Control of call termination prices on the public telephone network at a fixed location of operators with significant market power (SMP), with the exception of PT Group operators.
1. By the determination of 17/12/04 concerning obligations in the wholesale call origination and termination markets on the public telephone network at a fixed location, a price control obligation was imposed on operators with SMP in the call termination market on the public telephone network at a fixed location, with the exception of PT Group companies (OLOs).
2. As stated in the referred determination, ICP-ANACOM believes that without regulatory measures the OLOs would tend to fix excessively high call termination prices. Since competing operators cannot refuse to purchase call terminations, it is important to ensure that excessively high termination prices do not result in abnormally high retail prices charged for off-net calls as this would undercut the network externality effect and would be prejudicial for end-users.
3. Consequently, and taking into account the main interconnection guiding principles, particularly with regard to the promotion of the interoperability of services, the need to maximize the economic value and benefits of the users, and encourage transparency and predictability in the functioning of the market, ICP-ANACOM has determined that the price control to be applied to the OLOs should be based on a “delayed reciprocity” principle. It has been determined that the prices to be charged by the OLOs should be based on a maximum difference of 20% in relation to the prices practiced by the PT Group for call termination on its network. This difference was determined by ICP-ANACOM via appropriate weighting with respect to level and traffic volume.
4. Within the same determination, it was pointed out that, while OLOs are allowed to set prices higher than those practiced by PT Group (which will contribute to investment in own infrastructure), with this measure the OLOs are also encouraged to increase efficiency, such that prices, despite being subject to percentage differences, must be in line with the regulated rates of the PT Group.
5. In a letter dated 01/06/05, PT Comunicações, S.A. (PTC) sent this Authority a tariff proposal for communications made to direct clients of other telephone service fixed location providers, alleging that there are reasons to believe that most operators were not complying with the price control established for termination tariffs for OLOs.
6. Thus, taking into account the conclusions of the analysis conducted and in light of available information, ICP-ANACOM determined on 08/07/05, in execution of the determination of 17/12/04, that:
a) All operators with SMP on the call termination market on the public telephone network at a fixed location (with the exception of PT Group operators) that were not complying with the price control obligation under the terms of said ICP-ANACOM determination of 17/12/04, had to, within 10 working days, establish and apply a new call termination tariff that would fulfill the obligation in question. In other words, the prices of the new tariffs to be charged by the OLOs will be based on a maximum difference of 20% in relation to the prices practiced by the PT Group for call termination on its network. The maximum average termination revenue per minute will thus be 0.876 euro cents (without VAT);
b) The operators must send ICP-ANACOM, within 15 working days, the respective properly justified termination tariff, demonstrating that this fulfils the price control obligation to which the operators are bound under the terms of the ICP-ANACOM determination of 17/12/04.
7. Following the determination of 08/07/05, ICP-ANACOM received letters from ONITELECOM (15/07/05), APRITEL (20/07/05), Vodafone (21/07/05), SGC Telecom (22/07/05) and Novis (25/07/05), which included important information related to improving execution of the determination of 17/12/04, specifically mentioning, in some cases, recent trends in OLO cost structures, particularly resulting from changes that would be important in terms of connections to switches and routing of interconnection traffic.
8. Accordingly, we believe that the motives stated by the operators should be taken into consideration and highlight the European Commission recommendation, as per its letter dated 03/09/04 concerning case PT/2004/0092 (regarding “corrective measures for the Portuguese wholesale markets for call origination and call termination from a fixed location”), in order to attentively follow the development of the cost structures of the operators on whom the obligation to charge fair and reasonable prices is imposed and in order to assess whether the current criteria for determining fair and reasonable prices remains pertinent throughout the market analysis period.
9. Thus, the Board of Directors of ICP-ANACOM, following a meeting held on 28/07/05, determined that because such is convenient and favorable to the interested parties - in the scope of its jurisdiction provided for in sections b), h) and n) of nº. 1 of article 6 of its articles of association, approved by Decree-Law nº. 309/2001 of 7 December, in executing the powers stipulated in sections b) and g) of article 9 of said articles, and in accordance with the regulatory objectives provide for in sections a) and c) of nº. 1 of article 5 of Law no. 5/2004 of 10 February - it will grant the interested parties a period of twenty working days, if they so wish to use it, to provide their written opinion regarding the determination dated 08/07/05, with the adoption of this determination having been suspended as a consequence.
