Residential tariff of the fixed telephone service for 2011

Decision on the residential tariff proposed for the fixed telephone service for 2011, as presented by PTC on 29/09/2010 and amended on 22/10/2010

1. On 29.9.2010, PTC submitted to ICP-ANACOM a proposal for a revision of the basic tariff for the private residential fixed telephone service, to take effect from 01/01/2011, which was based on specific assumptions concerning the projected rate of inflation for 2011 (in this scope, PTC used the inflation rate of 2% projected in the Bank of Portugal's Summer Economic Bulletin), given that at the time the State Budget for that year had not yet been made available.

2. Taking into account the disclosure of the State Budget proposal for 2011, and the inflation rate estimate entered for that year, of 2.2%, PTC submitted to ICP-ANACOM, on 22/10/2010, a revised wording of the Basic Tariff proposal submitted earlier, which took into consideration the inflation rate.

3. With respect to the main tariff, PTC's new proposal consists of a reduction by 5.6% of the price per minute of communications made during peak hours, which would amount to 0.0304€ (excluding VAT).

4. With respect to the alternative tariff, PTC's new proposal consists of a reduction by 0.58% of the monthly line rental charge, which would amount to €11.92 (excluding VAT), the value for other communications remaining unchanged.

5. By determination of 14.12.2004 ¹, approval was given to obligations in retail narrow band markets that apply to companies of Grupo PT notified as having significant market power (SMP) in each of these markets, in particular: (i) to ensure transparency through the publication of tariffs, levels of quality of service and other conditions of the offer; (ii) to refrain from showing undue preference to specific end-users; (iii) to provide for cost-orientation of prices, (iv) to maintain an analytical accounting system; (v) to maintain separate accounts; and (vi) to maintain affordability.

6. To ensure affordability and cost orientation, a specific price-cap has been adopted for the residential market as a way of progressively achieving cost orientation of prices and of transferring efficiency gains to the customer.

7. In the scope of the referred determination, it was stated that, until ICP-ANACOM established modifications to specific elements making the obligation of price control operational, the price-cap provided for in the Universal Service Price Convention ² regarding the subscriber mode, of CPI -2.75%, would continue to apply to services previously provided for in the same document, that is, the installation of an analogue network line, analogue network line rental and telephone communications in the country.

8. With respect to the CPI value used to calculate the price-cap, and considering the inflation rate estimate entered in the State Budget proposal for 2011 (2.2%), the value of the price-cap applicable for 2011, resulting from the formula CPI-2.75%, is -0.55%.

9. Having examined the proposal submitted by PTC, it was concluded that:

a. The weighted variation of the prices resulting from the proposed main tariff of  the fixed telephone service (applicable by default), presented by PTC to take  effect from 01/01/11, is compatible with the applicable price-cap, resulting in  an average annual change in the basket of -0.55%;

b. For the alternative tariff (applicable on an optional basis upon the request of  customers), presented by PTC to take effect from 01/01/11, the variation of  the prices results in -0.59%, which is also compatible with the applicable price- cap;

c. As regards the possibility of replicating tariffs proposed by PTC on the basis of  this operator's wholesale offers, alternative operators, if they so wish, may  replicate PTC’s prices for both tariff options (taking into consideration the total  relevant residential traffic: PTC-PTC, PTC-Other Fixed Operators and PTC- Mobile Operators);

d. Relatively to the cost orientation of proposed prices, it is concluded that,  taking into consideration ''line rental + traffic'' as a whole, the estimated margin  would be positive, which leads to the conclusion that revenues earned by PTC  are sufficient to cover incurred costs (taking into consideration the total relevant residential traffic: PTC-PTC, PTC-Other Fixed Operators and PTC-Mobile Operators).

10. In the light of the above, under powers provided for in points b), d), f) and h) of paragraph 1 of article 6 of the Statutes in annex to Decree-Law number 309/2001, of 7 December and under paragraph 3 of article 86, paragraph 1 of article 93 of Law number 5/2004, of 10 February, and in the scope of regulation objectives established in points a) and c) of paragraph 1, point a) and b) of paragraph 2 and point a) of paragraph 4, all of article 5 of the same Law, the Management Board of ICP-ANACOM hereby determines to submit the proposal presented by PTC to the opinion of ICP-ANACOM's Advisory Council, pursuant to point c) of article 37 of this Authority's Statutes. It further determines, with suspensive effect until the Advisory Council’s opinion is produced, to declare the compliance of the proposal submitted by PTC with applicable regulatory principles, namely as far as the compatibility with the applicable price-cap is concerned.

 Imposição de obrigações na área de mercados retalhistas de banda estreita.