Claro Brazil looks to close video profitability gap

Gabriel Miramar-Garcia | 04-09-2012

The growing profitability gap between what users pay per month for video subscriptions and what it costs to support the increasing amount of network usage traffic is top of mind for Brazil's operators, said Claro Brasil President Carlos Zenteno, speaking at Telebrasil 2012.

"The whole industry has gathered here to assess the market situation, where we are going," Zenteno said during a panel, noting that most operators are being forced to make large investments to support the growing amount of traffic on their networks, without recouping the capex through subscription revenue.
The answer, he said, is to allow operators a greater role in the content value chain, finding money beyond being simply a big, dumb pipe for transport. "It should be revised and re-thought to allow operators to start participating in the content," said Zentano, according to Todo TV News. "And the creation of this new dynamic means engaging all players related to telecommunications: OTT, operators, ISPs and content distributors."
Zenteno also highlighted potential tax breaks for building infrastructure.
"Our main concern is that we see large increases in consumption per user, but the turnover is growing at a much slower pace," he said. "In order to accelerate and have a sustainable business model for the future, you have to make up that revenue growth and increase market penetration."
Building efficient 4G networks for content delivery is another option. Claro Brasil recently announced the first results of tests of LTE technology in the cities of Campos do Jordao (Sao Paulo), and Paraty and Buzios (Rio de Janeiro), saying the network reached a peak speed of 80 Mbps: 80 times faster than the current HSPA network, the company noted, and well-developed for supporting video traffic.