Brazil: New Multimedia Communication Services Regulations

On May 23, 2013, Brazil′s telecommunications regulatory body, Anatel, enacted new regulations for certain multimedia communications services (Resolution No. 614 of May 28, 2013). 

The services in question are prized by companies seeking to provide convergent services such as data and voice transmission. According to current estimates, more than 4,000 providers are authorized to supply this service in Brazil. 

This memo will address the main changes introduced by the new regulations. 

The definition of "multimedia communications services" ("SCM") was amended in order to expressly include the provision of Internet connection services. In fact, it was established that companies dedicated to Internet access services must request the granting of the new SCM license within the period of six (6) months beginning May 28, 2013. 

The new regulations also establish that an Internet access provider offering this service through an Internet access provider of its own economic group must ensure free Internet access to users (this rule is applicable to SCM providers with less than 50,000 users). 

The change has been causing serious disputes between Internet access providers and companies that provide telecommunications services. Indeed, Standard 4 of 2005, conceived some years before the privatization of the Telebrás system, provided for the provision of Internet services by means of two different activities: telecommunications services and Internet access services, which represented (and still represent) a value-added service. According to the new regulations, the SCM concept now includes the provision of Internet access. As a result, entering into an agreement to connect the user to the telecom network of a given provider is no longer required.  

Certain restrictions that were already imposed on SCM remain in the new regulation, such as the prohibition against providing switched fixed telephone services ("STFC"), broadcasting services, paid TV or "conditional access services", and the supply of unrestricted and simultaneous video and audio signal to subscribers.  

The term for the beginning of the provision of services continues to be eighteen (18) months from the date of grant, extendable for an additional twelve (12) months upon a showing of good cause.  

An important change (although not necessary, in our opinion) occurred in regard to the transfer of control of the SCM provider. Previously, post-closing communication to Anatel was sufficient. As per the new regulations, companies that fall within the purview of the new antitrust law (Law 12529/2011 - "New Antitrust Law") must obtain prior authorization from Anatel. Currently, domestic revenue limits for notification under the New Antitrust Law stand at R$750 million for one economic group and R$75 million for the other economic group involved in the transaction.  

For transfer-of-control transactions that fall below such notification thresholds, Anatel shall be informed of the transactions in within sixty (60) days as of the closing.

SCM providers must make customer service available for subscribers on a 24/7 basis. For SCM providers with less than 50,000 subscribers, the obligation to provide customer support is limited to business days from 8 a.m. to 8 p.m. Calls must be saved for 180 days by the service provider, while providers with less than 50,000 customers must keep such records for a period of ninety (90) days. 

The granting of discounts is still mandatory in the event quality of service is degraded or services are interrupted, proportional to the number of hours or fractions of hours above thirty (30) minutes. Upon the occurrence of such events, Anatel must be informed within twenty-four (24) hours.  

Service providers must keep all termination requests, complaints, and service orders for a period of two (2) years. Providers should also maintain an electronic system that permits verification of this information by Anatel. 

An innovation intended to assist criminal investigations is the storage of subscriber log access and registration data records for a period of one (1) year. Connection records include the date and time of the beginning and end of Internet access, its duration, the IP address used by the terminal to send and receive data packages, and other information that allows identification of the access terminal used. 

Obligations arising in connection with the purchase of equipment and contracting of services surpassing R$500,000.00 are still governed by Resolution No. 155/99, which establishes the need for publication of requests for proposals on the provider′s website, the definition of judgment criteria, the communication of results, and the availability of documents for interested parties.  

Regarding service plans and advertising materials, providers must make available clear, proper, and visible information about maximum download and upload speeds, and other information on use conditions, minimum allowance limits, and speed reductions in case contracted capacity is exceeded.  

Finally, although the new regulations do not provide new details regarding such matters, the new SCM regulation opens up the possibility of using a simplified grant procedure for SCM, STFC, and conditional access services, as well as the adjustment of the existing grants to this set of licenses, both at a total administrative cost of R$9,000.00. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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