In this section the product market is defined with regard to the leased line service provided to retail customers.
According to the position of the EC, "retail markets should in principle be examined, for market definition purposes, in a way that is independent of the network or infrastructure being used to provide services", whereby there may be two ways of assessing demand-side substitution 1:
- by considering customer reaction to a small and permanent increase in the pricing of the services and any substitutes; and
- by comparing the characteristics of products or services in order to determine whether they are particularly suitable for satisfying the constant needs of customers and whether they can be substituted by other products and services.
The key elements in demand and supply of dedicated connections at retail level are the bandwidth, distance and guaranteed quality of service, whereby any services that could substitute leased lines must be capable of providing transparent and dedicated end-to-end connections, of ensuring high and symmetrical (and constant) speeds and of ensuring the agreed levels of quality of service.
Where relevant, in the analysis of substitutability, use is made of the prices of the leased line service practiced by Grupo PT at retail level 2.
Given the assumptions identified and substitutability analyses conducted to date, ICP-ANACOM considers that, given the limited development reported since the last market analysis, the conclusions that were taken from it remain valid as regards the definition of the product market.
That is, the substitutability analyses performed previously are deemed to remain valid and current 3 between:
- analogue lines and digital lines with low bandwidth;
- large companies and SMEs; and
- leased lines and other data services.
In this context, a brief summary of the substitutability analyses is presented below, fully updated to reflect market developments and in particular the most recent statistical data compiled by ICP-ANACOM.
Later, in separate sections, the limits of the market and the possible need to segment it according to transport technology (lines supported on traditional technology. vs. Ethernet) and according to the speed/capacity of the digital circuits is discussed in greater detail.
1 See Guidelines, §48.
2 The prices used for the purposes of the present analysis - the prices charged by PT Prime, retail company of Grupo PT for the provision of services to corporations - may be considered as equivalent to the level of prices in a competitive environment, given the regulatory obligation of cost orientation of prices which, to date, has been imposed on the company by ICP-ANACOM.
3 See Section 2.1 of the previous market analysis.