Buoying BrOI: ANATEL Sessions on Concession Progression

BrOI. Source: Convergência Digital. Merger requires overhaul of federal regulation of broadcast concessions. Expect a human cockfight, with eye-gouging and ear-biting, over the issue.

DCI: Comércio, Indústria & Serviços (Brazil), a fine little business daily here, evaluates the strategic outlook for changes to the regulatory framework for “digital convergence” here in Brazil.

File this under “things I do not yet understand very well, but am trying to.”

Maybe the report will reach some reader who does have a better idea of what all of this signifies.

The PGO, the federal “general plan of [broadcast] concessions,” must be amended in order for the merger between Brasil Telecom and Oi (ex-Telemar) to go through. Currently, no two regional telephone operators may merge (much as no two Baby Bells were allowed to merge after the break-up of AT&T — at least for a while there).

See also

• CartaCapital: No Joy Over BrOI
• BrOI: Done (Potential) Deal
• BrOI: Material Events
• Non-Event of the Month: BrT-Oi Merger?
• What’s Cooking at Anatel? Time Will Tell

Telecoms will increase pressure against new concession plan

Victor Hugo Alves

SÃO PAULO – The chilly silence of fixed-line telephone operators like Telefônica, Oi (ex-Telemar), Embratel and Brasil Telecom during the first public hearing on the Plano Geral de Outorgas (”general concession plan,” or PGO), held in Brasília … will not last. The telecoms are starting to compare notes on their questions and criticisms about the policy. These should start to be voiced in the next public hearing, scheduled for July 7 in São Paulo, where the telecoms will exprss their opposition to certain provisions of the PGO in a bid to overturn the rule requiring fixed telephony and broadband operations to be carried on by distinct companies.

Another important fact is that after receiving many petitions on the subject, the National telecommunications Agency (Anatel) has put the issue of extending the period of pubic comment on the PGO on the agenda for its meeting today. According to a source close to the matter, the Anatel board will likely grant the extension, the only question being whether the extension will be for 15 or 30 days. “The tendency points to an extension of the period for public consultations. It’s just a matter of whether they will extend it for 15 or 30 days”. With an extension of the comment period, new public hearings should be scheduled on issues not yet taken up, such as the situation of the Brazilian South, a topic all of the Anatel advisory board members would like to see debated.

Plan of Attack

The chilly silence heard loud and clear in Brasilia should not be repeated in São Paulo. The strategy of the telecoms called for using the Brasília hearing to get an idea of how deep the debate over the PGO was really going to be, scouting the terrain before deciding how to position their forces. They listened carefull to Anatel’s explanations of the proposed changes to the PGO in order to get a sense of what the regulator’s real view of the matter is, and what its principal arguments will be.

Nevertheless, after the first hearing, and especially afte Anatel released all its documents and internal deliberations on the amended PGO, the fixed-telephone concessionaires began preparing their counterargumentts and objections for the Sâo Paulo hearing on July 7. “Their position will tend to get more intense from here on out. As soon as they get started with their analysis, they will be able to present a more consistent opinion. Besides the Anatel ocuments, the telecoms also got a better sense of what Anatel wants, and will now be able to take a more concrete stance”, says Eduardo Tude, a consultant at Portal Teleco.

Confab With the Advisory Board

Yesterday, Anatel commissioner Pedro Jaime Ziller meet with members of the Anatel advisory boar to present and explain the PGO amendments. There is, however, no in-depth studies were presented to back the claim that separating the two lines of business — fixed-line telephony and broadband — will really result in more competition without causing fee increases,which made members of the advisory board uneasy.

The advisory board is made up of representatives from the industry, the government, and civil society.

I would imagine, given that contentious mixture, that advisory board members who are not industry lobbyists might not be quite so appalled. If you really want to do serious Kremlinology on the prospects of this policy initiative, you should probably pay attention to the diversity of opinion there.

This suggest there may be an opening for the telecoms to make headway against the provision. “If there are no detailed studies to show that this will be the outcome, well, that complicates things. The telecoms will bring heavy pressure and may be able to get this provision withdrawn”, said Vilson Vedana, president of the Anatel advisory board. “The explanations offered were weak, lack internal consistency and produce a climate of uncertainty”, said advisory board member José Zunga.

Ziller said the separation will increase neither the tax burden nor user fees, as the telecoms claim, because the ICMS tax is collected from the final product and not from the renting of networks by one company from another.

Another opening for the fixed-line telecoms is the question of whether the definition of a “telecommunications group” is legally valid. The companies feel it is incorrect to regulate in this area, since in their view, different companies in the same group may have different corporate structures and different shareholders, which means they do not necessarily follow a unified strategy.

The fact that the draft amendments to the PGO that were published for comment were the not the same text reviewed by Anatel’s legal counsel will provide the telecoms with another point of attack, since Anatel will not be able to defend all of the provisions published in this current draft based on arguments from counsel. According to a source, the telecoms are complaining that the text of the amendments was reviewed by Anatel counsel without first being amended, and without the office of counsel undertaking a formal review.
Delay

As DCI predicted, Bill No. 29 was removed from the agenda of the Science and Technology Committee in the lower house of the Brazilian congress at the request of its sponsor, Jorge Bittar (PT-RJ), opening the way for possible amendments.