Brazil’s Hang-Up: New Phone System One Giant Mess

SAO PAULO, Brazil — Had Dante been a Brazilian living in the late 20th century, surely he would have found room in his Inferno for the torments of using a telephone in Brazil these days.

A traveler attempting long-distance calls here recently ran into the following obstacles: Silence. Hideous feedback. A busy signal. A recorded voice. Crossed lines allowing the caller to listen to a U.S. businessman reciting his credit card and Social Security numbers to someone overseas. Some calls reaching the wrong city or getting a connection that sounded like a cellular phone in a submarine.

The telephonic turmoil results from theoretical progress. Brazil has implemented the first phase of a $19-billion privatization of a state-run phone system that was maddeningly antiquated and expensive. The breakup of the monopoly has created one of the world’s most competitive phone markets.

As in other Latin American nations that have privatized utilities, competition and modernization are expected to drive down prices and otherwise benefit consumers. Unfortunately, the launch of a new system this month that allows consumers to choose companies as they dial caused a near-collapse of telecommunications nationwide.

In early July, about 80% of calls between Sao Paulo and Rio de Janeiro, the country’s two largest cities, were not completed, and only about 3 of 10 interstate calls went through nationwide. Disruptions hit everything from banks to governments to diplomatic institutions with special internal phone systems.

Service has improved, but it remains shaky. Under fire from federal regulators and indignant consumers, the competitors are blaming each other. Critics say the companies failed to upgrade technology and coordinate prior testing, and they cringe at the thought of future problems, such as potential Y2K-related computer foul-ups. They wonder about the larger repercussions for this privatization and others.

“People are realizing that privatization is not a magic wand,” a U.S. official said.

The debate is partly political. Unions and leftists see the fiasco as proof that the free market does not always produce progress.

Although Brazilians are less prone than people in neighboring nations to anti-foreigner sentiment, attacks on privatization also have a nationalistic element, the official said: “Don’t forget that telecommunications here were once considered part of national security.”

On the other hand, the companies and some experts insist that Brazilians, who have a cheerful capacity to withstand chaos, will soon realize that they are better off than before.

“The old state-run system was poor and had little capacity for growth,” said Ethevaldo Siqueira, publisher of the monthly National Telecommunications Magazine. “The worst has passed. In one or two months, nobody will remember that the situation was so bad.”

The national market has been divided into regions in which Embratel, a Brazilian-based company controlled by MCI, competes with conglomerates formed by international investors such as Telefonica of Spain.

The causes of the technological confusion are multifold. The rival companies never got together ahead of time to conduct joint tests for bugs, clean out software and eliminate other technological problems that afflicted long-distance service in particular, according to Siqueira. The government should create an agency to oversee technical coordination, he said.

Moreover, million-dollar promotional campaigns in past months apparently did an inadequate job of explaining the rather cumbersome new dialing procedures, which require callers to add a prefix to each call depending on where they live and what company they want to use.

Dialing mistakes contribute to snarled lines. Households with numbers beginning with digits such as 15, the prefix for the new phone company formed by Telefonica in Sao Paulo, have been deluged with calls.

“It’s not very difficult, but it is very new,” Siqueira said. “People didn’t pay attention or didn’t understand. My mother-in-law only figured out yesterday how to dial Rio de Janeiro.”

Some critics accuse the government of pushing a premature launch of the system over the resistance of some providers in order to favor Embratel. The company now controls the long-distance market, which will gradually open to competition during a three-year transition period that starts in October.

“Embratel wants time to consolidate the market,” Congressman Walter Pinheiro of the Workers’ Party told Isto E magazine. “Only the victim in this was the consumer, who should be protected.”

Embratel denies such allegations and has asked the government, which has threatened to impose multimillion-dollar fines on the firm, to bring in an outside auditor to determine responsibilities.

In addition to paying out refunds for the first few days, companies have cranked up aggressive advertising campaigns. Sao Paulo’s gritty skyscraper landscape has been plastered with billboards enticing consumers with discounts and gifts. Embratel promotes its “21” prefix with three chubby children, attractive models and subtle assertions that it is the most Brazilian of service providers.

Telefonica, meanwhile, appeals to the pride of sophisticated, hard-charging Paulistanos, as the city’s natives are known, with ads featuring the red-haired Rita Lee, a feminist rock star and local icon.

Another intriguing element in this period of cultural and technological transition: Numbers have special significance in Brazil. The animal lottery, an illegal gambling racket popular in working-class neighborhoods, equates numbers with animals and complex character traits. That could infuse the act of dialing a prefix with superstitious implications.

For the moment, however, Brazilians just hope the numbers will bring enough luck for the call to go through.