Lula’s team mulling industry-proposed subsidies for internet, devices

The transition team of Brazil’s president-elect Luiz Inácio Lula da Silva is mulling subsidies for internet services and the purchase of devices such as smartphones and tablets for low-income families.

The subsidies would come partly from resources from the public fund for the universalization of telecommunications, Fust.

The option was mentioned by the former president of state telco Telebras, Jorge Bittar, who was speaking to reporters while leaving the building in Brasília where the transition staff is concentrated.

Bittar, along with former communications minister Paulo Bernardo, was appointed by vice president-elect Geraldo Alckmin to form the transition team’s communications committee.

Although Bittar did not elaborate on the topic, both the subsidies and tax exemptions are requests of telecom operators. 

In the run-up to the October 30 election in which Lula defeated incumbent Jair Bolsonaro, industry association Conexis submitted to the campaign teams proposals for the sector in a document entitled Brasil + Digital.

The proposals included the creation of a program to connect low-income families to the internet via tax exemptions and direct subsidies. 

“Reducing the tax burden for devices, especially 5G, is essential to accelerate the adoption of this technology. As for low-income families, what is proposed is what is done in the US, where the bill is partially footed by resources from a grant from the local Fust fund,” known as the Universal Service Fund in the US, Eduardo Tude, head of telecoms consultancy Teleco, told BNamericas.

Conexis also called for fairer taxation, especially in comparison with over-the-top (OTT) and streaming companies, and the exemption of PIS/COFINS social welfare taxes for the entire 5G infrastructure and services chain.

On the macroeconomic front, the sector defends a broad tax reform, with unification and simplification of taxes and fees.

Following the confirmation of Lula’s win, Conexis highlighted its wish-list items in an acknowledgement letter to the president-elect.

According to Bittar, both the subsidies and the tax exemptions, if applied, will take into account legislation and fiscal limitations. The former lawmaker said the measures hinge on further studies.

“I'd say that it’s necessary to have greater detail of how this would happen, since the government that is about to start is making a great effort to accommodate other more urgent demands, such as the emergency aid. It’s hard to see such an initiative making room in the budget, at least at the beginning of the term,” Ari Lopes, senior manager for service provider Americas markets at consultancy Omdia, told BNamericas.

Bernardo has also said that internet in Brazil is expensive due to high taxes. But the former minister has also backed higher taxation of big techs, such as Google and Netflix.

Bernardo, who in the past was one of the targets of corruption probe Lava Jato, is one of the names considered for communications minister in Lula’s new government.

He was minister of planning under the previous Lula government and later communications minister during Dilma Rousseff's first term. One of his goals in communications was to beef up the then national broadband plan PNBL, including with subsidies.

It was during Bernardo's time in office that Brazil held the first spectrum auctions for 4G LTE technology: in the 2.5GHz bands in 2012, and 700MHz in 2014.