The plenary session of the Federal Senate approved, on Wednesday (11), PLC 79: the project modifies the current LGT (General Telecommunications Law) and allows Oi and Vivo stop following targets to universalize fixed telephony, such as installing pay phones. In addition, they can become owners of the fixed networks received as a government concession, converting them to broadband investments.
The approval of the project was unanimous among all parties, with only the Network abstaining. The text goes on to presidential sanction.
Understanding the concession model
O concession model it is used by the operators that acquired the former state-owned telephony companies; the main ones are Telefonica / Vivo and Hi. As concessionaires, they have goals and obligations related to investments in the fixed telephone network, with the objective of universalize the service – for example, they must install a minimum number of pay phones (!). However, the years have passed and fixed telephony is no longer a protagonist in the telecommunications market, giving space to cell phones and broadband services.
Another important factor is that the concessionaires hold the reversible goods, which are considered indispensable for the continuity of the service provision in the public regime, and which could be returned (reversed) to the Union after the end of the concession contracts in 2025. In practice, it is as if the operators had “rented” the fixed networks assembled by the state-owned companies and had to be returned to the State after the end of the contract, even having made investments and expansions in the network during the period of operation.
Therefore, PLC 79 is of great importance because it allows operators to “acquire” this infrastructure for themselves in exchange for investments in broadband; the government would no longer own fixed networks. Thus, they leave the concession model and start to act as authorized operators, migrating from the public to the private regime.
Measure should bring investments in fixed broadband
During the next year, Anatel should calculate how much these reversible assets are worth. The amount must also be approved by an independent audit and by the Federal Court of Auditors.
The measure will mainly benefit Oi, which operates in all states except São Paulo. The operator faces a judicial reorganization process with debts in the tens of billions of reais. Recently, the company released its strategic plan for the next three years, and is betting on expanding its network to bring broadband services, landline and pay TV through optical fiber to 16 million households by 2021.
Another company that will benefit is Vivo, which operates under the concession regime in the state of São Paulo. The conversion of reversible assets to broadband investments makes it possible to guarantee a return, and brings legal certainty, so that operators can invest in the expansion of their networks.
Operators celebrate decision
SindiTelebrasil, a union that represents telecommunications operators, celebrates the approval of the project. The entity points out that “the new framework allows mandatory investments in obsolete solutions, such as public pay phones, to be used to expand Internet access in areas without adequate infrastructure in order to reduce inequalities”.
In addition, the union points out that the broadband infrastructure to be built will be “essential to support the data growth forecast for the next 10 years, including due to the arrival of 5G”.
Another project should guide investments by operators
Although PLC 79 was unanimously approved, Senator Fernando Bezerra Coelho (MDB / PE) promised to present a new bill on an urgent basis to define where the resources from the LGT amendment will be applied.
The idea is to prioritize shadow areas where there is no presence of mobile telephony and broadband, along the lines of the Luz para Todos program. These areas tend to be depreciated by companies, precisely because of the low return on investment.