On July 3, Resolution No. 721/2020 (hereinafter, the “Resolution”) was published in the Official Gazette of the Argentine Republic, by which the National Communications Authority replaced the General Regulation of Universal Service approved by Resolution No. 2645/2016 and its amendments. En la misma fecha de su publicación, la Resolución entró en On the same date of its publication, the Resolution entered into force..
- INTRODUCTION
The new General Regulations for Universal Service are included in Annex I of the Resolution. It establishes that the National Communications Authority is responsible for issuing acts of both individual and general scope related to the clarification, interpretation, and application of the new Regulations.
- FROM THE TRUST FUND
The Resolution refers to the Universal Service Trust Fund (hereinafter, the “Trust Fund”), created by Law No. 27,078 “Digital Argentina.” Investment contributions, donations, legacies, and resources provided for in Article 91 of Law No. 27,078 will be administered through the Trust Fund by the National Communications Authority. The Trust Fund will also be implemented through the signing of the Trust Agreement.
- OF INVESTMENT CONTRIBUTIONS
Title II of Annex I of the Resolution mentions Investment Contributions. These are defined as those contributions that ICT Service licensees must make to the Trust Fund. The obligation to make Investment Contributions will take effect from the date the ICT Services were actually provided, or from the date the license was granted, whichever comes first.
For its part, Article 4 of Annex I of the Resolution establishes that the percentage to be paid will be the corresponding one percent (1%) of the total income accrued from the provision of ICT Services and the net of taxes and fees levied on ICT Services.
Regarding payment arrangements, Investment Contributions will be settled and credited monthly based on monthly sworn statements and information to be prepared by the obligated parties. The deadline for depositing Investment Contributions will expire on the tenth of the month following the settled period. If the deadline falls on a non-business day, the deadline will be extended to the next business day.
Investment contributions must be paid into the collection account identified by the National Communications Agency (EN) by electronic transfer from a bank account in the contributor’s name. The tax on bank credits and debits may be deducted from the investment contribution statement for the month immediately following the month in which the tax was actually incurred.
It is important to note that default in payment of Investment Contributions will occur automatically, upon the mere expiration of the payment deadline, without the need for judicial or extrajudicial notice.
The default interest rate to be used will be established by the General Administration Directorate of the National Communications Agency, pursuant to the delegation established in Article 2 of the Resolution.
With respect to the contribution obligations that are pending compliance by the respective obligors as of the date of this document, Article 10 of Annex I of the Resolution establishes that they must be fulfilled by depositing into the fiduciary collection account the corresponding amount plus accrued interest since the due date on which they should have been deposited, as determined by the previous regulations.
Contributors must consider that repeated failure to pay the contribution may be grounds for the expiration of the license granted, in accordance with Article 14, Section c) of Law No. 27,078.
Article 7 bis of Annex I of the Resolution establishes that the National Communications Entity may partially cancel the monthly obligation of the Contributors, up to thirty percent of the Contributions provided for in Article 4 arising from the sum resulting from the surrender of Computable Investments[1] made in Projects approved by the National Communications Entity. These Projects must be intended to develop connectivity infrastructure that facilitates access to the Universal Service.
On the other hand, Non-Computable Investments[2] and investments associated with the fulfillment of obligations within the framework of the granting of licenses will not be considered for the purpose of calculating the amount of the surrender.
All income accrued from the provision of ICT Services covered by the Projects will be computed for the purposes of calculating the Contribution established by Article 4 of Annex I of the Resolution.
Projects submitted by Contributors must be limited to Programs previously approved by the Board of Directors of the National Communications Agency. Article 7 ter of Annex I of the Resolution establishes the guidelines that projects must follow, which include, for example, promoting solutions to achieve Universal Service objectives through infrastructure development.
The Board of Directors of the National Communications Agency is the competent body to decide on the rejection or approval of Projects, prior to the start of their execution.
Regarding project financing, these must be financed with the Contributors’ own funds and will not generate rights or credits other than those approved by the reports referred to in Article 7 bis of Annex I of the Resolution.
In order to ensure compliance with the obligations arising from the awarded Project, the Contributor must provide a Performance Guarantee for an amount equivalent to ten percent of the total amount of the corresponding Project.
- OF THE INFORMATION REGIME
Article 11 of Annex I of the Resolution establishes that the National Communications Authority will determine the information regime applicable for the purposes of accrediting compliance with the obligations provided for in Title IV of National Law No. 27,078, corresponding to the Universal Service and the Trust Fund, as in the new regulations.
At the request of the National Communications Agency, those obligated to pay the Investment Contribution must proceed to exhibit instruments, receipts of the acts or operations that may constitute, constitute or refer to facts related to the Income Base subject to contributions or, with the determination of its amount, and have been recorded in the sworn declarations and in the corresponding books and registration systems.
To this end, inspections or audits authorized by Chapter VII of Decree No. 1185/90 may be ordered. The Decree herein establishes the procedure for monitoring compliance with the conditions of licenses, authorizations, or permits by the National Communications Authority.
Those inspections or audits will be carried out by those responsible for payment.
Likewise, the National Communications Agency may issue subpoenas, require written or verbal communications, or the presentation of information and documentation, including those generated by electronic, optical, or any other technological means, within the timeframe established by law.
- OF INSPECTION AND SANCTIONS
The National Communications Authority will be the Enforcement Authority in sanctioning matters, with the power to promote, analyze, and resolve the sanctioning process.
Article 13 of Annex I of the Resolution establishes that the obligations established in the regulations, including omissions, errors or falsehoods in compliance with the duty of information established by the regulations, will be subject in the case of non-compliance to the sanctions provided for in Article 67 of Law No. 27,078, namely:
- Warning.
- Penalty.
- Suspension of marketing.
- Closing.
- Disqualification.
- Confiscation of equipment and materials used to provide services.
- Confiscation.
- Expiration of the license, registration, or revocation of the authorization or permit.
Regarding the sanctions imposed for non-compliance with the regulations, the provisions of Article 74 of Law No. 27,078 shall apply to the repeated violation. It shall be considered as such when a sanction has been applied in relation to the same obligation within the previous twenty-four months.
Violations of the General Regulations of Universal Service must be reported, allowing a period of no less than ten business days to correct the situation.
Regarding the declaration of license expiration as a sanction for failure to pay the Investment Contributions, this must be preceded by a notice, for a period of no less than ten business days, and must be signed by the Board of Directors of the National Communications Agency.
The new regulation establishes that the obligated provider may be sanctioned with daily fines for each day that noncompliance with the obligations established in this regulation persists.
For its part, Article 18 of Annex I of the Resolution establishes that for cases not covered by the regulation under study, the National Law of Administrative Procedures No. 19,549 and its regulations, Decree No. 1759/73, will apply, as long as those regulations are compatible with the provisions of the new regulation.
- OF THE PROGRAMS
Article 19 of Annex I of the Resolution establishes that the President of the Board of Directors of the National Communications Entity, through the competent areas, will design the different Programs[3], for the fulfillment of the obligations and access to the rights provided for in respect of the Universal Service, being able to establish different categories.
Universal Service programs may include access to and provision of ICT services to groups of users who, due to their special social needs or physical, economic, or other characteristics, have limited access to services, regardless of their geographic location, among others.
Regarding the powers of the Board of Directors of the National Communications Entity, Article 20 of Annex I of the Resolution establishes the following:
- Issue the relevant resolutions for the purposes of deciding on the approval of Programs and Projects, the awarding of Projects;
- Declare the procedure void or failed, if applicable;
- To annul a procedure; to apply penalties to bidders, successful bidders, or co-contractors;
- Terminate a contract; and approve any extensions, reductions, and increases thereof. When the amounts involved do not exceed those provided for in selection procedures, where the competent authority for approval is the National Director, General Director, or equivalent official, the Board of Directors of the National Communications Agency may delegate the aforementioned procedures as it deems appropriate.
The Programs designed in accordance with the guidelines established in article 19 of the regulations will be executed through Projects[4], which will be awarded through one of the following mechanisms, as proposed by the President of the Board of Directors of the National Communications Entity:
- Direct execution to the entities included in Article 8, paragraph b), of Law No. 24,156, that is, state-owned companies and corporations.
- Tender or contest, public or private, national or international, single or multiple stage.
- Direct execution by the National Communications Authority, in the event of duly accredited exceptional and extraordinary circumstances and provided that the sale of goods or services can only be provided by a specific natural or legal person, or a small group of them, based on the type of service or goods contracted and depending on the human group and/or geographical area to be served.
ICT Service licensees may submit projects for consideration by the National Communications Agency for analysis and evaluation.
Article 21 establishes that priority will be given to considering projects eligible for Universal Service Funding Programs for those municipalities that have adopted the regulations proposed in the Code of Good Practices for the Deployment of Mobile Communications Networks, drafted by the Argentine Federation of Municipalities and Mobile Communications Operators on August 20, 2009, or that contemplate similar regulations. The National Communications Authority will approve the model agreement to be signed with the successful bidder.
The Board of Directors of the National Communications Agency will determine the financial and technical audit mechanisms for the Projects it deems appropriate based on their structure and execution mechanisms.
Likewise, it may request, through an audit, the financial status and the origin and use of funds from the Universal Service Trust Fund. This audit will be publicly reported. The Trustee must prepare detailed quarterly reports and an annual balance sheet audited by an independent accounting firm of recognized professional standing. The expenses incurred in carrying out these audits will be borne by the Universal Service Trust Fund.
The Universal Service Trust Fund, as provided in Article 22 of Law No. 27,078, may be funded through donations or bequests. If the funds are in cash, the Contributor must deposit the funds in the collection account, send the trustee a note identifying the transferred funds, and comply with any other requirements the Trustee deems reasonably necessary for proper registration. If the contribution is not in cash, the Contributor must also inform the Trustee in advance of their intention to make the donation, bequest, or transfer, so that the Trustee can notify the Enforcement Authority of this fact and be advised how to proceed.
Thoughtfully,
ALLENDE & BREA
[1]These are investments in active infrastructure, understood as the acquisition of equipment and/or software that enables the updating of service platforms and/or the implementation of a packet-switching network (switching equipment, servers, routers, gateways, modems, OLTs, radio links, etc.), using the necessary interfaces that enable the use of the current network layout; and investments in passive infrastructure, such as cables, poles, masts, self-supporting towers, antennas, power equipment, outdoor cabinets, grounding materials, racks, patch panels, and any other resources necessary for network commissioning that do not correspond to civil works. Infrastructure operations and maintenance services are included, subject to review and approval by the competent areas and the corresponding audit mechanism.
[2] Goods and services not included in active or passive infrastructure. These non-computable investments must be attributable to the implementation of the Project. Infrastructure operation and maintenance costs are excluded, unless extraordinary circumstances are proven that require the computation of such costs for the Project to be technically or economically viable.
[3] They are specific technical, economic and administrative interventions arranged by the Implementing Authority to comply with a specific objective and purpose of the Universal Service, in accordance with the design of the Information and Communications Technology policy.
[4] They are units for the execution of the objectives of the Programs, which require the prior approval of the National Communications Entity for their execution.
