7.1. Universal service of electronic communications

7.1.1. Affordability - residential tariff of the FTS provided under the Universal Service

7.1.2. Parameters and levels of quality of service

7.1.3. Strategy of the universal service provider for public pay-telephones

7.1.4. NCUS - Net costs of universal service

7.1.5. Procedure to designate the universal service provider

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7.1.1. Affordability - residential tariff of the telephone service at a fixed location (FTS) provided under the Universal Service

By determination of 29 November 2012, ICP-ANACOM did not oppose to the proposal presented by PTC on 25 October 2012 to amend the residential tariff of the FTS provided under the US and to take effect from 1 January 2013, considering that the proposed tariff was in compliance with regulatory principles, particularly as regards compatibility with the applicable price cap. The proposal was also submitted to ICP-ANACOM's Advisory Council for an opinion.

The proposal presented by PTC consisted of a 23.3% reduction in the main tariff, with the price charged per minute for peak-time calls falling to 0.0244 euros (excluding VAT). The following table summarizes the FTS tariff proposed by PTC.

Table 3. Main tariff of the fixed telephone service (FTS) proposed by PTC to take effect from 1 January 2013

Values excluding VAT	Initial charge (euros)		Time credit (seconds)		Price per minute (euros)
	Working days 9am-9pm	Other times	Working days 9am-9pm	Other times	Working days 9am-9pm	Other times
Local/national	0.0700	0.0000	60.00	-	0.0244	0.0000
Installation	71.83
Subscription	12.66

Source: PTC. Values excluding VAT.

As regards the alternative tariff, PTC proposed a reduction of 2.27% in the monthly subscription price, falling to 11.65 euros (excluding VAT), as detailed in the following table.

Table 4. Alternative tariff of fixed telephone service (FTS) proposed by PTC to take effect from 1 January 2013

Values excluding VAT	Initial charge (euros)		Time credit (seconds)		Price per minute (euros)
	Working days 9am-9pm	Other times	Working days 9am-9pm	Other times	Working days 9am-9pm	Other times
Local/national	0.0700	0.0700	60.00	60.00	0.0277	0.0084
Installation	71.83
Subscription	11.65

Source: PTC. Values excluding VAT.

In the analysis performed, ICP-ANACOM concluded that the proposed tariff submitted by PTC, as regards both the main tariff and the alternative tariff (applied optionally upon the request of customers and currently with a very small number of subscribers), complied with the applicable price cap, representing average weighted variations of the basket, consisting of installation, monthly subscription and communications, -1.86% and -1.90% for the primary and alternative tariff, respectively. For 2013, the applicable price cap, based on the rate of inflation foreseen in the Draft State Budget for 2013 (0.9%), is -1.85%.

It was also concluded that the necessary conditions are in place as allow replication by alternative operators of the proposed tariff based on PTC's wholesale reference offers. Regarding fulfilment of the principle of cost orientation of prices, it was concluded that the revenues reported by PTC in terms of subscription and traffic charges would be sufficient to cover the costs incurred, resulting in a positive estimated margin.

7.1.2. Parameters and levels of quality of service

In accordance with ICP-ANACOM determination of 30 March 2006, the US provider (now PTC) is bound to publish parameters of quality of service and performance targets applicable to the US on an annual basis, as well as information on the levels of performance calculated in relation to the previous year.

The targets established and the levels achieved by the US provider for each indicator in 2011 and 2012 are detailed in the following table.

Table 5. Quality of service parameters of the universal service

Universal service quality of service parameters	Target	2011	2012
QSP1. Supply time for initial network connection
(a) Supply time for connection when customer does not specify a date (days) (a1) which corresponds to the 95% percentile of the fastest installations (a2) which corresponds to the 99% percentile of the fastest installations	21 43	12 29	7 23
(b) Percentage of requests for the supply of connections satisfied on or before the date agreed with the consumer in cases where the consumer specifies a target date	85%	99%	98%
(c) Ratio between the number of initial connections provided where a target date is specified by the consumer and the total number of initial connections supplied	n. a.	25%	29%
QSP2. Fault rate per access line Total number of faults reported per access	0.10 n. a.	0.16 245 954	0.12 164 245
QSP3. Fault repair time (hours)
(a) Repair times of faults on local access network (a1) corresponding to the 80% percentile of fastest repairs (a2) corresponding to the 95% percentile of fastest repairs	72 165	76 167	29 75
(b) Repair times for other faults (b1) corresponding to the 80% percentile of fastest repairs (b2) corresponding to the 95% percentile of fastest repairs	47 108	81 172	28 72
(c) Percentage of faults repaired within the deadline established by the universal service provider as objective governing provision to its customers	80%	66%	88%
QSP4. Response time for operator services
(a) Average response time for operator services (seconds)	11.0	17.0	17.0
(b) Percentage of calls to the operator services answered with 20 seconds by human operator	80%	89%	91%
QSP5. Unsuccessful calls
(a) No. of calls eligible for the calculation of QSP5 - national calls - international calls	n. a. n. a.	1 290 129 607	1 274 480 905
(b) Percentage of unsuccessful national calls	n. a.	0.06%	0.06%
(c) Percentage of unsuccessful international calls	n. a.
QSP6. Time taken to establish calls
(a) Total number of calls eligible for the calculation of QSP6 of - national calls - international calls	n. a. n. a.	n. d. n. d.	n. d. n. d.
(b) Time taken to establish national calls (seconds) (b1) corresponding to the 100% percentile of fastest calls (b2) corresponding to the 95% percentile of fastest calls	n. a. n. a.	n. d. n. d.	n. d. n. d.
(c) Time taken to connect calls for international calls (seconds) (c1) corresponding to the 100% percentile of fastest calls (c2) corresponding to the 95% percentile of fastest calls	n. a. n. a.	n. d. n. d.	n. d. n. d.
QSP7. Response time for directory enquiry services
(a) Average response time for directory enquiry services (seconds)	5.0	1.0	0.3
(b) Percentage of calls to directory enquiry services answered within 20 seconds by a human operator or by equivalent answering systems	95%	99%	99%
QSP8. Proportion of coin and card operated public pay-telephones in working order
The total number of complete days during which existing public pay-telephones are in full working order compared to the potential number of operational days of the average public pay-telephones park.	96%	96%	97%
QSP9. Bill correctness complaints Percentage of bills resulting in complaints compared to the total number of bills issued	0.04%	0.02%	0.03%

Source: PTC.

In relation to 2011, there was an improvement in the performance of most parameters, especially QSP3 and QSP1 (a) and QSP7 (a).

In 2012, there were further breaches of performance targets established by ICP-ANACOM, particular with regard to QSP2 and QSP4 (a).

7.1.3. Strategy of the universal service provider for public pay-telephones

In January 2012, PTC submitted a development strategy statement for the public pay-telephone service for this year. It called for the reformulation of the stock, in line with the latest guidelines of ICP-ANACOM, from a perspective of optimizing benefits to the population and contributing to ensuring general access to the telephone service, bearing in mind the penetration of FTS and of the mobile telephone service (MTS).

PTC also stated in the strategy document, that provision of the public pay-telephone service in 2012 will be subject to an adverse environment, marked by uncertain evolution in the national economy (dependent on the conditions imposed by the EU/International Monetary Fund (IMF) Financial Assistance Programme), by a continuing decline in Portugal's immigrant community (which has an important role in the use of public pay-telephones) and by the fully competitive market comprising the service (which is reflected in the wide range of voice and data offers). In this respect, significant reductions are forecast in the overall stock (approximately 42%), leading to an overall stock of 15,412 public pay-telephones by the end of 2012.

In the first quarter of 2013, PTC submitted a report to ICP-ANACOM detailing its accomplishment of annual targets for 2012; this information is presented in the following table on public pay-telephones controlled by PTC in 2012, according to district and means of accepted payment.

Table 6. PTC Public pay-telephones in 2012

District	Actual in 2012
	Outdoors			Indoors		TOTAL PROVIDED
	Card only	Card and coins	Coins only	Conventional telephone	Coins only
Aveiro	4	269	133	615	216	1 237
Beja	8	155	104	217	88	572
Braga	12	280	101	808	209	1 410
Bragança	7	52	16	466	22	563
Castelo Branco	10	106	70	464	191	841
Coimbra	13	236	87	699	248	1 283
Évora	3	96	89	99	73	360
Faro	10	669	146	310	220	1 355
Guarda	12	73	47	462	87	681
Leiria	20	204	69	544	276	1 113
Lisboa	139	1 952	509	311	1 602	4 513
Portalegre	2	52	55	111	56	276
Porto	66	893	231	477	1 418	3 085
Santarém	11	158	97	461	79	806
Setúbal	29	646	152	129	678	1 634
Viana do Castelo	3	105	58	437	180	783
Vila Real	7	79	28	643	77	834
Viseu	11	128	85	856	237	1 317
Madeira	16	152	81	82	56	387
Açores	9	119	34	99	79	340
Total	392	6 424	2 192	8 290	6 092	23 390

Source: PTC.

The actual reduction in the stock of public pay-telephones controlled by PTC in 2012 fell far short of the reduction forecast under the company's development strategy. At the end of 2012, the overall stock comprised 23,390 public pay-telephones, about 42% more than expected. Compared to stock reported in 2011, there was a reduction of approximately 12%.

The following chart summarizes information reported on the evolution in the stock of public pay-telephones from 2004 to 2012. The overall change in this period consists of approximately -51% in terms of total pay-telephones (-42% for outdoor public pay-telephones and -55% for indoor public pay-telephones).

Graph 14. Evolution in stock of public pay-telephones in the period 2004-2012

 

Source: PTC and ICP-ANACOM calculation.

With regard to public pay-telephones in places of social interest (including hospitals and health centres, educational establishments and airports), a reduction was reported in 2012 of around 13%. In absolute terms the largest reduction was reported in public pay-telephones located in educational establishments, as shown in the following table.

Table 7. Variation in stock of public pay-telephones controlled by PTC in 2012, compared to 2011

Type of location	Total public pay-telephones		Deviations between 2012 and 2011
	Actual 2012	Actual 2011	Absolute difference	Percentage difference
Hospitals and health centres	638	729	-91	-12%
Educational establishments	416	615	-199	-32%
Airports	160	151	9	6%
Prisons	331	320	11	3%
Bus terminals	88	89	-1	-1%
Rail terminals	212	217	-5	-2%
Metro stations	140	158	-18	-11%
Courts and Halls of Justice	9	12	-3	-25%
Hotels, hostels and boarding houses	72	95	-23	-24%
Total located in sites considered of special interest	2 066	2 386	-320	-13%

Source: PTC and calculations of ICP-ANACOM.

With regard to users with special needs, PTC reports an increase, in 2012, in total cabins which allow the use of wheelchairs, increasing from 313 to 363.

7.1.4. NCUS - Net costs of universal service

During 2012, ICP-ANACOM developed a number of activities in this area, resulting i) from the process of designating the US provider; ii) the process associated with the launch and oversight of public tenders for the auditing of the NCUS of 2007-2009 and NCUS of 2010-2012, and iii) the consolidation of the concept of unusually high access costs.

ICP-ANACOM's work towards the designation of the US provider is more detailed in another section, although it needs to be underlined that ICP-ANACOM Determination of 7 February 2012 established that the values of NCUS that result from tenders 1 and 2¹ relating to the designation of the US provider(s) (since launched), will be considered as an unfair burden and as such will be funded under the terms and conditions set out in the tender documents and regulations setting up the compensation fund.

With regard to the auditing of NCUS presented by PTC, two tenders were launched during 2012, the first to audit the values of the NCUS estimated by PTC for 2007-2009 and the second to audit the NCUS estimated by PTC for 2010-2012 (in conjunction with the audit of the AAS for the same years, and also a draft revision of this system, as mentioned in section 6.1.4). These services were awarded on 6 August 2012 and 3 October 2012, respectively. The auditing of the 2007-2009 NCUS was closely followed by ICP-ANACOM, and was completed in early 2013.

Pursuant to the auditing of the 2007-2009 NCUS it is necessary to confirm the conformity of the NCUS calculations presented by PTC with the methodology defined by ICP-ANACOM to calculate these costs. In this context, it was considered necessary to consolidate the concept of "unusually high access costs' for the purposes of determining non-profitable customers in profitable areas and consequently to calculate the NCUS.

ICP-ANACOM Determination of 9 June 2011, which defined the methodology to be used for calculating NCUS, states that this calculation should include the net costs generated by non-profitable customers in profitable areas, arising solely from the existence of unusually high access costs, allowing also the adoption of alternative methodological approaches for determining the avoidable costs of access. The determination also states that, ideally, all non-profitable customers who reside in profitable areas and who generate "unusually high access costs" should be individually identified and the cause of this high cost duly justified by the US provider.

Accordingly, and after the prior hearing process, on 12 October 2012, ICP-ANACOM adopted a final decision on this matter and determined that the net costs of customers who make up the third of customers with the highest access costs are to be considered for this purpose.

7.1.5. Procedure to designate the universal service provider

In 2012, ICP-ANACOM worked intensely on this specific matter, both in the context of its role providing advice to the Government and under its regulatory functions. The procedure to designate the US provider(s) is covered later in this report in section 22, on the activity of advising the government, while this section details the clarification issued by ICP-ANACOM on 25 October 2012 relating to the determination of 17 May 2007 on "retirees and pensioners". This determination of 17 May 2007 established, in the context of the US, a framework of inseparable conditions for granting a 50% discount to retiree and pensioner subscribers. In summary these conditions have effect: a) in the conditions governing provision of the discount within the scope of the US; b) in the impact of this discount on the WLRO by means of SMP; and c) in the clarification of the associated net costs and the inputs considered in evaluating and calculating the NCUS.

Considering the new framework applicable to the US, following publication of the components of the tender to designate the US provider(s), including publication of the conditions governing US financing, ICP-ANACOM saw fit to issue a clarification.

Therefore, and with regard to the provision by PTC of the 50% discount for retirees and pensioners, ICP-ANACOM clarified that the set of new conditions established in Tender One of the US (connection to a public communications network at a fixed location and provision of a telephone service through that connection) overrode this obligation as arising from ICP-ANACOM Determination of 17 May 2007.

In this respect, the decision on the specific conditions provided to retiree and pensioner subscribers under the US become inapplicable as soon as provision of the US commences under the contract concluded pursuant to Tender One, notwithstanding that ICP-ANACOM reserves the right to review the specific conditions laid down in the WLRO in order to ensure compliance with the obligations arising from analysis of the relevant market.

ICP-ANACOM also stated, with specific regard to the NCUS, that it is inapplicable to the consideration of net costs identified in the 2007 determination, being incompatible with the compensation/funding scheme arising from the tender components.

 
¹ Tenders for the connection to a public communications network at a fixed location and provision of a telephone service through that connection and the offer of public pay-telephones.