a. Legitimacy
DST is a commercial company that pursues the activity of provider of publicly available electronic communications networks and services under the terms set out in ECL - it is an "electronic communications company" for the purpose of DL No. 123/2009 [article 3, paragraph 1 f) of the identified Decree-Law].
AMTQT is an association with specific purposes, which maintained the nature of legal person of public law under Law No. 45/2008, of 27 August (Legal Regime of Municipal Association1), the operation of which abides by the identified Law and the respective Statutes.2 Under Law No. 45/2008 [article 37, paragraph 1d), applicable ex vi article 38, paragraph 5], associations of municipalities with specific purposes are subject to the legal regime of administrative supervision, provided for in Law No. 27/96, of 1 August3.
Being an association of municipalities and a legal person of public law subject to administrative supervision, AMTQT is governed by point b) of article 2 of DL No. 123/2009 and, as such, in the scope of infrastructures suitable for the accommodation of electronic communications networks that it holds or manages, it is subject to access obligations laid down in Chapter III of that statutory instrument, pursuant to paragraph 1 of article 13 thereof.
Given that a dispute exists on the value of the remuneration requested for the access to and use of infrastructures held by AMTQT, DST is entitled to request ANACOM to assess and decide on whether the remuneration amount requested is appropriate, in the light of paragraph 3 of article 19 of DL No.123/2009, a decision which is binding on both parties.
b. Subject-matter of the dispute
DST ends the application submitted on 16.09.2014, requesting that ANACOM «determines (...) that the access granted by the Association to DST complies with the following conditions:
(i) Payment of the remaining contractual price ([BCI] [ECI] Euros) in annual instalments, due on 1 January each civil year;
Or in case the Authority does not agree with this,
(ii) Payment of the remaining contractual price ([BCI] [ECI] Euros) upon conclusion of the fibre optic deployment by DST, with the lodging on this date of a bank guarantee on first demand by AMTQT, corresponding to 20% of the total contractual price concerning the first 10 years of the contractual period.
And, cumulatively,
(iii) Non-lodging of any bank guarantee by DST.
DL No. 123/2009 does not confer on ANACOM the competence to establish specific provisions in contracts governing the access to and use of infrastructures suitable for the accommodation of electronic communications networks.
According to powers conferred for the settlement of disputes in the scope of chapter II of DL No. 123/2009, ANACOM is entitled to decide whether the refusal of access to infrastructures suitable for the accommodation of electronic communications networks is admissible (article 16) and whether the remuneration requested for the use thereof is appropriate, assessing whether such remuneration complies with the rule of cost-orientation of prices set out in article 19.
Paragraph 3 of article 19 of DL No. 123/2009 lays down also that «...at the request of electronic communications companies, or of any of the bodies referred to in article 2, ICP - ANACOM shall assess and decide, in a particular case, whether the amount requested is appropriate in the light of the rule established in paragraph 1 4...». Paragraph 1 of article 19 lays down that the «...remuneration for access to and use of infrastructures held by bodies referred to in article 2 must be cost-orientated, taking into account costs with the construction, maintenance, repair and improvement of infrastructures under consideration».
In this scope, it must be taken into account that DL No. 123/2009 contains in point t) of paragraph 1 of article 3, a definition of remuneration for access - «the amount due by publicly available electronic communications companies for the use of infrastructures suitable for the accommodation of electronic communications networks, to install, accommodate, repair and remove cables.»
Infringement of decisions issued by ICP - ANACOM in the exercise of the above-mentioned powers is deemed to be a breach, as follows from points f) and h) of paragraph 1 of article 89 of DL No. 123/2009.
Given the framework described above, the matter to be analysed and decided on must now be defined.
Therefore, bearing in mind that AMTQT readily approved the request for access submitted by DST to the infrastructure suitable for the accommodation of fibre optic, ANACOM’s intervention in the scope of this dispute will focus on the issue of whether the remuneration specified is appropriate in the light of the rule of cost-orientation of prices set out in paragraph 1 of article 19 of DL No. 123/2009.
c. Assessment of the appropriateness of the remuneration in the light of the rule of cost-orientation of prices
DST considers in its initial application that conditions for payment required by AMTQT are incompatible and illegal in the light of the principle of cost-orientation of prices, supporting this view with the following arguments:
- The contract to be concluded between AMTQT and DST is a contract for the lease of pipelines and other network elements. The requirement for the payment of the full contractual price concerning the 20-year period during the first year of the contract is «...completely unbalanced, in the light of how a leasing contract works... [which] assumes that the consideration offered for using the leased property (that is, the price) is paid periodically by the lessee as it uses (or is given the possibility to use) the leased property, and that such rent is only due where the lessee is able to effectively use such leased property».
The demand for an advance payment of the price in the course of the first year of the contract represents an advance financial burden and serves as a funding mechanism for AMTQT. The advance payment of the price is, on its own, a violation of the principle of cost-orientation of prices.
- DST decided to meet the conditions for payment demanded by AMTQT under the condition that the Association, upon payment of the first half of the price, provided a bank guarantee on first demand, corresponding to 20% of the total contractual price concerning the first 10 years and 10% in the remaining contractual period. That guarantee had the purpose of ensuring compliance by AMTQT with the obligation to provide the use of the network under proper conditions of maintenance for the whole period of the contract concluded between the two parties. DST believes that, failing this guarantee, it faces a real risk of having the leased property for a shorter period than what it paid for, which will result for the Association in a remuneration that exceeds the costs of construction and maintenance of the network, in violation of the principle of cost-orientation of prices.
- The requirement made by AMTQT, that DST, at the moment of the signature of the contract, lodges a bank guarantee intended to guarantee the payment of the remaining 50% of the price, is deemed to be, not only absolutely useless, but also an additional financial burden on a financial burden which DST also classifies as illegal. This requirement is also «...inappropriate and illegal, in the light of the principle of cost-orientation».
In ANACOM's view, and without getting into the argument of what type of contract will qualify DST for access to and use of AMTQT’s pipelines5, it must be stressed that under paragraph 1 of article 1039 of the Civil Code, which is partially quoted by DST, «the payment of rent or lease must be made on the last day of validity of the contract or the period to which it relates, at the address of the lessee on the due date, where parties or practices do not establish otherwise». As results from the excerpt now underlined, parties are entitled to establish, by agreement, the moment on which the value of the rent or lease is to be paid. The advance payment of the remuneration is without prejudice to the reduction of the amount due, where during the performance of the ongoing contract, the lessee is subject to a reduced use of the leased property, or deprived from it.
On the other hand, article 1075 of the Civil Code, paragraph 1 of which is invoked by DST to support the periodic nature of the rent, must be considered within the systematic context in which it is included. This rule in integrated in the section of the Civil Code that rules the rent (in full or in part) of urban buildings, and as such, it does not apply to lease contracts in general.
In order to examine whether the remuneration requested complies with the requirement of cost-orientation of prices laid down in paragraph 1 of article 19 of DL No. 123/2009, AMTQT was requested, as referred earlier, to submit all information on infrastructures (pipelines) it holds/manages, including detailed costs involved, both as regards the whole of infrastructure associated to DST’s request, and to other requests for access.
The network and respective construction costs
According to information conveyed by AMTQT on the network it operates, this network is made up of a central ring that connects all seats of local government (backbone) that are members, at a speed of 10 Gbps and a broadband connection to the exterior network, and five local network (where the five PoPs are located), and an inter-municipal Data-Centre established in AMTQT, in Mirandela6.
These infrastructures consist in underground three-pipe pipelines, deployed in prefab permanent manholes, and in these pipelines - between PoP - a fibre optic cable of 48 fibres (called link) was deployed. Optic distances measured for links are indicated in the following tables, according to technical information submitted by AMTQT.
[BCI] [ECI]
From information received, it may be concludes that, in total, 373.525 Km of fibre optic was installed.
As regards construction costs of supporting pipeline infrastructures, AMTQT submitted the following information:
[BCI] [ECI]
As such, average construction costs per single-pipe - costs not reimbursed by public funds and which include bank loans - are:
- €3.10/m in the backbone (236.241 Km);
- €3.76/m in the access network (in average, for around 32 Km of pipelines).
Conditions for provision to REFER Telecom of access to pipelines
AMTQT concluded, in early 2013, a contract with REFER Telecom for the access to and use of infrastructures owned by AMTQT, with the following characteristics and conditions: [BCI] [ECI].
Remuneration specified in the contract between AMTQT and DST
The application recast by DST does not question the principle of cost-orientation of prices, and focuses on conditions for payment. In any case, this Authority analysed data supplied by AMTQT.
As such, according to available data, it is deemed that the total cost of construction of pipelines for the purpose of the determination of the cost of access must include the value of “Transfers from AMTQT and Municipal Councils”, plus paid interest7 and capital amortisation up to the date of signature of the contract, as well as the amount of capital outstanding on that date, in the proportion of the area effectively occupied (a single-pipe).
The view expressed above is based on the fact that an initial payment was requested, and, as such, the amount of capital outstanding may be reimbursed in advance.
In addition, it is deemed that, although AMTQT did not include costs relating to infrastructure operation and maintenance, an analysis of cost-orientation of prices should take this component under consideration. For want of better information, and according to the method adopted, for example, in the assessment of prices for access to MEO's pipelines, an annual cost of [BCI] [ECI] % of the value of investment in the construction of infrastructures is deemed to be reasonable.
The value that results from the sum of components detailed above and values duly updated at the date of the contract is compatible, in a perspective of cost-orientation of prices, with the value that AMTQT requests from DST for access to its pipelines, in the conditions for payment included in the signed contract, and, as such, there is no evidence that the price proposed does not comply with that principle.
It must also be referred that the contract between AMTQT and DST includes the same payment conditions [BCI] [ECI].
Conclusion
In the light of facts described above, it seems to be clear that AMTQT does not refuse access to its infrastructure, rather provides it in an identical way to interested operators, with transparency and without discrimination.
It may thus be also concluded that there are no signs that the price for access to pipelines (per single-pipe) is not cost-oriented or is discriminatory.
1 Available at: Lei n.º 45/2008, de 27 de agosto
2 Published in Series III of the Official Gazette, No. 232, of 1 October 2004. AMTQT was constituted on 2 July 1982 by the Municipalities of Alfândega da Fé, Carrazeda de Ansiães, Mirandela and Vila Flor, which were later jointed by the Municipality of Macedo de Cavaleiros. According to paragraph 1 of article 1 of its bylaws, AMTQT is an association of municipalities with specific purposes. Available at: Diário da República (Série III - Parte A), de 1 de outubro de 2004
3 Available at: Lei n.º 27/96, de 1 de agosto
4 By mistake, corrected by Law No. 47/2013, of 10 July, paragraph 3 of article 19 determined the assessment of the conformity of the remuneration with the rule «established in the preceding paragraph», which however failed to establish any rule on the remuneration due for the access to and use of infrastructures suitable for the accommodation of electronic communications networks.
5 DST considers it to be a lease contract; AMTQT believes it to be a contract for the lease of pipelines governed by DL No. 123/2009. On this issue, it should be referred that DL No. 123/2009 does not characterize nor typify the contract that governs the access to and use of infrastructures suitable for the accommodation of electronic communications networks, leaving holders of such infrastructures free, within certain limits, to define the terms, which must be published, governing such access and use as deemed fit.
6 The fibre optic core ring, known as CBNTQT backbone, consists in physical infrastructures that allow the interconnection of transmission centres, Pop or Data-Centre, which were constructed or installed in Municipalities covered by the project.
7 As AMTQT requires remuneration for a value which is paid only once, there is no point in calculating all interest to be paid throughout the period of the bank loan, given that the value corresponding to the capital outstanding would fully repay the loan, thus no future interest would be incurred in.
