According to Joint Resolution 1 of November 24 1999 the Brazilian electricity, telecommunications and petroleum agencies regulate the sharing of infrastructure by:
- the public electricity service provider;
- community-interest telecommunication service providers; and
- companies that use pipeline services to convey petroleum and its byproducts, and natural gas.
Sharing consists of using surplus capacity that is supplied by an agent (who retains overall management) in order to fulfil the obligations of relevant concessions, permits and authorization.
Thus, the public electricity service provider, community-interest telecommunication service providers, and companies that use pipeline services to convey petroleum, its byproducts and natural gas, can share the infrastructure of another agent from any of these sectors. This must be done in a non-discriminatory manner and at just and reasonable prices and conditions, to stimulate the optimization of resources, a reduction in operational costs and benefits to service users.
Sharing is denied only if there are certain limitations, violations of engineering requisites, or clauses to that effect in the relevant concession contract.
Recently the shared use of infrastructure between the electricity, petroleum and telecommunications sector agents has caused controversy. This has mainly related to the amounts charged for infrastructure use and accusations of piracy of posts. For example, the telecommunications sector has struggled to close contracts for infrastructure use, particularly in relation to the leasing of electricity posts, since the rent charged for leasing has been excessive.
The agencies decided to create a Commission for the Resolution of Conflicts, through Joint Resolution 2 of March 27 2001 - Joint Regulation for the Resolution of Conflicts of the Regulatory Agencies of the Electricity, Telecommunications and Petroleum Sectors.
Any conflicts which arise between agents in the negotiation and execution of their contracts, and which relate to the application and interpretation of Joint Resolution 1/99, may be submitted to the examination of the agencies.
During conflict resolution proceedings, agents must still fully perform sharing contracts that are underway.
According to Joint Resolution 2/2001 the Commission for the Resolution of Conflicts shall convene whenever necessary. Its composition may vary according to the sectors with which the agents of a conflict are associated.
Generally, the commission will consist of a panel of:
- two representatives from the claimant's regulatory agency;
- two representatives from the regulatory agency of the respondent's sector; and
- one representative from the regulatory agency of the sector that is not involved in the conflict.
The administrative conflict resolution process will be conducted by the agencies with the objective of assuring fair competition between them and benefits to the service users.
A condition for the commencement of conflict resolution is that the agent instigating the proceedings must tell the agent with which it is in conflict that it wishes the matter to be settled through conflict resolution.
The initial written petition should be sent to the Commission for the Resolution of Conflicts, officially submitted to the petitioner's regulatory agency. The petition must be accompanied by relevant evidence, a copy of the contract in which the conflict may reside and copies of relevant prior communication.
The commission has 20 days to announce a decision. The decision is binding on the parties and their representatives, and no appeal at administrative level is allowed. However, one motion for reconsideration is allowed (addressed to the agency), although it must be filed within five days of the decision. By this method, it is possible to appeal to the judiciary, which may examine and overturn the panel's decision.
If the parties reach an agreement prior to any commission decision, the commission will approve it upon verifying its lawfulness.
The existence of enormous variations in the prices charged by infrastructure holders, coupled with a reluctance to assign their infrastructure, is apparent. In principle, the parties most adversely affected are the telecommunications operators who have network expansion obligations. Electricity companies are applying for authorizations to provide telecommunications services and will certainly begin to compete with the incumbents.
Through Public Consultation 239 of June 12 2000 the National Telecommunications Agency proposed a mathematical formula for calculating a just price for the leasing of infrastructure. The proposal stipulated a maximum price that should be accepted. According to the formula, prices should be between R0.40 and R1.50 per post. However, there is no specific regulation on such prices to date and, consequently, the formula has no practical effect with regard to overcoming the difficulties faced by the telecommunications sector.
The agents of the telecommunications sector must depend on negotiations with the infrastructure holders and, for now, must resort to the courts and the antitrust system.
In view of the difficulties faced by the telecommunications sector agents, conflict resolution is expected to continue to be an important means of establishing reasonable criteria for infrastructure sharing, particularly in relation to rent. The cooperation of the regulatory agencies makes it possible for conflicts to be settled in an impartial manner, with the necessary technical support.
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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