2.2.8. Application of the concept of unfair burden

APRITEL

APRITEL considers that it is necessary in this context to confirm that the concept of unfair burden remains relevant, and to clarify the exact terms of its application in a context where the provision of universal service is segmented by component and might be ensured by various entities.

CABOVISÃO

CABOVISÃO considers that after the CLSU is determined and audited, it should be made clear that the designated USP should only be compensated for these CLSU where they represent an unfair burden for that company. In this regard, the operator refers to what has happened in Belgium and Spain.

OPTIMUS

With regard to the concept of unfair burden, OPTIMUS considers that it should be clarified whether, following the tender to designate the USP, the concept of unfair burden will be maintained and on what terms. It is the position of OPTIMUS that maintenance of this concept calls for an explanation of how it will be applied in a context in which the universal service may be provided by various undertakings. The operator emphasises the need for clarification on how the minimum threshold of CLSU to determine activation of the compensation process - currently set at 2.5 million euros - will be impacted in the context of provision of the universal service by different providers.

VODAFONE

VODAFONE states that the financing of any CLSU (considered unfair burden) should only take place using public funds.

VODAFONE also seeks clarification on how the amount defined as unfair burden of CLSU will be applied considering the various obligations of the universal service and the various USP, where there may be several operators fulfilling different obligations in different areas.

Position of ICP-ANACOM

In this regard it is considered important to note ICP-ANACOM determination of 09.06.2011 on the concept of unfair burden. In this respect, it is deemed relevant to recall the provisions of paragraph 26 of this determination: "In ICP - ANACOM's view, regardless of any market share value, a minimum value of CLSU that justifies financing pursuant to article 97 of the LCE should also be established, taking into account the expression of such costs in PTC's own economy, the fact that the Grupo PT will contribute to the referred fund (limiting the contribution of other operators to the complement of that Group's market share), as well the implementation and management costs of a compensation fund that ensures such financing. In fact, other countries have already adopted, or currently consider adopting, similar approaches. In France ¹ the implementation and management costs of a financing mechanism (amounting to a maximum of EUR 4 million) have been estimated, and CLSU must exceed this estimate so they can be deemed to be unfair, and thus be financed. In Ireland ², the possibility of assessing the compensation of CLSU relatively to the implementation and management costs of a financing mechanism is also being weighted. As additional information is not available and considering that the size of the country will not affect significantly the management costs of the referred fund, it is deemed that the minimum CLSU value that justifies financing is EUR 2.5 million, notwithstanding the differences associated to different levels of levels of income between France and Portugal which may be measured through the purchasing power parity index.

Given that the conclusions on the capacity to internalise CLSU and on the appropriateness of activating compensation mechanisms provided for in the law are valid regardless of whether the USP is designated on the basis of a tender, it is deemed that the above-mentioned criteria are adequate and should be applied to the USP that is identified following a tendering procedure."

Accordingly, it is emphasised that the concept of unfair burden was consolidated in light of the market's competitive state, considering that in an extreme monopoly situation, the USP will internalise all the costs of this provision, whereby there is no justification for considering them unfair. It is also deemed that this situation would persist for as long as the USP enjoyed very high levels of market share.

Additionally, an evaluation was made of the specific situation of the current USP, whereby it was concluded in this context that the threshold of 80 percent market share would be appropriate to determine the point below which any CLSU would be considered as constituting an unfair burden. Now, it is noted that there is not, nor is there expected to be, any provider in the FTS market with such a high level of market share, and noting also that the tender process is a competitive process, it is ICP-ANACOM's view that, in the present context, this criterion should not be considered.

Moreover, the value of 2.5 million euros was also determined taking into account the costs of implementing and managing a funding mechanism.

Bearing in mind that PTC has already sent CLSU estimates and that preparations for the launch of a funding mechanism (compensation fund) are underway, it is considered that the criterion for the costs of implementation and management of this mechanism should also not be considered in the current context.

In light of the above, ICP-ANACOM's view is that the CLSU values that will result from tenders 1 and 2 will be deemed as constituting an unfair burden and as such will be subject to financing under the terms and conditions set out in the tender documents and in the constituting documents of the compensation fund.

 
¹ Décision no. 2010-0448 fixant les évolutions définitives du coût du service universel et les contributions des opérateurs pour l'année 2008 (available at ARCEP: Le service universel des télécommunicationshttp://www.arcep.fr/index.php?id=8102#c17580, of 10.01.2011).
² Costing of universal service obligations: principles and methodologies (available at: Commission for Communications Regulation: Publicationshttp://www.comreg.ie/publications/costing_of_universal_service_obligations__principles_and_methodologies.597.103738.p.html, of 10.01.2011).