ISPs express confidence in Brazil's new pole-sharing policy but costs remain an issue

Associação NEO, one of Brazil’s largest internet service providers (ISPs) and small carriers’ trade groups, is confident in advances in the new regulation for the use and rental of power poles by telecom companies.

The entity, however, warns that the new sharing policy proposed by electric power and telecom regulators is yet to address key issues for small operators, namely the costs and prices to access the structures.

“Today, for small providers, the pole represents the second highest cost for their operations. It is a lot. If we could effectively have fair values, we could reverse this cost in investment in new areas and new networks,” NEO’s president Rodrigo Schuch told BNamericas.

“ISPs are naturally entrepreneurs and investors,” he added.

One of the main topics for small providers refers to the so-called isonomy of prices between small and large telecom providers for using the pole. The new policy aims to address that, but details are still pending.

The policy also looks to end the transfer of 60% of the rental paid by telcos to electricity companies for power tariff subsidies, and the definition of rental prices based on a purely cost model.

NEO agrees with that and defends the creation of an exempt and non-profit entity to manage the poles and that the use of the resources paid for renting the structure go towards funding the process for reordering these aerial networks – rather than to subsidize tariffs for electricity clients. 

“The heart of the problem is still missing, which is to define the economic part more clearly. The price remains to be defined, as well as how this definition of access will be like in an isonomic way and, above all, the status of the already signed contracts [between power utilities and carriers],” Mauro Hiane de Moura, partner at law firm Veirano Advogados, told BNamericas in a recent interview.

WINITY-TELEFÔNICA

Schuch also stressed NEO's opposition to the commercial sharing agreement between Telefônica and Winity for the use of the 700MHz band. 

-Smaller operators, tower companies and ISPs oppose the contract as they consider it a circumvention of original 5G spectrum auction rules and an undue form of market reserve for Telefônica.

“It is important to remember that the 5G auction notice, when it was designed, sought to allow new entrants to have access to the market and thus foster new market competition,” said Schuch.

“The auction also established that there would be a new distribution format for the 700MHz band, which was not acquired by Oi in the previous auction, through the hands of a wholesale company serving new entrants,” he added.

Schuch insists that Telefônica should not have direct access to this frequency and that the agreement with Winity is a form of market "closure."

Cleared by antitrust regulator Cade, the Telefônica-Winity deal is pending approval by telecom regulator Anatel.

“We had two important votes in Anatel, which we fully support. It is the vote of rapporteur [of the process at the agency], Alexandre Freire, and that of counselor Moisés,” said Schuch in reference to conditions presented for approving the agreement.

Among these conditions, or "remedies," are the opening of the 700MHz network offer in some areas, called intra-area roaming, and a veto of the RAN sharing between Winity and Telefônica in localities with less than 100,000 inhabitants.

NEO is one of the largest associations of ISPs in Brazil, along with Abrint, Telcomp and Abranet. 

Brazil is estimated to have more than 10,000 ISPs registered to operate.

Originally called NEOTV Association, it was founded in August 1999 by independent and regional operators to negotiate better commercial conditions for the distribution of pay TV.

Currently, more than 200 ISPs and companies are members of the entity, including solution providers, platforms and equipment and content distributors. 

According to NEO, more than 5,000 municipalities are covered by some of the services provided by its members, encompassing 99% of the country.