CTT required to reduce prices in 2018 due to non-fulfilment of quality of service

CTT is required to reduce prices in force in 2018 by 0.085 percentage points due to a failure to comply with two quality indicators of the universal postal service. Under ANACOM's decision, adopted following a prior hearing of the universal postal service provider, these new prices must remain in force for at least 3 months.

Considering that the price update implemented by CTT for this year was 4.5%, the weighted average change in the prices of the basket of correspondence, parcels and editorial mail services may not now exceed 4.415%. This price reduction results from the application of the compensation mechanism, which is triggered when the quality indicators of the universal postal service are missed. The law also stipulates that price reduction must benefit the universality of users of the services in question.

This is the second consecutive year in which CTT has failed to meet all 11 quality indicators of the universal postal service. In 2016, the universal postal service concessionaire failed to comply with the minimum value set for the indicator "Non-priority mail not delivered within 15 working days", which led ANACOM to order the company to apply the compensation mechanism and corresponding reduction in prices.

In 2017, CTT failed to comply with the following two quality indicators of the universal postal service:

  • Transit time for priority mail on the Mainland Portugal;
  • Transit time for intra-community cross-border mail.

In the case of the indicator "Transit time of priority mail in Mainland Portugal", at a minimum, 93.5% of priority mail sent between any point on mainland Portugal must be delivered on the working day following the day of its deposit at a CTT mail reception point, although the target is for 94.5%. However, CTT only delivered 91.4% of mail within this time limit, in breach of both the minimum and the target level; i.e. about 2 million letters sent using priority mail took more than one working day to be delivered.

As regards the indicator "Transit time of cross-border intra-Community mail", it is stipulated that at least 85% of intra-Community cross-border mail sent to and from Portugal in the priority international mail category is to be delivered within 3 working days following its deposit at a mail reception point, while the target specifies 88% of cases. Only 82.6% of such mail traffic was delivered within that time limit, i.e. about 4.5 million cross-border letters with origin or destination in Portugal were delivered subsequent to the time limit.

In accordance with the applicable rules, where the accomplished level of any quality of service indicator falls below the acceptable minimum value in a given year, the deduction to be applied corresponds to the relative importance of that indicator multiplied by the applicable maximum deduction (deduction of 1 percentage point from the maximum allowable price variation of the basket composed of correspondence, parcel and editorial mail services that make up the universal service).

Accordingly, since the relative importance of these two quality of service indicators corresponds to 8.5%, the deduction to be applied is 0.085 percentage points.

This decision must be implemented by CTT no later than 01 October 2018 and for a minimum period of 3 months.