3.1. Allocation of capacity

From data submitted by MEO¹ and the information of the variant scenario and on the RUF², as regards the capacity of MUX A, it appears that the occupation of DTT transmitters is as follows:

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It directly follows from the preceding table that to television operators (RTP, SIC and TVI) must be allocated the capacity used by each one, under contracts for the provision of DTT service that were concluded (first line of the Table above). MEO must be allocated the capacity used to transmit the signal of the internal video network of the Assembleia da República - the Portuguese Parliament (Canal Parlamento)⁵, given that this capacity, in the scope of the management of the capacity available in MUX A, was commercially used by MEO, without prejudice to the nature of the referred Canal Parlamento.

As regards the capacity reserved for interactive services, it is noted that, although it was not specifically provided for in contracts concluded between MEO and television operators, under RUF No 6/2008⁶, “PTC is also required to ensure, where requested by television operators whose television programme services are specified in paragraph 1 [that is, RTP1, RTP2, SIC, TVI and the 5th channel], and as regards the latter, additional capacity for [...] any other interactive services”. As such, this capacity is currently reserved by MEO and will remain as such - unless RUF No 6/2008 is amended, but this company may not dispose of it to operate any other services. In other works, this capacity is intended to be directly allocated to television operators.

Consequently, the occupation of MUX A transmitters in the Mainland and in the Autonomous Regions is as follows:

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As regards the capacity reserved for the 5th channel and for the shared HD channel⁷ (excluding the capacity used by the Canal Parlamento), the following must be taken into account:

(a) The operation of MUX A is subject to a business risk factor and competitors (that is, MEO) could only accept the risk resulting from future or uncertain events.

(b) As far as the 5th channel is concerned, MEO was aware of the risk that it could not be launched, which is evident from the proposal submitted to tender, where the launch of such new channel is identified as a factor of success.

It is recalled that following the launch of the public tender for the licensing of a general and national programme service, with a free and unrestricted access (the so-called “5th channel”) to be carried over MUX A, the Entidade Reguladora para a Comunicação Social (ERC) - the Regulatory Authority for the Media - determined the exclusion of the two candidates that stepped forward, ZON II and Telecinco, deeming that both failed to present the required legal and regulatory conditions. ERC’s determination to exclude both applications was challenged in court by both companies, however both withdrew their cases, decisions which in due time were approved by court.

Notwithstanding the extinction of the procedure concerning the licensing of the 5th channel, MEO remains required to reserve capacity in the DTT network, the solution for this issue being now dependant on a decision by the Government, and, as such, out of MEO’s control.

In fact, it falls on the Government, under the Television Law, to launch by means of an administrative rule a public tender for the performance of television activity, where terrestrial spectrum is used, and consequently MEO is not entitled in the mean time to freely dispose of the reserved capacity (according to articles 13, paragraph 1 a) and 15, paragraph 1, 2nd part, of the Television Law - Law No 27/2007 of 30.07, as amended and republished by Law No 40/2014 of 09.07).

(c) As regards the spare capacity out of the scope of compulsory capacity reservations, the holder of MUX A frequencies is free to use the remaining capacity for the provision of other electronic communications services, under applicable law⁸. As such, MEO may provide any other service technically compatible with the network concerned, including the commercial provision of services to third parties and the engagement of this capacity to internal needs of its own group⁹.

MEO has already done this by using part of the spare capacity so as to make the Canal Parlamento available over the DTT network and by obtaining the respective remuneration for the provision of this additional service (on a non-permanent broadcasting basis). That is, MEO started to use part of the spare MUX A capacity and to be paid for this use.

(d) However, it is acknowledged that making the Canal Parlamento available over the DTT network is an atypical situation¹⁰ and that the inclusion of new channels in MUX A does not depend exclusively on MEO’s control. Channels may only be broadcasted over the DTT network where they are duly qualified for the purpose. This is, nonetheless, a frequent legal obstacle in commercial relations concerning activities that require licensing/administrative authorization.

On the one hand, ERC's current interpretation¹¹ is to deem as permissible the broadcasting on MUX A of channels of the public television operator which are no longer transmitted on this platform (as ERC believes that public service concession contracts entitle the carrying and broadcasting of such programme services on the DTT network), and, on the other hand, nothing prevents operators of other channels intended to be broadcasted on MUX A to take steps required for the purpose with ANACOM and/or ERC. In fact, this has already been the case, as is already public knowledge, and has led to the launch of a public consultation on the occupation of MUX A and on DTT evolution in the longer run¹².

(e) It is recalled that the number of television operators interested in DTT resulted in a capacity that exceeded the capacity available in MUX A, and as such this consultation intended, among other aspects, to identify the most reasonable and non-discriminatory way to grant access to possible stakeholders.

In this context, and although at technical level available capacity exists, the present reality of differences of interpretations on applicable rules, the public consultation undertaken in this scope and competition concerns associated to MEO’s unilateral decision to conclude with any potential operator a contract for the use of that capacity, makes, in practise, the use of this capacity dependent today also of a political option.

(f) In addition, in the framework of a regulatory intervention in the scope of prices charged for DTT services, ANACOM must take into consideration the economic and financial profitability and sustainability of the DTT platform.

(g) It must also be taken into account that it is ANACOM’s duty and responsibility to encourage an efficient use and to ensure an effective management of frequencies¹³, falling on this Authority to create incentives for an optimal and efficient use of MUX A frequencies, contributing, within the scope of its remit, to ensuring the implementation of policies aimed at the promotion of cultural and linguistic diversity, as well as pluralism, in particular in respect of the media¹⁴ (without prejudice to compliance with legal requirements for the broadcasting of television channels using spectrum).

(h) Moreover, it seems obvious that in case MEO was always paid the maximum amount that ensures the desired level of revenues (specified in its tender proposal in the variant scenario), transferring to television operators that currently use MUX A capacity all MUX A-related costs, regardless of whether such operators use all that capacity, then MEO would have no incentives to maximize the use of MUX A capacity.

In brief, when weighing risks behind the business, it must be taken into due account the fact that, on the one hand, the inclusion of new channels on MUX A does not depend exclusively on MEO and, on the other hand, in the scope of a regulatory intervention on DTT service prices, which must be based on principles of equity and proportionality, ANACOM is bound to ensure, to the extent possible, the profitability and sustainability of the DTT network and, at the same time, to encourage an efficient use of frequencies, which is achieved by maximising the occupation of MUX A capacity.

Having weighted arguments and objectives, it is deemed that costs related to MUX A spare capacity (including capacity for the 5th channel) must be shared between MEO and television operators/channels.

Among the various possibilities for the distribution of costs related to this capacity, it is deemed that the most fair and reasonable solution, taking into account arguments put forward earlier, is to allocate 2/3 of costs to the supply side (MEO) and remaining 1/3 to the demand side (television operators). That is, the business risk is allocated to supply to a greater extent than to demand, given that the operator providing the service should have taken it into account, and in a perspective of efficiency in the use of spectrum, such operator must seek to maximise the use of available spectrum in MUX A, while it is not ignored that such use does not depend exclusively on that operator.

In practise, this corresponds to the allocation to each television operator/channel currently operating DTT between 6.7% and 8.3% of the spare capacity¹⁵, the remaining 2/3 of that capacity being allocated to MEO.

The following allocation of capacity thus follows:

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