Satellite Exploitation Rights

Introduction
Right to Exploit Foreign Satellites
Right to Exploit Brazilian Satellites
Institution of the Space Segment
Exploiting the Satellite
Transferring the Right to Exploit

Introduction

The National Telecommunications Agency (ANATEL) has, in accordance with Law 9,472/97 and those international regulations, rules, treaties, agreements and acts to which Brazil is a party, approved the regulation of the right to exploit satellites for the transport of telecommunications signals, by way of Resolution 220 (dated April 5 2000). This regulation determines the conditions for conferring Brazilian and foreign satellite exploitation rights, and for their use to transport telecommunications signals.

Brazil is an interesting market to consider for the provision of telecommunications services using satellites. Considering the size of the country and the distance between the urban centres, the use of satellites for the provision of telecommunications services is indispensable.

The result of the last two bids for the exploitation of Brazilian satellites highlights the magnitude of this market. In October 1999, Hispasat offered R$27 million (approximately US$14 million) for the right to use the orbit licensed to Brazil and associated radio frequencies. In May 1999, Loral Skynet do Brasil made the last bid for another Brazilian orbital slot, with a proposal of R$33 million (approximately US$17 million), almost 17 times more than the minimum price established by ANATEL.

There are four Brazilian satellites in operation in the country and a further four under construction or in the process of authorization. There are 15 authorized foreign satellites in operation and another six under construction or in the process of authorization.

A Brazilian satellite is defined as a satellite that uses radio electric orbit and spectrum resources licensed within Brazil, or allocated or assigned thereto, whose control and monitoring station is located in Brazilian territory. A foreign satellite is a satellite that uses radio electric orbit and spectrum resources coordinated or licensed by other countries.

The right to exploit Brazilian satellites for the transport of telecommunications services assures orbit occupation and the use of radio frequencies for controlling and monitoring telecommunication via satellite. The right to exploit foreign satellites for the transport of telecommunications signals, in turn, permits the provision of foreign satellite capacity in Brazil and the use of radio frequencies via satellite (as well as the control and monitoring of the satellite if necessary).

The regulation also defines the 'provision of space capacity' as the supply of radio electric orbit and spectrum resources to entity holders of concessions, permits or authorizations for the exploitation of telecommunications services.

Preference will be given to the use of Brazilian satellites, where such use offers conditions equivalent to those of (foreign) third parties. Conditions will be considered equivalent when:

• the terms are compatible with the needs of the telecommunications service provider;
  
  
• the price conditions are equivalent or more favourable; and
  
  
• the technical parameters satisfy the requirements of the provider's project.

The preferential treatment afforded to Brazilian satellites raises doubts as to a possible violation of the World Trade Organization Rules, and generated comment during the public consultation process. However, the analysis of the regulation by the ANATEL director states that this provision does not contravene any treaty. This is because foreign systems will be chosen only if they offer more advantageous technical, operational and commercial conditions.

ANATEL exercises an important administrative role in Brazil, especially in terms of representing Brazil in international telecommunications organizations (coordinating with the executive branch). Thus, the agency may impose restrictions, limits and conditions on companies or business groups with respect to the assignment and transfer of the satellite exploitation right. This is in order to providing effective competition and prohibiting economic concentration in the market.

Right to Exploit Foreign Satellites

The right to exploit foreign satellites will be conferred upon the owner of the 'space segment' (or the person holding the right to operate teh space segment) totally or partially, by way of a 'term' issued by ANATEL. The 'term' must contain:

• the name of the entity;
  
  
• the purpose of the right;
  
  
• the duration of the right;
  
  
• the geographic area of coverage; and
  
  
• any other information requested by ANATEL.

'Space segment' is defined as the satellites themselves, the tracking, telemetry, command, control and monitoring stations, and equipment required to support the operation of the respective satellites.

ANATEL may conduct a public consultation to verify if it is in the public interest to confer the foreign satellite exploitation right requested. The public consultation held for the proposed resolution itself generated some doubt. It was alleged (i) that there was no legal basis for the proposed regulation, and (ii) it could favour the formation of cartels and be prejudicial to free competition. The anti-competition elements would have a contrary effect to the objective foreseen in general telecommunications law, aimed at stimulating competition and free enterprise.

Reciprocity
Prior to granting the exploitation right, ANATEL may also consider aspects relating to the reciprocity of other countries, in the treatment of satellites and Brazilian telecommunications providers.

This is another aspect that was also widely commented on during the public consultation. The reciprocity requirement for foreign satellites may give rise to disputes within the ambit of the WTO (World Trade Organization) and Mercado Comum do Sul (MERCOSUR). However, ANATEL alleges that this reciprocity will not offend any international treaty and that the decisions on the assignment of rights will always be based on a transparent, objective and non-discriminatory process.

Requirements
The owner of the space segment, or person holding the right to operate it, must satisfy certain requirements to be granted the foreign satellite exploitation right. These requirements include:

• notifying ANATEL of its legal representative in Brazil, its commitment to maintaining up-to-date information and its intention to provide space segment capacity only through the indicated representative. The legal representative must be a company organized in accordance with the laws of Brazil, with its principal place of business and administration in Brazil;
  
  
• presenting a document, issued by the competent authority, demonstrating the user conditions of the space segment authorized in the country of origin;
  
  
• presenting the technical information related to the satellite system (indicating possible uses, orbital parameters, frequency bands to be used, geographic area of coverage and other relevant information);
  
  
• paying the amount established by ANATEL for the right to exploit the foreign satellite and use the associated frequency; and
  
  
• obtaining acknowledgement by ANATEL of the performance of a prior technical coordination agreement with the Brazilian administration, detailing the orbital parameters and associated radio frequencies, pursuant to the provision in the International Telecommunication Union (ITU) Radio Communications Regulation.

Maintenance of the foreign satellite exploitation right is subject to the implementation of the results gained in accordance with the coordination agreement (as above), and ANATEL may stipulate certain conditions to be complied with. If a coordination agreement is not feasible, ANATEL may extinguish the right conferred.

The exploitation right will be conferred for a 15-year term, starting from the publication date of the term in the official gazette. This term may be extended once for a further 15 years, provided that the exploiter declares its interest up to three years prior to the expiration date of the original term and that the same technical characteristics of the satellite are maintained.

Tthe right may be extinguished if the space segment is not operative within a period of three years, starting from the publication date of the term in the Official Gazette.

Right to Exploit Brazilian Satellites

Entities interested in exploiting satellites using orbit and spectrum resources organized by Brazil must submit an application to ANATEL specifying technical information relating to the satellite system. This will include:

• the satellite's possible uses;
  
  
• orbital parameters;
  
  
• the frequency bands to be used;
  
  
• the proposed geographic area of coverage; and
  
  
• other relevant information.

Only entities organized according to the laws of Brazil, with their principal places of business and administration in Brazil may exploit Brazilian satellites. The Brazilian satellite exploiter must begin satellite operation under the conditions set forth in the exploitation right term and the operation of the satellite control station must be located in Brazilian territory.

ANATEL will analyze the information received, verifying compatibility with the terrestrial systems registered in its database and space systems, in coordination with the ITU. Upon considering the application satisfactory, ANATEL will then forward the information for advance publication. Advance publication is a procedure foreseen in the the ITU's radio communications regulation, and is aimed at apprising all administrations of any planned satellite system and its principal characteristics. However, this procedure does not assure the interested entity privileges or preferences for the granting of the satellite exploitation right.

Institution of the Space Segment

The satellite exploiter must tell ANATEL of the start-up of its space segment, with advance notice of at least 90 days, by means of a plan that contains a technical and operational description and is attested to by a qualified professional. The exploiter must ensure the plan is current and available to ANATEL at any time.

With the purpose of undertaking tests, the exploiter may operate the stations on a trial basis, for a period of 90 days, within the term established for the start-up of commercial exploitation. This is provided it communicates its intention to ANATEL at least five business days before commencing the tests.

The exploitation right conferred may be extinguished if the space segment is (i) not operative within the term established by ANATEL, or (ii) not fulfilling the conditions established by ANATEL.

Any land station facilities that may cause accidents or harm to persons must be constructed in such a way that they avoid proximity or contact with laypersons or unauthorized persons. They must include clearly visible warning devices. With regard to the buildings, antennae and towers, and the installation of physical lines in public places, the satellite exploiter must observe the municipal ordinances and other legal requirements pertaining to each location.

After the institution of the space segment, the satellite exploiter must apply to ANATEL for the issuance of the operating licence for the land station. The application must be supported with the liability instrument certifying that the installations correspond to the technical characteristics set forth in the plan, along with the technical responsibility registration.

The exploiter must advise ANATEL, at least 10 days in advance, of the activation of the space segment. ANATEL may demand that the exploiter cease transmission if it causes damaging interference to another regularly installed telecommunications service, until such time as the damaging interference is eliminated.

Exploiting the Satellite

Exploitation of the satellite may be undertaken by the exploiter itself, if the exploiter is also a telecommunications service provider. Accounting records must be maintained separately.

To this end, requests received that are technically viable and compatible with the satellite system project (as submitted by entity holders of concessions, permits or authorization for the provision of telecommunication services) must be fulfiled by the exploiter in a non-discriminatory manner. Requests may be made as to:

• prices;
  
  
• access conditions to the space segment; and
  
  
• contractual conditions.

The exploiter will always be responsible to ANATEL and the concessionaires, permit holders and entities authorized to provide telecommunications services using the space segment capacity.

For the discharge of its obligations, the exploiter may use equipment and infrastructure belonging to other entities and contract for the development of activities inherent in, or supplementary to, the exploitation (and also the implementation of associated projects).

Transferring the Right to Exploit

The transfer of the right to exploit a Brazilian satellite (or 'exploiter's control') may only be performed after the space segment is operative, and is subject to ANATEL approval. Transfers without ANATEL's prior approval will result in the loss of the right.

To obtain approval of the transfer, the proponent must satisfy the requirements compatible with the exploitation of the space segment (as they relate to technical and financial qualification, legal capacity and fiscal regularity). The proponent must also comply with all the clauses of the term, taking on the rights and obligations of the former exploiter. Approval of the transfer must also not be prejudicial to competition.

For further information on this topic please contact Ricardo Barretto or Paulo Brancher at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados by telephone (+55 11 3066 5999) or by fax (+55 11 282 8735) or by e-mail ([email protected] or [email protected] ).

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