Communications: regulation and outsourcing in Brazil: overview

A Q&A guide to communications regulation and outsourcing law in Brazil.

The Q&A gives a high level overview of communications law, including authorisation and licensing, universal service obligations, spectrum use, access and interconnection, data protection and security, price regulation, subscriber management, and outsourcing and telecommunications.

To compare answers across multiple jurisdictions, visit the Communications: Regulation and Outsourcing Country Q&A tool.

This Q&A is part of the Communications: Regulation and Outsourcing Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/communications-guide.

Contents

The telecommunications market

1. Give a brief overview of the structure of the telecommunications market in your jurisdiction. Briefly set out any major recent developments, such as mergers and acquisitions, restructurings and insolvencies.

Market structure

The Brazilian telecommunications market has changed radically over the last 18 years. In 1997, Law 9,472 (the General Telecommunications Law) came into force and since then almost all public telecommunications operators have been fully privatised. Brazil now has robust and detailed sector-specific regulation. The National Telecommunications Agency (Anatel) does not limit itself to fixing prices, assuring quality and universality goals and establishing market policies, but also has the objective of promoting and guaranteeing free competition, accomplished with the Administrative Council for Economic Defence (CADE). The reality of the market, however, reveals a concentration in large conglomerates of multiple scopes, that is, local incumbent operators currently providing fixed switched telephony, mobile telephony, broadband and pay-TV services, resulting in a high level of market verticalisation/concentration. On the other hand, new generation networks (NGNs), including M2M, OTTs and IoT, which provide services over internet platforms and are classified as value-added services, are outside regulatory control, and the market in NGNs is consequently more competitive.

However, telecom operators strongly criticise the lack of regulation of over-the-top content providers (OTTs) on the basis that OTTs use their broadband infrastructure without any fees. OTTS are also not liable to pay for the upgrades to network infrastructure needed to cope with the increase in internet traffic. In response to this, the National Agency of Cinema (Ancine) and Anatel are reviewing the regulatory framework, with a view to mitigating the conflict between, and balancing the interests of, OTTs and telecoms. Ancine is considering a new regulatory framework for VoD (video-on-demand), either cable VoD or OTTs, which will include:

  • The imposition of specific quotas that require a certain proportion of content catalogue to be made in Brazil.

  • The levying of a cash contribution, known as the Contribution for the Development of the National Cinema Industry (Condecine).

Anatel is still trying to formulate its strategy for tackling the challenges raised by OTTs, which may include establishing an interconnection regulation.

The government is looking to reform the current telecoms concession model with the aim of promoting fixed and mobile broadband services over fixed switched telecommunications service (FSTS). On 8 April 2016 the Ministry of Communications enacted Ruling 1,455 on the redesign of the regulatory framework. The ruling recognises internet access as essential to the exercise of citizenship and the implementing regulation will focus on the expansion of broadband infrastructure and coverage to rural areas. The current FSTS concession model, where the government sets tariffs, continuity obligations, and universalisation targets, will expire in 2025, and the Ministry of Communications proposes to replace it with a private regime. The National Congress is expected to approve a Bill (PL 3,453/2015) in the first half of 2017, that provides for this, together with several other amendments to the General Telecommunications Law. The most controversial aspect of the Bill is the possibility that telecoms operators' reversionary assets (such as equipment and infrastructure) will be converted into investment commitments in 2025 when the current FSTS model expires.

 

Recent developments

At the end of 2015, CADE approved an infrastructure sharing agreement entered into by TIM Celular S.A, Telefonica Brasil, and Intelig Telecomunicacoes Ltda, to facilitate compliance with the regulatory goals relating to coverage and services in rural areas.

In January 2016 CADE imposed a fine on Cisco Systems Inc. and Technicolor SA to the amount of BRL30 million for gun jumping, that is completing a transaction which required obligatory notification before receiving CADE approval. This is expressly forbidden by the Antitrust Act (Law 12,529/2011). It was one of the highest fines imposed by the CADE in any gun jumping case.

On 29 June 2016, Oi Group (a Brazilian telecommunications group) filed an application for judicial reorganisation (Law of Bankruptcy and Judicial Reorganization (Law 11,101/2005))to be approved by the State Court of Rio de Janeiro. The judicial reorganisation involves the following companies:

  • Oi S.A.

  • Telemar Norte Leste.

  • Oi Movel S.A.

  • Copart 4 Participacoes S.A.

  • Portugal Telecom International Finance B.V.

  • Oi Brasil Holdings Cooperatief U.A.

The total amount of the debt is BRL 65.4 billion and the debt with the National Telecommunications Agency (Anatel) is in the amount of BRL20.2 billion. Before the judicial reorganization, Oi and Anatel had already entered into a Term for Adjustment of Conduct (TAC) which, outlined the conversion of BRL3 billion of debt with Anatel into investments in its own network infrastructure.

The TAC still needs to be approved by the Brazilian Account Audit Court and the Public Prosecutor's Office.

The acquisition of DirectTV/SKY by AT&T may be blocked by Anatel and the CADE. According to the Pay TV Law (Law 12,485/2011), telecommunication companies cannot singularly own more than a 30% shareholding in any Brazilian broadcasting company or any producer or programmer. Therefore AT&T may have to offer its shares in SKY to Brazilians Pay TV groups.

 

Restrictions on foreign ownership

2. Are there any restrictions on foreign companies entering the telecommunications market in your jurisdiction?

In general, there are no restrictions on foreign capital in the telecoms sector. However, Decree 2,617/1998 requires that companies licensed to deliver telecommunications services must be:

  • Organised under Brazilian laws.

  • Headquartered and administered in Brazil.

  • Majority owned by individuals or companies also domiciled and headquartered in Brazil. The rules are different in the broadcasting market. At least 70% of the ownership of radio and TV broadcasting companies is restricted to native Brazilians or persons who have been naturalised Brazilians for more than ten years, and must be responsible for the company management and programming policy. In addition, foreign ownership in broadcasting companies' stocks cannot exceed 30% of the total voting capital of these companies, and can only occur indirectly by means of a legal entity organised under Brazilian laws and based in Brazil.

 

Regulatory framework

Legislation and regulatory authorities

3. Give a brief overview of the regulatory framework for telecommunications in your jurisdiction. Which authorities regulate telecommunications services in your jurisdiction? Is there a separate regulator for competition law issues in this sector?

Regulatory framework

The telecoms sector is based on the General Telecommunications Law. It sets out that the executive branch of government is responsible for establishing telecoms policy. Anatel is in charge of implementing such policy by regulating and supervising the sector. The General Telecommunications Law establishes that the telecoms policy must have as its main objectives universalisation and competition in public telecommunications services. Broadcasting services are regulated under Law 4,117/1962 (Telecommunications Code) and the policy is developed by the Communications Ministry jointly with the National Congress. Anatel has no authority over broadcasters except with regard to the technical aspects of radio frequency use and equipment compliance. The policy guidelines for the broadcasting sector are established by the Federal Constitution, and include fostering the national and regional culture and independent production, regarding ethical, social and family values, and preference for educational, cultural and informative content. Audio visual content (in terms of registration of audio visual works and implementation of government policies for development of the national cinematographic sector) is regulated by the National Cinema Agency (Ancine).

Regulatory authorities

Telecommunications services are regulated and supervised by Anatel, which is responsible for implementing the national telecoms policy and for carrying on most administrative activities relating to telecoms service providers. Broadcasting services are subject to control by the Ministry of Communications.

All companies that deliver any telecommunications services, as well as radio and television broadcasting, are subject to the general legislation regarding prevention and repression of violations of the economic order, especially Law 12,529/2011 (the Anti-trust Act). Thus, all acts of concentration or that may imply a violation of such laws must be submitted to the Administrative Council for Economic Defence (CADE). Anatel provides analysis to CADE on competition elements under the regulatory framework.

 

Authorisation and licences

4. What notification, authorisation and licences are required to provide telecommunications services? What is the licence application procedure and fee?

Telecoms services can be provided under a public or private regime. Under the public regime, telecoms services are only granted by Anatel through concession or permit (in specific situations). Under the private regime, communications services are granted by authorisation.

A telecoms service licence can only be granted to a company organised and existing under Brazilian law. Its head office must be in Brazil and it must have the corporate purpose of providing telecommunications services. Anatel requires certain conditions to be fulfilled for a licence to be granted, such as:

  • Presentation of a technical project.

  • Evidence that the company has the capacity to contract with it.

  • Evidence that the company is properly qualified to provide the services.

There is no exclusivity for telecoms services. Applying for more than one of the same kind of service licence in coinciding geographic areas is prohibited. The telecommunications service provider (or its affiliate) cannot hold more than one licence for the same service in the same area. Concessions and authorisations can be transferred only with Anatel's prior approval and by meeting the following requirements:

  • The service has been rendered for at least three years.

  • The concession conditions have been fulfilled (tax, technical, financial regularity and so on).

  • The competition is warranted in the market.

Transferring authorisations is subject to the same rules applicable to transferring concessions. Other modifications to licences are, in general, not possible. Concessions are usually granted through a bidding process.

Authorisation to provide a telecoms service is subject to the payment of a fee of BRL 9,000 for most services, such as mobile services and fixed switched telephone services. For data services, such as multimedia communications services, the fee is BRL400.

Mobile services are delivered under private regimes and Anatel's authorisation is granted by bidding processes, including the right to use the necessary radio frequencies.

To deliver satellite services, a licence must be granted to exploit Brazilian or foreign satellites. For Brazilian satellites, the right to exploit includes an orbit occupation right and right to use radio frequencies for controlling and monitoring telecommunications. The licence can only be obtained via a bidding process. Foreign satellites can be operated in Brazil through a licence granted to a local and legal representative. The licence to exploit foreign satellites authorises the provision of foreign satellite capacity in Brazil and the use of associated radio frequencies. The exploitation licence is granted for 15 years, extendable for a further 15 years.

 
5. How long does a telecommunications licence typically last and what are the usual conditions attached to it? Can conditions be varied? Are licences available for public inspection?

The duration of concessions may last up to 20 years, renewable once for the same term, provided the concessionaire has fulfilled all the conditions of the prior agreement and paid the additional amount for the extended term. Authorisations, in general, will not be subject to a final term and there are no limitations on the number of grants. They can only be terminated by cessation, forfeiture, resignation or repeal.

Authorisation to provide mobile services gives the right to use the necessary radio frequencies for 15 years and is renewable once for a further 15-year period. The terms and conditions vary according to the type of licence.

All licences granted are available for public consultation on Anatel's website (www.anatel.gov.br).

 

Penalties for non-compliance

6. What are the consequences of non-compliance with the telecommunications regulations?

If a provider fails to observe its duties under a concession contract, permit, service authorisation or authorisation for use of radio frequency, it can be subject to intervention by Anatel, and, depending on the case, to the sanctions of admonition, fine, temporary suspension, forfeiture, and declaration of unfitness, in addition to other penalties of civil or penal nature, which may be applied by the Brazilian administrative and/or judicial courts. The General Telecommunications Law also sets out the crime to illegally provide telecoms services. The penalty is imprisonment for two to four years, increased by half if the harm affects third parties, and a fine of BRL10,000.

 

Appeals

7. Can decisions of the regulators be appealed and on what grounds?

Under the General Telecommunications Law, no sanction can be applied without an opportunity to provide a defence. Administrative decisions rendered by Anatel's Superintendence can be appealed before Anatel's board of directors. If sentenced, the defendant company has the right to appeal to a federal judicial court by filing a writ of mandamus or other more suitable type of judicial lawsuit, on the grounds of illegality or unquestionable right.

 

Universal service obligations

8. Is the incumbent provider or other large providers with significant market power subject to specific regulations? Do universal service obligations apply? Are there provisions for the structural separation of a network?

In 2012, Anatel issued the general competition plan to identify groups with significant market power (SMP) and create solutions through regulatory means, including measures for transparency, equal treatment, price control and access obligations, among others. At the first stage, SMP groups have to run public offers for infrastructure sharing, but at the same time, they have a "regulatory holiday" of nine years for fiber optical infrastructure sharing, with the purpose of increasing their own investment in higher speed networks. All public service concessionaires must comply with both the universal access and continuity obligations which are periodically reviewed by Anatel. If a concessionaire violates these obligations it will suffer a fine, forfeit or intervention decree, as appropriate. Since fixed switched telephone services are the only services delivered under the public regime, they are the only services subject to compliance with universal access and continuity obligations.

The General Universalisation Goals Plan (Decree 7,512/2011) establishes the universal access and services goals for fixed switched telephone service (FSTS) incumbents for 2011 to 2015. It provides that in locations with more than 300 inhabitants, the FSTS must be installed with individual access. The plan also sets out that for every 1,000 inhabitants, operators must install four public telephones.

Any operator subject to these obligations must finance them themselves. A fund was set up to assist with the costs involved in complying with universal access, called the Universalisation Fund for Telecommunications Services (FUST).

A new General Universalisation Goals Plan for the 2016 to 2020 period was approved in December 2016 which is in accordance with the proposed reform of the telecommunications regulatory framework, but its publication depends on the presidential approval of PL 3,453/2015.

 

General conditions

9. What general conditions apply to telecommunications services? Which other regulations must be complied with?

A telecommunication service licence can only be granted to companies organised and existing under Brazilian law and which have their principal place of business and administration in Brazil and having been created to exploit such services. Licensees that do not satisfy these requirements will be subject to the commitment of adapting themselves or setting up a new company that complies with such requirements prior to the execution of the concession contract or the authorisation or permission term. The General Telecommunications Law determines that any company or holding company granted a concession that already renders, in the same geographical area, the same type of service subject to a bidding procedure will be obliged to transfer the service previously rendered to a third party within 18 months from the execution date of the concession agreement. Failure to observe this provision can result in forfeiture of the licence, as well as other sanctions set out in the grant procedure.

Anatel's Resolution 73/1998, which approves the Telecommunications Services Regulation, establishes that telecoms companies must keep separate accounting registers for each service they provide. They must also provide to Anatel all information concerning their operations, corporate changes, supply contracts and agreements entered into with other operators. In addition, telecoms companies must comply with the general conditions established by Anatel for each licensed service, such as accessibility and quality goals. The following regulations apply:

  • Personal mobile service. General regulation provided by Resolution 477/2007 and quality regulation provided by Resolution 575/2011.

  • Fixed switch telephone service.General regulation provided by Resolution 426/2005 and quality regulation provided by Resolution 605/2012.

  • Multimedia communication service (fixed broadband). General regulation provided by Resolution 614/2013 and quality regulation provided by Resolution 574/2011.

  • Pay-TV service. General rules provided by Law 12,485/2011 regulated by Anatel through Resolution 581/2012 and quality regulation provided by Resolution 411/2005.

 

Spectrum use

10. Which authorities allocate spectrum use and how is it managed?

The General Telecommunications Law provides that spectrum is a public asset managed by Anatel. Anatel is also responsible for:

  • Preventing damaging interference and maximising its economic use.

  • Altering the destination of frequency bands and all the characteristics and technical requirements of its use, to serve the public interest.

  • Cancelling authorisations or imposing new obligations on telecommunications service providers.

Some radio frequency bands are designated for certain telecommunications services, such as fixed switched telephone services or mobile services. Because of this, spectrum licences can only be granted to companies that exploit the same telecommunications services assigned on the bands. The fee for spectrum licences varies depending on whether there is a bidding process. If not, Anatel Resolution 387/2004, which regulates the public price for the use of radio frequencies, will apply the appropriate fee. The fee depends on various things such as geographical area, bandwidth and duration. If there is a bid for the spectrum, then the highest offer will be the price to be paid by the interested party.

 
11. Can spectrum use be traded or sublicensed?

Under the General Telecommunications Law, authorisations granted by Anatel are not tradeable without its permission and are regulated by specific laws. Instead, they are subject to analysis, when appropriate, by the Administrative Council for Economic Defence (CADE), the Brazilian anti-trust agency, when appropriate. Anatel expressly states that the licensed spectrum can only be transferred with the corresponding telecoms service licence.

 

Infrastructure and network management

12. Do communications providers have any powers to place their equipment on third party sites?

Law 13,116/2015, known as the General Antenna Law, requires a licence to place infrastructure and telecommunication networks in urban areas. A licence must be based on the following principles:

  • Reasonableness and proportionality.

  • Efficiency and speed.

  • Integration between the activities of supporting infrastructure deployment and urbanisation.

  • Reducing the landscape impact of the telecommunications infrastructure, where technically feasible and economically viable.

  • Safeguarding against the effects of non-ionising radiation emission, according to the parameters set by law.

Under the General Antenna Law, when a licence to install telecoms infrastructure in urban areas also involves applying for an environmental licence, the applicant may combine the two licence requests in one single application, respecting the rules stipulated by the Brazilian National Environmental Council, CONAMA. Charging for the right of way in respect of public roads, waysides and other public properties of common use is prohibited by the General Antenna Law. However, if the equipment is installed in public property, the parties will freely set an amount for the right of way. Licensed telecoms operators can agree with one another a collocation of equipment/networks under a contract, which may or may not provide for a fee. Telecommunications towers may be shared under special agreements among telecoms service providers.

 

Access and interconnection

13. Does access to infrastructure and a network have to be given to other providers?

Community interest telecoms service providers have the right to use poles, ducts, conduits and easements owned or controlled by a telecoms service provider or other public interest services, in a non-discriminatory manner and at fair and reasonable prices and conditions. To regulate use, Anatel and the agencies of electric power (Aneel) and petroleum (ANP) issued Joint Resolution 1/1999, which approved the Joint Regulation for the Sharing of Infrastructure between the Electric Power, Telecommunications and Petroleum Sectors.

Despite Joint Resolution 1/1999, Anatel submitted the proposed regulation to public consultation, which resulted in Resolution 274/2001. The objective of the Regulation is to regulate the sharing of infrastructure between telecommunications service providers. It provides, among other things, that sharing will only be denied for reasons of limitation in security, capacity, stability, reliability, or violation of engineering requisites. Operators in general have to connect their own network with networks deployed by other operators.

 
14. Is the interconnection of networks required? Are interconnection prices regulated and how are interconnection disputes resolved?

Both the General Telecommunications Law and the General Interconnection Regulation establish that:

  • Interconnection between networks is obligatory.

  • Integrated operation will be assured at both domestic and international level.

  • Ownership rights over the networks are conditional on the obligation to fulfil social function.

The General Interconnection Regulation sets out the general guidelines for interconnection between telecoms service provider networks and systems. It includes commercial, technical and legal aspects, and abides by the limits established by the General Telecommunications Law. It also imposes basic rules for interconnection agreements. The maximum chargeable amounts by way of network remuneration are currently controlled by Anatel, which is responsible for the price-level restatement of these amounts, from time to time. Anatel may no longer establish the interconnection rates paid by the providers and the public tariffs to the extent that competition is implemented and secured in the sector.

If any conflict arises from the application or interpretation of the regulations or during the negotiations for an interconnection agreement, either party can refer the dispute to arbitration. Within Anatel's scope, arbitration is a specific administrative procedure aimed at confirming the interconnection conditions if there is no agreement between the parties. Submitting any issue to arbitration does not exempt the providers and Anatel from the obligation to perform the interconnection agreements in force. Interruption of activities associated with the agreements is not permitted. The basic rules and procedures to be followed by the parties and Anatel are found in Annex III to the General Interconnection Regulation.

 

Data protection and security

15. What data protection regulations apply to the telecommunications sector? Are communications providers required to retain communications data? If yes, which data and for how long?

Law 12,965/2014, known as the Civil Rights Framework for the Internet sets out rules on the protection of personal data and internet usage. The rules cover connection records and information about access to applications, which cannot be communicated to third parties without free, express and informed consent from the individual. The content of private communications can only be made available by court order, in the situations and manner set out by law.

When providing an internet connection, the administrator must keep records of all connections in a controlled and safe environment for one year. It is prohibited to keep records of access to internet applications when providing connection services. When providing application services, the service provider must keep records of access to internet applications under confidentiality, in a controlled and safe environment, for six months.

If personal data or communications are collected, stored, retained or treated by connection providers and internet application providers in Brazil, then Brazilian law applies. This applies even if the operation is conducted by a company or entity headquartered outside Brazil, as long as it offers services to the public in Brazil, or at least one company in the same corporate group is headquartered in Brazil. In addition, there is a bill under discussion in Congress that provides wide regulation of personal data protection, including collection, storage, registration, monitoring, processing and disclosure of users' personal data.

The Federal Constitution already sets out as a fundamental right the inviolability of data and telephone communications. The General Telecommunications Law sets out respect for privacy and personal data as one of a user's fundamental rights. The Consumer Defence Code also has a section on databases. It provides that companies must give consumers access to their log and records. Law 12,737/2012 provides penalties for some internet crimes, such as computer hacking.

 
16. What are the rules relating to the interception of calls? How and on what grounds can authorities require disclosure of communications data? What are the penalties for breach of these rules?

Article 5, item XII, of the Federal Constitution assures the right to secrecy of correspondence and of telegraphic, data and telephone communications, except, in the latter case, by court order, in the cases and in the manner prescribed by law for the purposes of criminal investigation or criminal procedural finding. Interception of telephone and telematics communications is regulated by Law 9,296/1996 and can only be authorised by court order for several offences and when evidence cannot be produced by any other means. This measure can be authorised for a period of 15 days and renewed for a similar period, provided it is proved to be indispensable as evidence.

Interception of telephone communications, information technology, or telematics without judicial authorisation or with objectives not provided for in the law is a crime under Law 9,296/1996. Interception is not permitted if:

  • There are no reasonable indications of perpetration or participation in a criminal offence.

  • Proof can be obtained by other available means.

  • An investigation constitutes a criminal offence punishable by imprisonment.

 
17. Are there any network security obligations imposed on communications providers?

The General Telecommunications Law, on the basis of the constitutional principle of inviolability of communications secrecy (see Question 15), guarantees to telecoms service users that their communication is confidential, except in certain cases provided for by law. It also promises that reparation will be made if their rights are violated.

The rights of the user directly reflect the obligations on providers. The regulations issued by Anatel clearly establish that providers must ensure confidentiality of communication throughout their networks. The current Fixed Switch Telephone Service (FSTS) Regulation, along with Resolution 426/2005, makes the provider responsible for communications secrecy throughout its network, except in the segments installed in the subscriber's premises. The provider must protect the secrecy inherent to FSTS and the confidentiality of data and information, using any means and technology to ensure this right. Contracts executed by FSTS providers ratify the company's obligation to heed secrecy, under threat of a fine.

In relation to authorised interception providers must (Article 24, FSTS Regulation):

  • Make technological resources and necessary facilities available to suspend secrecy if decided by a judicial authority (under Law 9,296).

  • Maintain permanent control of all cases, making sure that they are fulfilled strictly within the authorised limits.

A provider has a legal obligation to permit interception of user communication when judicially authorised. However it can only use information relating to a user's individual use of the service in relation to the performance of its business. Disclosure of this information will depend on the express and specific consent of the user. Providers can disclose, however, aggregated information on the use of their services to third parties, provided that it is not possible to directly or indirectly identify any user.

It is a telephone communication violation crime to improperly disclose, transmit, or make abusive use of telephone conversations (Article 151, paragraph 1, item II, Penal Code (Decree Law 2,848/1940)). The Telecommunications Code contains a similar provision sanctioning the violation of telecommunications as a felony. The user (and not just the subscriber) must make appropriate use of the services, equipment, and telecommunications networks (Article 4, item I, General Telecommunications Law). Therefore, a user who, through a clandestine call, accesses services offered by providers without remunerating them will be violating the relevant legal provision. Wrongdoers who violate the law are subject to sanctions from Anatel and also to any civil or criminal penalties (Article 173, General Telecommunications Law).

Installation or use of telecommunications without regard to the law (originally, the Telecommunications Code and not the General Telecommunications Law) constitutes a crime subject to one to two years in prison, increased by half if there is damage to third parties (Article 151, paragraph 1, item IV, Penal Code). If a provider has its network violated (for example, with clandestine calls), it may request a police investigation to ascertain whether theft of third party movable assets has been committed (Article 155, paragraph 3, Penal Code).

The recently enacted Decree 8,771, of 11 May 2016, which regulates Law 12,965/2014, established rules on the request of data by public administration authorities, as well as on the security and confidentiality of records, personal data, and private communications.

Under the decree, administrative authorities must ensure that they state the legal grounds for any request of data, together with the reasons they require the access, otherwise the request can be denied by the data owner. Moreover, public federal administration bodies must adopt transparency measures and publish statistical reports on data requests.

Internet connection and applications providers must comply with the decree guidelines for security standards in the handling of personal data and private communications, including those relating to accountability and authenticity mechanisms, and requirements for access logs for those persons who have access to data. The use of encryption to guarantee inviolability of data is recommended.

Personal data cannot be retained once either the statutory time limit expires, or the purpose for its retention and use ceases to exist.

The following three organisations will be responsible for combatting infringements of these rules:

  • The National Telecommunications Agency (Anatel) will act under Law 9,742/1997 (General Telecommunications Law).

  • The Consumer General Secretariat, subordinated to the Ministry of Justice, will enforce the Consumer Protection Code.

  • The Administrative Council for Economic Defense (CADE), will police violations against economic order.

    The above bodies , together with other bodies and entities of the federal public administration, will act in a collaborative manner following the guidelines set by the Internet Steering Committee (CGI.br).

 

Price regulation

18. How are prices and charges regulated?

All telecoms companies have charges levied on their services, which are collected by Anatel. Law 5,070/1966 created the Funds for the Inspection of Telecommunications (FISTEL), imposing two inspection tariffs:

  • The Inspection of Installation Tariff (TFI) is charged when a licence is issued for the telecoms station. Currently the TFI varies from BRL26.83 to BRL1,340.80 depending on the service provided.

  • The Inspection of the Functioning Tariff (TFF) is paid annually up to 31 March each year and is 33% of the amount due under the TFI.

In addition, Law 9,998/2000 set up the Telecommunication Services Universalisation Fund (FUST). Companies operating telecoms services under both the public and private regimes must contribute 1% of their gross operating income.

Law 10,052/2000 set up the Fund for the Technological Development of Telecommunications (FUNTTEL). All telecoms service providers must contribute to it 0.5% of monthly gross operating income.

User charges vary depending on the service provided. According to Anatel's Resolutions 73/1998 and 522/2010, for services provided under the public regime, the maximum subscription charges are previously set by Anatel in the concession contract. On the other hand, as regards telecom services provided under the private regime the charges are freely settled by the operator but they must be fair, equitable and non-discriminatory, and may vary depending on the technical characteristics and facilities offered to users.

Interconnection charges (roaming, long distance and local calls) are regulated by Anatel under Resolution 639/2014. Currently, the interconnection charge for private mobile service network use is on average BRL0.23 per minute. In 2014, Anatel set out new charges intended for each telecoms company, reducing them by 90% until 2019.

The attachment price paid by a telecoms operator to the electricity distributor (infrastructure owner) can be freely settled in their pole sharing agreement. Anatel and the agencies of electric power (Aneel) and petroleum (ANP) established Joint Resolution 1/1999 which proposed a reference price of BRL3.19 per attachment in the event of disagreement between the telecoms and electricity company.

 

Telephone number and subscriber management

19. How are telephone numbers allocated and managed in your jurisdiction?

The numbering plan adopted in Brazil follows Recommendation E.164 of the International Telecommunications Union, and is regulated by Anatel through Resolution 83/1998. Fixed switch telephone service and private mobile service numbers follow the standard two-digit area code plus eight-digit subscriber number. The format for a subscriber number is "(aa)nnnn-nnnn", where the first digit identifies the service associated with the telephone number (two to five for fixed phones and six to nine for mobile phones).

From 2014 until the end of 2016, Anatel is implementing a nine-digit standard for private mobile service lines in area codes from all states. When dialling long-distance within Brazil or abroad, a carrier selection code is needed which varies according to the area code, depending on the operator licensed for the region.

 
20. Does access have to be provided to certain services, such as the emergency services and directory enquiries?

Under Anatel resolution 357/2004, any public emergency services or public utility services offered by telecommunications providers and intended for use by the general public must be free of charge. Likewise, Anatel establishes that support services for fixed switch telephone services must also be free of charge. The format number for those services is "1nn" (three digits beginning with a one).

Anatel considers the following to be public emergency services:

  • Human Rights Secretariat (100).

  • Military police (190)

  • Federal highway police (191).

  • Ambulance service (192).

  • Firefighters (193).

  • Federal police (194).

  • Civil police (197).

  • State highway patrol (198).

  • Civil defence (199).

If a person dials the emergency services numbers of the US (911), Mercosur (128) or European countries (112), they are redirected to the military police (190).

Public utility services include the following:

  • Telecommunications providers.

  • Public services providers (such as transport, water, electricity power and gas).

  • Authorities such as the public defender's office, prosecutor's office and regulatory agencies.

 
21. Are there regulations relating to specific consumer services, such as acquiring and transferring subscribers, number portability, complaint handling, and nuisance and silent calls?

In March 2014, Anatel published Resolution 632, approving the General Regulation on Rights of Consumer of Telecommunications Services. The resolution improves transparency between consumers and operators in fixed and mobile telephone services, multimedia communications and pay-TV.

The General Regulation introduced a series of obligations on operators, for example:

  • Services can be cancelled over the internet or through an option available at the operator's phone service, effective within two days.

  • All calls made by operators to consumers must be recorded and, if the call drops, the customer service operator must call the user back.

  • All promotional offers and combos must be available to all the operator's clients.

Number portability is only permitted between providers of the same class of telecoms services (Anatel Resolution 460/2007). For example, a user can request that a number be ported provided that he/she remains in the same area and the request relates to the same fixed switch telephone service (FSTS) or personal mobile service (PMS). Applying to port a number from FSTS to PMS or vice versa is not permitted.

 
22. Are consumer telecommunications contracts subject to specific regulations?

All concessionaires are required to submit a template of their user agreement to Anatel for prior approval. This user agreement must comply with the rules provided in the Civil Code and in the Consumer Defence Code. It must also comply with the regulations that establish mandatory clauses for fixed switch telephone services and personal mobile service agreements including:

  • Subject.

  • Service plan.

  • Conditions for changing customer access codes.

  • Installation address.

  • Termination.

  • Customer services.

 
23. Are there restrictions on the use of Voice over IP technology in your jurisdiction?

The provision of VoIP is not regulated is Brazil and there are no restrictions on its use. Anatel regulates only telecoms services and not the technologies used to implement them. Anatel considers VoIP technology as a tool for implementing telephony services, not a service in itself.

 
24. Are there regulations relating to the maintenance of net neutrality in your jurisdiction?

Net neutrality is the principle that internet service providers should enable access to all content and applications regardless of the source, and without favouring or blocking particular products or websites. In Brazil, net neutrality is regulated by Law 12,965/2014 (the Civil Rights Framework for the Internet), which has been in force since June 2014. Article 9 establishes a general rule ensuring that entities responsible for transmission, switching or routing have the obligation to process, on an isonomic basis, any data packages, regardless of content, origin and destination, service, terminal or application. The specific cases allowing discrimination or degradation of traffic have been discussed by representatives of government, the private sector, and civil society. One of the most talked about issues has been the offer of free access packets by telecoms operators (known as zero- rating) vis-a-vis the net neutrality. Finally, on 11 May 2016, Decree 8,771 was enacted to prohibit unilateral practices and agreements between internet providers and applications which "compromise the public and unrestricted character of internet access", or promote data and applications packets to the detriment of other offers.

The decree also provides that exceptional hypotheses of discrimination or degradation of network data traffic will only be allowed where there is compliance with "technical requirements deemed essential for the adequate provision of services and applications", namely the handling of web security issues (such as, control over bulk messaging (spams)), and the handling of exceptional cases of network congestion.

 

Outsourcing and telecommunications

25. Are there specific regulations for the outsourcing of telecommunications services or the management of these services?

There is no specific regulation for outsourcing telecoms in Brazil. However, there is a general rule established by the superior labour court that prohibits outsourcing of core activities. Thus, only activities related to non-core activities may be outsourced. Ongoing discussions in Congress indicate a trend towards allowing the outsourcing of core activities under certain terms and conditions.

 
26. Briefly set out the current trends in outsourcing transactions in the telecommunications sector.

Outsourcing of telecoms services along with information technology (IT) infrastructure is common. The decision to outsource IT and telecoms services has the following competitive advantages:

  • Integrated information storage.

  • Increased business focus and productivity.

  • Reduced costs of infrastructure and personnel.

Outsourcing contracts can involve sub-contracting either part or all of the telecoms and IT function of a company to an external outsourcing operator. The degree of sub-contracting involved varies across the whole spectrum ranging from just one part of the telecom and IT function (such as cloud computing) to the wholesale outsourcing of an entire department.

 
27. Who are the key providers of outsourced telecommunications?

The key providers of outsourced telecommunications services are those who offer a diversity of services such as data centres, corporate networks, network security and customer relationship management, and who assist all market segments (e-commerce, industry, finance and services). It is worth mentioning the following:

  • Embratel Prymesys SA (owned by the América Móvil Group).

  • Uol Diveo (owned by the internet provider Uol Group) which provides full outsourcing.

  • Algar Telecom SA, which is focused on security managed services.

  • Atento do Brasil SA and Contax Participações SA, both call centre services providers.

 
28. What are the current technologies influencing or affecting outsourcing by telecommunications operators?

The demand for new technologies in telecoms and information technology is increasing and providing mobility and flexibility in business. The current technologies offered by outsourcing companies include:

  • Big data managed services (data centres).

  • Cloud computing.

  • Managed security services.

  • Communications (voice, data and video).

  • Applications development.

 
29. From a contractual perspective, what are the key issues in a typical telecommunications outsourcing transaction in your jurisdiction?

Telecoms outsourcing transactions are usually complex and involve a whole range of assets (including licences, employees, equipment, intellectual property and so on) and related legal issues. Outsourcing transactions usually last between five and ten years. A written outsourcing contract is, therefore, the most important instrument for defining the rights, liabilities and expectations of both parties, guiding the behaviour of both parties. An outsourcing contract often includes a collection of related agreements covering a variety of issues such as:

  • Service level.

  • Transfer of assets

  • Staffing.

  • Pricing and payment.

  • Warranty and liability.

  • Dispute resolution mechanisms.

  • Termination.

  • Intellectual property matters.

  • Information security.

 

Online resources

Brazilian Telecommunications Agency (Anatel)

W http://www.anatel.gov.br/legislacao/en

Description. Anatel's website contains current and consolidated legislation about the telecommunications and broadcasting sector. Some rules are available in English, for guidance only.



Contributor profiles

Ricardo Barretto Ferreira, Partner

Azevedo Sette Advogados

T +55 11 9 6339 3349
E barretto@azevedosette.com.br
W www.azevedosette.com.br

Professional qualifications. São Paulo, Brazil, 1973

Areas of practice. Corporate and M&A; tax; information technology; telecommunications, media and entertainment; agribusiness.

Professional associations/memberships. ABA; IBA; FCBA-Federal Communications Bar Association, Washington, D.C.; Founder and President of the Brazilian Computer and Telecommunication Law Association (1995/1998).

Publications.

  • Editor and co-author, Computer Law in Latin America, published by the Computer Law Association, Inc., Washington, D.C., US, 1998.
  • Co-editor of Doing Business in Brazil, published by ABA, US, January 2002.
  • Lead Editor and co-author of Legal Guide to Doing Business in South America, published by ABA, US, April 2011 and June 2015.
  • Telecoms and Media Series, Getting the Deal Through.

Paulo Brancher, Partner

Azevedo Sette Advogados

T +55 11 4083 7626
E brancher@azevedosette.com.br
W www.azevedosette.com.br

Professional qualifications. São Paulo, Brazil, 1996

Areas of practice. Technology, media and telecommunications; arbitrator in international and national arbitrations.

Non-professional qualifications. Professor of Business Law and PhD in International Economic Relations Law, Law School of São Paulo Catholic University.

Professional associations/memberships. Former board member of the International Technology Law Association, ITechLaw; former Chairman of the Brazilian Association of Information Technology and Telecommunications Law (ABDTIC); former board member of the Brazilian Arbitration Committee.

Publications. Books including Intellectual Property and Antitrust; Software Agreements; Challenges on Regulation and Antitrust.

Camila Taliberti Ribeiro da Silva, Associate

Azevedo Sette Advogados

T +55 11 4083 7645
E ctaliberti@azevedosette.com.br
W www.azevedosette.com.br

Professional qualifications. São Paulo, Brazil, 2012

Areas of practice. Information technology; telecommunications, media and entertainment; consumer law; contracts.

Professional associations/memberships. Brazilian Institute of Consumer Defense (IDEC).

Publications. Contributor, Telecoms and Media Series, Getting the Deal Through.


{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1248251844217", "objName" : "Communications_regulation and outsourcing in Brazil", "userID" : "2", "objUrl" : "http://us.practicallaw.com/cs/Satellite/us/resource/8-619-3338?null", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-62dceab2:15b073282cf:2a6b", "analyticsSessionCookie" : "2-62dceab2:15b073282cf:2a6c", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }