Evolution of behaviour of operators in the retail market

In its decision of July 2008, ICP-ANACOM noted that available data pointed to the existence of market failure associated with price discrimination as a strategy of foreclosure, particularly in view of verification of the following factors:

  • the weight of traffic covered by tariffs with on-net /off-net discrimination  remains high;
  • Differentials in average on-net prices compared to off-net prices were particularly significant in TMN and Vodafone;
  • the market share of Sonaecom, in the years between 2005 and 2008 continued to decline, whereas at the time of the decision it comprised less than half and less than a third of the two other operators;
  • clients pointed to their ''network of contacts'' as the main reason for their choice of mobile operator;
  • the traffic imbalance continued to be very unfavourable to the smaller operator.

Fixed on resolving the same structural competition problem which had already been previously identified in the 2005 Price Control Decision, ICP-ANACOM then considered that it was important to intervene with a view to establishing a competitive market, which in the interests of consumers, would provide Sonaecom with the possibility of a more level competitive situation compared to its competitors in the acquisition and retention of customers.

ICP-ANACOM stated then that, in reviewing the 2008 Price Control Decision (which is now proceeding) it would pay particular attention to the evolution of the structural problem identified in terms of traffic imbalances and the tariff differentiation between on-net and off-net calls.  In the Report 1 of the public consultation which accompanied this decision, it was added that ''to [this] purpose, during the next year, ICP-ANACOM will collect information from operators and will evaluate their behaviour in the wholesale markets, particularly with regard to further reductions in prices that bring them closer into line with the actual costs, and retail markets, in particular with regard to the practices of on-net and off-net differentiation by larger operators''.

It is this analysis which is made below, starting with the identification and characterisation of the most important tariff developments that have occurred in this period, then presenting the analysis on the evolution of the referenced competition problem.

1 Available at PDF ''Relatório - Consulta Pública e Audiência Prévia sobre o Sentido Provável de Decisão (SPD) relativo a Mercados Grossistas de Terminação de Chamadas Vocais em Redes Móveis Individuais - Especificação da Obrigação de Controlo dos Preços''.