On September 12 2011 President Dilma Rousseff signed Bill 116/10 into law (Law 12,485/2011). The bill had been under discussion since 2007, when the first version was submitted to the House of Representatives. Before the approval of the bill, Brazilian legislation had provided a different regulation for each pay television service modality - that is, cable television, direct-to-home satellite or multichannel multipoint distribution service. The legislature had further limited the participation of telecommunications carriers in the cable television market. In contrast, the new law unifies pay television legislation, creating a so-called 'conditional access service', which covers all pay television service modalities, regardless of the adoption of a specific technology.

The president vetoed only two provisions of the bill, neither of which represented significant changes in the final text. The vetoed provisions included one that allowed for the charging of phone calls made to the customer care service. Decree 6,523/08, which regulated the Consumer Protection Code, establishes that this service must be entirely free.

However, the most significant change for the telecommunications sector refers to the total opening-up of the pay television market to foreign investors and to fixed switched telephony service (FSTS) concessionaires. At the end of 2010, when reviewing the concession agreements for the period 2011 to 2015, Brazil's telecommunications regulator had excluded the clause that prohibited these companies from offering cable television service in areas where they already provide telecommunications services. However, the FSTS concessionaires were still forced to observe the maximum limit of 49% foreign ownership of their capital, as determined by the Cable Television Act (Law 8,977/95). This restriction, which represented the last barrier to the opening of the cable television market to FSTS concessionaires, has been repealed by the new law.

Although the new law is not seen as ideal by the Brazilian market, its content was widely discussed and negotiated with the stakeholders. It is hoped that the new law will foster competition in the pay television market, thereby increasing supply and lowering prices for the consumer.

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]).