Brazil court suspends Telebras deal with Viasat

A court in Brazil's Amazonas state suspended a contract signed by federal telco Telebras and US company Viasat for the provision of satellite connectivity under the Internet for All program, which uses Brazil's geostationary satellite SGDC.

According to the decision of judge Francisco Carlos de Queiroz, the parties are subject to daily fines of 200,000 reais (US$60,400) in case of noncompliance. The decision follows a request by Brazilian company Via Direta.

The judge also scheduled a conciliation hearing between Via Direta and Telebras for April 25.

The challenged contract was for Viasat to operate 100% of the civil capacity of SGDC as of April.

Under the terms of the agreement, Telebras and Viasat would use the satellite to take internet to under-connected regions under Internet for All, and implement terrestrial network equipment and infrastructure provided by ViaSat, including small ground antennas known as V-Sats.

However, Via Direta claimed it was in advanced negotiations with Telebras, which reportedly began soon after the flop of the SGDC capacity auction for the provision of similar services. Via Direta said that because of that it bought thousands of V-Sat antennas from a local provider.

Via Direta also claims that Telebras' contract with Viasat, signed on February 23, is not legally viable and violates the tenders law because it was awarded directly without bidding.

The company also argued that the exclusivity agreement with the US company creates a "monopoly harmful to the Brazilian telecommunications market."

The association of satellite service providers, Sindisat, and of private telcos, SindiTelebrasil, had also decided to challenge the agreement, citing privileged treatment given to Viasat and lack of transparency in the deal.

Telebras, in turn, has said that the agreement is backed by legislation, which allows such deals between state-owned and private companies, without prior bidding, in certain cases.