This Monday, 26, after almost two years of on-going working, OECD concludes its review that reinforces Brazil’s strategic position in the global scenario: the launch of the peer reviews “On the Way to the Digital Era in Brazil”[1] and “Telecommunications and Broadcasting in Brazil”[2].
Brazil, through Anatel, contracted an OECD study to analyses the brazilian institutional maturity and the alignment of national legislation and regulatory policies with the best market practices. Over the course of 2 years, in addition to a draft with almost 200 complex questions, an OECD mission conducted a series of interviews with different stakeholders, civil society, experts and government officials, to collect sectoral information and data.
The final delivery of this immersion work was a very complete and comprehensive report, evaluated in a peer-review process (peer review) by other countries that are part of the OECD.
Similarly to Brazil, Mexico also went through this process, still in 2012, a context that resulted in the promotion, even, of amendments to its Constitution.
The OECD’s work has no legally binding, but its recommendations are guiding elements for the future of public policies and for sectoral regulation.
There is no doubt that the Brazilian score was very good and the country is on the right path to ensure digital transformation and inclusive digital connectivity. However, some framework’s weaknesses, especially institutional ones, were well pointed out by the OECD.
The original work of collecting data and information was divided into 5 chapters: introduction, status of market development, sectorial framework, public policies and regulation and, finally, taxes.
The information on the chapters above was redistributed in the final report, in addition to the insertion of recommendations about strengths and weaknesses aspects, that should be addressed simultaneously, in order to ensure a holistic approach to reform.
From an institutional point of view, the report highlights several institutional overlaps and suggests different adaptations: with regard to consumer protection, between Anatel, Senacon and Procon, the OECD suggests transparency and terms of cooperation; considering competition, OECD point out Cade as a strength Agency, but recommend to remove the 20% threshold for market share as a proxy for market power from the competition law; with regard to the external control promoted by TCU, the OECD is very critical about the ex ante performance and how much it harms Anatel’s independence; in the case of broadcasting and pay TV market, the OECD highline the importance of converged legal framework and a converged regulator, removing restrictions on the vertical integration of the chain; and praises the institutional structure of internet governance in Brazil, through CGI.br.
From the regulatory point of view, the OECD is also moving towards regulatory simplification, matching the real expectations of consumers and the quality indicators collected from the operators, introducing the concept of single-class licensing regime for communication and broadcasting services; regarding access to new operators, OECD reinforced fair and non-discriminatory access to ducts, poles and rights of way by reducing costs of infrastructure deployment through dig-once policies and streamlining rights of way, as well as ensuring efficient spectrum management.
One of the weaknesses highlighted by the OECD is the sectorial tax burden, around 40.2% in Brazil, above any reasonable parameter, responsible for undermining new investments and hampering digital inclusion. Although the OECD highlights the need for a “holistic reform of the structure of taxes and fees”, it also suggests a single license to eliminate the distinction between different services related to the provision of communications services, in order to “minimize legal costs, administrative burdens and the potential for tax arbitration”. It also suggests the integration of sectorial funds and the abolition, in the future, of sectoral contributions.
These reviews represent, in the end, an alignment of Brazil with the best public policy practices in the world, confirming the engagement with the OECD.
It is worth remembering that Brazil’s accession process with the OECD has been object of hard diplomatic efforts, especially in the last 3 years, even though it has been a key partner of the OECD since 2009 and there is no doubt of its engagement. Brazil’s application for membership as OECD’s member country was submitted in 2017, but there are still issues related to trade and the environment pending with other member states.
TMT
[1] https://www.oecd-ilibrary.org/docserver/e9bf7f8a-en.pdf?expires=1603822010&id=id&accname=guest&checksum=82310CED94CD7D9092D66A9CD9EBEECA
[2] https://www.oecd-ilibrary.org/docserver/30ab8568-en.pdf?expires=1603818284&id=id&accname=guest&checksum=A3A4AA8C4C407CAA6F79103A68BB6758