The multiple challenges facing Brazil's telecoms watchdog

In this interview, Carlos Baigorri, who was appointed head of Brazilian telecommunications regulator Anatel last April – after the 5G auction but before the start of 5G network activations – talks about the main topics on the agency's agenda, including the challenges of making a new fixed telephony concession attractive, the pace of 5G rollout, infrastructure sharing controversies and the expansion of private networks, among other topics.

BNamericas: Of the main items on Anatel's agenda for 2023-24 – the studies for a new fixed telephony concession, the [general competition plan] PGMC and the [spectrum usage regulation] RUE – which would you highlight as the most sensitive?

Baigorri: The most pressing issue we see at Anatel is precisely that of fixed telephony concessions. These concessions are coming to an end, the fixed telephony service is less and less demanded by the population, so we need to give a direction for that.

In addition, [telco] Oi's situation, as is well known, is becoming increasingly complicated. The company has come out of bankruptcy protection but it still has a significant debt challenge.

Another subject refers to the poles [rules and prices for the use of the infrastructure by telecom operators], which is quite complicated to find a solution for.

And a subject that was missing from our tactical plan, and we are considering including it, is the fight against piracy. This continues to be a priority issue for Anatel. Piracy is very harmful for Brazilian society. And in the telecom sector it’s very present, especially when we’re talking about pay TV.

BNamericas: The government said it intends to redouble its attention to critical telecom networks, such as fiber backbones, submarine cables, datacenters, due to acts of vandalism. Is Anatel participating in this task?

Baigorri: There is a national policy for the security of critical infrastructure. The coordination of this policy is carried out by the GSI [institutional security office] and each sector has a responsible person.

In the telecom sector, Anatel is responsible for this policy. There is a follow-up and monitoring group and a monitoring system. We've been doing this work since the 2014 World Cup. During the pandemic, we used this ecosystem to monitor the impact of the networks, also when there were the [mining] tragedies in Mariana and Brumadinho, the truck drivers' strikes in 2017-2018, etc.

We monitored everything during the January 8 attacks [in Brasília] and there were no incidents. Not from the perspective of physical infrastructure, of individuals taking down towers, nor in terms of cyberattacks. There are always cyberattacks, but there has been nothing out of the ordinary.

BNamericas: Was the government transition smooth from the agency's point of view?

Baigorri. It was. We’ve already been with [communications] minister Juscelino three times. The agenda is well lined up [with the ministry]. We presented the most important topics, 5G, the issue of poles, concessions, etc. We’re updating the minister.

BNamericas: Speaking of the fixed telephony concession, would you say that law 13,879/2019 [which allowed the adaptation of fixed telephony concessions to a lighter model, called authorization, which permits investments in other telecom segments] was ineffective? Or do you still believe that the concession-holders will choose to carry out this migration before 2025 and a new concession will therefore not be necessary?

Baigorri: I believe so. We are quite confident. The adaptation process began to be judged at the end of last year at [audit court] TCU. We await the conclusion of this. We believe that there is an interest, yes, in migration.

Of course, there is the issue of arbitration in parallel. But we still believe that adapting the regime from concession to authorization is the main way out, the most beneficial, on behalf of the public interest.

[Editor's note: Through this arbitration process, current fixed telephony concession-holders claim they are due compensation on the grounds that fixed telephony is no longer economically feasible, generating losses]

BNamericas: In the meantime, Anatel has to work with plan B, which is companies opting not to migrate their concessions and the agency having to hold a new fixed telephony concession. How can a fixed telephony concession be made attractive to investors?

Baigorri: This process is still preliminary, it’s still subject to public consultation. But what was reported [by the technical area] to [Anatel's] board is redesigning the concession obligations to try to make them “lighter.” Precisely to try to make them attractive.

Another issue being pondered is the design of geographic areas.

Current fixed telephony concessions cover very large areas in Brazil. You will hardly be able to find an investor who will want to provide services along the entire Brazilian coast, for example. So one of the possibilities would be to have smaller concession regions, in order to increase the attractiveness and potentially entice small providers that are already working with broadband.

BNamericas: Has there already been an initial approach to the market to assess the potential interest in these new concessions? Has Anatel already been contacted by any company on the subject?

Baigorri: We didn't assess the market, nor were we contacted.

This is something we expect to come with the final approval of the notice [the terms of the new concession]. Of course, it’s always possible to test the water. But we haven't reached this stage yet.

BNamericas: There is a lot of controversy in the market about the sharing agreement between Winity Telecom and Telefônica. What is your assessment of this?

Baigorri: This process was analyzed by our technical area, it was submitted to the board of directors [of Anatel]. Counselor Alexandre Freire is the rapporteur. It's a pretty complex process. We need to analyze it from a regulatory, competitive perspective and also from the terms of the notice [of the 5G auction]. I wouldn't want to anticipate anything, because I haven't read the files yet.

We see many things in the press, both against and in favor. We at Anatel seek to have a position, let's say, that's more orthodox and work on the record. We need to wait for the rapporteur's proposal to discuss what comes next. Whether it is to reject the agreement, to approve the agreement as it is, or to approve it with amendments.

BNamericas: What is the deadline for this?

Baigorri: The rapporteur received the process at the end of last year and has 120 days to present his vote. This period may be extended for another 120 days.

BNamericas: How is the demand for bands for private networks in the 5G range? Apparently, companies' appetite for these licenses has been low.

Baigorri: There hasn't really been much demand for these bands.

But the demand for private networks is something that has always existed. In 4G, in 3G. However, as before there was no specific band for private network applications, those who wanted to have one depended on operators. These companies had to rely on carriers, and often, for different reasons, they were not able to close a contract. Our strategy was, therefore, to create an alternative for those who want a private network [company license].

But what we have noticed is that operators themselves, in order to monetize their 5G licenses, have been carrying out these projects. So, in a way, we managed to generate the effect we expected, which was that providers Vivo [Telefónica], Claro and TIM offered private networks in a way that met the demand. 

If that doesn't happen, if a company can't do it with an operator, it has the alternative of using the 3.7-3.8GHz spectrum.

BNamericas: Can we expect the inclusion of new bands for private networks, in addition to all those already offered?

Baigorri: We're always discussing this, including in international forums for spectrum standardization. This year we'll have the World Radiocommunication Conference, where countries meet to harmonize the use of radiofrequency. Discussions for private networks are likely to appear there.

It's a natural process. Recently, the 450MHz band was approved for such usage.

What I can say is that there's indeed a demand for private networks. Now, if they're necessarily going to be in the 3.7-3.8GHz range, it depends a lot from project to project and on the operators' interest in offering this type of solution.

BNamericas: Did the speed of activation of 5G by the operators surprise you? What is the 5G outlook for this year?

Baigorri: We're bringing forward the timetable [for the clearance of the 3.5GHz band]. There was the intention to release it for cities with more than 500,000 inhabitants, but we chose to go further and do it in clusters. That is, also cover conurbation localities in the metro regions of these cities.

Counselor Moisés [Moreira, responsible for the 3.5GHz process] intends to make the band available well in advance. But it's important to note that this is only a use authorization, the availability. Carriers bring forward their launch [ahead of the auction deadlines] if they want to.

In any case, we see an appetite on the part of operators to do so. The speed is amazing. They had an infrastructure [antennas] implementation target and in some cities this goal is 9x, 10x above that required. We see a very large appetite from operators to position themselves in 5G.

Our concern is that this appetite doesn't happen in disrespect to the consumer. So far, we haven't seen any major problems, not least because it's still a small portion of the population that has access to 5G phones.

BNamericas: In an increasingly connected world, must Anatel's role, of regulating only telecoms, change to also include internet, social networks? How is this discussion from the agency's point of view?

Baigorri: We've undergone this big shift from a commercial and technology perspective. Society demands new things from us. But any change in Anatel's regulatory powers must come through a review of the general telecommunications law.

I'd say it's necessary to have a broad debate, engaging society, the government, the private sector, academia. I see it as a broader discussion, about the organization of the State, well beyond the role of Anatel itself.

The telecommunications study center [Ceatel] hired in August last year the University of Brasília to study the international benchmark, the regulatory framework of this digital ecosystem, and present proposals on how the Brazilian State can function in the face of this new reality.

This process is underway. The idea is that in the second half we will have some results. Our expectation is to present it to the government, which will then decide how to move ahead.