Image makers: Brazil could chart its own course in the swiftly approaching age of digital television

Latin Trade, Sept, 2005 by Luciano Somenzari

As television around the world begins its digital revolution, Brazilian authorities are considering launching their own, domestic version of the technology, a US$1 billion bet on potential demand from 180 million consumers for the new, high-tech sets. If successful, the country could justify creating its own national standard to compete with existing standards in the United States, Europe and Japan.

Global manufacturers are debating among several choices: The U. S. standard, which emphasizes high-definition image, known as ATSC; the European standard, which is better at programming and interactivity, called DVB; and a Japanese version, which adds mobile reception and portability to high-definition capabilities, known as ISDB. In Brazil, researchers from the private sector and from a consortium of 22 universities have been studying since 2004 whether to create a domestic Brazilian system, adopt an existing one, or develop a standard together with other emerging nations such as South Korea, China or India.

Augusto Cesar Gadelha, the director of industry, science and technology at Brazil's Communications Ministry, says Brazil's decision to consider taking its own path toward digital technology is already causing a stir. Industry lobbyists from abroad are treating Brazil differently, all because it might go its own way. "We're talking with them and aiming to prioritize our studies because we have all the necessary conditions to develop our own standard," says Gadelha. "If that weren't the case, they wouldn't hesitate to push on us an existing standard, with practically no room for negotiation."
 

Brazil's electronics industry association, Abinee, estimates that the semiconductor industry alone will need $1 billion to make the nation self-sufficient in manufacturing the fundamental components for new digital equipment. Toshihiko Komatsu, Abinee's vice director of electronic components, sees in digital television a historic opportunity for Brazil to create an industrial policy and to incentivize Brazilian television-set manufacturing. "We have what we need to develop everything here," Komatsu says.

Digital television could be a big driver for domestic industrial growth, according to both private-sector and government leaders. In 2004, Brazil imported $7.80 billion in electric and electronic components, 36% more than in 2003. Yet exports didn't exceed $2 billion last year.

Over the course of this year, Brazil's government will invest $26 million to study which digital-television standard would be best for the country. The big question will be how to structure incentives for local industry without repeating the disaster that occurred with similar decisions regarding Brazil's domestic computer industry made in the 1970s and 1980s. Importers were reticent, and the result was that Brazil ended up more than 20 years behind the global technology curve.

Adopting a new standard also requires that Brazil find a solution to a complex problem: How to switch consumers from analog to digital technology. Brazil has more than 50 million television sets in more than 87% of homes. All those sets will have to be replaced, or, in the best-case scenario, have some kind of signal converter during a transition period that could last from five to 10 years. It's not just the sets. The cost for the production side is also daunting. Brazil's Association of Radio and Television Broadcasters, Abert, figures that it will cost broadcasters more than $650 million to adapt to the new digital standard.

Argentina, Mexico and Canada have already moved to adopt the U.S. system. In Brazil, no matter which standard is adopted, industry representatives are concerned that there could be technical obstacles to producing new sets or signal converters. They say that any standard adopted must be able to communicate with standards already in use elsewhere in the world.

Brazil sold 7 million sets domestically last year, according to data from the national home-electronics manufacturers association, Eletros. That's an enormous market potential to be tapped once digital technology becomes a commercial reality. Paulo Saab, Eletros' president, says industry, government and broadcasters shouldn't limit the discussion to purely technical issues. "Eletros' point of departure is that we need to define a business model, not just a system, so that all of the relevant factors can be considered in this process;' says Saab.

Options. Beyond just high-fidelity sound and cinema-quality images, digital television could also allow for interactivity, programming, e-mail access, home banking services, and a wealth of additional services. With so many options, content could be key in the new age of television.

Celso Augusto Schroder, general director of Brazil's not-for-profit National Forum for the Democratization of Communications, argues that most of the decisions regarding the move to digital technology rightfully should be made in Brazil. "This discussion can't be done in a hurry," he says. "Just the opposite. We run the risk of taking a step backwards if we make decisions without duly analyzing all the possible impacts."