27
Annual Report -
2013
-
Vivendi
Group Profile |
Businesses
| Litigation | Risk Factors
1
GVT
2.3.6.
Regulatory Environment
GVT’s business is subject to comprehensive regulation under Brazilian
law. The adoption of new telecommunications service regulations and
the privatization of Telebras’ subsidiaries (the Brazilian government-
owned telecommunications operating companies) in 1998 led to broad
changes in the operating, regulatory and competitive environment
for Brazilian telecommunications. The Brazilian telecommunications
regulatory framework is constantly evolving.
Concessions to provide telecommunications services are only granted by
Anatel and are subject to a public service regime, while authorizations
are only granted under private law (the “private regime”).
Under the public service regime, concessionaires must comply with
obligations relating to quality, continuity of services, universal services,
network expansion, and the fees they charge are monitored by Anatel.
Under this regime, the Brazilian government may appropriate, at the
conclusion of the concession period, all infrastructure used to provide
STFC (including network, systems or equipment) so that the State may
continue to provide the relevant services.
Under the private regime, authorized providers are not subject to
the obligations to provide universal service or continuity of service.
Therefore, if an authorized provider ceases to provide services, the
Brazilian government is not under any obligation to continue to provide
such services. There are no restrictions on prices under the private
regime, and providers are only subject to the general laws and principles
that prohibit anti-competitive conduct. Under the private regime,
the State is not permitted to appropriate assets used for the provision
of services.
Obligations relating to the quality of services, interconnection and
compensation for the use of networks apply to telecommunications
service providers under both the public and the private regimes.
When GVT started operating in Region II, it was the first company
under the private regime to be authorized by Anatel to compete
with the already privatized incumbent, thereby transforming the
existing monopoly into a duopoly. In 2002 and 2003, GVT obtained
STFC licenses to operate in São Paulo, Rio de Janeiro and Belo
Horizonte. In November 2006, the Company received STFC licenses for
Regions I and III, resulting in nationwide coverage throughout Brazil.
In December 2010, GVT received a DTH (Direct to Home) license to
broadcast TV by satellite technology.
GVT currently operates under the following licenses, each covering
all of Brazil: local telephony, national and international long-distance,
multimedia communication services (
Serviço de Comunicação
Multimídia – SCM
) and a DTH license for Pay-TV.
In March 2012, Anatel approved the new regulation applicable
to Pay-TV services (called Service of Conditioned Access or “
SeAC
– Serviço de Acesso Condicionado
”), which consolidated the old
regulations relating to Pay-TV services, e.g., MMDS, DTH, TVA and
Cable TV, into one regulation. SeAC is provided under the private regime
and there are no restrictions on the type of technology that is used.
Anatel approved GVT’s request to migrate the DTH license to the SeAC
in February 2013.
2.3.7.
Competition
■
■
2.3.7.1. Long-distance telephony market
GVT competes in the long-distance market in two ways: acting as a
local carrier when serving its customer base and as a long-distance
provider for non-GVT customers. As of December 31, 2013, almost 80%
of GVT’s customers used its services for long-distance communications.
Due to regulatory issues, GVT could not offer its product “Ligue Fácil”
to new customers, which caused a decrease in market share year on
year. GVT does not intend to actively compete with the incumbents in
providing long-distance services to their local customer base due to the
low margins generated by such services.
■
■
2.3.7.2. Broadband/ISP market
In 2013, GVT’s main competitors offered new broadband speeds,
increasing customer expectations. In particular, Net launched its new
portfolio, with 30 Mbps and 60 Mbps. The 30 Mbps offer quickly
came to the forefront of Net’s triple play bundling contracts. Net, one
of GVT’s main competitors in broadband, improved its investments
in 2013, increasing its coverage from 140 cities to 180 (+28%).
The incumbents are also deploying new speeds and their IP TV
products on their FTTx networks, which are currently limited to major
cities in the southeastern region of Brazil.
Net has tried to position itself as being of superior quality, primarily
based on Anatel’s technical measures of broadband quality and
availability. In the second half of 2013, with its new portfolio, Net
changed to a strong promotional approach, using sales tag lines such
as “30 Mbps for the price of 10 Mbps”. Aggressive discounts on about a
dozen bundles were common during certain periods of the year.
■
■
2.3.7.3. Pay-TV
In 2013, the Brazilian Pay-TV market continued to grow, however at
lower rates than in previous years. In 2013, the total Pay-TV market
increased approximately 20% and GVT increased its subscriber base
by 58.4% compared to 2012, reaching 643,000 customers by year-
end 2013, which represents a net increase of 26% across the whole
market net increase in which it operates. GVT has consolidated its
position as the 4
th
largest operator in the cities where it is present.
