Coronavirus: Impacts on the Telecommunications Industry

The containment measures for hindering the progression of the COVID-19 pandemic in Brazil have impacted the conditions of telecommunications services in the country. Brazil has experienced considerable growth in the levels of consumption of connectivity services and the generation of content by households as a consequence of the adoption of social isolation protocols recommended by the World Health Organization (WHO), in parallel to the increased need for fast and effective communication by the public entities and private companies.

We have listed the impacts and legal consequences of this scenario to the Brazilian telecommunications industry, which derive mainly from the increased demand for data and voice services necessary to enable remote work solutions (home office) by companies, as well as the growing demand for media and entertainment by consumers.

Telecommunication services categorized as essential activities

On March 20, 2020, the Presidential Decree No. 10,282 was published in order to regulate Law No. 13,979/2020, which provides the framework of measures to be adopted by Brazilian authorities in the containment of the coronavirus pandemic.

Section 3, item VI, of the Decree establishes that telecommunications and internet access services are considered essential and, therefore, are now added to the Laws’ framework. This means such activities are rendered indispensable to meet the urgent needs of the public and their lack thereof will represent risks to the public’s survival, health or safety. Any limitations on the conditions of the provision of telecommunications services may only take place upon the enactment of a specific Act by the Federal Government, and such limitations must undergo the previous analysis of the Brazilian National Telecommunication Agency (Agência Nacional de Telecomunicações – Anatel).

The Federal Government has signaled that these services will play a central role in the social organization necessary to respond to this global health crisis, as well as in creating the conditions to enable and sustain certain economic activities during and after this period.

Public commitment within the telecommunications sector

On March 20, 2020, Anatel executed a Public Commitment regarding the maintenance of telecommunications services with assorted providers, individually or via representative entities acting in the sector. Among the measures to be adopted under the Commitment, we highlight:

(i) Providers must prioritize rendering services to the benefit of public health agencies;

(ii) The telephone number “196” was designated as an exclusive channel of communication by the Federal Ministry of Health for measures to combat the coronavirus outbreak;

(iii) Providers have committed to sending the public up-to-date information on the pandemic, via SMS messages, whenever required by the competent authorities; and

(iv) Anatel will maintain an internal group for continuous assessment of the volume traffic generated in telecommunication networks, with special attention to the conditions of operation of fixed broadband, as it is the most demanded service in the current scenario.

Financial and regulatory relief

The increased demand for telecommunications has resulted in the need for growing, unforeseen investments by operators, especially where it is indispensable to maintain the functioning of networks. Given these conditions, operators have sought alternatives for short-term financial relief before the competent public authorities.

Among other actions currently under discussion in the sector, the Ministry of Science, Technology, Innovation and Communications (Ministério de Ciência, Tecnologia, Inovações e Comunicações – MCTIC) has engaged with private companies, the Ministry of Economy and Anatel regarding potential changes in the conditions and values of tax collection to the Fund for the Inspection of Telecommunications (Fundo de Fiscalização das Telecomunicações – Fistel). It is expected that potential changes in payment conditions to Fistel may represent a relevant financial relief to telecommunications providers.

Other measures under discussion relate to the potential flexibilization of certain regulatory obligations currently imposed by Anatel to operators, especially where such duties are impacted by the maintenance of social distancing protocols and the increasing use of telecommunications services in various economic activities.

Some of the topics under discussion include relief from the regulatory obligations of providers to maintain in-person service attendance to consumers (due to restrictions on the functioning of commercial establishments by the competent local authorities), changes to KPIs applicable to various telecommunications services (especially in case of networks’ overload caused by the exponential increase in demand) and user experience regulatory requirements (such as deadlines for handling consumer complaints).

Anatel’s operation

While the measures remain under analysis, Anatel has adopted certain internal organizational changes to face existing circumstances.

As per Normative Ordinance No. 334, of March 17, 2020, the Agency now operates under a special regime with restrictions to the number of civil servants allowed to work in its headquarters, with reduced shifts and mandatory leave for employees within the risk group of coronavirus contamination.

As a result, the deliberations of the Agency’s Board of Directors are now solely by way of the remote voting system, and civil servants are required to abide by home office policies whenever possible.

Deadlines and ongoing administrative procedures were not impacted by these measures, including normative procedures, without prejudice to the postponement or changes in schedules in specific cases.

5G Bidding Notice

In the context of the public hearings on the draft bidding documents regarding the implementation and operation of 5G networks in Brazil, Decision No. 102 of March 25, 2020, of Anatel’s Board of Directors extend the deadline for submissions of contributions to Public Consultation No. 9 by any parties for 15 (fifteen) days, so that contributions may be made until April 17, 2020.

Impacts on economic activities

The impacts enlisted above tend to harden as the pandemic progresses. Companies and professionals must be able to react quickly and adjust internal procedures to the scenarios created by the enactment of further protocols by the competent authorities. Such measures include, whenever possible, the adoption of home office policies and the use of technology and telecommunications resources in the relevant activities.

Telecommunications and broadband services will, therefore, play a fundamental role in enabling conformity to the guidelines set by public authorities and are essential tools to home office policies and other remote operation initiatives required in the current scenario.