Municipal Laws
Legislation
The Concessionaires' Position
Numerous municipalities have passed laws and decrees concerning the use of public highways and subsoil for the provision of infrastructure services by public and private entities. Certain provisions impose financial charges on the switched fixed telephone service (SFTS) concessionaires for the installation of their telecommunications networks on public property (the so-called 'soil user fee'). Given such restrictions, it is difficult for the SFTS concessionaires to fulfil their legal obligation to provide a national telecommunications infrastructure, and achieve their expansion and universalization goals.
Under Article 21(11) of the Federal Constitution, the government must provide telecommunications services (either directly or by means of authorization, concession or permission) and manage their organization through the creation of a regulatory agency, among other things. Accordingly, Federal Law 9,472 (the General Telecommunications Law) was enacted on July 16 1997, which established new rules for the telecommunications sector and created ANATEL, the Brazilian Telecommunications Regulatory Agency.
In June 1998, pursuant to Article 207 of the law, ANATEL granted the rights to provide the SFTS to former companies of the Telebrás system under the public regime (pursuant to Articles 63 and 64, and the Constitution). The concessionaires may provide public services in their regions (subject to universalization and continuity obligations), with the objective of guaranteeing a domestic integrated telephony system.
Under Article 75 of the law ANATEL regulates the concessionaires' universalization and continuity obligations. The universalization obligations aim to make telephony services available to all, while the continuity obligations aim to give users uninterrupted availability and enjoyment of services. The non-fulfilment of these obligations may give rise to sanctions by way of a fine, loss of concession or a declaration of intervention.
Under the Brazilian Civil Code, public property includes all assets, real estate, livestock, credits, rights and shares that belong to the state, the government and municipalities, and their entities. The code divides public property into categories that include (i) property of common use (including highways and roads), and (ii) property of special use, such as buildings or land for federal, state or municipal use.
The SFTS concessionaires' use of public property (namely the passage of optical cables through subsoil) does not impair common use, nor does it cause damage that justifies the receipt of remuneration of any kind by municipalities. Moreover, the concessionaires' use of subsoil is essential in order for them to meet their legislative obligation to provide a nationwide telephony service. However, their use is restricted by the municipalities' imposition of financial charges for use of this public property.
The legality of a municipal charge imposed for the installation of electricity and telephone poles was recently analyzed by the Superior Tribunal de Justiça, one of the country's two highest courts.
The court ruled that the imposition of such charges by municipalities is unconstitutional and illegal. Upon assigning the subsoil for the installation of optical cables for the passage of telephony services, the municipality is not developing a commercial or industrial activity that justifies the collection of a public payment. The court stated that even if payment of the indicated financial contribution could be construed as being a fee, its collection would still be illegal insofar the assignment of the subsoil entails no consideration on the municipalities' part nor the exercise of police power (RMS12081/SE, May 15 2001).
For further information on this topic please contact Ricardo Barretto, Celso Nunes or Oscar Petersen 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], [email protected] or [email protected]).