Taking into account the important role of connections between the Mainland and the Autonomous Regions (AR), in particular to ensure competition in those regions, ANACOM analysed - in the context of the market for wholesale high-quality access provided at a fixed location (Market 4 1) - the cost of connections between the Mainland and the AR of the Azores and Madeira (MAM lines) and lines between the various islands of the Azores (Inter-island lines) that rely on submarine cables owned by MEO, in order to check whether prices charged were cost-oriented.
As a result of that analysis, ANACOM took the view2 that MEO should decrease the price of MAM and Inter-island lines, by adjusting it to real costs, in order to improve market competition conditions, to the benefit of operators and service providers (OSP), who must lease that infrastructure to carry out their activity, and of consumers in general, so that they may enjoy a wider range of offers.
In fact, costs with MAM and Inter-island lines, namely Ethernet lines, weigh heavily on the cost structure of these operators, and as such, the increase of traffic to the AR, to meet the increasing demand, leads to an increase of operational costs. This circumstance may lead to a rise in retail prices or restriction in offers, an effect which ANACOM seeks to avoid.
In the scope of that analysis, ANACOM determined that prices of MAM and Inter-island lines would be reviewed on an annual basis, and, for this purpose, MEO was required to make available every year cost data (including operating and maintenance (O&M) costs, as well as incurred and forecasted investment costs) and data on capacity contracted by OSP and reserved by MEO itself.
In this context, ANACOM requested, on 14 February 2017, detailed information on the referred costs, having MEO replied by letter of 7 March 2017.
By determination of 20 April 2017, ANACOM’s Management Board decided to conduct a prior hearing of stakeholders and a general consultation procedure on the draft decision it intended to adopt on prices of MAM and Inter-island lines, which ran up to 23 May 2017. Comments received, the respective analysis and grounds for the decision have been laid down in the “Report of the public consultation and prior hearing on the draft decision on prices of MAM and Inter-island lines”, which is an integral part hereof.
1 As provided for in Commission Recommendation (Commission Recommendation 2014/710/EU of 9 October 2014) on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation.
2 ANACOM determination of 1 September 2016, available at Final decision on analysis of market 4https://www.anacom.pt/render.jsp?contentId=1395262.
