Brazil: Brazil Opens Public Hearing To Reassess Pole Sharing Between Electric And Telecommunications Industries

The Brazilian National Electric Energy Agency (ANEEL) approved, on November 30, 2021, the opening of Public Hearing No. 73/2021, which aims to obtain comments on the Regulatory Impact Analysis (AIR) and the proposed regulatory review of infrastructure sharing between the electricity and telecommunications industries.¹ This is a joint effort between ANEEL and the Brazilian National Telecommunications Agency (ANATEL) to improve the regulatory environment for infrastructure sharing, providing greater legal certainty for negotiation between players in the two industries and incentives for the use of regular, standardized electricity distribution poles for housing antennas, cables and other telecommunications equipment.

Currently, infrastructure sharing between telecommunications and energy companies is regulated by the Joint Resolution ANEEL/ANATEL/ANP No. 01/1999 (which also applies to the oil sector) and by the Joint Resolution ANEEL/ANATEL No. 04/2014, which establishes the reference price and other conditions for sharing posts.² This regulation, however, has not been enough to put an end to informal and disorderly use of energy distribution poles by telecommunications operators, one of the objectives of Joint Resolution ANEEL/ANATEL No. 04/2014.³

According to a 2019 survey by ANEEL, only 42 percent of telecommunications operators had a contract with the electricity distributor responsible for the infrastructure they used. In addition to the problems arising from the informality of such relationships, the irregular use of poles can generate serious risks as a result of non-compliance with safety standards.4

Given this scenario, a substantial innovation in the draft presented by ANEEL is the possibility of assigning the right to commercially use the shareable space on the poles of the energy distributors' networks, with the creation of a new market to intermediate infrastructure sharing agreements: business use of poles by third parties ("polecos," similar to "towercos"). The main aim of the new model is to get energy distributors rid of the burden of inspecting poles, allowing them to concentrate their efforts on their main activity. Although, it is worth mentioning that the proposed regulation would have them remain responsible for the management of distribution assets and for the fulfilment of the obligations of concession and permission contracts.

The draft also proposes that infrastructure operators be required to prepare annually a Priority Poles Regularization Plan (PRPP), which should indicate the priority poles (those outside of the parameters of the proposed standards) to be regulated in their areas of operation. Another relevant modification is the definition of the price for the use of poles spaces, which shall be determined by a specific calculation and issued by ANEEL to each electricity distributor, as part of its Periodic Tariff Review process, considering the specificities of costs associated with the distributor's own network.

In this sense, the main subjects of the public hearing are (i) the regularization of the use of electricity poles, (ii) the general conditions for the infrastructure sharing between electricity and telecommunications companies and (iii) the price for the use of pole spaces.⁵

The regularization of the use of poles consists of optimizing the use of their operational capacity by removing idle cabling, organizing infrastructure sharing and adapting it to ANEEL's technical and safety standards. In addition, the updating of the general price conditions aims to encourage the regularized practice of poles sharing, reducing costs and mitigating the problem of disorderly and irregular use. We should also note that ANEEL and ANATEL have been highlighting the importance of setting standard conditions for commercial relations between energy and telecommunications players as a way to improve contractual predictability, based on practices from the electricity sector.⁶

According to these regulatory agencies: "Energy distribution and the provision of telecommunications services have several similarities, since both are network industries, dependent on infrastructure and extensive capital. In the most capillary part of the networks, synergies are quite evident, with the use of poles from distributors to support cables and telecommunications operators' equipment."⁷ Cross-sector infrastructure sharing aims to reduce the costs related to implementing the support network for telecommunications services, enabling the entry or maintenance of these providers in this market. In this way, energy distributors can lease part of the infrastructure they manage to telecommunications operators in exchange for payment.

Finally, it should be noted that the review of the regulation over infrastructure sharing is also under discussion at ANATEL and is part of its agenda for 2021-2022. Currently, the draft is in the office of Councillor Moisés Moreira, the reporting councillor for the process, who must submit it to the agency's board so that they can decide on the opening of a public hearing conducted by ANATEL. As stated in the record of the Board of Directors' Meeting No. 907, of November, 25 2021, the submission of the matter for deliberation was extended for 120 days and should therefore only take place in the first part of 2022.

The complete documentation of Public Hearing No. 73/2021 is available on ANEEL's public participation website. Written contributions can be submitted through February 2, 2022.

Footnotes

1. Public Hearing Notice No. 073/2021, ANEEL. Available at: https://www2.aneel.gov.br/cedoc/acp2021073ti.pdf

2. Joint Resolution No. 4/2014 (ANEEL and ANATELl). Available at: https://informacoes.anatel.gov.br/legislacao/resolucoes/resolucoes-conjuntas/820-resolucaoconjunta-4.

3. ANATEL, Analysis No. 133/2014-GCMB, Councillor Reporting, Marcelo Bechara de Souza Hobaika, Process No. 53500.025892/2006.

4. ANEEL, Reporting Director Efrain Pereira da Cruz Vote, November 30th, 2021, p. 03. Process No. 48500.003090/2018-13, Published on 12.02.2021. Available at: https://www.aneel.gov.br/consultas-publicas?p_p_id=participacaopublica_WAR_participacaopublicaportlet&p_p_lifecycle=2&p_p_state=normal&p_p_mode=view&
p_p_cacheability=cacheLevelPage&p_p_col_id=column-2&p_p_col_pos=1&p_p_col_count=2&_participacaopublica_WAR_participacaopublicaportlet_ideDocumento=
45395&_participacaopublica_WAR_participacaopublicaportlet_tipoFaseReuniao=fase&_participacao
publica_WAR_participacaopublicaportlet_jspPage=%2Fhtml%2Fpp%2Fvisualizar.jsp.

5. ANEEL discusses reassessment of the standard that deals with the sharing of posts, ANEEL, Published on 11.30.2021. Available at: https://www.aneel.gov.br/sala-de-imprensa-exibicao-2/-/asset_publisher/zXQREz8EVlZ6/
content/aneel-discute-reavaliacao-da-norma-que-trata-do-compartilhamento
-de-postes/656877?inheritRedirect=false&redirect
=http%3A%2F%2Fwww.aneel.gov.br%2Fsala-de-imprensa-exibicao-2%3Fp_p_id%3D101_INSTANCE_
zXQREz8EVlZ6%26p_p_lifecycle%3D0%26p_p_state%3Dnormal%26p_p_mode%3Dview
%26p_p_col_id%3Dcolumn-2%26p_p_col_pos%3D2%26p_p_col_count%3D3.

6. ANEEL, Reporting Director Efrain Pereira da Cruz Vote, November 30th, 2021, p. 03. Process No. 48500.003090/2018-13, Published on 12.02.2021. Available at: https://www.aneel.gov.br/consultas-publicas?p_p_id=participacaopublica_WAR_
participacaopublicaportlet&p_p_lifecycle=2&p_p_state=normal&p_p_mode
=view&p_p_cacheability=cacheLevelPage&p_p_col_id=column-2&p_p_col_pos=1&p_p_col_count=2
&_participacaopublica_WAR_participacaopublicaportlet_ideDocumento=45395&_participaca
opublica_WAR_participacaopublicaportlet_tipoFaseReuniao=fase&_participacaopublica_WAR_participacao
publicaportlet_jspPage=%2Fhtml%2Fpp%2Fvisualizar.jsp.

7. Regulatory Impact Analysis Report, ANEEL, March 2020, p. 08. Process No. 48500.003090/2018-13, published on 20.08.2021. Available at: https://www.aneel.gov.br/consultas-publicas?p_p_id=participacaopublica_WAR_participacaopublicaportlet&
p_p_lifecycle=2&p_p_state=normal&p_p_mode=view&p_p_cacheability=cacheLevelPage&p_p_col_id=
column-2&p_p_col_pos=1&p_p_col_count=2&_participacaopublica_WAR_participacaopublica
portlet_ideDocumento=45393&_participacaopublica_WAR_participacaopublica
portlet_tipoFaseReuniao=fase&_participacaopublica_WAR_participacaopublicaportlet_jspPage=%2Fhtm
l%2Fpp%2Fvisualizar.jsp.

Visit us at Tauil & Chequer

Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2020. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.