Militias in Brazil are providing illegal television services to millions of households at a fraction of the price of legal streaming apps -- another example of how these groups earn a fortune by subverting legitimate markets.
As police have stepped up raids against militia groups, they have seized staggering amounts of equipment related to gatonet. In 2020, over 1 million pieces were seized, mostly TV set-top boxes, with a resale value of around 1 billion reais ($200 million), according to Globo. And one lone operation last April seized 120,000 set-top boxes.
Gatonet works in different ways. The most common is through the purchasing of a set-top box that provides illegal access to hundreds of channels, as well as Netflix, Amazon and other paid streaming services. But the market is evolving, with people already owning a smart TV now able to sign up through an app.
And it is becoming more commonplace. First popularized in favelas of northern Rio de Janeiro, gatonet has spread along with the militias' influence. It has become popular in wealthier neighborhoods of the city and even across Brazil.
At the end of 2019, a cybersecurity firm estimated that 4.5 million households in Brazil were using gatonet, but the numbers are probably much higher now.
Advertisements for gatonet are left discreetly in mailboxes and slipped under doors. One pamphlet advertised access to all TV channels available in Rio, as well as on-demand streaming for just 30 reais or 5.75 US dollars per month, which is well below the prices charged by legal companies.
Gatonet connections are highly lucrative for militias and devastating for the media industry. According to the Brazilian Pay TV/Telecom Association (Associação Brasileira de Televisão por Assinatura -- ABTA), the 4.5 million households that used gatonet represented losses of over $1.5 billion for telecommunications companies, as well as significant tax revenue losses for the government.
InSight Crime Analysis
Real estate, electricity, gas, water - militias have become crucial, if illegal, providers of essential services to millions of residents in Rio de Janeiro.
These groups control their neighborhoods far differently than traditional drug trafficking gangs. Besides traditional illicit economies such as extortion, their form of criminal governance is largely based on penetrating legal markets and coopting them to provide sources of regular income and as convenient money laundering conduits.
Gatonet is just the tip of the iceberg. In April 2019, after two residential buildings collapsed in Rio's neighborhood of Muzema, police soon discovered the buildings had been built illegally. A further investigation revealed that one of Rio’s most notorious militias, Escritório do Crime (Office of Crime), had financed the construction of several such buildings, selling illegal apartments for thousands of dollars.
In April 2018, militias were found to be illegally building "luxury" apartment blocks up to 10 stories high to the west of Rio de Janeiro, including in environmentally protected areas.
These illegal constructions may seem legitimate from the outside, but there is no trace of them inside city registries. The owners of the constructions pay no water or electricity, simply stealing these from existing infrastructure and then selling them to their “tenants.”
Similarly, police have found warehouses filled with gas containers and taps stealing gasoline from Petrobras pipelines, so militias can also offer these services to communities. These groups even rent out parking spaces to the highest bidders.
A landmark study in October 2020 by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística - IBGE) concluded that militia groups controlled areas where one-third of Rio's population lives, far more than their drug trafficking rivals.