SCA - Sistema de contabilidade analítica (Analytical Accounting System) of PTC
Cost models for electronic communications
As follows from the responsibilities of this Authority, necessary measures were taken in 2010, as specified in the sections below, with a view to implementing the obligations of cost orientation applicable to the different electronic communications and postal operators holding SMP in certain markets and/or the USP.
SCA - Sistema de contabilidade analítica (Analytical Accounting System) of PTC
As an entity with SMP, PTC is obliged to undertake price control, accounting separation and cost accounting.
In this context and for regulatory purposes PTC uses an SCA that brings together information about revenues and costs, including direct, joint and common costs by product or service, and its form of imputation, respecting the principles, determinations and recommendations of ICP-ANACOM.
ICP-ANACOM, or another independent entity so designated, is charged with, inter alia, auditing the SCA and verifying compliance with legislation and with national and international standards and best practice to ensure reliable results; it is also responsible for issuing and publishing the respective declaration of conformity.
As such, by determination of 8 April 2010, ICP-ANACOM awarded the auditing of PTC's SCA, with reference to the results of 2007, with the development of an in-depth, systematic and comprehensive analysis of PTC's SCA, concluding in 2011.
Cost models for electronic communications
- Definition of the methodology to be used for calculating PTC's cost of capital for 2009-2011
Pursuant to the obligation of price control and cost accounting to which PTC has been made subject, provision is made in article 74 of the LCE - Lei das Comunicações Electrónicas (Law of Electronic Communications) that ICP-ANACOM shall "take into account the investment made by the operator and allow said operator a reasonable rate of return on the capital invested, taking the risks involved into account (...)". This rate corresponds to the rate of cost of capital.
Taking into consideration the impact that the cost of capital has on the unit costs of products or services, ICP-ANACOM considers it essential to define a proper methodology for determining the cost of capital. As such, a consultation on this issue was conducted by an independent company.
Subsequently, considering the study undertaken by the selected consultant and the results of the prior hearing of interested parties, by determination of 10 February 2010, approval was given to the final decision on the methodology for calculating PTC's cost of capital with respect to the 2009 2011 three-year period. This decision established a linear and annual 1.0% decrement rate for the value of the rate of cost of capital between 2009 and 2011 (rounded to one decimal place for the sake of simplicity), until the defined value of 10.3 per cent is achieved in 2011, resulting in the values described in the following table.
|
1st year - 2009 |
Tx 08 - (Tx 08 - Tx 09/11) x 0.33 |
12.3% |
|
2nd year - 2010 |
Tx 1st year - (Tx 08 - Tx 09/11) x 0.33 |
11.3% |
|
3rd year - 2011 |
Tx 2nd year - (Tx 08 - Tx 09/11) x 0.33 |
10.3% |
Source: ICP-ANACOM.
- Study on the curtailment costs of PTC
PTC's curtailment costs are associated with a staff restructuring programme, which includes early retirement and suspension of staff contracts, comprised by the company’s common costs.
Given their importance, and in line with the approach taken in 2009, it was considered important to study/analyze these costs, given the significant impact they have on the unit costs of PTC's products and services.
Accordingly, the award was made to hold a consultation with respect to PTC's curtailment costs; this was conducted during 2009 and 2010, in order to enhance ICP-ANACOM's capacity to intervene with regard to PTC's regulatory accounting.
- Cost model for mobile operators
Under the LCE, ICP-ANACOM is charged with defining and analyzing the relevant markets, identifying undertakings with SMP and determining appropriate measures to companies which offer electronic communications networks and services, acting in accordance with the principles of competition law and giving consideration to national circumstances, as well as the EC Recommendation 1 and the EC's guidelines on market analysis and SMP assessment in the context of the EU regulatory framework for electronic communications networks and services.
Having regard to Directive 2002/21/EC 2, establishing that Member States shall ensure that the NRA take utmost account of the Recommendations of the EC, to which objective the national regulators are committed, in 2010 ICP-ANACOM began development of the cost model for the service of voice call termination on individual mobile networks, in order to comply with EC Recommendation 2009/396/EC, as has been occurring in other Member States, such as the United Kingdom, France, the Netherlands and Belgium.
The development of this cost model for call termination on mobile networks was initiated during 2010 in collaboration with the consultant Analysis Mason, Ltd., continuing through 2011. ICP-ANACOM launched a public consultation on 1 April 2011 to compile contributions from interested parties in relation to the methodological options to consider in developing, implementing and applying the cost model in question, in particular the definition of the hypothetical efficient operator to which it refers.
SCA - Sistema de contabilidade analítica (Analytical Accounting System) of CTT - Correios de Portugal (CTT)
The Lei de Bases dos Serviços Postais (Basic Law for Postal Services) 3 gives ICP-ANACOM, as the regulatory authority of the postal sector 4, the power and responsibility to approve and supervise the proper implementation 5 of SCA, which is an obligation to which CTT is bound 6 as US provider. As such, ICP-ANACOM is required to publish a declaration of conformity, on an annual basis with reference to the SCA and the results obtained.
As the concessionaire of provision of the universal postal service and of operation of the postal network, CTT is required 7 to maintain an SCA which enables:
i) determination of the revenues and direct and indirect costs of each of the reserved services and each of the non-reserved services; and
ii) separation between the costs associated with the various basic operations making up the postal services (collection, handling, transportation and distribution), seeking also the accomplishment of the principle of cost orientation of prices, in accordance with paragraph 3 of article 2 of the Convénio de Preços (Price Convention).
The SCA used by CTT was based on the Fully Distributed Costs (FDC) methodology, which is used extensively across Europe and which takes into account all the costs incurred by the operator for the purpose of funding the various products and services. In this respect, and according to the study "Main developments in the postal sector (2008 2010)", the FDC 8 is the methodology used by the provider of the US in 18 of the 31 countries considered.
Additionally, the study also revealed that ICP-ANACOM is one of 22 national regulatory authorities (NRA), out of the 31 European countries considered, to audit the SCA results of their US providers.
Given ICP-ANACOM's responsibilities, the 2007 results of the SCA were audited by an entity designated by this Authority to verify compliance with the obligations under relevant legislation, as well as with the national and international standards and best practice, and with the principles, determinations and recommendations established and issued by ICP-ANACOM, to ensure the credibility of the results. Following this audit, on 29 October 2010, ICP-ANACOM published the SCA's declaration of conformity with respect to the 2007 results, and issued a set of determinations with a view to improving the SCA.
In 2010, a process was initiated to launch a public tender to contract auditing of the results of CTT's SCA in respect of the 2009-2011 periods (launched at the beginning of 2011), with the following main objectives:
i) increase the number of potential interested tenderers, promoting competition in the selection procedure;
ii) provide some stability in terms of the entity to be selected, to the extent that the gains in knowledge that it obtains will contribute to improving the quality and efficiency of the audit over the designated period; and,
iii) achieve synergies resulting from the simultaneous award of the audit of three years, resulting in improvements for the activity of ICP-ANACOM by simplifying processes and through proper optimization and scheduling of resources to speed up the completion of the SCA audits.
The process of selecting an external entity to conduct the audits for 2009 2011 has been completed, and auditing of the 2009 period is due to begin in the second half of 2011.
1 Recommendation 2007/879/EC of 17/12/2007, which replaced Recommendation 2003/311/EC of 11/02/2003.
2 Transposed into national legislation by Law no. 5/2004 of 10 February - Lei das comunicações electrónicas (Electronic Communications Law).
3 Law no. 102/99 of 26 July, as amended as by Decree-Law no. 112/2003 of 12 June.
4 Paragraph 2 of article 18 of Law no. 102/99 of 26 July.
5 Paragraph 2 of article 19 of Law no. 102/99 of 26 July.
6 Paragraph 1 of article 19 of Law no. 102/99 of 26 July, and paragraph 1 of Base XIII of Decree-Law no. 448/99 of 4 November.
7 Article 19 of the Basic Law and clause 13 of the Concession Contract.
8 Also known as Fully Allocated Costs (FAC).
