SAO PAULO, (Reuters) – The Brazilian government could force fixed-line telephone companies to lower rates and invest in expanding their network in order to ensure affordable service for the lower classes, according to a report published today.
The Folha de Sao Paulo said the government wants to foster competition and anticipate contract negotiations which were initially scheduled for 2015. Among other measures, it is considering eliminating charges for calls between different providers.
The new measures would affect land-line operators such as Telefonica Brasil, a unit of Spain’s Telefonica , and Embratel, controlled by the Mexican billionaire Carlos Slim.
Big operators will be required to beef up investments in their networks and even rent out some network capacity to third parties in order to foster competition, Folha said, quoting unnamed government sources.
Companies could also be forced to eliminate current flat rates for the basic service as well as charges for calls placed between competing operators.
Revenues from fixed-line services have been declining in Brazil while wireless operators have seen profits grow at record levels.
Folha said the companies are already exploring the possible scenarios and may challenge any decisions in court.