Brazilian carriers call for cuts in tax, regulation, red tape

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Thursday, November 24, 2016

Brazilian private telcos have spoken out again, calling for reductions in taxes, in regulation and in red tape, as well as for a level playing-field with internet over-the-top (OTT) players.

These requests were outlined in the already traditional Carta de Brasília, or letter from Brasília, which telcos unveil annually during their Painel Telebrasil event in the capital. The full letter can be read, in Portuguese, here.

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Above all operators want a new telecom framework. They want congressional approval of a bill allowing the end of the public concession regime for telecom services and the migration of these licenses to the private model. The bill is expected to be voted on by the lower house next week.

The industry also calls for the prioritization of broadband, especially for underserved areas, as well as in the formulation of public policies and regulations, but defends its "necessary freedom to formulate business models, to manage and to choose the technologies employed in their networks."

They also want tax-exempt smartphones and IoT devices, policies encouraging the sharing of networks and larger spectrum caps. As regards foreign trade, carriers want deeper integration of Brazil's hardware and software industries in the global chain.

During the event, André Borges, telecommunications secretary at the ministry of science, technology, innovation and communications (MCTIC), said that resuming the pace of telecom investments in the country and redirecting them to the expansion of broadband access in the country was a challenge to be overcome.

Eduardo Navarro, head of Telefônica Brasil, said that the review of the telecom framework was key to ensuring the sustainability of companies in the sector, while Mario Girasole, VP of TIM Brasil, said that regulation needs to be "fair" and not excessive.

Oi president Marco Schroeder complained about the tax burden, recalling that in January, 12 states increased the rate of the ICMS tax on telecom services. According to Schroeder, the tax contribution capacity of the sector "has been exhausted."

According to Telebrasil, the Brazilian telecom industry is responsible for 6% of the country's GDP, employs 500,000 people and pays 60bn reais (US$18bn) in taxes each year. Since the privatization of the segment 18 years ago, carriers claim to have invested 680bn reais.

ANATEL

In line with the telecom framework updates, telecom watchdog Anatel announced Thursday that it will formulate three new public consultations.

These will focus on assessing a new general competition plan for the segment, the revision of the general interconnection regulation and a proposal to define prices in the wholesale telecom market.