The impact of Economic Adjustment on the Brazilian Telecommunications Market: the mobile phone Segment

ORIGINAL ARTICLE

PORTELLA, Anderson Gonçalves ^[1]

PORTELLA, Anderson Gonçalves. The impact of Economic Adjustment on the Brazilian Telecommunications Market: the mobile phone Segment. Revista Científica Multidisciplinar Núcleo do Conhecimento. Year 03, Ed. 06, vol. 06, pp. 80-107, June 2018. ISSN: 2448-0959, Access link: https://www.nucleodoconhecimento.com.br/business-administration/telecommunications-market, DOI: 10.32749/nucleodoconhecimento.com.br/business-administration/telecommunications-market

ABSTRACT

This article aims to demonstrate the results of the intervention of the State in the post-privatisation period with the implementation of the telecommunications regulatory model, specifically in the mobile phone segment. The work discusses foundamentals theory initially, highlighting the European and American schools, the basic model used in the case of Brazil. Under this perspective, the study text, analyzes and evaluates the regulation model deployed in the telecommunications market and your evolution, discussing the appropriateness of the model and your consequent efficiency in achieving the desired objectives. The considerations of this work allow to conclude that the regulatory model implanted in Brazil appeared to be effective to the extent that allowed several productivity gains and boosted economic development. Presented, however, failures caused by the intrinsic characteristics of the Brazilian market, allowing the capture of ANATEL regulatory State agent, and by subjecting technical decisions to any political interests.

Keywords: Economic Regulation, Telecommunications Market, Regulatory capture, Public Choice.

INTRODUCTION

The purpose of this article is to address the economic adjustment process occurred in implementing privatisation started in the Decade of 90, that began to change in the Brazilian telecommunications and affecting mainly the telephony segments fixed and mobile. These sectors in which the State operates with the primary goal of stimulating competition and seek the improvement of telecommunications infrastructure.

As, in General, the infrastructure sectors are characteristically marked by a tendency to natural monopoly, it is necessary to set up a regulatory system, if the market is not contestable, to monitor the operation and the results pursued to the society and economy. In this way, the need for an effective regulatory system progressed as the privatization process has achieved the provision of public services (public utilities) as is the case of the telecommunications market, object of the present study.

From the point of view of economic adjustment, Joskow (1981, p. 36, apud Fiani, 2005) argues that the sectoral regulatory bodies intervene in order to correct “market failures”, being created a context in which the economy needed to expand the services of infrastructure, essential for the economic development that the Government has not been able to fill properly.

Stigler (1971), on the other hand, argues that the regulation is not always the most efficient way, because “the natural monopoly does not lead to an inefficient sit[necessariamente]uation because there would be mechanisms that would introduce the competition even in a monopoly.” (Giambiagi and beyond, 2001).

Peltzman (1976, p. 237 apud Fiani, 2005) argues that the regulation introduces inherent flaws of your creation process, and that she would be unable to lead to the desired results because it would be subject to the pressures of producers ( dealers), and another, to political pressure. It stressed that political pressure side interferes with the effectiveness of regulatory actions, the implementation of these policies is inherent in the granting authority.

Users for your time also press for constant improvements in the provision of the service.

GOAL

The focus of this work is to analyze the regulation model of the Brazilian mobile telephony market, highlighting their eventual virtues and faults. More specifically, it aims to:

1. Study and analyze the telecommunication structure presented in the pré-privatização period, i.e. a monopoly;
2. Present the evolution of the process of economic adjustment, and the model deployed in Brazil;
3. Expose the evolution of Brazilian telecom market, through mobile and fixed telephony segment since the period of privatization by the year 2010 and, when possible, by mid-2011;
4. Identify the advantages and disadvantages of economic regulation model deployed to the Brazilian telecommunications market (mobile and fixed telephony segment).

The relevance of the topic is in your complexity, because the Government interference in the decisions of economic agents aimed at correcting distortions which could not be resolved as explained on the Coase theorem[2] in which private economic agents in a context free costs between transactions, can solve their problems – but can lead to other problems that we classify as “government failures”.

It is observed that, as a rule, “solutions” are almost always illusions, where, when comparing the alternatives presented, we ran into “trade-offs”, and “incentives” that are generated by the interference of the State regulator. There are still “systemic effects” that can be indirect and/or longer term, generating effects (that explain better the frame when the market is regulated) and actions (which are consequences of market adaptation of the regulation created) not intended by the agents.

A new argument being considered by theorists, regulacionistas refers to the advancement of technologies (technological innovations), which significantly affect the minimum costs, as well as the scale of production, which in itself would affect in many cases the production to the point of eliminating the natural monopolies as undesirable.

Obviously the total deregulation does not assumes the existence of a “perfect competition”, but the proximity of an oligopoly, which once again, due to the notorious public interest in the provision of these services does not relieve a (with clear regulation of activities).

Economic regulation is derived from the analysis of the behavior of markets, where competition is intended to ensure the existence of conditions for competition, which, in principle, would lead to greater economic efficiency as a result of the functioning of the market.

Regulatory instruments have been employed in sectors dedicated to the provision of public services, which are provided by private companies authorized or permit holders.

This research can be classified as literature, allowing in this way to deduce conclusions through observation of the data collected (Lakatos and Marconi, 1987, p. 66) and was made through the survey, selection and documentation of relevant bibliography already published on the subject in books, encyclopedias, magazines, newspapers, brochures, newsletters, monographs, theses, dissertations, etc.

The data collection was conducted in your vast majority from sick material provided by ANATEL, which were also used data from specialized sites in telecommunications cited in the bibliography.

With the data obtained, assesses the earnings related to the regulatory model adopted, as well as the faults observed in the model, the technological innovations generated, the evolution of some of the indicators before and after the privatization of the sector and, Finally, the impact of economic regulation in the telecommunications infrastructure.

Held in this way an exercise of reflection on the evolution of the telecommunications market, so that they can measure the effectiveness, and lists the result obtained with the expected result (held x goals). In view of the high degree of convergence, and technology advances already achieved by the sector, presented some recommendations which aims to leverage pró-competitivas policies in the segment studied.

REGULATORY DETERMINANTS: NATURAL MONOPOLY

As described by VARIAN (2003), the natural monopoly occurs when there are large fixed costs and small marginal costs, and to operate where the price is equal to marginal cost and achieve an efficient level of production, he can’t cover their costs and, When is forced to produce at a level where the price equals the average cost, it covers its costs, but produces very little in relation to the efficient amount.

Thus, in natural monopoly realizes that the market does not support the existence of more than one company operating efficiently. This stems primarily from the subaditividade of cost function under these conditions, because “the costs will be lower if we can produce a given quantity” x “of the product in a single firm than in two”. (Fiani and Pinto Jr., 2002).

Despite this advantage in terms of productive efficiency, the great price from the point of view of society (marginal cost), is below the equilibrium price of the monopolist to obtaining the normal profit that would cover the your average cost. This occurs due to economies of scale that make the average cost is declining, and that marginal cost is less than the medium, preventing the occurrence of optimal solution found in a situation of perfect competition.

Infrastructure industries are classic examples of natural monopoly, as in the case of Brazil the electricity and telecommunications sectors, which in your origin were developed with a State-owned monopoly. This occurred due to a consensus that this structure would be the most effective to develop such sectors, and that the high initial investment would impede to the private sector, in addition to the execution of projects that involve long-term maturation.

The entry of new companies corresponds to the removal of barriers to entry in the sectors of infrastructure, which will not prevent productive inefficiencies occur if the exploitation of economies of scale and/or scope are being obtained through a cartelizada form and discriminatory pricing by the monopolist

The presence of new entrants, as well as the removal of barriers to entry should occur in the sectors where prices are above average costs, which undermines the productive efficiency and/or the monopolist’s ability to finance other objectives economic, as the universalization of services provided.

So that this situation does not occur, it is necessary that there is another way of financing the goals, through direct or indirect subsidies for example. However, the economic effectiveness could be achieved through a pró-competitivo model as a means of curtailing the boundaries of natural monopoly.

It is important to note that the period of transition between the State monopoly and a pró-concorrência model imposed the need for constant monitoring of business conduct, as well as conformation of new market structures more competitive in open threads, for efficient performance.

TECHNOLOGY-BASED CHANGES AND NEW APPROACHES TO REGULATION THAT INTERFERE WITH THE NATURAL MONOPOLY

The issue provided new technological vision of the natural monopoly of telecommunications from the Decade of 70, with the advancement of opto-digital technology replacing the electromechanical model, that second Dosi (1982) allowed, through a set limited technological alternatives available, speculate about the development of future technologies.

The possibility of introduction of new technologies opened up opportunity for increased competition and accelerated technical progress.

According to Marshall discussed in book IV of the Principles of Economics, companies develop along a lifecycle, and from a certain point, your Gigantism didn’t evolve in conjunction with the permanent needs of market change. The result is the aging of the good solutions created in the past and the decline of the company.

The State telecommunications monopoly went through this cycle, and lost the advantage of economies of scale in a world that was constantly changing, and increasingly needed economies of scope to survive.

From the early 80 significant changes have occurred, both in the aspect of economic organization, and the technological regime. Since then the industry headed for a growing industry deregulation, and privatization of State-owned companies before, with consequent clearer separation between network and service providers.

The “deregulation” also has defenders who argue that it would be enough that the concession was renewed periodically via auction.

The theory of transaction costs (TCT) to Coase demonstrates that the argument is flawed in that it would require renewal of a term to be defined, that generates by itself “trade-offs“. Being a short deadline would stimulate not dealer to make investments with long-term maturation.

This is due to the uncertainty that when transferring this lease to another company she gets the return for their investments.

According to TCT, if the renewal period is too long, there will be the cost for investment recovery/depreciation, which would entail complex conditional clauses that anticipate in all circumstances and relevant scenarios in the future.

EVOLUTION OF REGULATORY PROCESS

In the years 80, last century, two forms of regulation have excelled in the US with the basic interest of the public interest defence. The first was centered on regulation through the legal and institutional framework, being supported in the traditions and in case law for arbitration of conflicts between different agents.

The second form was developed in Europe from the late 1940 in which the State assumed responsibility for planning, operation, coordination and management of economic infrastructure. Under the legal and institutional point of view were defined public service properties and from the point of view of industrial structure, the industries model was characterized by the establishment of large State enterprises with territorial monopolies being vertically integrated. The European regulation has a more preventive and pro-active.

Traditionally in American regulation the regulation of competition is based on antitrust laws, being a monopoly and competition the exception rule.

The United States suffered clear influence of autonomous entities created in England in 1834 to fulfill measures defined in law by the Parliament. Every law that disciplinasse a matter of relief, an entity was created to apply the law. In 1887, in the United States, appeared the agencies to regulate activities, imposition of duties in the matter and sanctions. The American vision of regulation is less punitive and more intervening (cartel is a crime).

The idea of regulation in Brazil is not new, or totally unknown, because various initiatives have created regulatory agencies and entities, although they have not been called regulatory agencies, such as Public Power Commissariat (1918), Institute of Permanent defense of the Coffee-IBC (1923), the Institute of alcohol and sugar-IAA (1933), the National Institute of the Mate (1938), the National Institute of salt (1940) and the National Institute of pine (1941).

The process of economic adjustment in Brazil took importance in the 90 with the advent of privatisation that created the need for differentiation between the Government authorities and the power regulator, although in some cases the roles are exercised at the same time.  After the granting by the State, the service provider companies were subject to the regulator.

The service providers shall comprise an industry, where there is an initial primary structure that has, for example, barriers to entry, the power of the buyer and the supplier. The higher the degree of innovation, that is, changes in the economic space “in which businesses operate (changes in products, in production processes, in the sources of raw materials, in the forms of productive organization, or in their own markets, including in terms Geography), the greater the competitive advantage, economies of scale and scope.

Historically the Brazil has advanced in the application of antitrust laws in the 1995-2002 period, however, since there is a law of 1962 repression of abuse of economic power (4,137 Law/62), which created the CADE (Administrative Council of economic defense). Only in 11/06/1994 was promulgated the law 8,884 which gave the decisive steps for the establishment of a defence apparatus competition in the country, transforming the CADE in local authority under the Ministry of justice through the law.

Antitrust legislation, antitrust, or in your original name performs two basic functions:

• To curb the abuse of economic power;
• Prevent the concentration of market power.

The defence policy competition seeks thus preserve a kind of “patrimony of society”. This is a fuzzy law, i.e. belonging to the collective as a whole. (Leopardi Mello, 2002).

In Brazil, the concession contract is the ballast regulation, being a complex instrument that has two goals with potential for conflict: maximize consumer welfare and ensure an attractive return for investors.

In the Brazilian case of telecommunications, the argument put in favour of the need for regulation or the discourse on the lag of the same before the advance of technological innovations, has result unproductive, insofar as reductions are occurring significant minimum costs and minimum scale of production, increasing considerably great competition in this market.

The fact of the improvement in the competitive aspect itself wouldn’t be the only argument to justify that there is no need to regulate, given that the telecommunications industry has strategic aspects that need to be granted by the Government authorities in order to reach the desired results.

The big questions are: why do we have a regulation in telecommunications? Economic regulation is efficient and effective in which context (s) (s)? The goal of the study is to answer not just analyzing this issue, but showing all the context in which it is inserted. That is, the reasons that lead States to economic adjustment in General, and if their actions have the desired reflection despite the anachronism between the laws and the development of the market according to some authors.

EVOLUTION OF THE TELECOMMUNICATION SECTOR IN BRAZIL: PRIVATIZATION AND REGULATION

For 40 years a series of transformations began the era of telecommunications and continued into the era of digital convergence (the process of technological innovation of the telecommunication industry has very big reflection/impact throughout the production process ).

In 1969 1 fixed telephone line cost approximately $ $5,000, and only used for voice service. Today, this is a small portion of the flow of data and information that the technological innovations allow travel through telephone networks through bites and bytes.

Landlines, mobile phones, televisions, computers and other multifunctional devices enable via the Internet or wireless networks of traffic information and continually increasing interaction between all, hence the concept of Internet of things ( English, Internet of Things or simply “IoT”, is a network of physical objects, vehicles, buildings and others that have embedded technology, sensors and network connection capable of collecting and transmitting data) (SANTOS, BRUNO p. et al. 2016).

The restructuring of the Brazilian telecommunications sector began with the privatization process of Telebrás system, which was a State monopoly vertically integrated and organized in various subsidiaries, which provided services in a network of interconnected telecommunications throughout the national territory.

The privatization process started in the 80 ‘s had your heyday in the 90 with the launch of the SNES (national privatization Plan), making this process a priority of Government Fernando Henrique Cardoso, which sought to modernize and restructure the role of State and the economy as a whole, with the liberalization and deregulation of the domestic market.

The process of restructuring of the Brazilian telecommunications sector showed that the existence of an efficient regulatory system would become vital as the privatization process to achieve the provision of utilities such as telecommunications.

Finally, in 1995 important restructuring occurred in the sectors of infrastructure and constitutional changes that culminated in the creation of the electric energy regulatory agency (ANEEL) in 1996, that is, the process began two years before the creation of ANATEL.

THE REFORMATION: PRIVATIZATION AND STRUCTURAL CONSEQUENCES

Structural reform of the Brazilian telecommunications model left the observation that the current model not answering the needs of the country’s growth and did not correspond to similar standards in the world reality. The model was essentially a monopoly and not diversified, not in keeping with the period of economic globalisation, technological progress and the rapidity of the changes in the market and the needs of consumers.

Targets have been established to expand the telecommunications system on the basis of these objectives, in order to enlarge the offer of access to different services. These goals were described in PASTE-Recovery program and expansion of telecommunications system and the Postal system, and were disclosed by the Ministry of communications in late September 1995.

With respect to the goals of universalization and quality-these indicators found in the PASTE – they understand the prospects for expansion and modernization of the telecommunications industry of Anatel. The most important are related to the General Plan of Universalization targets (PGMU) and the General Plan of Quality goals (PGMQ), both the Fixed and Switched Telephone System.

Just before the privatization of Telebras, in April 1998, was released the General plan for Grants (PGO), which set the General parameters for the competition and the new rules for opening up the telecommunications market, including the different geographical areas for the exploitation of new services.

The fact is that the attendance of the indicators, as well as the schedule of opening of the market provided for in the PGO, represented a huge change and determined, along with the availability of internal sources of resources, the opening of the Brazilian market telecommunications.

The FCC was created as a special governmental agency linked to the Ministry of communications, with features that allow you to perform your mission with autonomy and independence, and its leaders enjoy stability, and that the institution would have decision-making autonomy and budget previously granted by LGT, regulated by Decree 2,238/97.

We can summarize the main attributes of ANATEL: regular, grant and oversee.

The existence of ANATEL and the regulation of the telecommunications market also aimed to generate an environment of regulatory stability that would allow long-term investment in the sector. That would be the key piece to inspire investor confidence in the stability of the market, to the contrary, the lack of technical competence and decision-making independence would generate suspicion and as a consequence would investors.

There has been considerable progress in almost all the indicators relating to quality, relevant results surpassing all predictions of accessions Anatel in this first step. Already at the end of 1999, most of the indicators already showed that the goals of quality had been affected and, soon, all the goals would be met.

ATTRIBUTES OF THE FUNCTION ADJUSTMENT OF THE STRUCTURAL CHANGE THAT HAS OCCURRED

The presence of technological innovations has created important conditions for changes in the regulatory regime of the infrastructure sectors in General, and particularly in telecommunications, with the purpose of increasing competition and allow more deregulation in the sector.

The purpose of economic regulation is to increase the well-being and economic efficiency in the regulated segments, always focusing on the appearance of technological innovations, where there is a great contribution to reducing the minimum scale required for the supply of various infrastructure services, adding to the pressure of demand for greater customization of services. (PIRES & PICCININI, 1999).

One of the reasons that can be raised as fundamental to this movement is seen with good eyes is just the realization that there are regulatory inefficiencies in the control of private companies, considering that the regulatory process involves heavy budget costs, and much of the time inefficient decisions due to stiffness and to delay making raised by the bureaucratic model of the State, in addition to the already mentioned risk of capture of regulatory agencies by the concessionary companies (Schwartz, 1997).

At present, there are two trends that aim to overcome the problems that were mentioned previously: introduction of incentive mechanisms and indirect regulatory intervention.

The introduction of incentive mechanisms has the purpose of encouraging the carriers or the threads that still act as natural monopolies to achieve objectives similar to those observed in a situation of competition in the markets, regulatory intervention indirect played through the encouragement and monitoring of a competitive structure for the industry, with the purpose of creating the more neutral environment possible for all agents involved.

In short, the effectiveness of regulation is achieved when it offers various tools such as: presence of independent agencies, control of entry and exit (via licenses to operators), defence of competition, setting the value and rate review criteria (using mechanisms measure the efficiency), monitoring of the concession agreement (in order to assess the quality of the services provided and of universal service).

For the role of regulation can be exercised with ideal effectiveness by regulating, it is necessary that certain instruments are available for this, namely:

1. Independent agencies;
2. Input and output control;
3. Regulation of competition.

According to explains the regulatory capture, the economic regulation seeks to correct market failures, and the primary role of the regulator is to be the arbiter of conflicting interests.

However, your action is subject to influence of affected groups, who often have a trading relationship with who promotes the Regulation (whether through political support or through resources).

According to the theory of capture, for capturing the legislator when the regulatory apparatus created ceases to meet the goal of great to meet the demand for regulation of the industry and the regulator, and the Agency goes on to meet the interests of industry with the time.

It is argued that she does not explain how the industry controls the regulation, however, as account for the public choice theories, applying the principles of “methodological individualism” to the political sphere, it is concluded that politicians and administrators the State are encouraged to work towards their own interests to the detriment of collective objectives for which should work, as States James Buchanan.

This argument raises the paradox that the purpose of economic regulation to achieve the great social, through State intervention in the economy (welfare economics), and in this way get the market balance (for lack of a better alternative), take the “failures of “Government, demonstrating that there are limits in this same State intervention in the economy.

One of the responsibilities of the FCC, and the purpose of the regulation of the telecommunications market, is to generate an environment of regulatory stability that would allow long-term investment in the industry. Without this reform does not inspire confidence to investors that there is stability of the market, since, otherwise, the lack of technical competence and decision-making independence would generate mistrust and, as a consequence, would scare away investors.

Circumstantial change the regulatory framework, in order to meet the interests of the State generates negative impact to the ex-ante incentives to investments of new possible entrants, i.e., changes in the regulatory framework indicates that “the rules can always change When it’s convenient. ”

The role of instigator of market competition through the regulatory role is contradictory with the Elimination of a potential competitor, reducing the contestability of the market, which could be generated by a possible regulatory network access policy.

Despite the advances of the model adopted in Brazil, the same lacks Pro mechanisms, transparency and stability in the rules of the market, in order to generate incentives for the market failures to be corrected by minimizing or avoiding possible Government failures.

The FCC’s role is strategic, and it’s up to her act in anticipation of market movements, preventive action, and implementing competitive instruments, given that your scope is wide.

PERFORMANCE OF TELCOS IN THE POST-PRIVATISATION

The telecommunications industry in Brazil has undergone a significant evolution in relation to the existing panorama in pré-privatização period where the system was inadequate and State growth standards desirable for the country, and of quality and features below the world panorama of the segment.

Between 2001 and 2006, the telecommunications companies held the largest investment plan for expansion, modernization and improvement in the quality of services provided.

Certainly it cannot be said that without the proper incentive economic regulation initiated through the various instruments which it had to first increase the penetration of mobile and fixed telephony in households, and then ensure the essential growth of the modernization of the Brazilian industrial park.

After a period of development in Brazil, in which the universalization of fixed telephony service was the flagship, the operators began to focus on services that offer greater added value to your product.

At the end of 2010, Brazil already had access 202.9 million personal Mobile Service (SMP), having registered an increase of 16.7% over the previous year. The estimate for the end of the year of 2011 is we get to 235 million. With the result of closing of 2010, the country achieved fifth place in the world rankings of mobile telephony access, behind only China, India, United States and Russia, according to survey conducted by the International Telecommunication Union in 222 countries.

This development was caused in large part by the increasing use of new features, such as dedicated terminals data connections.

Of this total of hits from SMP in 2010, 82.3 percent were 17.7% postpaid and prepaid. The prepaid amount in Brazil is mainly due to the possibility of spending control that allow the majority of the population, especially the poor consume a certain threshold of credits according to your budget.

At the end of 2010, were in progress on several initiatives to reduce Fcc prices charged on pre-paid mode, like the hiring of consultancy for the construction of a cost Model, as disclosed by the 2010 annual report.

However, in spite of successive efforts of operators to seek expansion of market share, the prepaid remains the most expensive mode compared to postpaid. The main factor of encumbrance of the mobile telephony service is surely linked to the tax burden, which, according to data collected by Telebrasil – SINDITELEBRASIL, until 2005, was 40.2%.

CHART-load of taxes on telecommunications services (in%).

This is the largest tax burden in the world (more than double the runner-up as chart above) on the amount paid by the user of telecommunications services. In 2010, the taxes have reached the highest rate in history in a year: 41.8% of the amount charged for the service provided, according to Telebrasil.

CONCLUSION

The adjustment is effective when it reaches what you crave and get to be effective and responsible. This means that it serves to achieve well established objectives and that does not impose unnecessary costs and burdens for society as a whole, thus reducing the discretion and the capture of the consumer by the regulated, as well as the regulator for the set. Being still open, participatory, and clear in your preparation and implementation of the competitive process.

This has numerous advantages, among them: belaying the regulatory system, reduce risks and costs, increasing the system’s intrinsic participation and social control and promote the development and economic growth.

The present work shows how essential the adoption of public policies that come accompanied by legislation and a regulatory framework capable of creating conditions that encourage companies to make these investments, ensure the investor the fair and appropriate compensation, and to promote the development of the infrastructure essential for the segment in the country.

It is still essential to ensure regulatory stability and flexibility so that the investor can manage your business the way that better fit the market in which it operates, and in the specific case of the work presented in the telecommunications market Brazilian.

The progress that has occurred since the 90 was demonstrated through categorical data about the DB model adopted, and how it was possible to prove the services answered reasonably with respect to aspects of quantity, diversity and coverage. However, aspects such as quality of service and the end need progress so that the consumer can understand the evolution in every way.

The difficulty to enforce clear rules, adopted by the Governor, ex-ante was the obstacle encountered by economic adjustment through the model adopted in Brazil, this is due to the inherent characteristics of the State suits, which is extremely subject to interference, and where the actions are motivated by decisions that public choice theory analyzes and classifies as government failures, which are associated with the possible failures of economic efficiency of decisions and injustice in the distribution of income.

In an extremely dynamic environment and essential as telecommunications, where citizens, companies and the Government itself have become extremely dependent on the provision of services, the need for a permanent evolution of legislation and Regulation in order to keep up with the growth of the sector.

The aspect of quality, certainly is connected to compatible investment initiatives, aiming at the improvement and the universal service access in all layers, where the amount that was invested at the beginning of the privatization process must be again applied in the coming years to achieve the necessary improvements in the segment.

As to the price of the availability of services to the consumer, we can identify through studies by Turolla and Freire de Lima (2008) that there are still significant improvements to be achieved, and there are several mechanisms that allow this.

The argument that certain decisions are made with purposes to take account of public interest, as shown in the case study, requires the deepening of decisions, from the perspective of economic regulation, in order to identify all the externalities associated with the operation, before the adoption.

Don’t judge it, the tools and the knowledge are not available under coach of the regulators and of policy makers, however, as noted by several economists (Wicksell, Buchanan and others), “the perspective of the theory of choice is that policy decisions and (especially) economic (…) are subject to a set of powers distributed between different players with different roles (and interests) in the political system “(Parker, 2002).

Just observe that the principle of best choice where all individuals involved to improve situation, i.e., Pareto improvements where the allocated resources reach “zero-sum games” depend on clear rules to be achieved.

Another aspect that should be taken into consideration in the role of redistribution that Government and regulators agents are empowered is to reallocate the resources aimed at the “zero-sum games”, however, as a general rule the economic analysis and the decision is political , where reigns the homo economicus who acts, sometimes through selfishness and irrationality in the choices.

As the research project be followed later, include the following issues:

1. Could control of the companies through the application of standards of certain harmful conduct prohibitive competition (agreements, concerted practices between undertakings and decisions by associations of undertakings, in addition to unilateral practices of companies that with significant market power) improve the conditions of regulation in Brazil?;
2. How to strengthen the role of the Brazilian competition Defense System (CADE, SAE and Anatel), preventing capture by regulator adjusted there is, as well as state regulator, which acts to meet different interests of the great social?

Some competitive revenue of this segment are known: opening of local networks; functional separation of structures that promote anti-competitive practices, disinvestment/ban the provision of competing services in overlapping networks, convergence of legislation closing the new possibilities that the market presents ( convergence of services calls for convergence of legislation).

In addition, other pró-competitivos aspects can be granted to economic development and infrastructure of the country, in return for use of the taxes collected in the sector: increasing investment in P&D, obligation to universalisation, against nationalization of services and inputs for growth of the technological park, upgrade the networks in less profitable areas, opening of markets of regions with less competition.

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APPENDIX – FOOTNOTE

2. The Coase theorem is a theory developed by economist Ronald Coase, that seeks to resolve existing externalities in markets. According to the Coase theorem, if the officers involved with externalities can negotiate (without transaction costs) from well-defined property rights by the State, may negotiate and reach an agreement in which externalities are internalized. Additionally, considering near-linear preferences, we can affirm, on the basis of this theorem, that every efficient solution must have the same amount of the external cost charge. (VARIAN, 2003)

^[1] Master in economics and business administration – Universidade Cândido Mendes-RJ.