On November 29 2001 the Brazilian Telecommunications Agency (ANATEL) stipulated the rules for full liberalization of competition in the fixed, switched telephony service (FSTS).
Liberalization of competition in the FSTS began in 1998 with the issuance of the General Grants Plan, which established a duopoly regime until December 31 2001. Thereafter, other FSTS licences may be issued. Further, the incumbents and mirror companies may apply for new licences in new localities, but must first comply with the universalization and quality goals. The fulfilment of the universalization goals must be certified and this procedure is regulated by Resolution 280 of October 15 2001.(1)
According to the new resolution there will be no limits for FSTS authorizations. Further, Article 27 of the resolution states that new authorization holders are subject to the General FSTS Quality Goals Plan (as regulated by Resolution 30/98).
Authorization holders must be organized according to Brazilian law, with their principal place of business and administration in Brazil, and the majority capital of their parent companies must be owned by an entity domiciled in Brazil.
Authorization licences are paid for and the prices do not include related radio frequencies or the carrier selection code.
Any corporate reorganization consisting of the transfer of control(2) must be submitted to ANATEL in advance.
The new regulation establishes that the concessionaires must make their local and long-distance networks available to the new authorization holders. It complements the General Telecommunications Law and other regulations by stipulating more specific rules in relation to unbundling.
Concessionaires must make their networks available at the maximum prices established in Rule 30/96. This rule governs the prices for the industrial exploitation of dedicated lines (ie, the maximum prices that local and long-distance concessionaires may charge other authorization holders for a dedicated line with certain technical characteristics).
Long-distance dedicated lines
| Distance/bits | 14.4 kilo bits per second (kbps) | 64 kbps | 2,048 kbps |
| 50 kilometres (km) | R132 line/month | R298 line/month | R3,775 line/month |
| Between 50km and 100km | R159 | R357 | R4,531 |
| Between 100km and 200km | R242 | R545 | R6,915 |
| Between 200km and 300km | R377 | R850 | R10,782 |
| Between 300km and 500km | R466 | R1,049 | R13,313 |
| Between 500km and 700km | R533 | R1,202 | R15,246 |
| Between 700km and 1,000km | R610 | R1,373 | R17,420 |
| 1,000km or more | R673 | R1,516 | R19,235 |
Source: Anatel
Local dedicated lines
| Digital lines (per month) | Price |
| Up to 14.4 | R67 |
| 64 kbps | R287 |
| 2,048 kbps | R3,636 |
| Analogue lines (per month) | R52 |
Source: Anatel
The new authorizations are granted in two types of area: (i) regions 1, 2 and 3 (which correspond to the areas of the General Grants Plan), and (ii) numbering areas (which correspond to the 67 local areas).
Generally, concessionaires (ie, incumbents) can apply only for General Grants Plan regions. The mirror companies and other new entrants are eligible for the smaller areas (corresponding to the numbering areas). ANATEL will grant an individual carrier selection code to those who apply for entire regions and specific codes (probably '0800' codes) will be assigned to those who apply for numbering areas.
Long-distance and international authorizations will be granted in association with local authorizations. Local concessionaires are entitled to provide long-distance and international services regardless of any new local authorizations.
Pursuant to the new regulation, long-distance and international authorizations are subject to specific coverage obligations.
Those who apply for an entire region of the General Grants Plan must serve (i) all capitals and the federal district, and (ii) all cities with more than 500,000 inhabitants if the authorization covers one region (decreasing to all cities with more than 700,000 inhabitants if it covers two regions, and all cities with more than 1 million inhabitants if it covers the entire territory).
In turn, authorization holders in local areas must provide their services to at least 1% of the population of the state capitals, federal district and all cities with more than 500,000 inhabitants.
These obligations must be fulfilled within a 48-month period by the end of 2005. Thereafter, coverage obligations will no longer apply.
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 email ([email protected] or [email protected]).
Endnotes
(1) ANATEL Issues Draft Regulation for Compliance of Obligations outlines the most important provisions of the public consultation on which the resolution was based. Although some minor changes were made to the version presented for public consultation, the main guidelines were maintained in the final resolution.
(2) See Resolution Creates New Control Concept.