On November 24 2010 the National Telecommunications Agency (ANATEL) approved the proposed revision of fixed switched telephone service (FSTS) concession contracts that are entered into between 2011 and 2015. In 2009 ANATEL opened up this proposed revision to public analysis through its issuance of Public Consultation 11/2009 and the holding of six public hearings.

The concession contracts establish the rights and obligations of FSTS concessionaires and are revised every five years by ANATEL. The main alteration to the FSTS concession contracts, which will be effective between 2011 and 2015, is the exclusion of the clause that prohibits these companies from offering cable television services in areas where they provide telecommunications services. The exclusion of this clause opens up the cable television market to FSTS concessionaires, allowing them to compete directly with cable television companies.

However, although the opening up of the cable television market has already been approved by ANATEL, FSTS concessionaires that wish to operate in this market must observe the maximum limit of 49% foreign ownership of their capital, as determined by Article 7(II) of the Cable Law (8977/95).

Nevertheless, this limitation is expected to be lifted as soon as HR Bill 116/2010, which is being considered by the federal Senate, is approved. As the wording of the bill stands, if approved, it would allow for the provision of cable television services by FSTS concessionaires, regardless of whether they have foreign control.

For further information on this topic please contact Ricardo Barretto Ferreira Da Silva, Fabio Ferreira Kujawski or Thays Castaldi Gentil at Barretto Ferreira, Kujawski, Brancher e Gonçalves – Sociedade de Advogados (BKBG) by telephone (+55 11 3897 0300), fax (+55 11 3897 0330) or email ([email protected], [email protected] or [email protected]).