tomers and distributors. Dialdata also signed up a number of stores, mainly florists and take-out food shops, to provide lim- ited electronic shopping. Most transactions are with credit cards. Hackers have been no problem, noted Antonio Tavares, managing director of Dialdata.

Shopping by means of a BBS has a distinct advantage over buying products through the Internet in that the bulletin board provider already has the buyer's personal ID number (carried by all residents of Brazil), social security number, and credit infor- mation. I f necessary! it should be easier to track down a pur- chaser in Sao Paulo than in, for example, New York City.

Dialdata was also ready last September to offer its hardware platform to an educational service organized by a group of ele- mentary schoolteachers. For $22 a month, first- and second- grade students mayask any number of questions on any subject for an hour a day. Teachers specializing in each subject reply through the BBS. Students may use other free Dialdata informa- tion services and chat lines, as well. +

About the authors Amitava Dutta-Roy (F) is head of Optimarc, a New York City-based

consulting firm that offers telecommunications and computer net- workng services in Latin America. A professor at the Institute for Space Research in S5o Jose dos Campos from 1970 to 1977, he is also the author of numerous articles for IEEE publications and Latin American magazines. He has a doctorate in electronic engineering from Imperial College, London. His e-mail is 61 525160mcimail.com.

Nelson M. Segoshi (M) is a computer systems specialist with CESP, Companhia de Eletricidade de Slo Paulo, an electric power utility in SBo Paulo State, where he coordinates the introduction of new information systems. He is also a member of Institute of Engineers of Slo Paulo and chairs the computer division of the IEEE's South Brazil Section.

Spectrum editor: Alfred Rosenblatt

DUTTA~ROY & SEGOSHI ~ GOING O N ~ L l N E WITH THE INTERNET 5 9