Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Tuesday, August 13, 2019

Brazilian IoT plan underpins business progress in definition as SVA and exclusion of Fistel tax payment

Decree 9,854/19 establishes the National Internet of Things Plan, which also provides for the creation of a sector chamber –the Chamber of Management and Support for the Development of Machine-to-Machine and IoT Communication Systems. MITIC must identify priority environments for IoT solutions, although it highlights that, at least, there will be health, cities, industries and rural areas.

The president of Brazil, Jair Bolsonaro, enacted decree 9.854/19, which establishes the National Internet of Things Plan, with the main definitions and agencies in charge of its implementation. The text contains a substantial definition for the Brazilian telecommunications market: Internet of Things is an infrastructure that integrates the provision of value-added services with the capacity of physical or virtual connection of things with existing ICT-based devices and with their evolutions , with interoperability. 

This, quite simply, means that IoT is a value-added infrastructure and not a telecommunications service. In legal terms it means that paying the Fondo de Fiscalización de las Telecomunicaciones, Fistel (Telecommunications Control Fund) fee is not applicable thereto; and in economic terms it is the key that will allow it to move forward with the rest of the countries.

At present, companies must pay US$6.82 for each activation of a cell chip in addition to a payment of US$3.41 annually. In the case of M2M chips, the value of the tax is US$1.44 per activation and a value payable annually of US$0.48. In this way, in the case of taxing the Fistel, the IoT would become unfeasible as a business for operators, which at most may obtain a few cents per month for each chip installed.

The decree also provides for the creation of a sector chamber (Chamber of Management and Support for the Development of Machine-to-Machine Communication Systems and Internet of Things), which will be integrated by state agencies. The participation of any civil society entity, whether business, scientific or consumer, is not allowed therein. This decision follows the guidelines of Bolsonaro's management, where the concentration of the State is sought and to avoid the participation of the civil sector in those considered strategic by the military.

In principle, since until now it was never established that chamber will be made up of representatives of the ministries of Science, Technology, Innovations and Communications (MITIC); Economy; Agriculture, Livestock and Supply; Health; and of Regional Development. The executive secretariat of the chamber will be exercised by the Ministry of Entrepreneurship and Innovation of the MITIC.

The decree also sets that MITIC must establish in which environments the use of IoT solutions applications will be prioritized, although it emphasizes that, at least, there will be the health, cities, industries and rural areas. For those areas not contemplated above, supply, demand and local development capacity criteria should be taken for their incorporation.

Public consultation on entry barriers

Along with the implementation of the decree, the Agencia Nacional de Telecomunicaciones (Anatel) (Telecom Regulator) approved a public consultation to re-evaluate the regulations and reduce the existing barriers to the expansion of IoT and M2M. In this process, proposals for the modification of the Regulation on the Exploitation of the Personal Mobile Service through the Virtual Network will be presented, making more flexible the accreditation model that is being used as a regulatory solution to support various IoT applications.

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