CTT does not comply with two quality of service indicators in 2018 and ANACOM applies compensation mechanism

In 2018 CTT failed to meet two universal postal service quality indicators, and ANACOM determined in its draft decision that the maximum price variation allowed for 2019 is a reduction of 0.085 percentage points. It follows that, taking into account that given the rules for updating prices the maximum price variation allowed for 2019 was 1.15%, the weighted average change in the prices of the basket of correspondence, parcels and editorial mail services may not exceed 1.065%.

This circumstance results from the application of the compensation mechanism, which operates when the universal postal service quality indicators are not met. It is further provided in the law that the price reduction will benefit all users of those services.

The two universal postal service quality indicators that CTT did not meet in 2018 were:

  • Transit time for priority mail on the Mainland;
  • Transit time for intra-community cross-border mail.

In the case of the indicator ''Transit time for priority mail on the Mainland'' it was established that at least 93.5% of the priority mail exchanged between any points in the Mainland must be delivered on the business day following that when it is deposited at a CTT point of mail reception, even though the goal is for this to happen in 94.5% of cases. However, CTT was only able to deliver 92.3% of the mail within this time limit (91.4% in 2017), thus violating both the minimum and the goal, that is, about 2 million priority letters took more than 1 working day to be delivered.

As regards the indicator ''Transit time for intra-community cross-border mail'', it is expected that at least 85% of the intra-Community cross-border mail traffic sent to and from Portugal in the first-class international mail mode will be delivered up to 3 working days after its deposit at a mail point of receipt, and the stated objective is for this to happen in 88% of cases. Only 80.5% of this mail was delivered within that time limit (82.6% in 2017), i.e., 4.5 million cross-border mail letters (originating in Portugal or with destination in Portugal) were delivered late.

Note that, in accordance with the applicable rules, where the value of any quality of service indicator falls below its acceptable minimum value in a given year, the deduction to be applied corresponds to the product of the relative importance of that indicator and the applicable maximum deduction (deduction of 1 percentage point from the maximum allowable price variation for the basket composed of correspondence services, editorial mail and postal parcels that make up the universal service).

Thus, since the relative importance of those two quality of service indicators corresponds to 8.5%, the deduction to be applied is 0.085 percentage points.

This is the third year in a row that CTT has failed to meet all 11 universal postal service quality indicators they are obliged to respect and the second year in a row that the company has not managed to fulfil the indicators regarding the transit time for priority mail on the Mainland and intra-community cross-border mail. In 2016, the universal postal service concessionaire had not met the minimum value set for the indicator of ''Non-priority mail not delivered within 15 working days''.

ANACOM's draft decision, approved on 9 May, has now been submitted to a prior hearing of CTT for 15 working days.

It should be recalled that according to the new set of indicators which, meanwhile, came into force in 2019, there was no longer a minimum value associated with the quality of service indicators, and there is only the objective value (which is higher than the minimum value), such that as of this year if CTT do not meet the target value of any indicator (even if they meet the minimum value, if it still exists) this will lead to the application of the deduction mechanism.

It should also be noted that by 1 July 2019, CTT should implement a set of changes to the procedures for measuring quality of service indicators. It should be recalled that, following ANACOM's audit of the system for measuring indicators for the years 2016 and 2017, which concluded that the measurement system showed multiple weaknesses, ANACOM established a set of changes to the measurement procedures of the indicators, for CTT, in order to make the measurement more robust.