Technology

Despite the pressure from telecom carriers, Brazil's government will not change 5G auction ordinance: sources

The intention is that instead of paying directly to the government, operators would pay these amounts in the consideration required by Brazil

Photo: REUTERS/Eric Gaillard
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  • On the business side, the complaint is that the requirements included in the ordinance went beyond expectations and had been negotiated with the government in advance;
  • The government claims, however, that the private network will meet the same criteria as the others: the operator that takes over will invest in the network the value it proposes in the auction proposal.

Despite pressure from telecom carriers, that complain about the amount and size of the counterparts required by the Brazilian government for the 5G auction, the government does not plan to change the ordinance published on Friday with guidelines for the event, sources accompanying the matter told Reuters on Tuesday.

The government’s view is that, regardless of the size of the cost these counterparts may have, companies will not have to pay for them more than they would pay for the 5G technology bands, so there is no reason to change the text.

READ ALSO: Brazil’s telecommunications agency postpones the final decision on 5G spectrum

“The calculation is that the auction should raise between BRL 20 billion and BRL 25 billion. We opted for this money to be invested in infrastructure instead of simply raising money for the government. But operators will not have to invest beyond that amount, ” explained a government source.

The intention is that instead of paying the government, the operators pay these amounts in the different compensations required by the government. Among them, the expansion of the fiber optic internet network for 12,000 kilometers in the Amazon, the signal coverage in 48,000 kilometers of federal roads, and the implantation of 4G in all municipalities with more than 600 inhabitants in the country. Besides setting up a private communication network for the federal government.

READ ALSO: 5G auction bidders will have to expand the internet network in Brazil

According to the source, companies will not have to take all these measures, but they will be able to choose which one and how much they will do up to the amount offered at the auction, within a period to be determined by the Brazilian Telecommunications Agency (Anatel).

“When the complaints came, we asked them if they would prefer us to go back to the collection auction, in which they will have to pay at once. Nobody wanted to, of course, ”said the source.

On the business side, the complaint is that the requirements included in the ordinance went beyond expectations and had been negotiated with the government in advance. Especially in relation to the government’s private data network.

READ ALSO: Bolsonaro will allow Huawei to take part in the 5G auction, says newspaper

“What was expected by the companies was the creation of a private mobile network in the Federal District to serve the defense, security services, the Planalto Palace. A fixed network across the country is much bigger, ”said a second source.

The government claims, however, that the private network will meet the same criteria as the others: the operator that takes over will invest in the network the value it proposes in the auction proposal only.

“What is the problem if the secure network costs them BRL 500 million, BRL 1 billion, or BRL 3 billion? None. They ran out of money they don’t give anymore. They only give up to BRL 20, BRL 25 billion ”, said the source.

The federal government plans to put the auction on the street by the end of the first half of this year. On Monday, Anatel started voting on the report for the auction notice, but the agency’s president, Leonardo Euler de Morais, asked for views to give the government and operators time to resolve the differences raised so far.

However, in addition to the rapporteur, Carlos Baigorri, two other advisers from the agency gave favorable votes to the report, which already guarantees the majority.

(Translated by LABS)