Residential FTS tariff provided in context of US
ICP-ANACOM decided not to oppose the proposed residential FTS tariff in respect of the US, which was presented by PTC on 28 October 2008, without prejudice to the obligations of transparency to be undertaken.
Examining the proposal submitted by PTC, which only extended the free period already offered during working days to weekends, ICP-ANACOM concluded that the variation in prices arising from the proposed FTS applicable by default, which was presented by PTC to take effect retroactively from 27 September 2008, is compatible with the applicable price-cap.
The average prices charged by the incumbent in the context of the US continued to decline in 2008, and there was a reduction in nominal traffic prices following the introduction of additional periods of free traffic (nominal variation of approximately 13 percent compared to 2006) while the monthly subscription price 1 and installation price remained unchanged.
Graph 33. Nominal evolution of FTS prices for residential customers (base year = 2006)
In real terms, a general decline in prices can be seen, in terms of calls, monthly charge and installation. Indeed, using 2006 as a base, there is a change in real terms of about -3 percent for installation and the monthly charge and approximately -17 percent for the traffic (local and national calls), representing a real variation in the basket of services of approximately -5 percent in the period 2006-2008.
Graph 34. Real evolution in FTS prices for residential customers (base year = 2006)
Net costs of universal service provision
By determination of 30 January 2008, approval was given to the decision and to the report of prior hearing on the evaluation of the net costs of universal service provision, whereby ICP-ANACOM deemed that it was not appropriate to accept the estimated net costs of universal service provision for the year 2003 and the estimate revisions for 2001 and 2002 presented by the USP.
Since this decision provided for the beginning of a process of detailed specification on the methodology to be applied in the calculation of the net costs of universal service provision and for the definition of conditions whereby it may considered that the provision of US may represent an excessive burden to the respective provider, it was decided to engage the consultants, WIK - Wiseschafliches Institut für Kommunikationsdienste GmbH, with the aim of defining the methodology to be applied in the calculation of the net costs of universal service provision and the definition of excessive burden. This task was concluded during 2008 and will give basis to the public consultation which is to be held in 2009.
The process of designating the US Provider(s) (USP)
Article 99 of the LEC, sets out that:
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The universal service may be provided by more than one undertaking, differentiated by the provisions included or by geographical area, without prejudice to provision throughout national territory;
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The process for designating the provider(s) "shall be efficient, objective, transparent and non-discriminatory, ensuring that no undertaking is excluded a priori from being designated";
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It is incumbent upon the Government, by resolution of the Council of Ministers, to designate the undertaking or undertakings responsible for the provision of the universal service following a tender, the regulation of which shall be approved by administrative regulation of the members of the Government with responsibility for areas of finance and electronic communications;
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The terms of said tender shall ensure that the universal service is provided in a cost-effective manner, and may be used as a means of determining the net cost of the universal service obligation.
Therefore, the US comprises the provision of various services and one or more undertakings may be charged with providing them, whereas it remains the responsibility of the Government to order the respective tender and approve the rules governing the selection of the undertaking or undertakings on which the obligation of providing these services is conferred. It is within this framework that the process of designation the provider(s) of the US should be seen.
As part of its remit of advising the Government, in 2008 ICP-ANACOM played an active role in this regard, preparing the tender for the designation of the US provider(s), taking into account from the outset the position expressed by the Government that, before starting the procedure for designating the US provider(s), it is important to sound out the market with respect to a set of choices involved in the identification of the most efficient and appropriate solutions to ensure provision of the components of the universal services and select the undertaking(s) responsible for its provision.
Accordingly, by joint order of the Minister of State and of Finance and the Minister of Public Works, Transport and Communications of 28 January 2008, it was determined to conduct a public consultation with the aim of compiling views on a range of issues related to the process of designating the USP and expressions of interest from the various market players in said provision and how it should be provided.
Under the terms of the same order, approval was given to the document setting out the questions to be submitted to the market, while ICP-ANACOM remained responsible for launching the consultation process and conducting it to its conclusion, and, in the same context, receiving and examining the proposals put forward by the various entities that responded.
Under the conditions described, the consultation was launched on 19 February 2008 and remained open for a period of thirty days, during which ICP-ANACOM received several contributions from the market which were then subject to detailed analysis.
On 23 July 2008, ICP-ANACOM approved the final report with the summary of expressions received and, together with this report, forwarded a document to the Government containing a set of twenty-three recommendations with respect to the tender for the selection of the provider(s) of the US. In particular, note should be made of the recommendations presented on the division of services, geographical division, conditions associated with the price affordability and quality of service and criteria for the classification of tenders.
In September 2008, after the report and recommendations of ICP-ANACOM had been sent, this Authority was asked to: (i) start preparation of the documentation necessary for the conduct of the tender in accordance with the presented recommendations; and (ii) to send additional clarifications and more detailed information about certain aspects of the recommendations presented.
In October 2008, ICP-ANACOM sent the Government a memorandum responding to the requests for additional clarifications and presenting more detailed information, in which it was considered by the Authority that the previous recommendations remained justified, and it started the preparatory work of the Tender Regulation.
1 Analysis of evolution taking into account the traffic profiles reported by PTC and assuming, for 2007 and 2008, the base tariff applicable by default.
