On July 3rd, Resolution No. 721/2020 (hereinafter, the “Resolution”) was published in the Official Gazette of the Argentine Republic. Through this Resolution, the National Communications Agency (ENACOM) replaces the General Regulation on Universal Service approved by Resolution No. 2645/2016 and its amendments. The Resolution entered into force on the same date of its publication.
INTRODUCTION
The new General Regulation on Universal Service forms part of Annex I of the Resolution.
It establishes that the National Communications Agency is responsible for issuing both individual and general rulings related to the clarification, interpretation, and application of the new Regulation.
TRUST FUND
The Resolution refers to the Universal Service Trust Fund (hereinafter, the “Trust Fund”), created by Law No. 27,078 “Argentina Digital.” Investment Contributions, donations, bequests, and the resources referred to in Article 91 of Law No. 27,078 will be administered through the Trust Fund by the National Communications Agency. Furthermore, this Trust Fund will be implemented through the execution of a Trust Agreement.
INVESTMENT CONTRIBUTIONS
Title II of Annex I of the Resolution refers to Investment Contributions. These are defined as the contributions that licensees of ICT Services must make to the Trust Fund. The obligation to make Investment Contributions applies from the date on which the ICT Services effectively begin to be provided, or from the date the license is granted—whichever occurs first.
Article 4 of Annex I of the Resolution establishes that the percentage to be paid is one percent (1%) of the total revenue accrued from the provision of ICT Services, net of taxes and fees applicable to those services.
Regarding the payment mechanism, Investment Contributions must be calculated and paid monthly, based on monthly sworn statements and information prepared by the obligated parties. The deadline to pay the Investment Contributions is the tenth day of the month following the liquidation period. If this date falls on a non-business day, the deadline will be extended to the next business day.
Investment Contributions must be paid into the collecting account identified by the National Communications Agency via electronic transfer from a bank account held in the name of the Contributor. The bank debit and credit tax may be deducted from the Investment Contribution due in the following month in which such tax was effectively paid.
It is important to highlight that late payment of the Investment Contributions will automatically be considered in default upon the expiration of the payment deadline, without requiring judicial or extrajudicial notice.
The applicable late payment interest rate will be set by the General Administration Office of the National Communications Agency, pursuant to the delegation established in Article 2 of the Resolution.
As for any unpaid contributions owed by obligated parties as of the effective date of the Resolution, Article 10 of Annex I states that they must be fulfilled by paying the corresponding amount into the trust collecting account, along with interest accrued since the original due date, as provided under the previous regulation.
Contributors should note that repeated failure to pay the contribution may be grounds for revocation of the granted license, pursuant to Article 14, Subsection (c) of Law No. 27,078.
Article 7 bis of Annex I of the Resolution provides that the National Communications Agency may consider a Contributor’s monthly obligation partially fulfilled—up to thirty percent (30%) of the amount established in Article 4—based on the total amount rendered for Eligible Investments1 made in Projects approved by the Agency. These Projects must aim to develop connectivity infrastructure that facilitates access to Universal Service.
On the other hand, Non-Eligible Investments2 and investments related to the fulfillment of obligations under the license granting framework will not be considered in the calculation of the rendered amount.
All revenue accrued from the provision of ICT Services covered by the Projects will be included in the calculation of the Contribution established in Article 4 of Annex I of the Resolution.
Projects submitted by Contributors must fall within Programs previously approved by the Board of Directors of the National Communications Agency. Article 7 ter of Annex I outlines the guidelines that Projects must comply with, such as promoting solutions that support the goals of Universal Service through infrastructure development.
The Board of Directors of the National Communications Agency is the competent body to decide whether to approve or reject Projects before their execution begins.
Regarding project financing, Projects must be financed with the Contributor’s own funds and shall not create any rights or credits beyond those recognized through the accounting of expenditures described in Article 7 bis of Annex I.
In order to ensure compliance with the obligations arising from the awarded Project, the Contributor must provide a Performance Guarantee equal to ten percent (10%) of the total value of the corresponding Project.
INFORMATION REGIME
Article 11 of Annex I of the Resolution provides that the National Communications Agency (“ENACOM”) will determine the information regime applicable for purposes of verifying compliance with the obligations set forth in Title IV of National Law No. 27,078, related to the Universal Service and the Trust Fund, as well as in the new regulation.
Upon request from ENACOM, the parties required to pay the Investment Contribution must present instruments, documents supporting acts or operations that may constitute, constitute, or relate to facts concerning the income base subject to contributions or the determination of its amount, and that have been included in the sworn statements and the relevant books and registration systems.
For such purposes, inspections or audits as authorized under Chapter VII of Decree No. 1185/90 may be carried out. This Decree sets out the procedures for ENACOM to verify compliance with license, authorization, or permit conditions.
Such inspections or audits will be directed to the parties responsible for payment.
Additionally, ENACOM may issue summons, request written or verbal communications, or require the submission of information and documentation, including that generated by electronic, optical, or any other technology, within the legal timeframe.
OVERSIGHT AND SANCTIONS
ENACOM will act as the Enforcement Authority for the imposition of sanctions, with the power to initiate, analyze, and resolve the sanctioning process.
Article 13 of Annex I of the Resolution provides that the obligations set forth in the regulation, including omissions, errors, or falsehoods in fulfilling the duty to report as defined by regulation, will be subject to the sanctions provided in Article 67 of Law No. 27,078 in the event of non-compliance, namely:
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Warning;
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Fine;
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Suspension of commercialization;
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Closure;
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Disqualification;
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Seizure of equipment and materials used to provide the services;
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Forfeiture;
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Revocation of license, registration, authorization, or permit.
Regarding sanctions for non-compliance with the regulation, Article 74 of Law No. 27,078 will apply in determining repeat offenses. A violation will be considered repeated if a sanction has been imposed for the same obligation within the previous twenty-four months.
Violations of the General Universal Service Regulation must be notified, allowing a period of no less than ten business days to correct the situation.
Regarding the revocation of a license as a sanction for non-payment of the Investment Contributions, such revocation must be preceded by a notice of default, allowing a period of no less than ten business days, and must be signed by ENACOM’s Board of Directors.
The new regulation states that the obligated provider may be sanctioned with daily fines for each day the non-compliance with the obligations set forth in the regulation persists.
Furthermore, Article 18 of Annex I of the Resolution provides that for cases not specifically regulated, National Law No. 19,549 on Administrative Procedures and its implementing decree (Decree No. 1759/73) will apply, insofar as they are compatible with the new regulation.
UNIVERSAL SERVICE PROGRAMS
Article 19 of Annex I of the Resolution provides that the President of the Board of Directors of ENACOM, through the relevant departments, will design the various Programs to ensure compliance with obligations and access to the rights established for the Universal Service. Different categories may be created.
Universal Service Programs may include the access to and provision of ICT services to user groups with special social needs or with physical, economic, or other limitations that restrict access to services, regardless of their geographic location, among others.
As for the powers of ENACOM’s Board of Directors, Article 20 of Annex I of the Resolution grants the following:
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Issue resolutions approving Programs and Projects, and award Projects;
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Declare the procedure void or unsuccessful, if applicable;
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Terminate a procedure; impose penalties on bidders, awardees, or co-contractors;
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Rescind contracts; and approve contract extensions, reductions, or increases. For amounts below the thresholds established for procedures that may be approved by a National Director, General Director, or equivalent, the Board may delegate these operations as deemed appropriate.
Programs designed under Article 19 of the regulation will be executed through Projects, which must be awarded via one of the following mechanisms, as proposed by ENACOM’s President:
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Direct execution by the entities listed in Article 8(b) of Law No. 24,156 (i.e., state-owned companies and corporations);
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Public or private, national or international, single-stage or multi-stage tenders or calls;
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Direct execution by ENACOM in exceptional and extraordinary circumstances that are properly documented and when the goods or services can only be provided by a specific person or a small group of providers due to the nature of the service or goods and the target population or geographic area.
ICT service licensees may submit Projects to ENACOM for analysis and evaluation.
Article 21 provides that priority for eligibility under Programs financed with Universal Service Funds will be given to Projects developed in municipalities that have adopted the regulatory framework proposed in the Code of Good Practices for the Deployment of Mobile Communications Networks, issued on August 20, 2009, by the Argentine Federation of Municipalities and Mobile Communications Operators, or similar regulations. ENACOM will approve the standard agreement to be signed with the awardee.
ENACOM’s Board of Directors will determine the technical and financial auditing mechanisms for the Projects, as appropriate based on their structure and execution methods.
It may also require an audit of the financial condition and source/application of funds of the Universal Service Trust Fund. This information must be publicly disclosed. The Trustee must prepare detailed quarterly reports and an annual audited financial statement, audited by a reputable independent accounting firm. Auditing costs will be covered by the Universal Service Trust Fund.
As provided by Article 22 of Law No. 27,078, the Universal Service Trust Fund may be funded through donations or bequests. If monetary, the Contributor must deposit the funds into the designated collection account, send a note to the Trustee identifying the funds, and fulfill any other reasonable requirements set by the Trustee for proper registration.
If the contribution is not monetary, the Contributor must notify the Trustee in advance of the intent to donate, bequeath, or transfer, so that the Trustee can inform the Enforcement Authority and receive instructions on how to proceed.
