Telecoms regulator Anatel has stopped three of the four biggest Brazilian mobile operators from selling new mobile lines in an attempt to improve the country’s network infrastructure. Telecom Italia’s subsidiary TIM Brasil, America Movil’s unit Claro and local operator Oi are banned from acquiring new clients in selected states across the country. This measure was taken because of the growing number of complaints that Anatel has received since last year.

This is not the first time that the regulator has adopted a drastic measure to penalize poor-quality services. In 2009, Anatel banned Telefonica from offering new contracts for its fixed-broadband service Speedy. Telefonica was allowed to re-start selling new services after two months, when it had implemented measures to ensure network stability and made improvements in customer services.

Telecoms is always at the top of the list in Brazil as the industry sector receiving the most complaints. On the other hand, it is the biggest industry in the country, accounting for nearly 260 million users in May, up 67 per cent in the last three years, according to Informa Telecoms & Media. It is important to remember that mobile services are expanding at an intense pace in Brazil and spectrum plays a key role in this.

Operators have been asking Anatel to increase the 80MHz spectrum cap for a long time but they have been ignored. Brazilian market has changed significantly in past few years and data services have been widely adopted. Spectrum and network investment are fundamental to satisfying this new demand.

Anatel will give TIM, Claro and Oi 30 days to submit action plans to convince the authorities to lift the suspensions, which are set to come into force on July 23. Market leader Vivo, Sercomtel and CTBC, which were not prevented from selling new lines, will also have to present action plans for improving their services’ quality to Anatel.

TIM Brasil is the most affected by Anatel’s action. It has been banned from 19 states, including Rio de Janeiro and Minas Gerais, which represent 54 per cent of its national presence. According to Informa Telecoms & Media, TIM has had the fastest growth in subscription numbers since 2009, up 86% after adding 31 million new customers.

The operator has been very aggressive with its new plans. TIM increased its minutes of usage (MoU) by 80 per cent in the last three years, while its Infinity Web plans are attracting millions of prepaid customers to mobile broadband services. The operator did not invest sufficiently in its network to cope with this dramatic growth in traffic and the network collapsed. In my opinion, it was TIM’s network problems that motivated Anatel’s draconian measure but, as the regulator had to be fair, it adopted criteria to punish the operators equally.

Claro was banned from offering new contracts in three states. Although the number of states is small, they account for 29 per cent of Claro’s presence. The operator was banned from Sao Paulo, the most important region, particularly in the corporate market. The negative impact could be tremendous for Claro. Oi was suspended from offering new contracts in five states, including Rio Grande do Sul. However, it is the least affected of the three operators as these states only represent seven per cent of its presence.

However, mobile operators’ main issues are not just about network quality. The largest number of complaints to Anatel is about billing problems, the call center is a nightmare and the time taken to solve problems is unsatisfactory. None of these issues are related to network capacity. Undoubtedly, Anatel is the new hero to the customers for punishing the operators but it has not necessarily adopted the right criteria for this measure.

Brazil has a highly competitive mobile sector, operators are launching aggressive promotions and plans to attract new clients. However, the quality of the overall services offered is far from the customers’ expectations. Now, rather than just acting to increase their revenues, mobile operators will have to be concerned about also providing high quality services.