Brazil gives up on local data storage, demands net neutrality

Summary: Government backs down on demands of local datacenters in a bid to get support from the opposition but net neutrality remains a sticking point 

By Angelica Mari for Brazil Tech 

In the latest chapter of Brazil's Marco Civil da Internet, Dilma Rousseff's government has backed down from its intentions to demand that companies store data locally in order to get opposition support to pass the country's first set of internet governance rules.

Despite being unhappy about the numerous delays around the voting of the Bill, the president agreed to postpone it once again to remove the requirement for local datacenters.

Even though Rousseff and key ministers had voiced their preference to enforce local storage following the NSA espionage scandal, the requirements were strongly criticized by businesses and the opposition - their point being that this could mean cost increases to users since companies would have to build local facilities.

The government may have given up on local storage demands, but will require that companies will be subject to Brazilian rules in case of legal disputes involving data, regardless of whether it is stored elsewhere.

"The question that is not negotiable is that the Brazilian law should be applicable to any data that has originated or circulates here in Brazil. Of course, having the data stored locally would make [the enforcement of the local regulations] easier," congressional relations minister Ideli Salvatti told Radio Estadão.

However, ditching local storage is not enough as net neutrality remains the most controversial point of the Marco Civil. Supported by the opposition, the telco industry wants to continue to base its business on data discrimination - this means setting higher or lower speeds according to individual internet usage patterns, load certain websites faster and also offer free access to certain content while charging for others.

While the government does not want to negotiate net neutrality, Dilma also wants to be able to regulate it by presidential decree after the Marco Civil is approved - but part of the government's supporter base and the opposition do not agree on that particular move.

Opposition leader Eduardo Cunha has said openly that a decree to regulate how telcos operate is a major annoyance, adding that this would get on the way of "freedom." However, the freedom cited by Cunha is more to do with business models rather than internet user rights.

The disagreements and the escalating tension between the opposition and the president's main ministers - particularly minister Salvatti, who was one of the main supporters of the requirement for local datacenters and was pushing for the voting of the Marco to take place yesterday - prompted the voting of the Bill to be postponed once again until next Tuesday (25).

The Marco Civil is now right at the center of a political battle involving interests that dig deeper than just guaranteeing civil rights in the use of the Internet - but Dilma wants to sanction it before April, when Brazil will be hosting a global internet governance event. However, time is short and the list of challenges appears to be getting longer.

Brazil changes tech minister and demands quick results

Summary: Dilma Rousseff brings in economist Clélio Campolina to set priorities for the sector: "Brazil is in a hurry" 

By Angelica Mari for Brazil Tech

As Brazil places more emphasis on its technology agenda, president Dilma Rousseff has brought in a new minister with a clear remit of defining priorities and delivering them fast.

The Science, Technology and Innovation Ministry (MCTI) will now be headed up by economist Clélio Campolina, a former professor at the University of Minas Gerais and a specialist in economic development, with a PhD on the subject from the University of Rutgers in the United States.

When taking over from previous minister Marco Antonio Raupp on Monday (17), Campolina said president Rousseff had invited him to take up the job with the specific brief of giving continuity to the ongoing MCTI programs, but more importantly, create a project to drive economic growth through science and technology and boost the quality of Brazil's output in that field.

"Brazil is in a hurry and has the ability to define and prioritize areas of technology and science that are critical to the transformation of the Brazilian business environment," Campolina said.

"We need to have a big program [science and technology] program for Brazil, have a forward-looking vision and deliver fast," he added.

Foreign investment and skills development

One key area of focus for minister Campolina will be to attract international businesses to build research and development centers - and therefore invest - in Brazil.

"All developed countries have done this. They increased the internationalization of their research efforts - the United States brought in European companies to do research there, which is what China is also doing, " the new minister said.

"We are facing a restructuring of the global order. We have to show that Brazil is a viable country and has potential - and foreign companies will bring their research capabilities here when they are convinced that is the case," he added.

According to the minister, another major area of attention will be policies to boost the creation of science and tech skills in Brazil.

"Creating a policy of human resources development is an absolute priority. Brazil already has very advanced academic programs in that field, but they need to be supplemented mainly by [improvements in] basic education and an interface with businesses," Campolina said.

"The journey is not easy. It takes political and social awareness of these issues, as well as acting objectively and permanently to seize opportunities, which is only possible with a great deal of determination and hard work."

Campolina plans to hear his new colleagues at the MCTI and the science and tech community in business and academia before announcing any major changes.

As he stepped down, former minister Marco Antonio Raupp highlighted the achievements of his two-year mandate, mainly around the progress of Inova Empresa, a $14mi program built to boost innovation in the private sector through the provision of subsidized loans for specific projects.

"I am sure I have done my duty, both from a personal and institutional perspective, as a scientist and as a citizen," Raupp said.

Israeli Company Reinvents The Wheel – Literally

By Avner Meyrav, NoCamels

Wheeling down a flight of stairs may no longer be a formidable challenge for those confined to a wheelchair. Israeli company SoftWheel has developed a next-generation wheel that has its own inner-suspension system for shock absorption.

SoftWheel is the brainchild of Gilad Wolf, a farmer who found himself bound to a wheelchair for three weeks. “Four years ago, I broke my pelvis,” he tells NoCamels. “When I was wheeled to the synagogue one day, I was in agony when we went over some Ackerstein stones (a traditional stone used for sidewalks in Israel, which has many grooves).

I work with tractors and I noticed that tractors have a simple and ingenious airbag-based shock-absorbing construct. So I put two and two together: I built a wheelchair and combined a similar construct for each wheel. It made the wheelchair experience completely different. I took the idea and started to roll with it,” Wolf tells NoCamels. 

While the company’s first product, Acrobat, is designed for wheelchairs, the company believes its product has a much wider-ranging application. “We understood very quickly that it’s not only a wheelchair product, but a complete game-changer,” CEO Daniel Barel tells NoCamels, “it is a platform for anything that has wheels.”

Israeli drones to patrol Brazilian skies during World Cup

Drones join tanks, remote-controlled robots, thermal cameras and other security measures to be deployed by federal government.

By Haaretz

Brazil’s Air Force has purchased two new $12 million drones from Israel, to patrol the skies during the FIFA World Cup. The football extravaganza begins in just over three months.

Manufactured by Elbit Systems, the drones are expected to provide crowd surveillance above Brazil’s soccer stadiums during the competition.

“The intelligence-gathering electronic and optics technologies of Elbit and our Brazilian partners are perfectly suited for the homeland security challenges at these events,” said Elbit CEO Bezhalel Machlis.

The drones are among a raft of security measures being brought in, including thermal cameras, German tanks and stadium fly-overs by Air Force fighter jets and helicopters kitted out with surveillance equipment including, high-resolution, night-vision and thermal cameras.

Brazil has also ordered 30 PackBot 510 robots from the United States to beef up its security measures. Equipped with cameras, the PackBots can be remotely operated. Nearly 2,000 such robots are operational in Iraq and Afghanistan.

The Brazilian federal government, which is worried about threats of terrorism and street protests, says it is spending a total of $1 billion on security measures for the June event.

Parking your car just got easier thanks to Israeli technology

When it comes to finding and paying for parking spots in cities all over the world, Israeli technologies like Anagog, Parko and Pango are leading the way.

By Abigail Klein Leichman, ISRAEL21c

Chances are you already use the Israeli app Waze to find the best route to wherever you want to drive. After arriving, you might have another Israeli company to thank for finding you a parking spot and paying for it without a hassle.

Pango is an app that lets you book and pay for on-street and parking lot spots via iOS, Android or Blackberry device, in Israel and in a growing number of major US cities. Pango Mobile Parking, based in Kadima, just raised $6.5 million in a new funding round.

Thanks to the convenience of its patented pay-by-phone technology – no need for cash or paper tickets — Pango is the leading app to pay for parking in Israel. If you won’t make it to your car before the time runs out, you get a reminder to “feed the meter” from your phone. If you’re done early, you can use the “unpark” option to be billed only for the time you’ve been parked.

The Pango+ service enables businesses to manage company fleet expenses more easily, offering a single invoice for all employee parking expenses and access to detailed online data about employee parking. Among the major corporations signed up for this service are Microsoft, Pelephone and Israel Railways.

Brazil Stands Out as Favorite in Expanding Admin Outsourcing Sector

Latin America’s general and administrative outsourcing (GAO) sector accounts for less than 5% of the global market but is growing at 1.5 times the rate of the global market, according to a February 2014 report by Everest Group.
By Duncan Tucker ,Nearshore Americas

The study (available here) by the Dallas, Texas-based global management consulting firm focuses on non-voice BPO services in general and administrative functions, such as finance and accounting (F&A), human resources (HR) and procurement, for organizations with a presence in Latin America. While F&A accounts for 47% of the regional GAO market, which is worth $700 to $800 million, HR accounts for 23% and procurement makes up the remaining 20%.

Based on assessment of over 400 contracts with 40+ global service providers in the region, the report found that Brazil dominates the Latin American market. It is the source of up to 55% of GAO activity and also delivers 40% of services.

Brazil also has the strongest case for arbitrage opportunity because of the high labor costs there, but Everest Group notes that – unlike in the global market – cost arbitrage is not the key value proposition, because of the low labor costs across most of Latin America. The key drivers of GAO activity in Latin America are speed-to-market and access to best practices and technology, according to Abhishek Menon and Saurabh Gupta, two of the authors of the report.

Nearshore Americas: Why is the GAO market in Latin America is growing at 1.5 times the rate of the global market?

Abhishek Menon & Saurabh Gupta: Firstly, most large global organizations have leveraged some form of outsourcing or shared services for their U.S. and European operations. Now they are aggressively looking at different sourcing models to both expand and optimize their operations in emerging markets such as Latin America and the Asian Pacific. Secondly, domestic Latin American companies faced with increasing competition also need access to global best practices and technologies. And thirdly, there is the denominator effect. Growth on a small base is always magnified – it’s important to keep in mind that Latin American GAO accounts for around 5% of the global GAO market.

NSAM: In the report you observe that growth in Latin America’s GAO market is primarily driven by new contracts – not renewals or extensions. Why is that?

Menon & Gupta: It’s the natural progression for any market. Since Latin America is an emerging market, the growth in driven more by new demand, meaning new contracts, compared to renewals or extensions. In more mature geographies such as the United States or Europe, there is already a significant base of GAO contracts that were signed three, five or seven years ago that are now coming up for renewal. That kind of install base does not exist in Latin America (yet!) and hence new contracts are fueling the growth.

NSAM: The report also notes that the average size of GAO contracts in Latin America is 35% smaller than the global average. Why is that?

Menon & Gupta: Since GAO is still emerging in Latin America, clients are taking a risk-averse approach. We call it the “phased approach” where they start small and then expand as the relationship matures. Such a phased adoption is a practical way to go about transformation but it is important to build a strategic roadmap or guiding principles since business context will change dramatically over time.

NSAM: Why is Brazil so prominent in terms of both the source and delivery of GAO in the region? Is it partly because Brazil is one of the only countries in the region with arbitrage potential?

Menon & Gupta: There is a strong correlation between the market size for GAO and the overall size of the economy. In Latin America, Brazil is the largest economy and also a leading country in terms of economic development. As a result Brazil is the largest adopter of GAO. While the theoretical arbitrage potential from Brazil exists, it is difficult to offshore work from Brazil given tax, legal and language issues – Brazil speaks Portuguese while the rest of Latin America speaks Spanish. So most of the work originating in Brazil is also delivered from Brazil – that is the reason why Brazil is the largest delivery location also in Latin America.

NSAM: Why are large clients more prominent in Latin America’s GAO market, with fewer small or medium enterprise (SME) clients than in the global market?

Menon & Gupta: Both push and pull for SMEs is currently low but we expect it to change over the time. Historically the GAO market adoption has been led by the large clients and then as the market matures the SMEs follow. Since the GAO market is relatively nascent in Latin America it is being pioneered by the large clients and as the market matures we can expect more participation from the SMEs. But initially service providers will go after larger opportunities and then start looking at smaller opportunities when the market matures and some of the larger opportunities are hard to come by.

NSAM: Why is it that you consider speed-to-market and access to the latest technology and global best practices to be the drivers for GAO in Latin America?

Menon & Gupta: Global multinational corporations are expanding their operations in the fast-growing Latin America region and third-party outsourcing is a vehicle for them to do this quickly. Domestic Latin American companies faced with increasing competition also need access to global best practices and technologies, and last but not the least, arbitrage potential is low and offshoring is hard. So the business case has to be built on standardization, efficiency, automation, and speed.

Companies brace for Brazil local data storage requirements

Summary: What started as a debate around privacy is now becoming a money matter

By Angelica Mari , Brazil Tech 

While Brazilian politicians try to agree on the country's first set of regulations around data and Internet governance, local storage requirements are most likely to go ahead.

Brazil's "Internet Constitution", the Marco Civil da Internet, was due to be voted last October by the House of Representatives. However, disagreement between politicians and ISPs - particularly around the point of providers being required to treat all data that goes through their network in the same way - meant that the Marco is yet to become law.

Despite all the to-ing and fro-ing between public representatives and companies around net neutrality, requirements that data collected about Brazilian internet users is to be stored locally are pretty much agreed on within the government. This was initially presented as a mechanism to protect citizen data - but the government is now becoming much more aware of the value of information.

During the Mobile World Congress last month, Brazilian communications minister Paulo Bernardo reinforced the point that local storage plans will go ahead and criticized the likes of Google and Facebook.

"Google told us that it could not hand data over to the Federal Police in Brazil because the information was stored in the United States, so the company has to comply with the laws of that country. Then they tells that they store the data in a random-access system - it is not possible to believe in everything they say," Bernardo told trade publication Convergência Digital.

"What is certain is that data is turning into money and we can't afford to be out of this business. Data will be the motor of the economy in the next few years. Datacenters of companies like Google and Facebook also have to be in Brazil," he added.

The requirement to force companies to store data locally has been criticized by business people and activists alike, such as World Wide Web creator Sir Tim Berners-Lee, who said this is an "emotional reaction" to the NSA spying episode and will not have any practical impact in reducing espionage risk.

Brasscom, the Brazilian IT trade body, warned that the local data storage provisions will mean an increase in costs incurred by local IT companies and prompt these firms to move their operations elsewhere.

And small business owners who rely heavily on cloud services to operate their businesses are also not happy about the government's intentions. That is the case of Bidu, a insurance price comparison start-up, who stores all its data on systems operated by Amazon Web Services and Google.

"[If the government requires local storage], Brazil will take a massive backward step. It would be such a big setback for Brazil that small companies would be a lot less competitive," says Bidu's founder, Eldes Mattiuzzo.

The Marco Civil da Internet is now being processed as a matter of constitutional urgency and the fact it is still up in the air prevents various other proposals from being voted. Until an agreement is reached around net neutrality, voting cannot take place.

Data security firm Varonis Systems, Nasdaq IPO $1 Billion Valuation

Varonis Systems, an Israeli firm that develops data protection and management software, saw specular success in its debut on Wall Street Friday. By the close of trade on the Nasdaq exchange the company’s market capitalization had neared $1 billion.

By Inbal Orpaz, Haaretz

Varonis Systems  initial public offering last week raised about $106 million, with an initial price per share of $22, but on its first day of trading, on Friday, the share price doubled, to $44.

Even the initial $22 share valuation was above the price range of $19 to $21 that had been expected. As recently as February 18, the company priced its IPO at $17 to $19 per share.

Friday’s Nasdaq close would give the company a value of $955.8 million, putting Varonis in the league of other high-tech firms with an Israeli connection that have made the headlines in the past year with similar valuations. They include Ra’anana-based Waze, the mobile navigation application developer that was sold to Google last year for $1 billion and Viber, the Cyprus-based, Israeli-run mobile communications app developer that was snapped up by a Japanese high-tech giant last month for $900 million.

Founded in 2005, Varonis helps organizations manage and analyze their unstructured data, such as documents, spreadsheets and media files. It was founded by CEO Yakov Faitelson and Chief Technology Officer Ohad Korkus. Headquartered in New York, it has offices in Herzliya. According to its prospectus, 224 of the company’s 536 employees are in Israel. At the end of 2010, Varonis had fewer than 200 employees worldwide.

Before last week’s IPO, the company raised around $33 million from investors that included Accel Partners, Evergreen Venture Partners, Pitango Venture Capital and EMC Corp. Morgan Stanley and Barclays Capital were the lead underwriters in the initial public stock offering.

The success of Varonis Systems on Wall Street has sparked optimism that other Israeli high-tech IPOs offerings planned in the near future will also fare well. Among them is Borderfree, an Israeli-U.S. firm that provides a platform through which retailers, particularly in the United States, can offer their wares to overseas customers in a more user-friendly format, including pricing in foreign currencies and shipping to foreign American addresses.