 | Issue: | Latin America IV 1998 |
| Article no.: | 14 | |
| Topic: | Telecommunications in Brazil: The Day After | |
| Author: | Silvia Maria Ribeiro Lopez | |
| Title: | Associate Lawyer | |
| Organisation: | Azevedo Sodre Advogados, Brazil | |
| PDF size: | 20KB |
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Article abstract
One of the greatest events in the history of Brazil is the privatisation of the telecommunications sector. The Implication of the changes brought about by the privatisation, stretches far beyond the Brazilian boarder. Brazil not only is in a good position to successfully achieve the goals established such as universal access and competitiveness, but is also repositioning its international role as evident by the election of the first Brazilian to occupy the post of Deputy Secretary-General of the International Telecommunication Union.
Full Article
One of the greatest events in the history of Brazil is the privatisation of the telecommunications sector, marking the end of the monopoly of the state-owned company, Telebras. The sale of the twelve holding companies (originated from the spin-off of the giant Telebras), totalled US$19 billion dollars, which is the largest and one of the most successful industry privatisations in the world in 1998. The day of the public auction, July 29th, 1998, ought to be considered, not as the final day of the restructuring process of the telecommunication sector, but as the beginning of a new era, where competitiveness and liberalisation play important roles. In order to fully understand the implications of the events leading up to the auction, one ought to analyse the regulatory environment prior to and after the auction date. A number of measures such as; the reform of the legislation, the introduction of new concepts like competitiveness and universal access, the creation of the National Telecommunication Regulatory Agency (ANATEL), the privatisation of Telebras, have led to a permanent change in the telecommunications sector. New Telecommunications Law The first move towards changing the Brazilian regulatory framework was the issuance of Law 9.295, which regulates the entry of competitiveness in the area of cellular telephony. This was followed by the issuance of the new Telecommunication Law, Law 9.472 of July 16th, 1997, introducing a number of modern principles in the sector outlining the legal steps to its privatisation. The Act has been complemented by the ‘Plano Geral the Outorgas’ (Decree 2.534 of April 2nd, 1998), dividing the Brazilian territory into regions and by the ‘Plano Geral de Metas para a Universalizacao dos Servicos de Telecomunicacoes Prestados no Regime Publico’ (Decree 2.592 of May 15th, 1998), which outlines the rules neccessary to achieve universal access. The creation of ANATEL has played an important role in the development and the supervision of the sector after privatisation took place. From a State Monopoly to a Competitive Market One cannot imagine the full impact of the changes, which have been implemented in Brazil over the last years prior to the privatisation. The decision to privatise the sector has brought new investments (the government has invested US$7 billion in 1996 and 1997) to the sector and modified relationships among the companies. Previously, Telebras was a holding company controlled by the federal government, consisting of local operators. The relationship between these operators were regulated by the parent company. In effect this meant that the operators, although being individual companies, were unable to regulate matters such as interconnection between their network, the use of new technology developed by Telebras’ Centre of Research and Technology (CPqD), the use of each others network, or even to regulate the rendering of some services among themselves. In response to this situation, the contractors launched a campaign, collecting more than 1000 signatures, demanding that the above issues should be regulated as part of the process of preparing for a situation in which these companies would have different owners. As private operators belonging to different owners, each company will develop its own management strategy under the supervision of ANATEL. It is necessary for private operators to develop new forms of cohabitation now that the monopoly is broken and Telebras is no longer the regulator. The Brazilian telecommunications sector is entering a new era, creating a number of challenges. The way in which these challenges are met will determine the success of any future set up. Centre for Research and Development The CPqD has been transformed into a private foundation. This centre was responsible for the development of new technologies, used by all the local operators. As a department of Telebras, it was financed by the system (1% of Telebras budget was enough to maintain the structure of the centre). Now as a foundation, it has to intensify its partnership with the private sector in order to guarantee its own financial means. Another problem this centre is going to face is the competition from research centres and the development of multinational companies by the new owners of the operators. At the moment, the income is guaranteed by the contracts signed with the local operators, upon their completion in three years time. Competitiveness The first step towards the introduction of competitiveness in the telecommunications sector, was the issuance of Law 9.295/96 and the opening of the bid process for the B-Band concessions for cellular telephony. The country was divided into ten operating areas, whose licenses were acquired by the private sector. The B-Band owners from the private sector began to compete with the public local operators of the Telebras system for the rendering of services of cellular telephony. At first, the operators of the Telebras System were responsible for the rendering of both fixed and cellular telephone services. In January 1998 these operators were divided by the spin-offs into fixed line companies and cellular phone companies (the A-Band), all belonging to the government. The A-Band licenses were also granted according to the ten areas in which Brazil was divided. The second step was the division of the Brazilian territory into three areas for the rendering of fixed telephone services (local calls and national intra-region long distance calls). Another national area for the rendering of national and international long distance services was established in Decree 2.534/98. The next step is going to be accomplished by the ‘mirror companies’. They are the companies which will be receiving licenses to render services in the same area as the three fixed line companies and the long distance company, which were all sold in the public bid. The invitation to bid has already been published and the public sale of these licenses is set forth for January 15th 1999. The granting of these new licenses will establish two companies rendering the same type of services in each region and the consumers will have the chance to choose between the two. In the State of Sao Paulo for example, the B-Band operator has announced that there is no longer a waiting list for the purchase of cellular phones and the competition between the two companies (A-Band and B-Band), which render the services in Sao Paulo, has begun, as observed by the advertisements in the media. Universal Access According to Decree 2.592 of May 15th, 1998 which set forth the rules of universal access to the concessionaires of fixed telephony, universal access shall be understood as “the access of every person or institution, independently of its location or social-economical condition, to the fixed line telephone service, which is designated to the use of the general public.” This Decree establishes the number of fixed line telephones and of public telephones, which shall be installed in each Brazilian Federation Unit until the year 2001. The cost of these installations shall be covered by each of the concessionaires (now privatised) and the goals that each concessionaire shall achieve are established, in detail, in the Concession Agreement. Besides these goals, the concessionaires shall begin the rendering of the fixed line telephone service, with individual access, as follows: · until December 31st, 2001 in every location with more than 1,000 habitants; · until December 31st, 2003 in every location with more than 600 habitants; and, · until December 31st, 2005 in every location with more than 300 habitants. They also have to comply with the request of individual access, in the locations where these services are already available, according to the following deadlines: · from December 31st 2001 on, in four weeks; · from December 31st 2002 on, in three weeks; · from December 31st 2003 on, in two weeks; and, · from December 31st 2004 on, in . one week. These deadlines appear to be realistic. In countries like the US, Germany or UK, a request for a telephone line is complied with in less than three days. However, for a country like Brazil, it will mean a lot of effort, since the waiting list for Sao Paulo (one of the most developed states of the Federal Republic of Brazil), for example, can leave people waiting for more than two years. As a consequences of this situation, there was a growth in the black market for telephone lines, where the price of a telephone line has reached, in some periods and in some areas of the city, the amount ofUS$5,000. The price for a telephone in the black market has come down to around US$1,500 now that the companies have been privatised. These regulations also ensure that, if any concessionaire demonstrates, in any time, the compliance; with every individual request for telephone access in four weeks until December 31st 2001, they will be released from the goals set forth in their respective concession agreements. The Role of ANATEL ANATEL was created by Law 9.472/97 and is regulated by Decree 2.338 of October 7th, 1997. This regulatory body was created as an autarchy having as main characteristics: administrative independence, financial autonomy, absence of hierarchic subordination, as well as stability of its management. These characteristics give the Agency the necessary autonomy to develop its competencies without any commitment. Among the competencies of the Agency are: · the implementation of the national telecommunications policy; · the representation of Brazil in international telecommunication organisations and bodies, under the co-ordination of the executive power; · the exercise of the legislative power in respect to the telecommunications ruling; · the review, periodically, of the rules to universal access; · the issuance or the extinction of the concession to the rendering of telecommunication services in public regime; and, · the signature and the management of the concession agreements and the supervision of the rendering of telecommunications services in public regime, applying the sanctions and making the necessary intervention. ANATEL has also developed important regulations such as: the rules for interconnection of networks, the selection of providers and line expansion targets, among others. The Agency is also representing Brazil in several international organisations, such as in the International Telecommunication Union (ITU), and conducted a fantastic demonstration of its expertise in the recent Plenipotentiary Conference in October. The expertise came with the Counsels of the Agency, who together have years of experience in the telecommunications sector, not only in Brazil, but also in some international organisations. International Stature As a result of these factors (the development of the regulation of the sector, the privatisation of the State Monopoly, the creation of an independent regulatory body), Brazil is in a good position to successfully achieve the goals established, such as universal access and competitiveness. The implication of these changes stretches far beyond the Brazilian border, having repositioned the international role of the country, evident in the election of Mr. Roberto Blois, the first Brazilian to occupy the post of Deputy Secretary-General of the International Telecommunication Union (ITU). Conclusion Brazil will be presently occupying, for the first time, one of the most important posts of this Union in the international arena, and so will be able to share with others the expertise acquired in the transition period.
