ANATEL Issues Draft Regulation for Compliance of Obligations

Draft Regulation
Proof
Declaration
Comment

Draft Regulation

The Brazilian Telecommunications Agency (ANATEL) has presented the draft Regulation of the Procedure and Criteria for the Declaration of the Performance of Switched-Fixed Telephone Service (SFTS) Provider Obligations for public consultation.

This regulation is an important step in the liberalization process of the telecommunications market which is due to commence in early 2002.

The telecommunications regulatory model and the implementation of competition in the sector are grounded in the General Telecommunications Law and the General Grants Plan. In accordance with this legislation:

• Brazil was divided into three areas for the provision of local and inter-regional telephony services (regions I, II and III), and a fourth region was created for the exploitation of inter-regional, domestic long-distance and international services;

• each of the incumbent companies has a concession to provide fixed telephony in each of the designated areas. These operators are subject to the public regime and must perform obligations including universalization and expansion;

• authorizations were to be auctioned in each region for the new players (mirror companies), implementing the duopoly fixed telephony system. These new players render the service under the private regime and are subject to different obligations including expansion and service;

• no new authorization for the provision of fixed telephony will be granted before December 31 2001;

• the incumbents may not hold new authorizations for the provision of other telecommunications services prior to December 31 2001 and while they have not performed the universalization and expansion obligations set forth in the concession contracts and regulations; and

• the new players may not provide fixed telephony services other than in the regions for which they hold authorizations until December 31 2001 2001, and while they have not performed the expansion and service obligations (also foreseen in the regulations and respective authorization terms).

In light of the forthcoming date for the implementation and liberalization of the telecommunications sector, companies are eager to fulfil the necessary regulatory and contractual obligations.

Proof

In order to obtain new authorizations, providers must prove that they have fulfilled their obligations. When it becomes definitive, the new resolution will set out how this must be done, aiming to establish a generic procedure for evidencing the performance of obligations by telecommunications providers, when this compliance is required.

Declaration

The provider will commence the certification process by giving 30 days' advance notice in a major newspaper of its intention to fulfil a given obligation. Although the proposed regulation is unclear, it seems that publication will only be required where the obligation relates to user rights, including universalization and quality obligations. The final version of the regulation will clarify this.

The provider should be prepared to receive and act on comments from the public which may contest the performance of a given obligation.

Following publication, and within 30 days of the date declared for the performance of the obligation, the provider must officially submit a declaration of the performance of obligations to ANATEL, supported by documentation proving the declaration. This declaration shall be audited by an independent auditing entity.

ANATEL will then publish a document for a 30-day public consultation period. The provider must respond to all comments within 15 days.

Finally, ANATEL will then prepare a report and the board of directors will give its opinion on the declaration. During the analysis period, ANATEL may request clarification on any inconsistencies. ANATEL's final pronouncement is through legislation.

Comment

Not counting possible suspension periods or time for the board of directors' analysis, the process for the certification of the performance of obligations may take more than 125 days. Thus, it is thought that the whole procedure (including the periods for comments from the general public, the preparation of replies and production of reports audited by independent entities) will make it impossible to meet the December 31 2001 deadline established in the General Grants Plan for the opening of the sector.

For further information on this topic please contact Ricardo Barretto 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])