ENACOM Issued New Universal Service General Rules

On June 29, 2020, through the issuance of Resolution No. 721/2020 of its Board of Directors (the "Resolution"), the National Communications Entity (the "ENACOM" after its acronym in Spanish) replaced the General Rules for the Universal Service (the "Rules") and delegated to its own Directorate General of Administration the capacity to set the default interest rate on licensees' contributions to the Universal Service Trust Fund (the "FFSU", after its Spanish acronym).

Among the recitals of the Resolution, it should be noted that the new Rules are based on the new management guidelines established in ENACOM's Board of Directors Act No. 56 dated January 30, 2020, among which the ENACOM highlighted the need to prioritize the reduction of the digital gap, through the promotion of connectivity programs and projects in the Argentine Republic that enable equitable, affordable and quality access to Information and Communication Technologies ("ICT") for all its inhabitants, with special emphasis on currently underserved areas.

The new Rules, incorporated as Annex IF-2020-40488927-APN-DNFYD#ENACOM to the Resolution, maintains the obligation of ICT service licensees ("Contributors") to contribute to the FFSU, representing 1% of the total income earned from the provision of ICT services, net of taxes and fees levied on them, through the monthly submission of the form "Affidavit of Universal Service Contribution") provided for by ENACOM’s Resolution E-2884/2017. To such end, the obligation for the Contributors to make the submission of said affidavits, and the payment of the corresponding contributions, within the 10 following days of the liquidated period, is maintained.

Likewise, the new Rules incorporate Section 7 bis, which establishes that the Application Authority (ENACOM) may have the monthly obligation of the Contributors partially cancelled up to 30% of the contributions to the FFSU, arising from the amount resulting from the rendering of computable investments made in projects approved by the ENACOM, destined to develop connectivity infrastructure that favors access to the Universal Service (the "Projects"). It is provided, among other things, that (i) the Projects must not be aimed at the deployment of infrastructure for the provision of basic telephony service or mobile communication services, which coincide with deployment obligations for similar services, provided for in legal rules of any nature by the Contributor and/or a third party; and (ii) The deployment of last mile of NGN fixed networks for broadband, which is the subject of the Projects, will not be covered by the protection described in Section 3 of Decree No. 1340/2016 (no unbundling of last mile NGN network for a period of 15 years to be counted from the publication of the aforementioned Decree).

In addition, Section 7 ter is incorporated to the Rules, which establishes (i) that the Projects must be limited to programs previously approved by the ENACOM Board of Directors (the "Programs"), and (ii) the various guidelines that such Projects must comply with for their submission to the ENACOM Board of Directors for reworking or approval, and subsequent awarding. The same Section also establishes that the award of the project will be made under the constitution of a performance guarantee equivalent to 10% of the total amount of the project.

For its part, Section 21 of the Rules introduces through subsection "c." the possibility of direct execution by the ENACOM (in exceptional and extraordinary circumstances) of the Projects for the execution of the Programs for the fulfillment of the obligations and access to the rights provided for in respect of the Universal Service, which was not foreseen in the former Universal Service Rules.