The National Telecommunications Agency (ANATEL) has taken the first step to regulate fourth generation mobile services (4G) in Brazil, through the publication of Resolution 544, dated August 11 2010.
The resolution alters the allocation of the 2.5 gigahertz (GHz) (2,500-2,690 megahertz) frequency bandwidth of multi-point, multi-channel distribution services (previously used for the provision of pay television), allocating it to personal mobile services used for the provision of mobile telephony.
However, for the provision of 4G services to be possible from a regulatory viewpoint, the alteration of the 2.5GHz bandwidth allocation is insufficient. Instead, it is necessary to hold a bidding process to grant rights of use to personal mobile service providers.
Recent reports indicate that the draft bidding notice for the 2.5GHz bandwidth is under discussion by ANATEL, though it is possible to anticipate some of its main rules.
The 2.5GHz bandwidth is expected to be divided into lots, as the agency has previously done in similar auctions, and that the authorisation term for radio frequency use will be 15 years. It is also anticipated that, in return, ANATEL will require the auction winners to agree to a timeline with regard to rolling out their services across the country:
- one year to serve 100% of the municipalities designated as the host and sub-host cities of the 2014 World Cup;
- two years to serve state capitals, federal district and municipalities with more than 500,000 inhabitants;
- three years to serve all municipalities with more than 200,000 inhabitants;
- four years to serve all municipalities with more than 100,000 inhabitants;
- five years to serve cities with populations of between 30,000 and 100,000 inhabitants, as will be specified in the notice; and
- six years to serve municipalities with fewer than 30,000 inhabitants that are not yet served by 3G service.
Considering that spectrum is a scarce asset, ANATEL is studying the imposition of limits with regard to the maximum spectrum that a provider (including affiliates, subsidiaries and controlling companies) may own. If a provider already operates in the 2.5GHz bandwidth, the limit would be close to 60MHz of the spectrum, with the possibility of reaching 40MHz in specific sub-bands.
The successful auction bidders will also have to allocate 30% of investments in technology and products developed in Brazil.
The next steps will be:
- submission of the draft bidding notice to public consultation;
- agency evaluation of the public comments and input; and
- publication of the definitive text, which is expected to occur at the end of this year.
For further information on this topic please contact Ricardo Barretto Ferreira Da Silva, Fabio Ferreira Kujawski or Thays Castaldi Gentil at BARRETTO FERREIRA KUJAWSKI E BRANCHER – Sociedade de Advogados by telephone (+55 11 3897 0300), fax (+55 11 3897 0330) or email ([email protected], [email protected] or [email protected]).