Draft Decision relating to Distribution and Broadcasting Service of Terrestrial Television Signal
I. Precedents
1. The Prices Convention celebrated in 01/07/97 between the Instituto da Comunicação Social (ICS), the Autoridade Nacional de Comunicações (then called of Instituto das Comunicações de Portugal), a Direcção-Geral do Comercio e Concorrência (DGCC) e a PT Comunicações, S.A. (PTC), then Portugal Telecom, S.A., pursuant to no. 1 and 2 of the article 17 of the Decree Law nr. 122/94, 14/05, has defined the regimen of prices for the distribution and broadcasting service of terrestrial television signal provided by PTC. Pursuant to no. 1 of paragraph 2 of the referred Convention, the determination of the prices of that service should consider the principles of transparency, of non discrimination and the orientation for the costs. Paragraph 3 has defined the maximum prices for the distribution and broadcasting service of terrestrial television signal to be exercised in 1997 and has established that in 1998 the prices would be updated until the maximum value of the average variation rate of IPC, foreseen in the State Budget, for that year. By determination of ANACOM of 25/01/01, the related Convention was kept in activity.
2. The prices of the distribution service and broadcasting of the terrestrial television signal were not updated since 1998, despite the Convention allowing its updating, so that between 1998 and 2002 they have sustained a true negative accumulated variation of -12,2%.
3. On 17/02/03, has been published the Decree-Law no.. 31/2003 (modifying Agreement for the contract of concession of the telecommunications public service), whose no. 3 of the article 16 keeps the applicable principles of access prices policy to the transport and broadcasting network of the television signal, and ANACOM, having heard the ICS, should assure the respect of the same.
4. ANACOM received, on 18/03/03, a letter from Radiotelevisão Portuguesa S.A. (RTP) (Portuguese Television Network) related to prices for distribution and broadcasting services of terrestrial television signal exercised by PTC. RTP considers that the prices exercised by PTC, as for the related service, are very much above the costs, requesting an intervention from ANACOM, pursuant to no. 3 of article 16 of Decree-Law no. 31/2003, of 17/02.
II. Analysis
5. According to recent available information relating to the results of the cost accounting system (CAS)of PTC, relating to first semester of 2002, the distribution and broadcasting service of terrestrial television signal presents a significant profit margin. Those figures, after deduction of costs, which were entirely distributed including remuneration of capital, are considered incompatible with the principle of orientation of the prices for the costs.
6. This mismatching of prices in relation to costs is all the more noticeable as does not exist at moment another operator to provide a service that, in terms of quality, coverage and price, be an alternative offer to the distribution and broadcasting service of terrestrial television signal provided by the PTC.
III. Action Proposal
7. Thus, considering:
a) That, pursuant to no. 3 of article 16 of the Decree-Law no. 31/2003, of 17/02, the prices of distribution and broadcasting service of the television signal must comply with the principles of transparency, not-discrimination and orientation for the costs;
b) That, the current profit margin of the service, such as shown on the available CAS results of PTC, is significant;
c) The necessity of swift and supported promotion of a bigger adhesion between the principle of orientation of prices for the costs and tariffs of distribution and broadcasting service of terrestrial television signal provided by the PTC, in particular attending to the social repercussion of this service and to its relevance in the global context of the development of the Information Society ;
d) PTC’s prevailing position as distribution and broadcasting service provider of the terrestrial television signal,
8. The Board of Directors of ANACOM, in a meeting held on 21/04/2003, has determined that:
a) The real reduction of the price of each one of the individual parts which integrate the distribution and broadcasting service of terrestrial television signal provided by PTC must not be lower:
i. In the included period between 01/06/03 and 31/05/04, than 18,5%;
ii. In the included period between 01/06/04 and 31/05/05, than 0 %;
iii. In the included period between 01/06/05 and 31/05/06, than 0 %;
b) For the decision of real variations referred in a), it is considered that the rate of inflation in each one of the related periods corresponds, respectively, to the inflation foreseen by the Government for 2003, 2004 and 2005, such as registered in the respective State Budget Report. In cases, where in the State Budget Reports is registered an interval for the expected variation of inflation, the inflation to be considered corresponds to the average of such interval.
9. Wanting, the interested entities will be able, namely television operators and distribution and broadcasting services providers of terrestrial television signal to pronounce themselves on the actual draft decision, pursuant to article 100 and subsequent of the Code of the Administrative Procedure, in the stated period of 10 days.
