1. According to articles 58 and 59 of the LEC of 10 February, it is incumbent upon the National Regulatory Authority, ICP-ANACOM, to define, analyze and, in the event that it concludes that markets are not effectively competitive, determine which undertakings have significant market power and impose appropriate and specific regulatory obligations on said undertakings or maintain or amend such obligations where they already exist.
2. This decision was subject to the Public Consultation procedure 1 and to prior hearing 2, between 20.01.2010 and 03.03.2010, in conjunction with the decision now approved on the definition of the product markets and geographic markets, the assessment of SMP and the imposition, amendment or withdrawal of regulatory obligations in the wholesale market of call termination on individual mobile networks, pursuant to which responses were received from 12 entities.
3. AdC - Autoridade da Concorrência (Competition Authority) was notified, in the same period and under the terms of article 8 of the statutes of ICP-ANACOM, in annex to Decree-Law No 10/2003 of January 18, in order that it issue an opinion on this decision.
4. In the opinion submitted by AdC, on 26.02.2010, it was deemed that the reduction in voice call termination rates appeared appropriate and a significant reduction in the rates in question was supported.
5. The EC, notified pursuant to paragraph 1 of article 57 of Law No 5/2004, set out its position on 12.04.2010, whereby it positively considered the proposal of ICP-ANACOM to considerably lower mobile termination rates in Portugal, while expressing concern about the measure's retroactive application.
6. The three mobile network operators - TMN, Vodafone and Sonaecom - have significant market power in the market of call termination on their respective mobile networks.
7. The maintenance of very high prices on the mobile networks is a factor which distorts competition, as recognized by the European Commission and by the ERG, resulting in a net annual transfer which remains very significant, of 67 million euros, from the fixed networks to the mobile networks 3. It is further considered that, if termination rates remained at 0.065 euros, an annual transfer would result of about 11 million euros from the smaller operator to the two larger operators 4.
8. The recent debate within the ERG, embodied in the draft Common Position on ''Next Generation Networks Future Charging Mechanisms - Long Term Termination Issues'', points towards the assessment of a termination system based on a Bill-and-Keep model as a promising model, whereby the NRAs may adopt a glide-path that functions as a transition to this model.
9. On 7 May 2009, the European Commission published a Recommendation on the regulatory treatment of fixed and mobile termination rates in the European Union, proposing the adoption, by no later than 31 December 2012, of symmetrical termination rates based on the costs of an efficient operator, using a Pure LRIC model.
10. The European Commission, according to statements by Commissioner Viviane Reding, expects that the implementation of this Recommendation will result in mobile termination rates which range between 1.5 and 3 cents per minute, which will mean gains of at least 2 billion euros in the European Union in the period 2009-2012.
11. ICP-ANACOM is currently engaged in the work required so that a cost model, which is in accordance with the Recommendation on Terminations referred to in paragraph 6, will be implemented and produce results so as to establish further reductions in termination rates in November 2011.
12. The behaviour of the mobile operators in the wholesale market has not changed, insofar as the operators have not made any reductions to prices beyond that required by ICP-ANACOM.
13. The behaviour of the mobile operators in the retail market, particularly regarding the structural problem identified by ICP-ANACOM in 2008 with respect to the practice of on-net and off-net price discrimination, which intensifies the network effects and distorts competition, has not changed insofar as such practices have not been eliminated.
14. ICP-ANACOM considers that this decision involves gains for consumers totalling approximately 54 million euros (mobile-mobile and fixed-mobile calls in conjunction) over the period of its implementation which is 6 quarters.
15. The prices applied by a set of six countries (Sweden, Finland, France, Italy, Austria and Romania) that the Commissioner for the Information Society has designated as being in the on the right path point to average prices of 3.5 cents per minute in November 2011.
16. This proposed figure places Portugal near to being included in the first quartile of the benchmark whereas there is no reason to believe that Portugal cannot remain at this level in the light of the development, penetration level and dynamism of the Portuguese retail mobile market compared with the level of other European markets.
17. A possible proxy for termination costs on the mobile networks in Portugal, according to the method described in the 2008 Price Control Decision, would corresponded to a value of 2.61 cents per minute.
18. Certain European NRAs have already conducted studies and analyses of the costs that will result from the application of the costing methodology advocated in the Recommendation of the EC, whereby it is expected that these costs range between 1 and 2 cents per minute, or even below this level.
19. It would be overly disruptive to immediately implement a mobile termination rate of 3.5 cents per minute (particularly given the distortions in international traffic), whereby it is considered appropriate to provide a transition period of six quarters, allowing the operators to make the necessary adaptation until this value is attained.
ICP-ANACOM takes the position that it is necessary to determine a new downward movement in voice call termination rates in the context of the price control obligation, the maintenance of which obligation is proposed in the context of the Market Analysis conducted simultaneously with this decision.
Taking into account the reasons set out above and in pursuit of the objectives of regulation, especially in terms of the prices in points a) of paragraph 1) and a), b) and c) of paragraph 2 of article 5 of Law No 5/2004 of 10 February, the Management Board of ICP ANACOM, pursuant to Articles 66 and 74 of the same law determines:
1. To order that, as of 24.05.2010, the maximum termination rates for voice calls on mobile networks to be applied by the three mobile operators notified as having SMP shall be:
- 0,0600 euros per minute on 24.05.2010
- 0,0550 euros per minute on 24.08.2010
- 0,0500 euros per minute on 24.11.2010
- 0,0450 euros per minute on 24.02.2011
- 0,0400 euros per minute on 24.05.2011
- 0,0350 euros per minute on 24.08.2011
irrespective of the origin of the call, with per second billing from the first second.
2. To review the present decision in 2011, taking into account the results of the cost model, based on the methodology set forth in the Recommendation on Terminations of 7 May 2009, which is in development and which will enable the establishment of new reductions in termination rates from November 2011.
1 Under the terms of article 8 of Law No 5/2004 and in accordance with paragraph 1 of article 57 of the same law and with paragraph 3 of the ''Consultation Procedures'' of ICP-ANACOM, as approved by determination of 12.02.2004.
2 In accordance with the provisions of articles 100 and 1001 of the Code of Administrative Procedure.
3 Estimated annual value based on termination rates currently in force and traffic data from 2008.
4 Estimates based on 2009 traffic data.