New Fund Scores Universalization Goals

Introduction
Vetoes
Regulation

Introduction

Law 9,994 of August 17 2000 introduces the Telecommunications Service Universalization Fund. The fund aims to provide resources to cover costs associated with the accomplishment of universal access goals.

The fund's resources will be allocated to programmes and projects that aim to supplement the goals established in the General Universalization Goals Plan, including, among others:

• to serve low-income communities;

• to deliver service to localities with less than 100 inhabitants; and

• to provide all schools, libraries and hospitals with telephone and internet access.
  

Law 9,998/2000 maintains the monthly contribution already provided in Bill 60/2000, which corresponds to 1% of gross operating income, derived from the provision of telecommunications services. This excludes:

• value added tax on sales and services;

• the Social Integration Programme; and

• turnover tax on gross profits.

At least 18% of the fund's resources will be applied to public education establishments. At least 30% will be applied annually to programmes and activities realized by concessionaires of the Switched Fixed Telephone System in the areas covered by Sudam (Department for the Development of the Amazon) and Sudene (Department for the Development of the Northeast).

Service providers must provide the National Telecommunications Agency (ANATEL) with monthly statements regarding their contributions.

Vetoes

Bill 60/2000 was partially vetoed by President Fernando Henrique Cardoso for containing certain provisions contrary to public interest. One of the vetoed provisions (Article 5(11)(2)) stated that the resources should be applied to projects that aim to deliver services to localities with less than 600 inhabitants. This provision was vetoed because it conflicts with the General Telecommunications Law, which determines that the fund's resources shall not be used to cover universalization costs. Rather, they shall be borne by the service provider itself, pursuant to the concession contract agreed with ANATEL.

Article 12, which established the accomplishment of universal access goals in the areas of concessionaire controller companies, was also vetoed. In accordance with the concession contract agreed with ANATEL and pursuant to the rules of the General Grants Plan, the concessionaire controlling companies do not hold concessions to exploit telecommunications services.

Regulation

On August 28 2000 a draft of the decree that will regulate the Telecommunications Service Universalization Fund was submitted to public consultation. Interested parties were asked to send their comments and suggestions by September 7. The final regulation was published on October 9 and will be effective from December 3 (Decree 3624/2000).

The regulation details that:

• ANATEL is attributed to collect operators' contributions and to develop the universalization goals;

• domestic suppliers of equipment, materials and/or services that use fund resources must have priority, when their offers are equivalent to those of foreign companies; and

• service providers shall not pass to consumers the costs related to the 1% contribution. The percentage allocated to the fund shall be specified in the telephone bills of subscribers. Contributions shall be undertaken from January 3 2001.

For further information on this topic please contact Ricardo Barretto, Camilla Pardini or José Leça at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados by telephone (+55 11 3066 5999) or by fax (+55 11 3167 4735) or by e-mail ([email protected] or[email protected] or [email protected]).