Brazil's Status as World Pay-Phone Holdout May Finally End

Updated on
  • `Nobody uses public phones anymore,' says Oi CEO Gontijo
  • Number of `orelhoes' would be cut to 450,000 from 900,000

Brazil’s public pay phones -- known as “orelhoes,” or big ears for their unique shape -- may start vanishing from the landscape as early as next year, and with them millions of dollars in costs for Oi SA and Telefonica Brasil SA.

Anatel, the country’s telecommunications regulator, is considering cutting the number to 450,000 from 900,000, as the ubiquity of the mobile phone has damped demand, its president, Joao Rezende, said in an interview.

Brazil’s Orelhoes

Photo: Godong/UIG via Getty Images

The booths are relics of an era when many Brazilians had no phone at home, especially in rural areas, years before the arrival of mobile devices. Across the world, many sit broken, graffiti-scarred and abandoned, ready to be repurposed into something more useful like a Wi-Fi hotspot -- or a charging station for the very gadgets that rendered them obsolete.

Among Brazil’s telecom operators, Oi and Telefonica Brasil would be the happiest to see them go. The companies bear the burden of maintaining most orelhoes -- 650,000 for Oi and 198,000 for Telefonica Brasil. But before Brazil can catch up to the rest of the world in decommissioning them, Anatel, the Communications Ministry, and President Dilma Rousseff all must approve the cuts as part of Brazil’s General Plan of Universalization Goals. Rezende said he hopes that process will conclude by April 30.

“Today there are many obligations that were put in place in 1998,” Telefonica Brasil said in an e-mailed statement about the country’s General Telecommunications Law, which was meant to achieve universal access to phone services. Many of those regulations “don’t make sense anymore, like the excessive number of public phones,” the company said.

Oi declined to comment. It spends 300 million reais ($77.4 million) per year to maintain its pay phones, according to the company. Telefonica Brasil declined to provide cost figures. The companies also are subject to fines of about 1 million reais per broken pay phone, an obligation that’s now under discussion with Anatel.

Phone Booth to Bird Nest

Much like in other countries, public pay-phone usage in Brazil has dropped substantially. Yet the auriform booths are still everywhere, some repainted for corporate marketing campaigns and others to look like coconuts and berimbaus.

More than 80 percent of the orelhoes had only four calls per day in May 2013, the most recent data available from Anatel, while 60 percent had two calls per day. As of October, there were 273.8 million active mobile-phone lines in Brazil.

Oi Chief Executive Officer Bayard Gontijo recounted a story of a hummingbird nest in an orelhao that put the local population on constant watch so no one would disturb the bird by making a call. “There is no need to watch,” he said at the Futurecom telecommunications industry show in October. “Nobody uses public phones anymore.”

With about 450,000 booths remaining in transportation hubs and areas with poor populations that need orelhoes, Brazil would still have more than double the number in the U.S: There are about 195,000 active pay phones left in the country, according to the American Public Communications Council, a trade association.

Every five years the Brazilian government reviews the obligations of certain telecommunications operators like Oi and Telefonica Brasil. The Communications Ministry, in a statement, said Anatel’s board hasn’t made a final decision on the “new goals for the next five years” and that it “hasn’t been informed officially of any proposal from the agency to reduce the number of orelhoes.”

Forecasts for an economic contraction this year have worsened in Brazil, and a top lawmaker has moved to impeach Rousseff, setting up a process that could take months and further distract legislators from acting on proposed fiscal reforms.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE