| BRAZIL'S PLAN FOR GRANTING FIXED TELEPHONY CONCESSIONS AND AUTHORIZATIONS. J. Paul Groom The recently established Brazilian telecommunications regulatory agency, the Agência Nacional de Telecomunicações, ( "Anatel" ), published its "General Plan for Grants" ( "the Plan" ) on December 4th. This document, Consulta Pública # 002/97, provides draft regulations governing the granting of fixed telephony concessions and authorizations. A thirty-day period is allowed for interested parties to review the regulations and provide comments. This memo is not a translation, and is intended only as a digest of the Plan's principal provisions. COMMENTARY Definition of "public and private regimes" The General Telecommunications Law provides for a distinction between public and private Telecommunications services. In Article 3 of the Plan it is clear that fixed telephony will be the only services that may shall be characterized as public. Geographical Considerations The Plan divides Brazilian Territory into three Regions, ( see Annex 1 ) and the three regions into thirty-four sectors ( see Annex 2 ). Transfer of Concessions Note 7 below, when read in conjunction with Article 202 para. 2, and Article 209 of the General Law suggests that Anatel will encourage the purchase of the few non-Telebrás Group fixed telephony operators by the groups purchasing the Telebrás concessions. Time Limits until Competition The most important objective of the Plan is to give the newly privatized fixed telephony concession holders until December 31st 2002, or under certain circumstances December 31st 2001 before competition for their basic services will be allowed. However, the fixed telephony operators are similarly restricted from receiving authorizations to operate new services until December 31st 2003 or under certain circumstances December 31st 2001 . Thus, the "immediate opening of competition" would appear to suggest a somewhat dilatory definition of "immediate". The only event that could happen quickly could be the immediate opening of bids to operate services competing with those of the existing fixed telephony provider, but there will be no fixed telephony competition until January 1st 2002 at the earliest. It should be remembered that most authorizations will be awarded after competitive bid. Foreign Ownership Using Article 18, sole paragraph of the General Telecommunications Law as its authority the Plan states that there will be limits to foreign capital without specifying what those limits might be. THE PLAN Definitions ·Fixed telephony is defined as "The telecommunications service for the transmission of voice and other sounds used for communication between determined fixed points". ·Fixed telephony service may be classified as local and long distance, and long distance may be classified as "within Brazil" and international. ·Included in the definition of "fixed telephony" are the expansion and operation of trunks, networks and switches necessary for the functioning of fixed telephony as well as the third party use of the telecommunications infrastructure associated with fixed telephony. Provisions 1. For the purposes of these regulations Brazil will be divided into three regions, as defined in Annex 1. 2. The three Regions will be divided into thirty four sectors as defined in Annex 2. 3. Existing providers of fixed telephony will have no rights to exclusivity of service or area. 4. Owners of the international and "within Brazil" long distance concession, currently Embratel, will not be allowed to own a direct or indirect controlling interest in companies operating in other areas of the General Plan of Grants. 5. The Plan defines the services of local, and long distance within a specific sector, ( one concession per service ) that will be granted to existing fixed telephony providers. 6. Within the same Region concessionaires that were subject to the same company control may provide long distance service within its geographic area ( sector ) of service provision. 7. After privatization of the Telebrás group, the transfer of concessions, or of shareholder control will only be permitted if it promotes the compatibility of the geographic operating areas and the consolidation of company control within a Region. 8. The privatization of the Telebrás group implies the immediate opening of competition for fixed telephony obliging Anatel to expedite: I. A private authorization to provide long distance service throughout Brazil and internationally. II. A private authorization to provide, local and long distance service within each Region. 1. Starting on December 31st 2001 there will cease to be a limit to the number of fixed telephony service providers. 2. The provision of service under new authorizations will be allowed only after 31st December 2002 or 31st December 2001 if the entity authorized has completely accomplished obligations of expansion and service that according to its agreement arising from the bid, it must accomplish prior to 31st of December 2002. 3. The provision of new service authorizations to certain existing providers of fixed telephony will be allowed only after 31st December 2003 or 31st December 2001 if all of the concessionaires within the Region have completely accomplished the obligations of universality and expansion that, according to the concession contract, must be accomplished prior to 31st December 2003. 4. A holder of an authorization that controls, or is controlled by, or is a subsidiary of, or is associated with a concessionaire does not have the right to provide the same services as the concessionaire in the same Region. 5. Concessions, authorizations and permissions may only be provided to companies constituted under Brazilian laws with a limit to foreign capital as authorized by Article 18, sole paragraph of the General telecommunications Law. 6. Anatel, in compliance with the principles of universality and competition, may provide for bids in specific areas for concessions for fixed telephony service, prior to 31st December 2001, that may not be provided by the existing operator. ANEXO I The General Grant Plan: REGIONS
ANEXO II The General Grant Plan: SECTOR
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