Decision on the methodology for calculating the net costs of the electronic communications universal service

According to article 86 of Law number 5/2004, of 10 February ¹, the universal service (US) consists of a minimum set of services of a specified quality, which is available at an affordable price to all users regardless of their geographical location. The minimum set of services which must be made available in the US scope includes, according to article 87 of the same statutory instrument: (a) connection at a fixed location to the public telephone network and access to publicly available telephone services at a fixed location; (b) provision of a comprehensive directory and of a comprehensive telephone directory enquiry service; and (c) an appropriate provision of public payphones.

The referred law covers the issue of US financing. Paragraph 1 of article 95 provides that "where the NRA considers that the provision of universal service may represent an unfair burden on the respective providers, it shall calculate the net costs of the universal service obligations (...)" by applying the provision in article 96 of the referred law:

"1 - Where the calculation of the net cost is to be undertaken, pursuant to point a) of the preceding article, the following assumptions shall apply:

a) All means to ensure appropriate incentives, so that providers comply with universal service obligations in a cost efficient manner shall be considered;

b) The cost of universal service obligations is to be calculated as the difference between the net cost, for an organization, of operating with the universal service obligations and of operating without the universal service obligations, whether the network is fully developed or is still undergoing development and expansion. Due attention is to be given to correctly assessing the costs that providers would have chosen to avoid had there been no universal service obligation;

c) The calculation of net cost should take into account the benefits, including intangible benefits, obtained by the universal service operators;

d) The calculation of the net cost of specific aspects of universal service obligations is to be made separately and so as to avoid the duplication of any direct or indirect benefits and costs;

e) The net cost of universal service obligations is to be calculated as the sum of the net costs arising from the specific components of universal service obligations.

2 - The calculation is to be based upon the costs attributable to:

a) Components of the identified services which are unavoidably provided at a loss or provided according to conditions of cost which fall outside normal commercial standards, which components may include access to emergency telephone services, provision of certain public payphones or the provision of certain services or equipment for people with disabilities;

b) Specific end-users or groups of end-users which can only be served at a loss or according to conditions of cost which fall outside normal commercial standards, as a result of the cost of providing the specified network and service, the revenue generated and any geographical averaging of prices imposed by the NRA.

3 - For the purpose of the provision of point b), this category is deemed to include end-users or groups of end-users which would not be served by a commercial operator which did not have an obligation to provide universal service.

4 - The universal service providers shall make available all accounts and other relevant information in order to provide a basis for the calculation referred to in the present article, which accounts and information shall be audited by the NRA or a body independent of the interested parties and subsequently approved by the NRA.

5 - The NRA shall make publicly available the results of the cost calculation and the conclusions of the audit referred to in the present article."

The methodology to be adopted for calculating CLSU - custos líquidos do serviço universal (net costs of the universal service) has a significant impact on the market, and for this reason the consultation mechanism provided for in article 8 of Law number 5/2004, of 10 February was launched. It should also be referred that as provided for in the Universal Service Directive 2002/22/EC, of 7 March, transposed by Law number 5/2004, especially recital 19, CLSU must be calculated on the basis of transparent procedures.

The Annex attached hereto describes the methodology defined by ICP - Autoridade Nacional das Comunicações (ICP-ANACOM) for calculating the net costs of the universal service provided by the Universal Service Provider (USP), which is currently PT Comunicações (PTC), to be applied until the universal service provider(s), which shall be designated following a tendering procedure, start(s) the service provision.

This methodology for calculating CLSU observes and complies with provisions in national and European legal frameworks.

Under the described conditions, the Management Board of ICP-ANACOM, in the scope of powers provided for in points b) and d) of article 6 of its Statutes, approved by Decree-Law number 309/2001 ², of 7 December, and under articles 95 and 96, of ECL, and taking in to consideration the contributions received in the scope of the prior hearing of interested parties, according to articles 100 and 101 of the Administrative Procedure Code, and the General Consultation procedure, according to article 8 of the ECL, to which it was submitted and the report of which is approved together with this determination, of which it is an integral part, hereby determines as follows:

1. To approve the methodology for calculating CLSU, as described in the annex hereto.

2. To allow ICP-ANACOM to take a final decision on CLSU, PTC must convey to this Authority within ninety (90) working days, a preliminary calculation of CLSU, in a completely transparent and auditable manner, for each year, in compliance with the methodology described in the Annex. In case duly substantiated grounds are submitted and accepted, this deadline may be extended up to one hundred and eighty (180) working days. To preliminary CLSU figures must be attached all relevant information used to calculate them (including the electronic support with the respective calculations, indicating in detail the various parameters that were used and the respective reasoning), so as to enable submitted figures to be replicated. All studies carried out and assumptions considered must also be submitted, as well as the demonstration of its representativity, where the resource to samples or breaking down of costs by MDF and customers is deemed to be indispensable.

3. To submit the particulars referred to in point 2. to an audit by an independent body prior to making a determination on CLSU figures for the years at stake.

• Annex - methodology for calculating net costs of the electronic communications universal service https://www.anacom.pt/render.jsp?categoryId=342318