A great achievement has been accomplished by the Open Business project in Brazil. The project, supported by IDRC (International Development Research Center), negotiated an important change on the part of the Brazilian Classification of Economic Activities (referred to by the acronym CNAE in Brazil). This major change will make it easier the formalization of the Brazilian so-called "LAN-Houses" (that is name used in Brazil to define "Local Area Network-Houses", i.e., micro and small business providing internet access to the public in exchange for a small fee).

What is CNAE and why is the change important?

CNAE is the national classification of economic activities. Based on the CNAE definitions, State and City governments determine the tax levies and the rules applicable to each economic activity. The CNAE is defined by the National Commission of Classification (referred to by the acronym CONCLA).

The Open Business Team project has been discussing since the last year with several governmental branches the need creating an adequate classification for the LAN-Houses. Without a special classification, many LAN-houses were being classified under the category of "gambling, betting or entertainment". Under that category, the LAN-houses had to face very strict regulations. For instance, they were subject to strict laws that imposing a minimum distance between the LAN-houses and educational institutions (such as being prevented from being locating close to schools), having to prohibit entrance by children and teenagers, and very strict and burdensome tax regulations. In practice, because of this inadequacy, the absolute majority of LAN-houses were operating without any license whatsoever, or under other licenses which had nothing to do with their current business (such as "snack places" or even "beauty parlors").

With this major change, all the LAN-Houses in Brazil can now be registered Internet services providers, open to the public. The best thing is that electronic games continue to be permitted at the LAN-houses, provided that they are not the "predominant" activity.

Mario Brandão, president of ABCID - the biggest organization that represents the LAN-Houses in Brazil and an important group that also supports the change – said: "the decision alters in a significant way how the category is treated by the government and by law". Ronaldo Lemos, one of the coordinators of the Open Business project said: "This is an important recognition on the part of the government of the role played by the LAN-houses in bridging the digital divide in the country, from the bottom-up". From now on, it will be much easier for the LAN-Houses to obtain all the necessary permits, reducing "informality", with great benefits for society as a whole.

The Importance of the LAN-Houses: bridging the digital divide

The LAN-Houses play an important role in bridging the digital divide in Brazil. The last research released by the Brazilian Steering Committee, a governmental branch, indicates that LAN-houses currently provide internet access to more than 45% of the Brazilians connected to the internet., becoming the local most used by Brazilians to connect to the web (see chart below). The majority of the LAN-houses are located in poor areas (such as rural areas, favelas etc.), which otherwise would not be able to have access to the internet at all.

There are currently more than 90,000 LAN-houses in Brazil (as opposed to 2,200 movie theaters, and 2,000 bookstores). Accordingly, the Open Business project understands LAN-Houses can be extremely important not only to provide access to the internet in places where the income rate is low and the access would not happen, but also as a place with a huge potential to disseminate citizenship, public interest activities, and also to help other business to become "formal" in Brazil.

About

CTS and the Open Business Project

The Open Business Project is conducted by the Center for Technology & Society (CTS) at the Fundação Getulio Vargas Law School in Rio de Janeiro. CTS is the only institution in Brazil specifically aimed at dealing with the interplay of law, technology and society. The CTS is engaged in several research and education projects, always under an interdisciplinary approach. Its collaborators include anthropologists, computer scientists, economists, and media executives.

Among its projects, the CTS is responsible for launching and managing the Creative Commons project in Brazil (www.creativecommons.org). CTS is also a consultant to several branches of the Brazilian government (the Brazilian Internet Steering Committee, the National Institute of Technology, the Ministry of Education and others). CTS is also engaged with the Ministry of Culture in developing projects to promote access to knowledge and for bringing cultural production to the more impoverished areas of Brazil, with the help of technology.

Also, the CTS coordinates several courses at the Fundação Getulio Vargas law school, such as the intellectual property course, both at graduation and post graduation levels.

www.direitorio.fgv.br/cts

IDRC

The International Development Research Centre (IDRC) is a Crown corporation created by the Parliament of Canada in 1970 to help developing countries use science and technology to find practical, long-term solutions to the social, economic, and environmental problems they face. Our support is directed toward creating a local research community whose work will build healthier, more equitable, and more prosperous societies.

www.idrc.org/index_en.html