The mutual agreement between TNL Acesso (Telemar) and iG to terminate their revenue-sharing arrangement could contain unpleasant surprises for the market. Those who say free Internet service providers can die without transfers of funds from incumbent local exchange carriers may have overlooked the fact that the agreement calls for Telemar to pay compensation to iG for terminating a contract to provide access in Regions 2 and 3. The problem is the value of this compensation. Industry observers believe Telemar may disburse several million to keep iG alive for two or three years until legislators define a new business model. The agreement states that unless the parties agree on the sum to be paid by Telemar within 90 days it will go to arbitration and appoints Cluster Consulting as arbitrator. The fear that compensation could be a disguise for the continuation of revenue sharing is justified, according to observers, because iG and Telemar have the same controlling shareholders. A closet deal would be easy to reach, they argue, allowing iG to keep its subscribers until it finds a new source of revenue.
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