By letter received on 31 March 2015, Vodafone submitted to ANACOM, under article 20 of ECL, a request for review of the date of expiry of its right of use for frequencies in the 2100 MHz band, stating in brief as follows:
a) By means of Administrative Rule No 532-A/2000, of 31 July, approval was granted to the Public Tender Regulation governing the allocation of 4 licenses of a national scope for the operation of international mobile telecommunication systems (IMT2000/UMTS), according to which the license would have a 15-year period of validity (article 24). On its turn, Administrative Rule No 532-B/2000, with the same date and subject-matter, established that the license would be charged 20.000.000.000$00 (currently about 10 million Euro).
b) On 19 December 2000, the Minister for Social Equipment announced the allocation of 4 licenses of a national scope for the operation of the international mobile telecommunication systems (IMT2000/UMTS), and on 11 January 2001, ICP-ANACOM issued the corresponding licenses which conferred Rights of Use for Frequencies in the 2100 MHz band for a 15-year period, which could be renewed for similar periods, upon request for licensed bodies.
c) Several factors which subsequently arose at technological and economic levels made it impossible to start the commercial operation of the UMTS system on the date initially established, January 2002 (namely, unavailability of equipment, underdevelopment of overall interoperability tests, absence of available technology, weak user demand of new technologies and shortage of solutions on service platforms).
d) These subsequent changes occurred not only on a national but also on an international level, leading some National Regulatory Authorities, in view of the same situation, to alter the date of the start of commercial operation (such as Belgium, Spain, Germany, Austria, Finland, United Kingdom and Italy) and/or to extend the period of validity of licenses by a further period of 5 years, that is, for 20 years (such as France and Italy).
e) In Portugal, the date initially determined for the effective start of service operation was also postponed three times, for reasons of force majeure, namely to 31.12.2002, 31.12.2003 and 1.7.2004.
f) In the scope of Vodafone’s application of 21 August 2003 (as well as of other holders of UMTS licenses) which determined the last postponement of the start of service operation, the company applied for the review of the period of validity of the UMTS license held by it, so that such period was calculated from the date of effective launch of the service.
g) This application was analysed in the Working Group set up by ICP-ANACOM for the purpose, which considered, in brief, that (i) legislation in force at the time did not allow for the change of the period of validity set out in the license, however (ii) in any case, the statutory instrument transposing the so-called 99 review, the approval of which was expected to take place, provided that the Regulatory Authority was entitled, in duly substantiated situations, to allocate rights of use for frequencies up to a maximum of 20 years. The Working Group did not recommend the immediate amendment of periods of validity of licenses, but proposed that ICP-ANACOM decided “to admit for the possibility of reviewing periods of validity of licenses issued according to applicable rules of the new regulatory framework.” ICP-ANACOM approved this proposal as a final decision on 10.02.2004.
h) In any event, ICP-ANACOM considered as postponed the time limit for compliance with part of obligations arising from the UMTS license, namely when the Regulatory Authority provided, as regards Vodafone’s coverage obligations that “year 4” of its license would only end on 5 May 2008.
i) As ICP-ANACOM had foreseen, the legislative evolution of the electronic communications regulatory framework did in fact establish that: “Rights of use for frequencies shall be granted for a 15-year period of time, and in duly substantiated situations, according to the service concerned and taking due account of the objective pursued as well as of the need to allow for an appropriate period for investment amortisation, they may be granted by the NRA for a different period, for a minimum of 10 years and a maximum of 20 years.” This provision is currently in force in article 33, paragraph 1, of the Electronic Communications Law.
j) On the other hand, paragraph 1 of article 20 of ECL lays down that: “The conditions, rights and procedures applicable to the exercise of the activity, including the rights of use or rights to install facilities, may only be amended in cases of objective justification and in accordance with the principle of proportionality, by means of law, regulation or administrative act, as appropriate.”
k) Vodafone believes that it finds itself precisely in a situation where there is objective justification for amending the date of expiry of its right of use for frequencies in the 2100 MHz band, given that, through no fault of its own, by the current date of expiry of its rights of use for the referred frequencies - 11 January 2016 -, it will not have had the opportunity to operate the referred frequencies for the period initially established, that is, 14 years (this is because, although the UMTS license provided for a 15-year time limit, in fact the expected period of commercial operation was 14 years, as a 1-year time gap had been provided for the actual start of operation).
l) The company considers that the referred duration of the UMTS license is intrinsically linked to the investment it made, both in the scope of the purchase of the license - worth a 100 million Euro -, and at the level of commitments undertaken in the scope of the public tender to obtain it (such as contributions to the Information Society, investment for complying with the various obligations underlying the license, such as coverage levels, etc.)
m) Vodafone refers that this possibility of “correcting” the date of expiry is also expressly provided for in equivalent national law. In fact, under articles 297 and 298 of the Public Procurement Law, in case the performance of a public contract is “suspended” for reasons outside the control of the private contracting party, the time period of the referred impossibility must not be considered for the purpose of the duration of the contract initially determined. Consequently, in the first place, the performance of the contract is suspended, and in the second place, the initial contractual time limit is extended, in order to guarantee the duration of the contract as previously established, which determined, obviously, the initial decision to enter into a contract and the value of the investment required to perform the contract (and corresponding amortization plans). Although the allocation of rights of use for frequencies under consideration here is not qualified as a public contract, Vodafone takes the view that the ratio decidendi of solutions put forward fully applies to this situation.
n) On the other hand, in an international comparative perspective, Vodafone stresses also that most “UMTS Licenses” are allocated at European level to last for 20 years.
o) In this case, the company believes that the postponement of the date of expiry of rights of use for frequencies is not disproportionate given that (i) not only the requested postponement of the date of expiry will not determine that Vodafone shall benefit from a period of time longer than the 15 years initially stipulated (it will only consider that during part of those 15 years the commercial operation will not have taken place, this situation being corrected) but also (ii) such alteration will not determine any competitive advantage compared to its European peers, which for the most part already enjoy rights of use for frequencies for a 20-year period.
p) Vodafone further admits that this amendment of the date of expiry is applied to all Portuguese mobile electronic communications operators, as the situation that determined the impossibility of commercial operation of frequencies for 15 years affected the whole market.
q) Lastly, Vodafone takes the view that the request, as set out, does not change the substantial nature of rights of use, nor does it create comparative advantages, and the company naturally agrees with it, as holder of the respective rights of use. For this reason, under paragraphs 3 and 4 of article 20 of ECL, it does not require necessarily a public consultation, although Vodafone does not oppose to such a procedure, in case ICP-ANACOM deems it to be appropriate.
Vodafone thus request, under articles 20 and 33 of ECL, the amendment of the date of expiry of its Right of Use for Frequencies in the 2100 MHz band to 5 May 2018, according to the possibility already admitted by ICP-ANACOM in its Determination of 10 February 2004.
