1. Background

1.1. Determination of ICP-ANACOM

By determination of 14 June 2012, the Management Board of ICP - ANACOM required PT Comunicações, S.A. (PTC) to “decrease in LLRO each and every element of prices (including CAM lines) for 2 Mbps, 34 Mbps and 155 Mbps lines by at least 35%, 40% and 45%, respectively” ¹ (emphasis added) - vide determination point D 31.

1.2. Amendments to LLRO made by PTC

By letter received at ICP - ANACOM on 23 July 2012, PTC informed that, in its opinion, determination point D 31did not apply to the setup of local extensions, nor to setup prices and monthly fees of internal extensions of partial lines and internal extensions for traffic interconnection (at 2 Mbps), as according to costing results for 2010, these elements show negative margins. That is, PTC takes the view that determination point D 31 applies only to the monthly fee of local extensions and main sections of 2 Mbps, 34 Mbps and 155 Mbps lines.

In the same letter, PTC refers that although there are no specific prices in LLRO for all N × 64 Kbps (N = 1, …, 31) speeds, technically it provides lines at any of those speeds, which are charged at the price of the next higher speed. In the case of lines at a speed over 1536 Kbps, especially 1920 Kbps (N = 30) and 1984 Kbps (N = 31), also known as structured 2 Mbps, the respective price has been equivalent to 2 Mbps unstructured lines (i.e. at 2048 Kbps or “pure” 2 Mbps).

PTC also refers that, considering the substantial reduction of 35% of prices to which 2 Mbps lines are subject, and given that the company does not intend to decrease prices of N × 64 Kbps lines, it broke down in LLRO the 1984 Kbps speed, which will maintain the current price, this price then applying to any line of speeds higher than 1536 Kbps (and lower than 1984 Kbps). According to PTC, these lines should not be covered by that reduction, simply because the usual approach has been to charge them at the price of the next higher speed defined in the tariff.

In short:

1. For N × 64 Kbps lines of speeds higher than 1536 Kbps, PTC has:

(a) Maintained the previously charged monthly fee - that is, the former price of 2 Mbps lines - as regards end-to-end lines and half-circuit components of partial lines ²;

(b) Increased the price of internal extensions of partial lines, both the monthly fee and set up price.

2. Prices formerly applied for internal extensions of partial lines at 2 Mbps, 34 Mbps and 155 Mbps were maintained.

1.3. Draft decision of 30 August 2012 on PTC’s failure to comply with determination of 14 June 2012 on amendments to LLRO and RELLO

On 30 August 2012, the Management Board of ICP - ANACOM approved a draft decision on PTC’s failure to comply with determination of 14 June 2012 on amendments to LLRO and RELLO (hereinafter referred to as DD), having notified PTC to assess the issue within 10 working days.

PTC provided its opinion by the defined deadline, comments received, the respective analysis and grounds for the decision having been included in the “Report of the prior hearing on PTC’s failure to comply with determination of 14 June 2012 on amendments to LLRO and RELLO”, which is an integral part of this determination.