4. Decision

Whereas:

(a) From the in-depth investigation into the costs of the DTT service provided by MEO, and without prejudice to some ad hoc doubts that still remain on some specific issues, which however do not affect the direction of this decision, it was concluded that the information presented by MEO on costing data for the DTT service for 2010, 2011 and 2012 is in general duly substantiated, having CAS results for those years been already audited.

(b) Costs for 2013, which have also been audited, but not analysed in detail in this document, show an increase by 6.5% compared to costs for 2012.

(c) Costs of the DTT service vary from year to year, mainly as a result of changes in fixed assets, both due to additional investments which obviously lead to an increase of costs and to the reduction of the net value of fixed assets, which entails a reduction of the cost of capital, and taking also into account past investments which are being fully depreciated, there are grounds for assessing on an annual basis the need for reviewing the price that MEO charges television operators for the DTT service.

(d) In a perspective of evaluation of (cost-oriented) prices, it is necessary to take into account the spare capacity in MUX A, the cost allocation of which (to television operators and/or MEO) must be duly weighted.

(e) 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 in 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 capacity on MUX A.

(f) Having weighted arguments and objectives, it is deemed that costs related to spare capacity in MUX A must be shared between MEO and television operators/channels. It is deemed that the most fair and reasonable solution, in the context of this determination, is to allocate 2/3 of capacity to the supply side (MEO) and remaining 1/3 to the demand side (television operators).

(g) The price currently charged by MEO to television operators is not excessive, and is cost-oriented, taking into account the estimated costs for 2013 and the above-mentioned allocation of spare capacity in MUX A.

(h) Prices charged to television operators may require a cut, in a perspective of cost-orientation of prices, as spare capacity of MUX A is occupied or costs decrease, in the light of price analysis methodologies deemed to be more appropriate to be taken into consideration in a future decision, bearing in mind that the principle of cost-orientation of prices may only be imposed further to a market analysis.

(i) According to point 2.3 of ANACOM’s determination of 14 March 2014, it is incumbent on ANACOM to decide when it is timely and convenient to launch the definition and analysis of the market within which the DTT service is included, the present analysis, pursuant to determination of 2 May 2014, serving also as an input for such market analysis.

(j) By decision of 22 July 2015, ANACOM approved a draft decision on the conclusions of an in-depth investigation into the costs and revenues of the DTT service provided by MEO, having been decided to submit this DD to the prior hearing of stakeholders, pursuant to articles 100 et seq of the former Administrative Procedure Code, approved by Decree-Law No 442/91, of 15 November (applicable ex vi article 8 of Decree-Law No 4/2015, of 7 January, which approves the new Administrative Procedure Code), as well as to the general consultation procedure laid down in article 8 of ECL, stakeholders having been granted in both cases a period of 30 days to assess the matter¹. Comments received, the respective analysis and reasoning of the decision have been included in the “Report of the prior hearing and public consultation on the in-depth investigation into the costs and revenues of the DTT service provided by MEO”, which is deemed to be an integral part of this determination,

ANACOM’s Management Board, in pursuing the tasks assigned and exercising the powers granted, respectively under points b) and e) of paragraph 1 of article 8 and in points g), i) and n) of paragraph 1 of article 9, both of ANACOM’s Statutes, approved by Decree-Law No 39/2015, of 16 March, and also in pursuing regulatory objectives set out in point a) of paragraph 1, point d) of paragraph 2 and in points a) and b) of paragraph 5, all of article 5 of Law No 5/2004, of 10 February, as amended and republished by Law No 51/2011, of 13 September, and subject to subsequent amendments (Electronic Communications Law - ECL), and taking into account competences provided for in articles 43, paragraph 3, and 56 of the same Law, hereby determines:

1. To close the in-depth analysis into the costs of the DTT service provided by MEO, concluding that costs presented in the CAS for that service do not give rise to reservations.

2. To conclude that the price currently charged by MEO to television operators is not excessive, taking into account costs for 2013.

3. To recommend MEO that, without prejudice to the results of an analysis to the market within which the DTT service is included, it assesses prices charged on its own initiative, in case spare capacity in MUX A is occupied or costs change to an amount that justifies a reduction of prices.