The Instituto das Comunicações de Portugal (ICP) has approved the maximum interconnection prices for 2001. For the second consecutive year, this pricing decision enables interconnection prices to draw closer to best EU practices. Portugal Telecom has now ten days to correct its Reference Interconnection Offer in order to conform it to the approved prices. Interconnection prices do not correspond to retail prices charged to end customers, but are the amount that fixed or mobile operators will pay to Portugal Telecom for the use of its network. ICP's decision will nonetheless affect retail prices, and will expand the conditions for new operators to enter the market, enlarging thus the choices available to consumers.
Interconnection may be defined has having two main categories: origination and termination. Origination means that the telephone connection is routed by Portugal Telecom, from its point of origin to another operator's network.
Termination means that the telephone connection is routed by Portugal Telecom between another operator's network and the point of destination. A third kind of interconnection relates to transit, which is defined as the indirect interconnection between different networks, i.e. when a connection is originated within one operator, it is transported by Portugal Telecom and then terminates within another operator's network.
In average and global terms, prices will fall by 19.4% in origination and by 16% in termination. In transit, prices will rise by 9.9%.
It was also decided that the call activation price should not be higher than PTE1.60 for local interconnection, PTE 1.80 for Simple Transit interconnection1 and PTE 2.00 for Dual Transit interconnection2, for call termination, origination and transit services.
The maximum prices to be applied in 2001 (retroactively to January 1, 2001) are as follows, per minute and with billing per second from the start of the call:
| Tremination | Origination | Transit | ||||
| Normal Period |
Economy Period |
Normal Period |
Economy Period |
Normal Period |
Economy Period |
|
| Local | 1.80 | 1.32 | 2.07 | 1.52 | 1.30 | 0.96 |
| Simple Transit | 2.75 | 2.15 | 3.15 | 2.44 | 2.01 | 1.55 |
| Dual Transit | 4.30 | 3.20 | 5.20 | 3.86 | 2.67 | 1.98 |
Prices that have now been approved make it possible to draw closer to European best practices, based on the most recent prices published by the European Commission as a reference for 2000 prices. Considering termination, local transit now lies at the upper limit of best practices, being simple transit 9% below best practices and dual transit 19% above. In terms of origination, although there is greater convergence towards average European prices, average prices currently lie 30% above best practises.
ICP's current decision will also make it possible to correct deficiencies in the field of interconnection in Azores and Madeira Islands, through the creation of two national interconnection points (PGI) in Funchal and Ponta Delgada. The creation of these two PGI will allow reducing the global interconnection costs with those islands.
ICP also decided to grant Portugal Telecom with a four months deadline to present ICP a proposal to revise the interconnection infrastructure and PGI list. ICP aims at increasing the efficiency of the system and ensuring that the resulting gains lead to benefits for consumers.
Questions related to Internet will be subject to a later decision, following final hearings with operators and consumer associations, to be held on Wednesday January 24 in a meeting convened by ICP.
1 Simple transit, in general terms, is equivalent to regional connections.
2 Dual transit, in general terms, is equivalent to inter-city connections.
