Anatel approves ILEC tariff increase, ignoring pressure from Lula

Ignoring a strongly worded request from President Luiz Inácio Lula da Silva to continue negotiating, Anatel?s board decided Thursday, June 26, to approve the tariff reset agreed with the incumbent local exchange carriers (ILECs). Luiz Guilherme Schymura, director-general of Anatel, announced the decision at 10 p.m. and published the new tariff on June 27 so that it could come into force on June 29.
According to Mr Schymura, Anatel?s view was that an increase of 25% on average for residential lines and 41% for non-residential lines would be better for consumers than the counter-proposal favored by Lula and the Communications Ministry, while also complying with the terms of the ILECs? license.
The license entitles the local telephone companies to a tariff review every 12 months in Anatel?s view, and not at any time after the 12th month, as construed by Communications Minister Miro Teixeira.

Anatel also decided it was advantageous to grant a one-time increase that fell short of the contractual index (IGP-DI) for the period, which would have been 28.75%, rather than a staggered hike and the full index, as proposed by the telcos during their negotiations with the Government, Mr Schymura said.
Mr Schymura also said he regarded Miro Teixeira?s position as legitimate. The minister was worried about the impact of the tariff increase on consumers, he acknowledged. But it was up to Anatel to carry out its duties under the law, approving a 12-month tariff review based on the IGP-DI index for the period less 1% for productivity.
He refrained from clarifying whether the Government authorized the announcement after pressuring Anatel not to grant the increase. He said he contacted Mr Teixeira on receiving his submission, to convey Anatel?s view that there was no longer anything to negotiate and that it was time to make a decision. He didn?t say now Mr Teixeira responded but denied that the ministry had attempted to interfere with Anatel?s work at any time.