Politics, Business & Culture in the Americas

Business Innovator: Osvaldo Lucho, Brazil



In the last decade, 32 million people joined the ranks of Brazil’s middle class, increasing demand for consumer goods and cyber-connectivity. But while urban centers in Brazil are as plugged in as anywhere else in the world, smaller cities and rural areas struggle with limited infrastructure, shoddy connections and overpriced services. Internet entrepreneur Osvaldo Lucho has stepped in to fill the gap left by the government and telecommunications companies.

In 2004, Lucho founded Gigalink, a company dedicated to providing affordable and dependable broadband Internet service to Brazil’s marginalized populations. The 45-year-old electrical engineer started the company in his native state of Rio de Janeiro. Growing up in Nova Fiburgo, one of the state’s poorest municipalities, he had experienced the “digital divide” first hand.

The key to Lucho’s success was developing a fiber-optic cable that allowed the installation of broadband infrastructure at one-eighth the cost of traditional fiber optics. Low production costs enable Gigalink to charge less for monthly service.

Trained at Pontifícia Universidade Católica do Rio de Janeiro, Lucho went through two failed prototypes before finding what he calls his “tool of digital inclusion”: a cable that combines a standard copper telephone cable with three other wires for power, fiber optics and support infrastructure.

Gigalink has transformed a market previously dominated by unlicensed, overpriced and unreliable providers. Of the 5,000 Internet service providers (ISPs) in Brazil, only about 800 are licensed by the federal government. But Gigalink is licensed and affordable, with rates starting at 40 reais ($23) for 0.8 Mbps—about half the average charged by other Brazilian broadband providers. So it was not surprising that within weeks of opening for business, “there was a line of customers out the door,” Lucho recounts.

Nevertheless, Gigalink’s services are not universally affordable. So Lucho has made a special effort to make broadband services available for as many clients as possible, providing discounts of 50 percent or more to nonprofits and local newspapers. Public entities like firehouses, police stations and hospitals—many of which don’t receive government-provided broadband service—receive free service through Gigalink.

Installation for businesses represents only 40 percent of Gigalink’s activities. The company also wires households and provides voice-over IP service, Internet security and video monitoring, with plans to expand to satellite television service as well.

After seven years, Gigalink now serves over 15,000 customers in the state of Rio de Janeiro. The company seems to have found its niche in small and medium cities of 5,000 to 300,000 inhabitants, where major ISPs have yet to establish a foothold. But Lucho is already looking nationally: by 2017, Gigalink expects to expand its client base to 1 million across the country.

To turn his small business into a national enterprise, Lucho will have to grow Gigalink’s coverage network, which currently spans a radius of 300 kilometers (186 miles) around Nova Fiburgo. At the same time, he needs to increase his skilled workforce and develop effective evaluation methods. And though he has kept the design of his fiber-optic cable a secret, Lucho now plans to sell the cable to other companies and open franchises across Brazil. “Only then,” he says, “will we really begin to bridge the digital divide.”

ABOUT THE AUTHOR

Matthew Aho is a consultant in the corporate practice group at Akerman LLP.

Like what you've read? Subscribe to AQ for more.
Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.

Like what you're reading?

Sign up for Americas Quarterly's free weekly newsletter and stay up-to-date on politics, business and culture in the Americas.