Duncan TuckerMicrosoft plans to dramatically expand broadband access throughout Brazil and beyond by utilizing a vacant space in television transmissions, Hernan Rincon, the president of Microsoft Latin America, revealed at the 2014 Latin American Cities Conference in Sao Paulo this week. Rincon also stressed the role that the latest Cloud technology can play in unlocking the vast potential of Brazil’s many Small and Medium Enterprises (SMEs).
White Space Broadband
“Today in Brazil about 40% of households and companies have access to the Internet. We need to work on that,” Rincon said “The Brazil government needs to make it easier, cheaper and faster for people to have access,” he added. “We’re searching for other ways to bring the Internet to the whole country and we’re working with the federal government to explore the use of a very specific part of the spectrum called White Space.”
White Space dates back to when television was first invented and refers to the gap left between different channels broadcast over open air in order to prevent spillover between the channels. “That little spectrum can now be used to transmit and send Internet signals,” Rincon explained. “So we have used out latest research technology, brought it to Brazil, signed an agreement with the Ministry of Technology in Brazil and we’re trying to use that so we can bring technology everywhere. Anywhere that you have a TV channel broadcast over the air you could have Internet.”
“Of course that would be available to other countries as well,” Rincon added. “We have another small similar pilot in Central America and Microsoft has another couple in Asia and Africa. That will be probably not 4G plus or LTE, but very close, certainly 3G type of velocity.”
ICT Use in SMEs
Microsoft recently commissioned the Boston Consulting Group to do a study on the role that ICT plays in the operations of 4,000 SMEs in the United States, Germany, India, China and Brazil. Depending on how much technology they adopted and used to run their core business, these companies were then classified as technology leaders, technology followers and technology laggers, while their level of success was determined by revenue growth and employment generated.
The study showed that “Companies that use technology aggressively and proactively – the leaders – generate twice as much revenue as those that do not, and grow 50% faster than companies that do not. This is true in developed economies such as the US and in emerging economies such as India, China and Brazil,” Rincon said.
“In emerging markets these differences are even more accentuated than in developed countries,” he added. “That was a total surprise to us. We assumed that companies in Germany and the United States would be significantly more aggressive in the use of technology but that is not the case. Companies in emerging markets tend to be more inclined to use technology as an enabler. Brazil is even more advanced and thoughtful about the use of technology to run a business than the rest of the world.”
Brazil Needs More Tech Leaders
However, Brazil still needs more technology leaders in order for its SMEs to realize their enormous economic potential, Rincon said. “99.5% of all companies in Brazil are SMEs,” he explained, but only “about 40% of Brazil’s economy, measured by GDP, is generated by SMEs. And about 50% of employment is generated by SMEs.
“In most other countries, SMEs generate a significantly higher proportion of the GDP – not 40% but 60% or 70% – so that’s a great opportunity for Brazil. Secondly, the amount of employment generated by SMEs in the rest of the world is closer to 80%. So in Brazil we have a very vast number of SMEs but they haven’t reached their full potential yet in terms of generating more employment and growing faster, so I think there is an opportunity for Brazil to leverage the SMEs to accelerate growth and continue on the very nice trajectory that Brazil has had in the last few years.”
The rewards to be reaped by more widespread and intelligent adoption of the latest technology are substantial, Rincon explained: “Let’s assume that 10% of the companies that are lagging in Brazil become leaders, and that 25% of the companies that are followers become leaders. If those companies were as thoughtful, insightful and proactive as the leaders in Brazil in the use of technology, the outcome would be the generation of an additional two million jobs and 122 million dollars in incremental sales. The potential for those SMEs in Brazil is fantastic, it’s huge.”
Debunking Common Misconceptions
“Common wisdom has it that technology does not generate jobs. This study shows the opposite, the companies that used the most technology generated the most new jobs,” Rincon said. “Another common misconception is that technology is very expensive. The study demonstrated that if you are intelligent and thoughtful about the use of technology you actually spend less in technology than other companies and can be more successful.”
Rincon cited Cloud technology as evidence of the latter. A modern and sophisticated communications, collaboration and messaging system, “which is probably the most basic technology that companies use,” would require a SME to buy a few servers and the associated software, Rincon noted. “They would have to hire three or four people to install the systems, the software and the hardware, and to run the systems, they would have to buy security software and have procedures to deal with privacy. In summary they would need to have a small data center and a small IT department.
“That’s the traditional approach, but now you can have all of that – the servers, the communications, the data center, the specialist, the security – all outsourced to the Cloud, and have one of the multiple vendors that we have today in Brazil provide all of that for you,” Rincon explained. “So the capital investment goes from a few million dollars to nothing. And the operations are now tied only to usage. If I have 10 employees I pay for what 10 employees consume on a monthly basis. If I hire two more employees, I increase that to 12. It scales up and down according to the needs and requirements of the company … and anybody can really have access to this.”
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