ICP'S Annual Report and Accounts for the Year 2000

/ Updated on 08.08.2002

1. Introductory Note

Pursuant to the remit of ICP's Advisory Board, a Working Group was set up made up of:

    • Ms Rita Rocha (NOVIS)
    • Ms Ana Sofia Alvim (MAXITEL)
    • Mr Resina da Silva (APPSTVA)
    • Mr Henrique Correia (Telecel Vodafone)
    • Mr Jorge Pinheiro (PT Comunicações)
    • Mr Fernando Carreiras (ICP) to provide clarifications, and
    • Mr Robalo de Almeida (PT Comunicações), in his capacity as works coordinator and reporter, with a view to auditing the Institute's Annual Report and Accounts for the fiscal year 2000.

The Working Group congratulates the Board, Management and Workers of ICP on the great work done, as will be indicated below.

2. Market Framework

Two lines of intervention marked the domestic telecommunications market, international and domestic alike.

The international stage saw:

    • The revision of the European regulatory framework ("Revision 99"), including the Regulation on the Unbundling of the Local Loop ("ULL")
    • The E-Europe initiative, approved during the Portuguese Presidency of the EU.

At a more operational level the following events are worth reporting:

    • The World Radiocommunication Conference (WRC 2000), under the aegis of the ITU.
    • Brain storming on UPU's mission and its ensuing restructuring and reorganization.

On the domestic front, the highlights are:

    • The launch of the bid and granting of licences for the provision of UMTS.
    • The development and implementation of various measures on the total liberalization of the telecom market in connection with the missing segment: the Fixed Telephone Service, and the further implementation of others, such as the network access market.
    • The timely distribution by ICP of the telecommunications liberalization timetable.
    • The Government's Internet initiative.

3. National Communications Market

The National Market has developed at a pretty good pace, which is very much due to the total liberalization of the telecommunications market, stiffer competition and the development of the Information Society and the Digital Economy.

The sector was particularly impacted - albeit negatively - as of the 2nd quarter by the development of the capital market, and more specifically by the TMT/dot com phenomenon.

As for the behaviour of the various services, here are some highlights:

a) Postal Services
· Traffic increase: + 4.8%
· Price trends: - 0.7% in real terms

b) Fixed Telephone Service
· Number of Accesses: + 2%
· Domestic Traffic: + 16,1%
· International Traffic (outgoing): + 24,6%
· Price trends in Fixed Telephone Service / Universal Service: - 8.6% in real terms

c) Interconnection
·Marked drop in prices in a context of progressive alignment with current EU practices.

d) Land Mobile Service
· Number of Subscribers: + 43% (+ 2 Million)
· Average Utilization: + 18.6%
· Penetration Rate: 67%

e) Mobile Trunking Service
· Number of Subscribers: - 12%

f) Paging Service
· Number of Subscribers: - 75%

g) Internet Access
· Number of Clients: + 319% (+ 1500 thousand)
· Access through Cable TV
· Increase in the number of domains

h) Cable TV
· + 362,000 of cabled dwelling homes
· + 165,000 subscribers

i) Radiocommunication
· For the first time, fall in the number of licences.

j) Audiotext
· The introduction of information on the audiotext services is recommended. Since they are not legally described as telecommunications services, they are provided by organizations registered with ICP and are subject to its supervision. Any complaints lodged with ICP are thoroughly looked into by the latter, as suggested in this Report.

The sector has been dynamic in growth and innovation, with the exception of the Mobile Trunking Service and Paging Service, both very much threatened / impacted by the Land Mobile Service.

4. ICP's Activity

ICP undertook some major actions.

Numbering, coverage and even diversity and complementarities of activities put ICP in the limelight.

The sector became well known in the past year and this ICP had quite a bit to do with this.

Of the vast gamut of activities undertaken, here are some that need to be pointed up:

a) Regulation
· Bid for and granting of UMTS licences
· Mechanisms for the Fixed Telephone Service
· · Indirect Access
- Domestic, International and Fixed-Mobile
· · Pre-selection

· List of Business Organizations with a Significant Market Power
· Public consultations (Portability, TETRA, PRI 2001 and Unbundling of the Local Loop)
· Change in ownership of Fixed-Mobile Traffic
· PRI 2000
· Postal Services Price Agreement
· Audits of CTT and PT Comunicações

b) Market Follow-up
· Quality of Service of Mobile Networks
· Overseeing the obligations of Audiotext providers
· New framework of telecom installations in buildings (ITED)
· Accreditations of ICP laboratories

c) Dissemination of Information
· Various studies and publications
· Widespread interest in, use of and dynamism behind ICP's Website.

5. Degree of Compliance with ICP's Plan of Activities for 2000

As for the opinion of ICP's Advisory Board on the 2000/2002 Plan clarifications were sought from ICP's representative on some of the recommendations made by the Advisory Board:

  • Study carried out on benchmarking in various functional areas of ICP, making a comparison with similar organizations, aimed at setting and assessing the goals to be fixed for future revisions of the of ICP's Plan of Activities:

    • It was made clear that a study is under way at the level of 9 EU countries, and the outcome thereof will be submitted June next. The Advisory Board was pleased to note this development.

  • Reinforced supervision of actions of compliance by operators and service providers with their regulatory obligations, which is indispensable to a healthy market and improving the quality of various offers on the market:

    • This activity was covered by various studies on Quality of Service and the analysis of the Annual Report and Accounts and the statistical input sent by the various operators and service providers.
    • The recommendation to reinforce supervision has been maintained.

  • Presentation of scenarios for ICP's funding, as well as a forecast for a price reduction in the utilization of the radioelectric spectrum, still under the rates current in most of the European sister organizations.

    • The ICP representative clarified that studies are still under way to reformulate the price list of the radioelectric spectrum.
    • He further clarified that some fine-tuning in Cost Accounting and the Funding Method is under way.
In general terms, the ICP representative provided information on the level of compliance with ICP's Activities Plan:

The Advisory Board recommends:

    • Strengthening the supervision of operators and service providers.
    • Quick finalization of ICP's Cost Accounting System and Funding Model. Regrettably after so many years there are no results in this area.
    • Adjustment of ICP's economic and financial situation, with an impact on the price list of the radioelectric spectrum.

6. Resources

6.1. Human Resources

An increase in the Work Potential at 10.7 % and in Regular Work at 12.6 % has been observed.

As for the areas of growth in ICP's Work Potential, ICP's representative said that this was due to the strengthening of the Market Supervision and Follow-up departments on Prices and Interconnection.

As to training there was an increase of 90% in the financial effort and other variables, with the training costs accounting for 3.8% of the Personnel Costs and Cost per average worker of PTE 263,600 (as opposed to PTE 128, 200in 1999).

The highest costs are concentrated in the area of specific development, with clarifications provided by the ICP representative.

6.2. Investment

ICP's achievement capacity rose, which is noteworthy, and stands at PTE 892,000,0002000.

However, following the earlier opinions of the Advisory Board, the Investment into IT systems mopped up 67% of the total Investment, which led the Advisory Board to recommend that continuous flow of investments in this area be looked at.

7. Accounts

ICP's Statutory Audit Committee has certified ICP's accounts and therefore it is not the Advisory Board's place to express any opinion in that matter.

The Advisory Board's analysis suggests the following:

    • ICP registered a net positive result of almost PTE 6 billion (5,889,000,000,000), a sum the Advisory board once again deems high for a public undertaking. It therefore recommends that investments be made in studies, projects and initiatives of interests to the sector.

As for this recommendation ICP's representative provided clarifications on the following items:

    • Logistical support to other organizations: PTE 293,000,000

    • Special projects: PTE 156,000,000

    • ICP's equity capital rose to PTE16 billion

    • ICP's financial indicators are excellent and stand far above those of the telecom market and the market at large alike.

    • ICP's operating income grew 29%, which leads the Advisory Board to recommend a revision to the price list of the radioelectric spectrum and ICP's funding model.


We would like to express our thanks to Mr Fernando Carreiras of ICP for the clarifications given, which have indeed enabled us to draw up this opinion report