Market spotlight

Trends and developments

What is the current state of the telecoms market in your jurisdiction, including any trends and recent developments/deals?

After the privatisation of the state-owned telephone companies in 1998 and the opening of the market to new entrants, Brazil has experienced significant growth in its telecoms sector. By the end of 2016, there were approximately 42 million landlines, 244 million mobile accesses, 27 million broadband internet accesses and 19 million pay television terminals in service. More than 90% of the market is held by four major telecoms groups: Telefónica, América Móvil, Telecom Italia and Oi.

In 2016 the companies belonging to the Oi group – the largest concessionaire and the operator with the greatest number of landlines in service – filed a request for judicial reorganisation before the Rio de Janeiro Bankruptcy Court. On July 19 2017, the company’s board of directors authorised the board of executive officers to discuss with creditors, potential investors and other stakeholders possible changes to the judicial reorganisation plan in order to increase the company’s share capital by R8 billion (approximately $2.5 billion). The judicial reorganisation plan has not yet been approved by the creditors’ board.

On June 6 2017 AINMT Holding AB acquired from NII Holdings, Inc a 30% stake in Nextel Holdings, the parent of mobile service provider Nextel Brasil, for $50 million. AINMT also has the option to invest an additional $150 million to acquire another 30% stake in the company and became its controller.

Regulatory framework

Legislation

What is the primary legislation governing the telecoms market in your jurisdiction?

The legal framework governing the provision of telecoms services in Brazil is established in the General Telecommunications Law (9.472), enacted on July 16 1997. Pay television services are also regulated by Law 12485, enacted on September 12 2011. Broadcasting services are regulated by the Telecommunications Code (4.117), enacted on August 27 1962.

Reform

Are any regulatory reforms or initiatives envisaged?

Yes. A bill that would substantially modify the General Telecommunications Law is being debated by the Senate. Already approved by the House of Representatives, if enacted the bill would allow:

  • the existing concessionaires of the fixed telephone service to migrate their concessions (subject to the public legal regime) to authorisations (subject to the private legal regime);
  • the transfer of radiofrequency authorisations between telecoms service providers without the need to transfer them alongside authorisation to provide associated telecoms services; and
  • the extension of the right to exploit Brazilian satellites for the transport of telecoms signals for indefinite times (under existing legislation, this right can be extended only once).

According to the bill, the financial gain arising from the conversion of the concessions (eg, limited validity term, reversible assets) to authorisations (eg, unlimited validity term, non-reversible assets) will be evaluated by the National Telecommunications Agency (ANATEL) and converted into investments under directives of the executive branch.

Universal service obligations

What universal services obligations apply?

Telecoms services in Brazil can be provided under two legal regimes: the public regime (under concessions or permits) and the private regime (under authorisations). Universal service obligations are imposed only on telecoms services provided under the public regime. Universal service obligations are established by the executive branch by means of decrees and are reviewed approximately every five years. The existing universal service obligations are established in Decree 7.512 (enacted on June 30 2011) and comprise:

  • the provision of fixed telephone service in areas with more than 300 inhabitants;
  • the installation of public phones at a ratio of at least four public phones for each 1,000 inhabitants in every city; and
  • the installation of a backhaul in every city.

Regulators

Which authorities regulate the telecoms sector and what is the extent of their powers?

The provision of telecoms services and satellite capacity is regulated by ANATEL, while the provision of broadcasting services is regulated by the Ministry of Science, Technology, Innovation and Communications. Spectrum use, whether for the provision of telecoms or broadcasting services, is regulated by ANATEL. The General Telecommunications Law grants ANATEL the power to organise the exploitation of telecoms services, comprising the regulation of the performance, commercialisation and use of services, and the implementation and operation of telecoms networks, as well as the use of orbit resources and radio-frequency spectrums.

Foreign ownership

Restrictions

Are there any restrictions on foreign ownership or investment in the domestic telecoms market?

According to Decree 2.617, enacted on June 5 1998, concessions, permits and authorisations for the exploitation of telecoms services provided to the public in general can be granted only to companies incorporated under Brazilian law, with their headquarters and administration in Brazil. The decree also establishes that the majority of the company’s voting stock must be held by individuals resident in Brazil or other companies incorporated under Brazilian law with headquarters in Brazil. From a practical point of view, there is no restriction on foreign ownership in the Brazilian telecoms market since foreign companies interested in the provision of telecoms services in the country merely need to incorporate two companies in Brazil: they must establish a holding company which will then own the majority of the voting stock of a second company which will hold the licence to provide telecoms services in Brazil.

Licensing and authorisation

Licences/authorisations required

What licences/authorisations are required to provide telecoms services?

As a rule, to provide telecoms services in Brazil a party must obtain authorisation from the National Telecommunications Agency (ANATEL). There are four main telecoms services targeted at the public and thus heavily regulated by ANATEL:

  • fixed telephony;
  • mobile telephony;
  • data services (including broadband internet access); and
  • pay television services.

ANATEL requires a company to obtain specific authorisation for each service that it wishes to provide. According to ANATEL Resolution 680, enacted on June 27 2017, a company providing data services for up to 5,000 users, using exclusively wire communications or restricted radiation radio communication equipment, does not need prior authorisation from ANATEL. It need only inform ANATEL of its activities before the commercial launch of services. Once the client base reaches 5,000 users, the company must obtain authorisation to expand its services.

Procedure

What are the eligibility, documentary and procedural requirements to obtain a licence/authorisation?

In order to obtain authorisation to provide telecoms services to the public, a company must file a request accompanied by the following documents:

  • a copy of the bylaws to prove that the company:
    • is established pursuant to Brazilian law;
    • has its headquarters and administration in the country; and
    • is also controlled by individuals resident in Brazil or another company also incorporated under Brazilian law with its headquarters in Brazil;
  • a declaration that the company is not prohibited from bidding or contracting with the government and that it has not been declared unfit or been penalised within two years by the forfeiture of any concession, permit or authorisation to provide telecoms services, or any radiofrequency authorisations;
  • evidence that the company has the necessary technical qualification to render properly the service that it wishes to provide;
  • evidence that the company is in good economic-financial standing; and
  • evidence of the company’s tax compliance, including good standing in the social security system.

Validity period and renewal

What is the validity period for licences/authorisations and what are the terms of renewal?

Authorisations to provide telecoms services are not subject to a fixed term; rather, they are terminated solely by disfranchisement, forfeiture, lapsing, waiver or annulment. According to the General Telecommunications Law, these are defined as follows:

  • Disfranchisement is the administrative act that withdraws the service authorisation based on the loss of the necessary conditions for its delivery or maintenance.
  • Forfeiture is the administrative act that withdraws the service authorisation based on critical violations, an irregular transfer of the authorisation or recurrent non-fulfilment of commitments undertaken to ANATEL.
  • Lapsing will be decreed by ANATEL by an administrative act if, by force of exceptional public significance, the rules prohibit the type of activity subject to the authorisation or otherwise cancel its exploitation under the private legal regime.
  • A waiver is a unilateral formal, irrevocable and unchangeable act by which the service provider manifests its lack of interest towards the authorisation.
  • The annulment of an authorisation will be decreed judicially or administratively in case of irreparable irregularity of the act causing its issuance.

Fees

What fees apply?

ANATEL charges up to approximately $3,000 to grant each service authorisation. After authorisation for the provision of a specific telecoms services has been granted, the company must also license its telecoms stations. The issue of a licence certificate for the operation of a station is subject to the payment of an installation inspection fee; once the station is licensed, the company must also pay an annual operating inspection fee. The fees vary according to the telecoms service for which the station is used.

Timeframe

What is the usual timeframe for obtaining a licence/authorisation?

ANATEL usually takes around three months to grant an authorisation once the application is filed with the agency. However, the incorporation of the company or companies and the preparation of the documents required by ANATEL may take longer. Therefore, in some cases the time to market may reach almost one year.

Network access and interconnection

Regulation

What rules, requirements and procedures govern network-to-network access and interconnection?

According to the General Telecommunications Law, the interconnection of networks used for the provision of telecoms service to the public is mandatory if they are functionally compatible. Interconnection must be provided on a non-discriminatory basis under adequate technical conditions and fair prices. If a party refuses to interconnect or establishes unreasonable conditions for providing interconnection to its network, the party seeking the interconnection can file a complaint with the National Telecommunications Agency (ANATEL), which has the legal power to arbitrate the conditions for interconnection. The conditions for the provision of interconnection are established in the General Interconnection Regulation, approved by ANATEL Resolution 410 (July 11 2005).

In 2012, ANATEL approved the General Plan of Competition Goals (Resolution 600) establishing a series of asymmetric regulatory measures on the wholesale market. Service providers with significant market power in the wholesale market may also be subject to one or more of the following asymmetric regulatory measures:

  • transparency;
  • isonomic and non-discriminatory treatment;
  • price control;
  • access to and provision of specific network resources;
  • obligations to provide wholesale products under the conditions specified by ANATEL;
  • obligations to correct specific market failures or to meet the applicable laws or regulations; and
  • accounting, functional or structural separation.

Since 2012 the following wholesale products have been regulated by ANATEL:

  • the wholesale supply of fixed-access network infrastructure for data transmission by means of copper pair or coaxial cable in transmission rates equal to or lower than 10 megabits per second (Mbps);
  • the wholesale supply of fixed network infrastructure for local and long-distance transportation of data transmission at rates equal to or lower than 34Mbps;
  • a passive infrastructure supply involving ducts, conduits, poles and towers;
  • the supply of call termination in mobile networks; and
  • mobile national roaming.

Pricing

Are access/interconnection prices subject to regulation?

Yes. Interconnection fees must be cost oriented and are subject to control by ANATEL.

Disputes

How are access/interconnection disputes resolved?

Any party can file a complaint with ANATEL, which as a first step will arrange a meeting and attempt conciliation. If conciliation is not possible, ANATEL will rule on the access or interconnection conditions. A party can also submit a dispute to the courts without previously complaining to ANATEL.

Next-generation access

Have any regulations or initiatives been introduced or proposed with respect to next-generation access?

In 2010, the executive branch launched the National Broadband Plan, aimed at the mass roll-out of broadband internet access in Brazil. So far, government initiatives have been directed at the provision of 1Mbps fixed access and the deployment of 4G mobile networks. In February 2017 the secretary of telecoms of the Ministry of Science, Technology, Innovation and Communications stated the National Broadband Plan was under review and that one of the main goals of the revised plan would be to increase the speed of fixed broadband access to 30Mbps.

On August 22 2017 the Ministry of Science, Technology, Innovation and Communications announced that a new decree from the executive branch with a revised public policy on telecommunications will be submitted to public consultation.

Infrastructure access

Land access

What rules and procedures govern telecoms operators’ access to land (both public and private) to install, maintain and repair infrastructure?

Providers of public interest services are obliged to share rights of way with telecoms services providers which offer services to the public on a non-discriminatory basis and under fair and reasonable price conditions.

Law 13116 (April 20 2015) guarantees to telecoms service operators that provide services to the public access to public ways, rights of way and other public assets in order to install, maintain and repair their telecoms infrastructure.

The concessionaire of a fixed telephone service may also request the president of the republic to declare in the public interest, under the public law regime, any real estate necessary to carry out the service for the purpose of expropriation or easement. If such declaration is given the concessionaire is responsible for implementing the measure and for the payment of indemnification and other expenses involved.

Infrastructure sharing

Are infrastructure sharing agreements among operators popular and/or encouraged by the regulatory authorities? Which infrastructure sharing structures/agreements are commonly used? Do any regulations apply?

According to the General Telecommunications Law, providers of public interest services are obliged to share poles, ducts, conduits and rights of way with telecoms services providers that provide services to the public on a non-discriminatory basis and under fair and reasonable price conditions.

In November 24 1999 the National Telecommunications Agency (ANATEL), the Brazilian Electricity Regulatory Agency and the National Agency of Petroleum, Natural Gas and Biofuels approved Joint Resolution 1, regulating the sharing of not only ducts, conduits, rights of way and poles, but also towers among providers in these different sectors.

Infrastructure sharing among telecoms service operators is regulated by ANATEL Resolution 274 (September 5 2001) which regulates the sharing of not only the infrastructure items mentioned in the General Telecommunications Law, but also towers.

In 2015 Congress passed Federal Law 13.116, expanding the infrastructure obligations established by the General Telecommunications Law. According to such law, both providers of telecoms and other services of public interest and tower companies are obliged to share infrastructure. Instead of listing the infrastructure items that must be shared, the law obliges companies to share the excess available capacity of any fixed physical means used to support the telecoms network.

Moreover, the law provides that telecoms service providers are obliged to share towers installed after May 5 2009 which are located less than 500 metres from one another.

At the end of 2016 ANATEL submitted for public consultation a revision of Resolution 274/2001 to adapt the resolution to the new legislation.

Infrastructure-sharing agreements are commonly used in Brazil and generally comprise other infrastructure items such as AC power and air conditioning.

Pricing and consumer protection

Retail pricing

What rules govern retail pricing for telecoms services?

Only retail prices charged by fixed telephone services concessionaires are controlled by the National Telecommunications Agency (ANATEL). The prices charged by holders of authorisations to provide fixed telephone service and all other services are freely established by service providers.

Consumer contracts

What rules govern consumer service contracts?

Consumer service contracts are subject to the general provisions of the Consumer Defence Code (approved by Federal Law 8.078, enacted on September 11 1990). On March 7 2014 ANATEL issued Resolution 632, which approved the General Regulations on Telecommunications Services Consumer Rights and established rules regarding customer care, billing and marketing for the four main telecoms services: fixed telephony, mobile telephony, data services (including broadband internet access) and pay television services.

Disclosure requirements

Are telecoms service providers bound by any consumer disclosure requirements?

According to the General Regulations on Telecommunications Services Consumer Rights, service providers are obliged to provide consumers with the following information before they enter into a service agreement:

  • applicable prices and tariffs, including promotional offerings;
  • promotional offerings’ periods;
  • price readjustment’ dates and conditions;
  • prices for acquisition, installation and maintenance of services and equipment;
  • service usage restrictions;
  • voice and data usage limits and conditions for additional usage;
  • minimum and average connection speeds;
  • availability of immediate service installation, activation and usage; and
  • service commitment periods and early termination fees.

Competition

Issues and concerns

Are there any particular competition issues or concerns in the domestic telecoms market?

In 2012 ANATEL approved the General Plan of Competition Goals (Resolution 600) establishing a series of asymmetric regulatory measures on the wholesale market.

At the end of 2016 the National Telecommunications Agency (ANATEL) submitted for public consultation a review of its General Plan of Competition Goals. According to the agency’s proposal, cities will be separated into four different groups according to their verified level of competition. The goal is to allow the agency to impose more severe asymmetric measures in cities with fewer competitors and to relax regulation in cities with fierce competition.

Sector-specific regulation

Do any sector-specific competition regulatory/legal provisions apply (eg, special conditions for dominant telecoms market players)?

According to the General Plan of Competition Goals (2012), service providers with significant market power in the wholesale market may also be subject to one or more of the following asymmetric regulatory measures:

  • transparency;
  • isonomic and non-discriminatory treatment;
  • price control;
  • access to and provision of specific network resources;
  • obligations to provide wholesale products under the conditions specified by ANATEL;
  • obligations to correct specific market failures or to meet the applicable laws or regulations; and
  • accounting, functional or structural separation.

Since 2012 the following wholesale products are regulated by ANATEL:

  • the wholesale supply of fixed-access network infrastructure for data transmission by means of copper pair or coaxial cable in transmission rates equal to or lower than 10 megabits per second (Mbps);
  • the wholesale supply of fixed network infrastructure for local and long-distance transportation of data transmission at rates equal to or lower than 34Mbps;
  • passive infrastructure supply involving ducts, conduits, poles and towers;
  • the supply of call termination in mobile networks; and
  • mobile national roaming.

Separation

Are there any requirements for structural, functional or accounting separation of operators’ activities?

Telecoms service providers must keep separate accounting records for each service they provide. According to the General Plan of Competition Goals, ANATEL also has the power to impose a structural or functional separation if it considers that this asymmetric measure is necessary to ensure competition in the wholesale market.

Spectrum

Allocation

What rules and procedures govern spectrum allocation?

In Brazil, spectrum is deemed to be public property and is managed by the National Telecommunications Agency (ANATEL), which is responsible for the allocation, distribution and destination of radiofrequencies in Brazil, whether used for the provision of telecoms or broadcasting services.

The use of radiofrequency on either exclusive or non-exclusive grounds depends on previous authorisation from ANATEL. Such authorisation is always linked to a concession, permit or authorisation to provide a determined telecoms or broadcast service.

A radiofrequency authorisation linked to a concession or permit to provide telecoms or broadcast services must have the same term of validity as the concession or permit to which it is linked.

A radiofrequency authorisation linked to an authorisation to provide telecoms or broadcast services can have a maximum term of validity of 20 years, extendable once for an equal term.

Fees

What fees apply to spectrum allocation/authorisation?

In order to use spectrum, interested parties must pay ANATEL the public price established in the agency’s regulations. The price is calculated based on:

  • the central frequency;
  • the bandwidth authorised;
  • the type of service provided; and
  • the area in which the frequency will be used.

If the frequency is granted through a bidding process, the price due for the use of such radiofrequency will be determined by the winning bid.

Transferral

Can spectrum licences be transferred, traded or sub-licensed?

Radiofrequency authorisations cannot be freely transferred, traded or sub-licensed. It is possible to transfer or trade a radiofrequency authorisation provided that the authorisation to provide telecoms services to which it is connected is transferred at the same time. On November 3 2016 ANATEL issued Resolution 671, approving the new Regulation on Spectrum Use. According to the new regulation, interested parties can celebrate RAN-sharing and spectrum-sharing agreements, subject to the agency’s approval.

Voice over Internet Protocol

Regulation

How is Voice over Internet Protocol (VoIP) regulated in your jurisdiction?

The National Telecommunications Agency (ANATEL) sees VoIP as a technology rather than a telecoms service. In this sense, it can be used in the provision of any telecoms service provided that the interested party follows the corresponding service regulations. Communication between two terminals connected to the Internet (for example, softphones or analogue telephone adaptors) is not considered to be a telecoms service and thus can be provided without prior authorisation from ANATEL.

Telephone numbers

Allocation

How are telephone numbers allocated in your jurisdiction?

The use of telephone number resources depends on previous authorisation from the National Telecommunications Agency (ANATEL), which is linked to a concession, permit or authorisation to provide a telecoms service. Only two services have numbering plans: fixed telephony and mobile telephony. Authorisations for the use of numbers for these two services are issued on a first come, first served basis and can be revoked if the provider does not use at least 80% of the requested resources within 18 months of issue.

Number portability

What rules govern telephone number portability?

All providers of fixed and mobile telephone services are obliged to offer their customers number portability. In fixed telephony, portability is guaranteed in four situations:

  • when the customer migrates to another fixed telephone service provider in the same local area;
  • when the customer moves to another premises in the same local area;
  • when the customer changes its service plan; and
  • when the customer has a non-geographic number and migrates to another fixed telephone service provider.

In mobile telephony, portability is guaranteed in two situations:

  • when the customer migrates to another mobile telephone service provider in the same home area; and
  • when the customer changes its service plan.

Portability is regulated by ANATEL Resolution 460 (March 19 2007), which approved the General Portability Regulation.

Privacy and data security

Net neutrality

What is your jurisdiction’s regulatory stance on net neutrality?

According to Federal Law 12.965, enacted on April 23 2014, known as the Brazilian Civil Rights Framework for the Internet, parties responsible for the transmission, switching or routing of internet traffic have a duty to process, on an isonomic basis, any data packages, regardless of their content, origin and destination, service, terminal or application. Discrimination or degradation of traffic can result only from:

  • technical requirements essential to the adequate provision of services and applications; and
  • prioritisation of emergency services.

On May 11 2016 the president of the republic issued Decree 8.771 regulating the circumstances in which discrimination or degradation can occur.

Encryption

Are there regulations or restrictions on encryption of communications?

No regulations or restrictions apply to the type of encryption that can be used by telecoms service providers.

Data retention

Are telecoms operators bound by any rules or requirements on the retention of consumer communications data? If so, for how long must data be retained?

Yes. Telecoms service providers must retain copies of the call detail records, customer bills and clients’ personal information for five years.

Government interception/retention

What rules and procedures govern the authorities’ interception of communications and access to consumer communications data?

All telecoms service providers must guarantee the secrecy of their clients’ communications and must apply all means and technologies available to protect this right. However, on a court order telecoms service providers must also suspend the secrecy of clients’ communications.

Data security obligations

What are telecoms operators’ general data security obligations to consumers?

Telecoms operators must guarantee the secrecy of their clients’ communications. Moreover, providers may not utilise information regarding the individual use of telecoms services by users, except for the performance of their own activities. The disclosure of individual information depends on the user’s express and specific approval. However, a service provider may disclose aggregate information on the use of its service to third parties provided that it does not allow direct or indirect identification of the user, or the violation of his or her privacy.