Notice with Invitation to Bid
Conditions for Participation
Invitation to Bid Process
Clarification of Notice with Invitation to Bid
On October 16 2001 the Brazilian Telecommunications Agency (ANATEL) published Public Consultation 323, proposing the notice with invitation to bid for authorizations for the use of radio frequencies in the 3.5 gigahertz (GHz) and 10.5 GHz bands.
The public consultation was drafted with the aims of managing the frequency spectrum efficiently, stimulating competition between telecommunications service companies, and diversifying and expanding service supplies.
Comments and suggestions could be submitted to ANATEL up to November 12 2001.
Authorizations will be granted for a 15-year period (extendable for an equal period) for Regions One, Two and Three of the General Grants Plan (Decree 2,534 of April 2 1998) and the 67 numbering areas of the General National Codes Plan (Resolution 263 of June 8 2001).
Company licence holders of the following services may enter the invitation to bid process:
- the telecommunications transport network service;
- the fixed switched telephone service;
- the multimedia communications service;
- the network and circuit specialized limited service;
- the packet and circuit switching network service; and
- the dedicated line service.
Operators of mobile telephone and mass electronic communication services are excluded from the process.
Each bidder (and its subsidiary, parent or affiliate company) may win a maximum of two pairs of 5 megahertz (MHz) blocks in the 3.5 GHz band and two pairs of 7 MHz blocks in the 10.5 GHz band.
Bidders may not use 5 MHz radio frequency blocks in the 3.5 GHz band or 7 MHz frequency blocks in the 10.5 GHz band totalling a range of more than 20 MHz and 28 MHz respectively.
Participants may opt to obtain licences for regions of the General Grants Plan or areas of the General National Codes Plan. Two blocks of 10 MHz (5 MHz for upstream and 5 MHz for downstream) will be put up to bid in the 3.5 GHz band for the General Grants Plan regions, with a further two blocks of 10 Mhz for each of the General National Codes Plan areas. The same procedure applies for the frequencies in the 10.5 GHz band.
The bidder that obtains a licence for 3.5 GHz or 10.5 GHz must commence its operations within 18 months of the contract execution date. The service will be operational in all cities with more than 500,000 inhabitants (and state capitals in the case of licences for General Grants Plan regions). In the areas of the General National Codes Plan in which there are no capitals or cities with a population of 500,000, the winner will provide a service to at least one city of its choice. In the first five years of the contract the winning bidder shall enjoy exclusive use of radio frequency in municipalities with less than 500,000 inhabitants.
The fixed telephony concessionaires (and their subsidiary, parent and affiliate companies) cannot participate in the invitation to bid to obtain radio frequencies in the 3.5 GHz or 10.5 GHz bands in the areas of the General Grants Plan in which they already operate. The exception is Embratel, the domestic and international long-distance concessionaire, which may apply for authorizations for any area of the country. The objective of this restriction is the promotion of competition.
Consortia and corporate entities are prohibited from participating in the invitation to bid process where:
- they have been declared bankrupt;
- they are involved in debt restructuring;
- they have been declared unfit by any body of the federal, state or municipal public administration; or
- their right to bid with ANATEL has been suspended.
The invitation to bid is divided into three phases:
- receipt of identification documents and financial proposals;
- opening, analysis and judgment of the financial proposals for the 3.5 GHz band; and
- opening, analysis and judgment of the financial proposals for the 10.5 GHz band.
If the bidder's documents are not in Portuguese they must be legalized by a notary public of the country of origin, certified by the Brazilian consulate and translated into Portuguese.
Bidders must submit guarantees that they can honour their financial proposals, corresponding to 10% of the highest minimum price for the relevant area. Guarantees may be made by means of a guarantee letter or bond. The minimum prices will be stipulated in the final notice with invitation to bid. The price offered for the right to use the radio frequency blocks in the 3.5 GHz and 10.5 GHz bands must at least equal these minimum prices; otherwise the proposal will be disqualified.
The total amount is payable on the execution date of the authorization term for use of the radio frequency blocks. However, if 20% is paid, the remaining 80% can be paid in four annual instalments from the execution date of the term. Authorizations will only take effect upon payment.
The financial proposals for the 3.5 and 10.5 GHz bands will be analyzed by the relevant authorities in the General Grants Plan region and General National Codes Plan area respectively. The notice provides for a 'bidding-up' system, whereby bidders that offer up 80% or more of the highest price offered may reformulate their proposals to submit a better price until one bidder remains.
The winning bidder will be able to choose its blocks of frequencies. The authorization term for use of the blocks will be signed within 10 days of the winning bidder's call date (extendable once for an equal period) by the Special Invitation to Bid Commission.
Appeals may be lodged against the acts of the Special Invitation to Bid Commission (concerning the identification, classification and adjudication phases only) within three working days of the public session or publication of the adjudication notice in the Official Gazette. Appeals should be addressed to ANATEL's board of directors.
Clarification of Notice with Invitation to Bid
Oppositions to the notice may be submitted to the Special Invitation to Bid Commission within 10 days of publication of the notice. The means of opposition must comply with the conditions of the notice. If no opposition is expressed within 10 days, the bidders are presumed to accept and agree unconditionally with its terms, and to be subject to the relevant obligations.
Requests for clarification on the content of the notice with invitation to bid may be submitted to the Special Invitation to Bid Commission up to 20 days before the date for the receipt of identification documents and financial proposals. All requests that are submitted to ANATEL concerning clarification will be answered and made available to the public.
Given the diversity of the technology available, ANATEL also seeks comments and suggestions on the segmentation of radio frequency blocks by means other than those set forth in the Regulation on the Conditions of Use of the 3.5 GHz Band, approved by Resolution 164 of September 2 1999.
For further information on this topic please contact Ricardo Barretto or Fernanda Bottura Casella 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 email ([email protected] or [email protected]).