Universalization Goals Plan
Invitation to Bid Process
Education Programme

Since January 2 2001 all telecommunications companies have had to make financial contributions to the Telecommunications Service Universalization Fund (FUST), which was instituted by Law 9998/2000. In accordance with the law, 1% of the gross operating income of telecommunication services provided under the public and private regimes now constitute FUST's revenue.

FUST was created in order to collect resources to cover the costs of fulfilling the obligations inherent to the public telecommunications services which cannot otherwise be recovered (Item 2, Article 81 of the General Telecommunications Law).

According to the National Telecommunications Agency, FUST collected R600 million from companies authorized to provide telecommunications services between January and June 2001.

On July 9 2001 the agency approved the Regulation of the Application of Resources of the Telecommunications Service Universalization Fund (Resolution 269/2001), along with the notice of invitation to bid for the first FUST programme. The Education Programme aims to provide education to more than 7 million students from secondary and vocational schools, with FUST resources. The Education Programme is the first of its kind.

Universalization Goals Plan

Resolution 269/2001 establishes that the agency must specify the telecommunications service universalization goals that use FUST resources for their fulfilment, through the universalization goals plans submitted to public consultation.

The universalization goals plans aim to serve localities with less than 100,000 inhabitants and implement rural telephony services, among other things. The attainment of the objectives is the joint responsibility of the contracted providers, beneficiary entities and users, and the universalization goals plans establish the rights and obligations of the parties involved.

Modernization of the service that is subject to universalization is the responsibility of the contracted provider. This is effected by means of the introduction of equipment and media to provide an up-to-date service to the user and if necessary the adoption of alternative solutions that make it possible to maximize the efficiency level in the exploitation of the service. Moreover, the provider must furnish the agency with reports on the achievement of the goals established in the universalization goals plan.

In accordance with the nature of the universalization obligations, the contracted provider may subcontract to other service providers, suppliers of goods or even company holders of satellite exploitation rights. However, the contracted provider remains solely responsible for complying with the conditions of the obligations term that it entered into with the agency.

Users have the responsibility of ensuring that the services and operation of the equipment supplied to them are correctly used.

FUST resources cannot be used to cover costs relating to the universalization of services which the contracted provider itself should bear, nor can they be used in applications for tax incentives, financing or other government funds.

Thus, the contracted provider must evidence the costs that will be covered by the FUST resources.

The agency prepares a reference term which constitutes a summarized description of the programme and its principal objectives.

In situations that it deems necessary, and observing the universalization goals plans, the agency may take a backseat role in the use of FUST resources for a given programme so that the contracted providers gradually assume full absorption of the costs relating to their attainment with their own funds.

Invitation to Bid Process

For selection of the provider responsible for achieving the telecommunications service universalization goals using FUST resources, the agency will use invitation to bid procedures, based on the universalization goals plan and reference terms.

The telecommunications provider that satisfies all of the requirements established in the notice of the invitation to bid and will use the lowest amount of resources from FUST will be selected.

An obligation term will be entered into by the selected company and the agency, which stipulates:

  • the object and duration period;
  • the FUST monies that may be used by the provider; and
  • the reimbursement conditions for the fulfilment of the universalization obligations, implementation or installation of accesses or services, and the supply and use of the relevant services.

The telecommunications service providers, operating in distinct areas, may adhere to a joint reimbursement proposal.

Reimbursement for the performance of the universalization obligations will be quarterly and will depend on the presentation (by the contracted provider) of a document that has been duly attested by the beneficiary entity. The provider must present proof of execution or a service provision report in matters of installation or implementation of accesses or services.

The reimbursement amounts may be readjusted at intervals of less than 12 months from the execution of the obligations term.

In cases where the invitation to bid process is deemed unnecessary or is dismissed, the agency may request that the interested provider offer a price for the achievement of the goals. If the price established is not accepted by the agency, it may attribute the implementation of goals to the provider, while setting its own reimbursement amount.

The transfer of the obligations term will be subject to the prior approval of the agency. With regard to public interest, the agency may also review or rescind the term for the adoption of the necessary procedures for the continuity of the services rendered and inspection of the associated goods.

If the agency decides to extinguish the obligations term, the terminal equipment and devices resulting from the acquisitions and contractings with the use of FUST resources will be transferred to the benefit of users under the agency's coordination and with the agreement of the beneficiary entity.

The acquisition and contracting of equipment, materials and services associated with the execution of the Universalization Goals Plan that use a portion of the FUST resources may only be materialized with due consideration of their price, quality and technology. In the event of identical offers, priority will be given to offers originating in Brazil with Brazilian technology.

Failure to comply with the provisions of Resolution 269/2001 and the obligations term will give rise to the application of penalties set forth in the relevant contracts.

Education Programme

The notice of invitation to bid for the Education Programme, with the use of FUST resources, provides that proposals must be delivered to the agency by August 31 2001.

The objective of the notice is the implementation, supply and maintenance of accesses and terminal equipment for the use of information digital networks designed for public access (including the Internet) by public secondary education schools and vocational colleges.

The invitation to bid is divided into five lots which correspond to the schools located in the areas of each region defined in the General Grants Plan.

Only concessionaires of the Switched Fixed Telephone Service may present proposals by December 13 2001. They may present proposals for the entire area provided they have the cooperation of the other associated concessionaires that operate in the same area.

The proposals must contain reimbursement amounts for the installation of equipment constituting the terminal modules and the monthly supply of services. The concessionaire that covers the unit price will win the invitation to bid.

For purposes of comparing the proposals, the bidding providers shall present the existing value of the total reimbursement for the lot, which shall be calculated on the basis of a performance methodology, stipulated in the qualification documentation. The notice establishes the minimum criteria and parameters that must be used for drawing up this proposal.

Services will be provided to secondary and vocational schools as follows:

  • by December 13 2001, to 60% of schools with more than 600 students;
  • by June 30 2002, to 80% of schools with more than 300 students; and
  • by December 31 2002, to 100% of all schools.

By December 31 2002, 13,000 schools and more than 7 million students will have benefited from the first programme for the application of FUST resources implemented by the government, to be carried out by telecommunications companies.

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 e-mail ([email protected] or [email protected]).

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