w w w . p i n h e i r o n e t o . c o m . b r1

No. 21February 2019

TECHNOLOGY MEDIA TELECOMMUNICATIONS

This bulletin is meant for general informational purposes only and should not be relied upon as legal advice on any specific deal or matter. If you need more information, please contact our lawyers or visit our website www.pinheironeto.com.br.

A newsletter on technology, media, telecommunications and internet. Our practice group gathers knowledge from different areas to provide a holistic approach to the most complex legal issues brought by our clients. From telecommunications and audiovisual regulatory matters to tax, labor and intellectual property, Brazil is not a country of simple answers; an approach taken by a global company in another jurisdiction may need to be considered from surprising new angles.

SUPERVISING PARTNERS Raphael de Cunto

CONTRIBUTORS Carla Cavalheiro, Beatriz Landi L. Figueiredo e Sofia Fortes Cruz.

CONTACT

pinheironeto.com.brPinheiro Netopna@pn.com.br

←→↑ back to top

▪ Claro filing sparks debate on linear OTT channels

▫ Telemedicine regulated in Brazil ▫ Pernambuco State Consumer Protection Code

▫ Ancine revokes regulation on digital advertising

▫ Anatel calls for public contributions to proposed emergency communications and cybersecurity regulations

▫ State law prohibits data caps on mobile broadband

Claro filing sparks debate on linear OTT channels The National Telecommunications Agency (Anatel) has been asked to review whether linear channels distributed in the internet should be regulated under the Pay-TV law. According to a filing made with Anatel by Claro, a carrier, the distribution of linear OTT channels in the internet should be deemed Pay-TV, which is a type of telecom service in Brazil.

Under Brazilian law, companies must be licensed by Anatel to provide telecom services, including Pay-TV and broadband networks. Programmers

TECHNOLOGY

(IMAGE: MARIO CARUSO; UNSPLASH)

w w w . p i n h e i r o n e t o . c o m . b r2

No. 21February 2019

TECHNOLOGY MEDIA TELECOMMUNICATIONS

Why this is importantEven though the theoretical debate around the regulatory asymmetries between OTTs and telecom carriers has been around for a long time, Claro’s filing recently presented to Anatel took the discussion out of the theoretical sphere and created a concrete case that now must be resolved. The decision may set an important precedent for the media industry in Brazil. If OTT linear channels are considered telecom services this would mean that they must comply with several regulatory obligations, including the obligation to obtain a prior license from Anatel, limitations on foreign capital, quotas for national content, and payment of telecom taxes (Fust, Funttel, Fistel and ICMS). They would also be subject to cross-ownership restrictions in relation to programmers, producers and broadcasters.

and producers in the Pay-TV industry, on the other hand, are regulated by the National Films Agency (Ancine), while content delivery on top of broadband telecom networks (OTTs) is generally viewed in Brazil as a value added service, not subject to any telecom or audiovisual license or regulation. Up to this date, linear channels distributed in the internet, as well as video on demand and any other business model for content delivery in the internet, have been treated as OTTs.

The need to establish a fair level playing field in a scenario where OTTs grew to compete with traditional telecom services, but subject to a much simpler regulation and lower tax burden, is not a recent issue. But the debate may gain momentum given Claro’s proposed interpretation of the law that tears down the traditional separation in the digital environment between the (regulated) carriers and the (unregulated) OTT providers.

According to the filing under review by Anatel the definition of Pay-TV telecom services (named Subscription-Based Access Services – SeaC) is technology-neutral and is broad enough to encompass any content delivery in the programmed linear format, regardless of whether the content provider also holds the networks or uses a third party network. Claro argues that the Pay-TV law is a more recent and specific law than the General Telecommunications Law, and the traditional separation between the carriers/networks and the OTTs was superseded in relation to Pay-TV services. (IMAGE: CHARLES; UNSPLASH)

▪ Claro filing sparks debate on linear OTT channels

▫ Telemedicine regulated in Brazil ▫ Pernambuco State Consumer Protection Code

▫ Ancine revokes regulation on digital advertising

←→↑ back to top

▫ Anatel calls for public contributions to proposed emergency communications and cybersecurity regulations

▫ State law prohibits data caps on mobile broadband

w w w . p i n h e i r o n e t o . c o m . b r3

No. 21February 2019

TECHNOLOGY MEDIA TELECOMMUNICATIONS

←→↑ back to top

Why this is importantThere was an ethical uncertainty around telemedicine activities, since the Physicians Council regulation had been last updated in 2002 and had ambiguous guidelines to support the adequate provision of telemedicine services. A more robust ethical framework resulting of this new draft regulation opens doors to a collaborative association of technology and medical assistance, to the benefit of health and patients.

Telemedicine regulated in BrazilThe Physicians Federal Professional Council (CFM) has announced it will regulate telemedicine practices in the country. The draft resolution number 2,227/2018 is already available on the CFM’s website, and CFM informed it should be published soon in the official gazette. It will enter into force 90 days after publication.

The resolution authorizes several forms of distance medical assistance, including medical appointments, screening, diagnosis, monitoring, exchange of medical opinions and also surgeries with the use of remote technological means. The resolution also brings ethical requirements in connection with these activities.

The patient’s free and informed consent is required, in writing, in connection with the transmission of information, images and videos via telemedicine. If the information will be shared with third parties, the consent must be explicit in this sense and patients must have the right to deny it. The companies rendering telemedicine services must be headquartered in Brazil and enrolled with the relevant local Physicians Professional Council. A physician enrolled with the same Council must be technically responsible for the telemedicine activities.

Pernambuco State Consumer Protection CodeThe Brazilian State of Pernambuco published, on January 16, 2019, the first State Consumer Protection Code in Brazil, which will apply to consumer relations involving supply of products and services in Pernambuco.

The Pernambuco State Consumer Protection Code has 204 articles and will enter into force 90 days after its publication. This State Law not only confirms provisions of the Federal Consumer Protection Code but also sets forth new rules on several economic sectors, such as e-commerce, e-payments and call centers.

In relation to e-commerce, for instance, the Pernambuco State Consumer Protection Code establishes that online stores must disclose on their websites information on products’ availability for immediate shipment, and sets forth rules on group buying sites.

For more information about the Pernambuco State Consumer Protection Code, please contact our product liability team.

Why this is importantThe State Code creates a second rule which will add to and possibly overlap with the Federal Consumer Protection Code’s rules. Companies willing to offer products or services in Pernambuco will now have to keep track of rules under both statutes.

(IMAGEM: RAWPIXEL)

▫ Claro filing sparks debate on linear OTT channels

▪ Telemedicine regulated in Brazil ▪ Pernambuco State Consumer Protection Code

▫ Ancine revokes regulation on digital advertising

▫ Anatel calls for public contributions to proposed emergency communications and cybersecurity regulations

▫ State law prohibits data caps on mobile broadband

w w w . p i n h e i r o n e t o . c o m . b r4

No. 21February 2019

TECHNOLOGY MEDIA TELECOMMUNICATIONS

←→↑ back to top

Under Normative Ruling 134, issued on May 2017, Ancine attempted to create a market segment named “internet audiovisual advertising” within the “other markets” listed in MP 2,228-1/2001. This would expand Condecine payment obligation to advertisement videos in the internet, at the same time that it would create additional regulatory obligations such as registering the video and respective producer with the Agency, adapting foreign ads to the Portuguese language, and keeping records and making filings of documents at the Agency’s request.

The industry reacted immediately in 2017 and challenged Ancine’s authority to regulate digital video advertisements. In response, Ancine delayed the effectiveness of these rules and carried out a Regulatory Impact Assessment (AIR) into the consequences of the proposed obligations. Ancine has now concluded the AIR and decided that it will not regulate the industry until Congress clarifies whether it is a segment of the audiovisual industry.

Ancine’s position deserves praise. Specifically when it refers to tax matters, the constitutional principle of legality has strict contours and

Ancine revokes regulation on digital advertising The National Films Agency (Ancine) has revoked the regulation on digital advertisement in the internet and acknowledged that this matter cannot be regulated by the Agency via normative rulings without a prior law confirming the Agency’s authority to do so.

Ancine was created, and its authority established, by Provisional Measure No. 2,228-1/2001 (MP 2,228-1/2001), which also puts forth several regulatory obligations, including the payment of the Contribution for Development of the National Cinematographic Industry (Condecine) on the commercial use of audiovisual works (whether advertisement or not) in specific market segments. The segments specifically named in MP 2,228-1/2001 are movie theaters, home videos, free-to-air television, pay-TV, and a very general “other markets”.

taxation will only be valid if specifically prescribed in law, because “it is forbidden to the Federal Government, the States, the Federal District and the Municipalities to create or increase taxes without prior law.” While there is no law amendment and a clear legal definition (not through normative ruling) of such “other markets” under MP 2,228-1/2001, the Agency and tax authorities are prevented from regulating and collecting Condecine on market segments deemed part of the audiovisual industry by an extensive interpretation of this vague “other markets” provision.

Why this is importantAs the distribution/consumption of audiovisual content shifts from television to the internet, Ancine has demonstrated in the past a willingness to extend its authority to the digital environment. There have been other similar attempts to regulate the Video on Demand (VOD) market and the video games market based on an extensive interpretation of what could be the “other markets” in the audiovisual industry. Both debates are still unfinished. By acknowledging that it does not have authority to regulate the digital advertisement segment without prior law, Ancine indicates a possible shift in approach and creates a precedent that can certainly be considered in relation to VOD and video games.

MEDIA

(IMAGE: KABOOMPICS; PEXELS)

▫ Claro filing sparks debate on linear OTT channels

▫ Telemedicine regulated in Brazil ▫ Pernambuco State Consumer Protection Code

▪ Ancine revokes regulation on digital advertising

▫ Anatel calls for public contributions to proposed emergency communications and cybersecurity regulations

▫ State law prohibits data caps on mobile broadband

w w w . p i n h e i r o n e t o . c o m . b r5

No. 21February 2019

TECHNOLOGY MEDIA TELECOMMUNICATIONS

←→↑ back to top

Anatel calls public contributions to proposed emergency communications and cybersecurity regulations The National Telecommunications Agency (Anatel) is sponsoring a public debate to discuss the review of its regulation on emergency communications and the enactment of a new regulation on cybersecurity for the telecommunications industry. The initiative is part of Anatel’s regulatory agenda for 2019-2020.

Under Anatel’s proposal, the current National Information Infrastructure Committee would be replaced by the National Telecommunications Infrastructure and Security Committee, in charge of

supporting the decision-making process of Anatel’s Board of Directors on relevant issues. Additionally, current regulations would be adjusted (especially the Telecommunications Services Regulation) to include provisions on support of public security through emergency communications, fraud prevention, telecommunications secrecy and data confidentiality.

The proposal also addresses the enactment of a Regulation on Cybersecurity for the Telecommunications Industry. The goal is to set measures to be taken by telecommunication service providers that ensure and promote cybersecurity in the networks, such as the adoption of a cybersecurity policy for companies, sharing of security incidents information, and compliance with mandatory security standards, in accordance with the future regulations’ requirements.

Initially, the public had until January 25 to submit their comments on the proposal. However, after requests made by industry players, Anatel has extended the deadline until February 25.

Why this is importantIn times of mounting emphasis on information protection and security matters, Anatel’s intent to review the related regulation is not surprising and is consistent with the industry’s recent moves. The regulation should be considered carefully, however, to avoid increasing the already heavy regulatory burden on the telecom industry.

TELECOMMUNICATIONS

(IMAGE: UNSPLASH)

▫ Claro filing sparks debate on linear OTT channels

▫ Telemedicine regulated in Brazil ▫ Pernambuco State Consumer Protection Code

▫ Ancine revokes regulation on digital advertising

▪ Anatel calls for public contributions to proposed emergency communications and cybersecurity regulations

▫ State law prohibits data caps on mobile broadband

w w w . p i n h e i r o n e t o . c o m . b r6

No. 21February 2019

TECHNOLOGY MEDIA TELECOMMUNICATIONS

←→↑ back to top

Why this is importantData caps are a very controversial matter in Brazil with no consensus up to this date. There are ongoing class actions involving the matter, and Anatel has been reviewing the related regulation since 2016, after a temporary restraining order prevented carriers from imposing data caps on fixed broadband until Anatel’s definitive decision. Even though the State of Ceará may lack jurisdiction to legislate on telecom matters, the law enactment may push Anatel to expedite its review and resolve the controversy.

State law prohibits data caps on mobile broadband The State Government of Ceará has passed a law prohibiting mobile broadband service providers to discontinue their users’ connection after a data cap is exceeded. Even though providers may decrease the user’s speed, access cannot be blocked except in case of the user’s default.

Mobile broadband service providers associations plan to bring a lawsuit to the Federal Supreme Court (STF) challenging the state law’s validity since telecommunication is a matter of Federal Government exclusive legislative jurisdiction. Other telecommunications-related state acts are already being reviewed by the STF based on motions on the same grounds.

Even though the Federal Supreme Court has yet to issue a decision on these cases, the Attorney General has already provided a legal opinion confirming the federal government’s exclusive jurisdiction to legislate on telecommunications matters. (IMAGE: MARKUS SPISKE; UNSPLASH)

▫ Claro filing sparks debate on linear OTT channels

▫ Telemedicine regulated in Brazil ▫ Pernambuco State Consumer Protection Code

▫ Ancine revokes regulation on digital advertising

▫ Anatel calls for public contributions to proposed emergency communications and cybersecurity regulations

▪ State law prohibits data caps on mobile broadband