Anatel is coming around to the view that telcos might be better able to serve the lowest income groups (D and E in the Brazilian classification) if its universal-access and quality-of-service targets weren?t so demanding. The idea may be placed on the table during negotiations on the renewal of incumbents? licenses. The proposal Anatel is analyzing would entail lower regulatory hurdles for telcos to pass provided they offered cheaper calls and monthly subscription charges. This could be done by creating a new class of subscriber. Easing quality-of-service requirements would enable telcos to reduce operating costs and pass the savings along to end-users. Luiz Tito Cerasoli, a member of Anatel?s board, notes that telcos would have to work out a way of controlling access to such special low-cost plans. Initially they should be available to any user who agrees to lower quality. Anatel is still analyzing the economic and regulatory feasibility of the proposal. Luiz Guilherme Schymura, director-general of Anatel, suggests easing the targets for call center response time and trouble report resolution, as well as line speeds. Asked whether the minimum percentage for long-distance call completion could be cut from 60% to 55%, Mr Schymura says it would be hard to measure the effect on operating cost, if any.
Cross-subsidies
Another possibility is to use cross-subsidies within the same subscriber category: residential subscribers who spend more would offset the cost of serving those who spend less, for example. This already happens in practice, but it could be institutionalized or at least more carefully regulated by Anatel. Lastly, fixed-line telcos could invest more heavily in prepaid service, which according to Antônio Carlos Valente, deputy director-general of Anatel, has greatly increased the penetration of cellular telephony. He warns, however, that this solution should also be evaluated with care, since capital expenditure on infrastructure is far larger in the fixed-line segment than it is in wireless, not to mention the difficulty of taking physical access to fixed-line subscribers.
