There is no easy way out of a complex problem: the 5G auction in Brazil
Summary
A needy public school in Paraisópolis needs internet. This is important for Davi, a young student, and for Juliana, his teacher attentive to the demands of the community. At the same time, the entry of 5G connectivity technology in the country is being discussed. A number of factors caused schools to be included among the counterparts of the 5G auction in the Brazilian context, a complex process that took place between 2018 and 2021. The case presents the conflicts observed by Henrique, a public servant linked to the regulatory agency ANATEL. Among the difficulties presented by the case are the conciliation between political and technical aspects, as well as possible captures of regulatory policies by other actors in the universe of public policies and limitations in evaluations (ex-ante and regulatory impacts - RIA), adding complexity to the proposed analysis. Participate in the debate with Juliana, Davi and Henrique, each with their role in this reality. This case is recommended for Public Management, Public Policy and Regulation disciplines.
Keywords: 5G, auction, regulatory policy, public management, Brazil
Abstract
A public school in Paraisópolis slum needs internet. This is important for Davi, a young student, and for Juliana, his teacher who is sensitive to the needs of the community. At the same time, the entry of 5G connectivity technology in the country is being discussed. In Brazil, several factors led to the fact that schools would be included among the counterparties of the 5G auction, a complex process that took place between 2018 and 2021. The case presents the conflicts observed by Henrique, a public servant linked to the regulatory agency ANATEL. Among the challenges presented by the case you will find: the conciliation between political and technical aspects, as well as possible captures of regulatory policies by other actors in the public policies arena and limitations in evaluations (ex-ante and regulatory impacts - AIR), adding complexity to the proposed analysis. Take part in the debate with Juliana, Davi and Henrique, each one with its own role in this reality. This case is recommended for Public Management, Public Policy and Regulation courses.
Keywords : 5G, auction, regulatory policy, public management, Brazil
Every story has two sides
Davi is a student at a public high school located in Paraisópolis, a favela in São Paulo where more than 100,000 people live. Engaged in causes that seek social transformation through education, the young man was very happy to read that a group of parliamentarians led by Deputy Tabata Amaral (PDT/SP) delivered to the Federal Court of Accounts (TCU) a technical note that requested the inclusion of the commitment to connect public schools in the 5G notice. The deputy even posted on Twitter:
Historic day for education! Anatel approved the 5G public notice and, after much struggle and articulation, more than 14 thousand public schools will be connected to the internet as a counterpart to the auction. The technological revolution makes the inclusion of schools in this public notice a big step towards the future!
When commenting on the news with his teachers, Davi wanted to understand the impact of that political decision to ask for a billionaire investment to connect public schools. Juliana, her Portuguese teacher, an activist engaged in the community, sought to clarify her doubts.
David: Teacher, the deputy cited a study by the education bench that states that the decision will not bring major financial impacts or delay the deadlines of the public notice...
Juliana: So... Every story has two sides... Let me tell you...
The conflict between technical opinion and political will
Despite living in the community of Paraisópolis, Juliana was born and raised in Brasília, where she met Henrique, her childhood friend, a public servant for more than 10 years at the National Telecommunications Agency (Anatel).
Since 2018, Henrique has participated in Anatel meetings about the preparations for the 5G auction, which, as it is something very complex, required many studies and analyses before it happened. From 2021 onwards, meetings became more frequent. As a result of this process, it was decided that in order to bear the high cost of installing 5G, mobile operators would have to install the antennas and comply with other obligations defined by the government.
Juliana was curious to know what these obligations were, and Henrique said that mobile phone operators would have to bring internet to the cities of the Amazon, the highways and the remote cities, and build a private network just for the government. Juliana found this very strange, because of the billionaire investment. The professor wondered why operators would make such a commitment, imagining a loss for them.
Henrique explained that the cost estimate for operators exceeds 40 billion reais, but there were people at Anatel who dubbed this business a "money-making factory", considering that the return for companies would be much greater. Still, he said that TCU technicians analyzed the draft of Anatel's notice for the bidding, and the reporting minister Raimundo Carreiro commented:
The analysis of this bidding for the 5G public notice was preceded by extensive procedural dialogue, through numerous meetings with the Ministry of Communications, Anatel and various stakeholders in the telecommunications sector, both companies and civil entities representing the respective categories and economic activities, including through a reference panel.
Henrique also told Juliana how the various corrections to the public notice aim to avoid losses of billions for the government. However, the TCU technicians were not satisfied, a lot had to be fixed in the public notice, but the Anatel people said that, to do everything the technicians said, it would take a long time and the auction would be delayed.
Juliana was at a loss to understand and showed Henrique the headline of the newspaper that said that the Minister of Communications took the TCU Ministers to Europe, Asia and the United States to meet the companies and operators that were already working with 5G. The newspaper said that the Minister of Communications guaranteed that the auction notice would be ready before November and the auction would come out on time, later that year.
Of course, Juliana was rooting for this, imagining that the community of Paraisópolis could benefit from the arrival of 5G. However, his friend warned that it was impossible and added: "the TCU technical staff is always in the meetings here. They say that they are working non-stop because the auction notice is full of problems, and that we will have to spend a long time correcting it; while their bosses travel with the Minister of Communications, saying in the newspaper that there will be no delays..."
The months went by, and Henrique saw that scenario of uncertainty at Anatel, all without knowing if the TCU Ministers would decide to stop the 5G auction to fix the notice or comply with the government's will and hold the auction even with the problems identified.
Capture of regulatory policy by parliament
Juliana, when she met David again, reported what she had talked about with Henrique.
David: I saw here that the deputies declared that they want to connect all public schools to the internet by 2024, but the term of deputy Tabata Amaral, who is leading the defense of this agenda, is already ending... She had better hurry...
Juliana: Now you've said it all! The political decision on the 5G auction is an excellent opportunity to raise resources and legitimize campaign promises. Deputy Tabata Amaral's electoral campaign focused mainly on the education agenda, being elected for the period from 2019 to 2022 with the sixth highest number of votes in São Paulo.
Davi researched and saw that the deputy asked the TCU Ministers to include the obligation for telephone operators to connect all public schools with broadband internet. She sent a Technical Note to the TCU that said:
If the Administration does not act to guarantee schools' access to the internet, in practice, it makes the right to education unfeasible. This is an omission that disrespects the Constitution and federal legislation.
David: Wow, but this deputy is brave! Did she accuse the Ministers of omission?!
Juliana: But it is precisely this behavior that ended up invading the competence of the public policy management bodies, the Ministries of Communications and Education, and the situation may have represented a risk of capture to achieve their political objectives.
David: What do you mean "capture", teacher?
Juliana: Capture in the sense that it goes beyond the limits of its organ and allows the defenders of this flag some kind of benefit.
David: Just look at this other report: it seems that there was still confusion among the agencies, because the Ministry of Communications even issued another Technical Note to inform that it considered it "inopportune" to change the draft of the 5G Auction Notice to oblige telephone operators to include public schools in the offer of the technology.
Juliana: And in this article, do you say what the operators thought of this new obligation?
David: Here it says that the operators reported fear, because "there is no detail about which public schools should be connected, nor in which cities"... So... How much will it cost and who will pay? Then, I'm already afraid of being left over for us, what if the operators pass on the cost to the consumer and increase the phone bill...
Juliana: Davi, the notice is still with the TCU, let's follow the scenes of the next chapters...
From the information obtained with the help of the teacher, Davi's optimism began to give way to distrust, since he had come to understand that the internet for all public schools was not as simple as he imagined.
Lack of ex-ante analysis and regulatory impact assessment
Meanwhile, in Brasilia, Henrique learned details of the Technical Note that the deputy sent to the TCU about the need to bring internet to 14,295 basic education schools, at an estimated cost of R$ 2.54 billion. There were already two laws that mandated connecting all Brazilian public schools to high-speed internet by 2024. Henrique then sent a message to Juliana, who was following closely and with interest in the topic:
Henry: They are commenting that this constant bombardment in the media about the request to the TCU is a way of pressuring the ministers to include this obligation in the auction notice and not be seen as enemies of education...
Juliana: Huh... But this can be a problem. What do you think?
Henry: So... analysis is very important Ante and the regulatory impact assessment prior to the launch of the 5G auction, as implementing or changing a public policy requires prior studies and preparations. This is because policies can impact the government and society, and these impacts have to be foreseen before taking public policy to its beneficiaries.
From this conversation, Juliana was able to understand that the ideal would be make a prior assessment (analysis Ante ) to accurately identify the public problem to be solved (where and how many schools need internet), in order to define the objectives and goals (number of schools to be connected), the intervention alternatives (survey of the technologies that can be adopted), the best implementation strategy (direct action, decentralized, etc.), the estimated costs (to implement each technological solution), among other aspects. The teacher thought: how would they know that my school needs internet and how much it would cost, just like so many others?
By updating Davi and exposing this reflection, Juliana heard an excellent understanding from him.
David: I understand... then the analysis Ante it serves to plan and rationalize government action, avoid unnecessary actions and expenses, which may already be being done by other agencies or ministries, or by states and municipalities...
Juliana: In addition to this prior assessment, it would be necessary for Anatel to have prior knowledge of the effects that an obligation established in the auction may have on companies in the sector. That is, the regulatory impact analysis (RIA) and that must be done to know the impacts of this policy on all those affected by it. In the case of the obligation to connect schools to the internet, without the RIA, this obligation can generate effects on the telecommunications sector, especially in competitiveness, with impacts for the interested economic agents, and eventual creation of difficulties for the entry of new competitors...
David: Pulls! Less competition is worse for everyone, the service becomes more expensive... It ends up being worse for society, because the fewer companies offer a certain service, the fewer options to choose from the citizen, and so the services tend to worsen their quality and the prices are higher than in an environment with a greater number of companies.
Juliana: That's that... AIR seeks to avoid so-called anticompetitive practices by encouraging an environment of competition. The previous analysis tries to identify the effects of the policy, through discussion with all stakeholders, seeking to anticipate this type of impact.
David: In the case of the internet in public schools, the stakeholders would be the operators, the education councils, the ministries that take care of the policies and even the schools that would be impacted. We should have public calls to listen precisely to the population that is affected at the end, so that we can know the reality!
Juliana: This type of situation, in which we do not know the reality of someone affected by politics, is known as information asymmetry. And the RIA also serves to reduce this. In the case of schools, it would provide security for us to know if the mandatory connection in the auction would in fact be the best alternative to make up for the lack of internet in public schools.
David: Would the Technical Note that came from the Legislature to ask for the inclusion of the obligation to connect schools in the 5G Auction Notice serve as these previous studies you mentioned? This can speed up the arrival of the internet here at our school!
Juliana: No... The studies must come from the responsible bodies, in this case Anatel and the Ministries of Education and Communications. And in this case, the Technical Note was very superficial, based on a contract that took place in a certain state of Brazil, without considering all the diversity of the more than 14 thousand schools to be served. It does not deal with the difference in costs, the equipment to be used, or who would operate the internet... imagine the difference between those of us who are in São Paulo and those who are in Acre, for example.
David: In other words, although the gesture of connecting public schools seems grandiose, it can generate greater costs and inefficiencies than the benefits that were being advertised. This obligation may even harm the competition of the auction itself, reducing the number of interested parties and reducing the amount obtained by the government... There are many sides to this story.
The TCU endorses the Congressional proposal and influences the change in public policy
In August 2021, Henrique was at an Anatel meeting when the TCU's technical area concluded the analysis of the auction notice, and that they had communicated to Anatel that several serious problems would have to be solved for the auction to be held. The TCU technicians said that the obligations of the government's private network and the connection of the Amazon could not be included in the public notice, the prices of the frequency bands were wrong, there were problems in the costs of equipment and in the number of stations needed for 5G.
Henrique was very frightened when he heard that the TCU estimated that these problems could cause losses of more than 100 billion reais to the public coffers. Despite this, Henrique's experience told him that the auction would take place anyway, no matter how many problems the technicians found, because there was a political will of the TCU Ministers.
Now, what could explain this? Henrique realized that the Ministers are appointed by the government itself and by Congress. He also noticed that some of them had recently been traveling with the Minister of Communications. And if he remembered that next year there will be an election, so it suits the government to promote that it has achieved the 5G auction.
In the following weeks, Henrique saw the TCU Ministers approving the auction notice without Anatel solving the problems that the technical area had identified, which could generate billionaire losses to the public coffers. And that one of the few demands of the Ministers of the Court was for Anatel to include in the auction notice the obligation to connect the schools, in response to the deputy's request.
In those days, Henrique commented to his friend:
Henry: Did you see? Our predictions have been confirmed... in the end, the ministers ignored all the warnings of problems and losses that the technical area of the TCU identified, approved the notice as it was, and even ordered the inclusion of what the deputy requested. Nothing scares me anymore...
Juliana: For us, we can only hope that so many schools in Brazil that need internet are served!
Discussion questions
- Analyze the pros and cons, for the government and society, of inserting the obligation to connect schools in the 5G auction.
- Highlight technical and political aspects that confront each other in the situation presented.
- What will be the impacts of the inclusion of the new obligation for the regulated sector? And what will be the impacts for Anatel?
- Considering the inclusion of more than 14 thousand schools in the scope of the auction, how could they be selected?
- How could ex-ante analysis and AIR help in the process of defining the obligations of the 5G auction?
- Analyze whether the best way to achieve the goal of school connectivity was via a 5G auction. Are there other alternative ways to achieve this goal?
Gallery
Video Gallery
References
NATIONAL TELECOMMUNICATIONS AGENCY (ANATEL). Public Notice No. 1/2021, Bidding No. 1/2021-SOR/SPR/CD-ANATEL, Radio frequencies in the 700MHz, 2.3GHz, 3.5 GHz and 26 GHz bands, Process No. 53500.004083/2018-79. Available at: https://sei.anatel.gov.br/sei/modulos/pesquisa/md_pesq_documento_consulta_externa.php?eEP-wqk1skrd8hSlk5Z3rN4EVg9uLJqrLYJw_9INcO6OyRD8iqL9S9Xn8pP7_7nZL7eBIQWeOiWAZmPzrP88GsKp4NawWkp9n0q_6bMePRxnAscg5z5FRrlZQdkKAcHw . Accessed on: June 10, 2010.
BRAZIL. Constitution of the Federative Republic of Brazil of 1988. Brasília: Presidency of the Republic, 1988.
______. Chief of Staff of the Presidency of the Republic, Ministry of Finance, Ministry of Planning, Development and Management, Ministry of Transparency and Comptroller General of the Union. Public Policy Evaluation: Practical Guide to Ex Ante Analysis, v.1. Brasília: CC/PR, MF, MPGD and CGU, 2018.
______. Ministry of Communications. Ordinance No. 1,924/SEI-MCOM, published in the Official Gazette on January 29, 2021, Establishes Guidelines for the bidding events of the frequency bands. Available at: https://www.in.gov.br/web/dou/-/portaria-n-1.924/sei-mcom-de-29-de-janeiro-de-2021-301396768 . Accessed on: June 10, 2010.
______. Ministry of Economy. Guide for the Preparation of Regulatory Impact Analysis (RIA), v.1. Brasília: SEAE/SEPEC/ME, 2021.
______. Federal Court of Accounts. Ruling No. 2032/2021 – Plenary. Available at: https://pesquisa.apps.tcu.gov.br/#/documento/acordao-completo/*/NUMACORDAO%253A2032%2520ANOACORDAO%253A2021%2520COLEGIADO%253A%2522Plen%25C3%25A1rio%2522/DTRELEVANCIA%2520desc/0/sinonimos%253Dfalse . Accessed on: June 10, 2022.
DIAS, Tatiana. High Speed . The Intercept Brasil, São Paulo, May 16, 2015. 2022. Available at: https://theintercept.com/2022/05/16/secretario-leilao-5g-deixa-governo-para-vencedora-ligga-telecom/ . Accessed on: June 10, 2010.
FLESCH, José Norberto. Broadband – "If we were to include schools, the 5g public notice would be delayed by 8 months", says minister . Tele.Síntese, São Paulo, 11 ago. 2021. Available at: https://www.telesintese.com.br/se-fossemos-incluir-escolas-o-edital-do-5g-atrasaria-8-meses-diz-ministro/ . Accessed on: June 10, 2010.
MELO, André Marcus. Regulatory Policy: a Literature Review. BIB, Rio de Janeiro, nº 50, 2nd semester of 2000, pp. 7-43.
SGARIONI, Mariana; AMARAL, by Bruno. Tabata Amaral takes to the TCU a proposal of R$ 2.5 billion in the 5G public notice for connection in schools . Teletime, São Paulo, 15 Apr. 2021. Available at: https://teletime.com.br/15/04/2021/tabata-amaral-leva-ao-tcu-proposta-de-r-25-bi-no-edital-de-5g-para-conexao-em-escolas/ . Accessed on: June 10, 2010.
WIZIACK, Julio; HOLANDA, Marianna. TCU pleases the government and approves 5G auction rules. Folha de São Paulo, Brasília, 18 ago. 2021. Available at: Source: https://www1.folha.uol.com.br/mercado/2021/08/tcu-agrada-governo-e-aprova-regras-do-leilao-do-5g.shtml . Accessed on: June 10, 2010.
About The Authors
João Vicente de Morais holds a master's degree in Public Administration from FGV EBAPE (2022), a specialist in Public Policy Evaluation from ISC-TCU (2020) and a degree in Electrical Engineering from São Paulo State University – UNESP (2004). He has been a Federal Auditor of Finance and Control at the Office of the Comptroller General of the Union – CGU since 2008, and currently works as Chief Auditor at the National Land Transport Agency (ANTT). Email: joaovmorais@gmail.com
Marcelo Montalvão Reis holds a master's degree in Public Administration from FGV EBAPE (2022), a specialist in Public Sector Auditing from ISC-TCU (2019) and a degree in Mechanical Engineering from São Paulo State University (2002). He has been a Federal Auditor of Finance and Control at the Office of the Comptroller General of the Union – CGU since 2007, and currently works in the area of science, technology and communications at CGU, carrying out audits and evaluations of public policies on these topics. Email: mmreis123@gmail.com
Vanessa Constanti Geeverghese holds a master's degree in Public Administration from FGV EBAPE (2022), a specialist in Financial Auditing from ISC-TCU (2019) and a degree in Electrical Engineering from the University of Brasília (2011). She is a Federal Auditor of Finance and Control at the Office of the Comptroller General of the Union – CGU, and currently works in the area of science, technology and communications, carrying out audits and research in the area of regulation. Email: vaneconstanti@gmail.com
Aline Brêtas de Menezes holds a PhD in Business Administration (2022) and a Master's degree in Public Administration from FGV EBAPE (2014), a degree in Logistics Sciences and Public Administration from the Air Force Academy (2009). She is a professor in the undergraduate and graduate programs stricto sensu at FGV EBAPE. She researches (re)forms of public service delivery, with a special interest in partnerships between governments and civil society organizations. Email: aline.menezes@fgv.br
Helena Araújo Costa is Associate Professor III of the Department of Administration of the University of Brasília and coordinator of the Casoteca ADM. PhD in Sustainable Development. Email: helenacosta@unb.br
Thanks
The authors are grateful for the valuable contributions received from professors Caio Costa (UnB), Tatiana Soster (FGV EPPG) and Renata Paz (MEC) during the construction of this teaching case.
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