Trends in telecommunications prices - November 2021

Executive Summary

Prices fell by 1.2% in November 2021

In November 2021, telecommunications prices, as measured by the Consumer Price Index (CPI) sub-index), decreased by 1.2% compared to the previous month, mainly as a result of “Black Friday” promotions.

Compared to November 2020, prices increased by 0.4%, 2.2 percentage points below growth in CPI.

The average rate of change in telecommunications prices over the last twelve months was 0.3% (0.7 percentage points below the change in CPI (1.0%).

Since January 2021, telecommunications prices have increased by 0.6%, due to the growth in monthly charges for bundled offers¹.

Average change over the last 12 months in Portugal was 0.1 percentage points below the EU

In November 2021, the average rate of change in telecommunications prices in Portugal was lower than in the European Union (-0.1 percentage points). The average variation rate of telecommunications prices over the last twelve months in Portugal was the 11th highest (17th lowest) among EU countries. The country where the biggest price increase occurred was Slovakia (+6.8%) while the biggest decrease occurred in Luxembourg (-3.0%). On average, EU telecommunications prices increased by 0.4%.

Prices have increased by 9.0% since the end of 2010

From a long-term perspective and in accumulated terms, telecommunications prices have increased by 9.0% since the end of 2010, while CPI has increased by 12.2%. Divergence between the two indexes, seen first in 2015 and increasing in 2016, is associated with the “price adjustments” applied by the principal providers. As of May 2019, the narrowing divergence between the two indexes was mainly due to the entry into force of Regulation (EU) 2018/1971 of the European Parliament and of the Council, which imposed a maximum price on international calls and intra-EU SMS messages.

If it was not for the price reduction in intra-EU calls, it is estimated that telecommunications prices would have increased by 12.6% since the end of 2010 (0.3 percentage points above the variation in CPI over this period, in accumulated terms).

Since the end of 2009, prices have increased by 7.0% in Portugal and decreased by 9.7% in the EU

Between the end of 2009 and November 2021, telecommunications prices in Portugal increased by 7.0%, while in the EU they decreased by 9.7%. The difference narrowed with the entry into force of new European rules on 15 May 2019 regulating the prices of intra-EU communications.

A finer comparative analysis shows that, between the end of 2009 and November 2021, telecommunications prices fell by 15.6% in Lithuania, while in Latvia, Finland and Portugal they increased by 0.8%, 4.1 % and 7.0%, respectively.

NOWO has the lowest monthly fee for eight offers

Among the services/offers considered, the lowest monthly charges are offered by NOWO in eight cases out of a total of 13 services/offers; while MEO, Vodafone and NOS reported the lowest monthly charges for two types of services/offers each.

In year-on-year terms, there were 16 price increases and 13 decreases. The following price variations stand out:

• The minimum monthly charge for STV increased by 30.8% with the discontinuation of an offer from NOS;
• The minimum monthly charge for fixed broadband (FBB) fell by 4.2%, due to NOWO's offer waiving the first monthly charge for its basic service.
• The minimum monthly charge of the Mobile Telephone Service with Internet increased by 50.0%, due to discontinuation of the offers from NOWO and MEO (Uzo offer) with a monthly charge of five euros;
• The minimum monthly charge for Mobile Broadband via PC/Tablet fell by 6.8%, as a result of NOS's "Black Friday" promotions;
• The minimum monthly charges of the FBB+STV (-4.3%), FBB+FTS (-4.3%), STV+FTS(-13.9%), 3P (-13.9%) and 4P (- 2.2%) offers decreased following NOWO's “Black Friday” promotions. Additionally, the minimum monthly charge for STV+FTS increased by 77.6% with the discontinuation of an offer from NOS, making a total of 52.9%;
• The minimum monthly charge for 5P offers increased by 5.8%, as Vodafone discontinued its offer of a free first monthly charge for the basic service;

By provider, MEO increased the minimum monthly charge for six services/offers in relation to November 2020. NOS increased the minimum monthly charge for five services/offers and reduced the monthly charge for two offers (mobile telephone service with mobile phone Internet – “Mundo” offer, and mobile broadband via PC/tablet - Black Friday promotion of the “Kanguru” offer). Vodafone increased the minimum monthly charge for three services/offers and reduced the monthly charge for two offers, including the mobile telephone service offer with mobile phone Internet and the mobile broadband Internet offer via PC/tablet. Meanwhile, NOWO increased minimum monthly charges for two services/offers and reduced minimum monthly charges for nine services/offers.

There were notable increases in the monthly charges for 4P and 5P offers by MEO, NOS and Vodafone in May and June 2021².

According to the OECD Economic Surveys: Portugal 2021, broadband prices are relatively high in Portugal, reflecting a low level of competitive pressure

According to the OECD Economic Surveys: Portugal 2021, published in December 2021, “broadband prices are relatively high”³. The OECD considers that “broadband prices are high by international standards, including for basic services, reflecting low competition pressures among service providers. Reducing barriers to consumer mobility between suppliers can improve market contestability"⁴. The OECD recommends “removing constraints to consumer mobility across telecommunications providers, for example, by restricting the use of loyalty clauses in contracts and providing clearer information on the quality of services”⁵.