Declaration of Significant Market Power
1. Decree-Law no. 415/98, of 31st of December laid down a regulatory framework for interconnection between public telecommunications networks in an open and competitive market environment, in order to enable interoperability among public telecommunications services and with the general guiding principles of promoting consumer interests and efficient allocation of resources.
A fundamental aspect of this decree-law is the concept of significant market power and, in the accomplishment of the responsibilities specifically attributed to the Instituto das Comunicações de Portugal, the regulating body for the telecommunications markets, the declaration of the entities that have SMP.
According to their categories, these entities are subject to the different types of obligations made duly explicit in Decree-Law no. 415/98.
2. Under the terms of no. 2 of article 7 of this decree-law, an organization shall be presumed to have significant market power when it has a share of more than 25% of a particular telecommunications market in the geographical area in which they operate. However, the Instituto das Comunicações de Portugal may resolve, according to the additional criteria laid down in no. 4 of the same article 7, that a given organization has significant market power regardless of whether it has a market share of more than 25%.
To this end, it falls upon the Instituto das Comunicações de Portugal, following a prior statement by the Directorate-General for Trade and Competition, to decide, declare and publish yearly a list of entities that have significant market power in the relevant markets. According to the provisions of this decree-law, in particular of article 6, no. 1, apart from the interconnection market, the following
markets may be considered: fixed telecommunications networks and or fixed telecommunications services market; leased lines market; mobile telecommunications networks and or mobile telecommunications services market. At the moment, it is essential to regulate and effectively implement this Decree-Law, in view of the sound functioning of the market from a perspective of full market liberalisation, and to progress with the determination of entities with significant market power in the relevant markets.
3. In fixed telecommunications networks and or fixed telecommunications services market, leased circuits market and mobile telecommunications networks and or mobile telecommunications services market, market shares are calculated based on the sales volume of the companies in each of these markets.
4. Regarding the interconnection market, it is necessary to make some clarification about the market definition and the method of calculating market shares.
4.1. As for the services which define the interconnection market, they correspond to the services that ensure a physical and logical connection between telecommunications networks used by the same or different operators, in order to allow access and communication between the different users of the services provided.
4.2. With respect to the determination of entities with significant market power, the transactions that originate the following revenue were considered:
a) Revenue obtained by the mobile and fixed operators, owing to calls from other networks terminating in their networks.
b) Revenue owing to the transport of national and international traffic.
c) Internal revenue attributed to the operator of the fixed network, owing to its long distance traffic, which is calculated based on the terminating prices of mobile-fixed.
For this purpose, transactions carried out between the operators mentioned in paragraphs a) and c) of no. 1 of article 6 of Decree-Law no. 415/98 relating to switching services of transit and termination of calls were considered.
5. Weighing up these factors:
5.1. Portugal Telecom, S.A. has significant market power in the fixed network and or fixed services market.
5.2. Portugal Telecom, S.A. has significant market power in the leased lines market.
In consequence, Portugal Telecom, S.A. is subject to all the obligations laid down in Decree-Law no. 415/98, for the fixed network and or fixed services operators and leased lines operators which have significant market power.
6. As regards mobile operators:
6.1. The declaration of significant market power in relation to mobile operators will be the object of a parallel analysis, under the terms of the law.
6.2. TMN-Telecomunicações Móveis Nacionais, S.A. and Telecel-Comunicações Pessoais, S.A. do not have significant market power in the interconnection market. This conclusion arises from analysis of the market share held by those companies and especially, from the weighing up of their eventual capacity to manipulate the market conditions, as was established in no. 4 of article 7 of Decree-Law no. 415/98, bearing in mind the significant competitiveness of mobile operators and the potential effects, in 1999, resulting from the entry on the market of a third company during the second half of 1998.
However, because of the increasing weight of the so-called mobile services in the telecommunications markets and, in particular, in the interconnection markets, the Instituto das Comunicações de Portugal is going to analyse the evolution of the interconnection market in particular, throughout 1999, and the present position should be the object of a new analysis after a period of 6 months from the date this declaration is published.
Consequently, TMN - Telecomunicações Móveis Nacionais, S.A. and Telecel - Comunicações Pessoais, S.A. are not subject to the specific obligations laid down in Decree-Law no. 415/98 for mobile operators that have significant market power in the interconnection market.
7. The rapid technological and market evolution that has taken place warrants the progressive consideration of interconnection services in a framework of technological convergence, from the users' perspective, and not exclusively or fundamentally according to the technologies that support the different services, whether fixed or mobile or of the distinction between voice and data, which is traditional but, in a growing number of cases, inappropriate to market realities. For example, although for the year 1998 the definition of an interconnection market could be considered justifiable, having the interconnection services provided by the bodies mentioned in no. 1 of article 6 of Decree-law no. 415/98 as a reference, if market tendencies continue, the possibility of including interconnection services provided by operators traditionally called "data operators" in the definition of an interconnection market, should not be excluded. This should obviously be without prejudice to the various obligations that Decree-Law no. 415/98 lays down for different operators and services providers and the different forms of intervention by the Instituto das Comunicações de Portugal foreseen therein. It should be mentioned that compared to 1998, conclusions of the analysis carried out by the Instituto das Comunicações de Portugal have not been fundamentally altered, resulting from the eventual inclusion of services provided by the operators of data transmission services in the interconnection market during that year.
8. What is also noteworthy is that Decree-Law no. 415/98 lays down the principle of freedom of negotiation of interconnection agreements between the operators of public telecommunications networks and the providers of public telecommunications services. The same Decree-Law also foresees that the Instituto das Comunicações de Portugal, as regulating body for the sector, may intervene in the negotiation of interconnection agreements, ensuring that the market exhibits financially efficient and socially desirable results.
Thus, the Instituto das Comunicações de Portugal, in seeking to promote the operation of a free market will continue to analyse the results of any agreements held or to be held according to the stipulations of articles 14, 16 and 17 of Decree-law no. 415/98.
Declaration of Significant Market Power in the Mobile Telephone Networks Market and or Mobile Telephone Services
1. A fundamental aspect of Decree-Law nr. 415/98 dated December 31st, which establishes a regulatory framework for interconnection between public telecommunications networks in an enviroment of open and competitive markets, is the concept of significant market power and, in the materialisation of those powers specifically attributed to the Instituto das Comunicações de Portugal, the declaration of the entities which have such power. Depending upon their categories, these entities are subject to different types of obligations duly explained in Decree-Law nr. 415/98.
2. Under the terms of nr. 2 of article 7 of this diploma, an organization shall be presumed to have significant market power when it has a share of more than a 25% of a particular telecommunications market in the geographical area within which it is authorized to operate. However, the Instituto das Comunicações de Portugal may, using the additional criteria established in nr. 4 of the same article 7, decide that a given entity has significant market power regardless of whether it has a 25% market share or not.
To this end, it shall fall upon Instituto das Comunicações de Portugal, following a prior statement by the Directorate-General for Trade and the Competition, to decide, declare and publish yearly a list of entities which have significant market power in the relevant market. In accordance with that laid down in this diploma, namely in article 6, nr. 1, the following markets may be considered: mobile telephone networks and or mobile telephone services; fixed telephone networks and or fixed telephone services; leased lines; inter-connection.
3. Under the terms of the Declaration of Significant Market Power made by the ICP on 16/04/1999, Portugal Telecom, S.A. was notified as having significant market power (a) in the interconnection market, (b) in the fixed telephone networks and or fixed telephone services market and (c) in the leased lines market, indicating at the time that the declaration of significant market power in the mobile telephone networks and or mobile telephone services market would be subject to a complementary analysis within the legal terms.
4. Thus, and bearing in mind that market shares in the mobile telephone networks and or mobile telephone services market are calculated on the basis of the sales volume of companies in this market, the said analysis produced the determination of the entities which have significant market power in the mobile telephone networks and or mobile telephone services market.
Hence, TMN - Telecomunicações Móveis Nacionais, S.A. and Telecel - Comunicações Pessoais, S.A. have a market share significantly higher than 25% in the mobile telephone networks and or mobile telephone services market, and therefore have significant market power in this market, being subject to all the essential obligations foreseen in Decree-Law nr. 415/98 for operators with significant market power in the mobile telephone networks and or mobile telephone services market.
The consideration of the additional criteria foreseen in nr. 4 of article 7 of Decree-Law nr. 415/98 does not contradict and, on the contrary, strengthens the presumption that those entities have significant market power, which resulted from the calculation of the respective market shares.
5. The Instituto das Comunicações de Portugal also considers that the regulatory framework applicable to the entities now notified as having significant market power, namely in relation to:
a) the availability of access to the network, including access at points other than those network terminal points offered to the majority of final users;
b) respecting the non-discriminatory principle in the supply of interconnection;
c) the availability, through requests for inter-connection from applicants, of all information and specifications necessary for inter-connection;
d) respecting the confidentiality of the information made available by applicants for inter-connection, using it exclusively for the purpose it is destined;
Will maintain and create strong incentives for the further development of competitive conditions in the communications sector, with the expectation that this will bring benefits for the final user.
6. Bearing in mind the swift evolution of the mobile communications market, the significant competitive dynamic of the mobile operators and the potential effects in 1999 resulting from the recent entry of a third mobile operator in the market, the Instituto das Comunicações de Portugal may soon make a reevaluation of the significant market power situation in the mobile telephone networks and or mobile telephone services market.
Consult:
- Notice of 5.7.1999, published on 20 of July https://www.anacom.pt/render.jsp?categoryId=214184
