ANACOM orders MEO to cut the price of islands circuits by more than 72%

ANACOM has ordered MEO to make a reduction of 72.8% in the price of Ethernet leased lines (capacity of up to 10 Gbps) between Mainland Portugal and the Autonomous Regions of the Azores and Madeira (CAM circuits) and between the various islands of each region (inter-island circuits), where supported on MEO’s submarine cables. The reduction which is now being imposed will have to be implemented within 30 days. This price reduction comes on top of a 50% reduction ordered by ANACOM in July 2015 as part of an urgent adopted measure. 

In total, the reduction in prices ordered by ANACOM in its two decisions totals 86% over one year.

With these measures, ANACOM aims to improve conditions of competition in the market, benefiting operators who need to lease this infrastructure to develop their businesses and generally benefiting consumers who may enjoy a greater range of supply. The competition problems identified by the analysis carried out by ANACOM stem, in particular, from leased line pricing that is excessively above costs.

With the growth of broadband offers, increases in Internet speed and the expansion of bundled offers, there has been increasing demand for capacity on these submarine cables from operators competing with MEO to provide services in the Autonomous Regions.

The cost of CAM circuits and inter-islands are a large part of the cost structure of these operators and therefore, the increase in traffic to the Autonomous Regions, in line with growing demand, has led to increased operational costs for operators. Without implementation of the present measures, this may lead to a rise in retail prices.

The price reduction now imposed was decided following conclusion of the analysis of the market for high-quality wholesale access at a fixed location (market 4); this analysis was notified to the European Commission which did not raise reservations.