The monthly SLRO payment to be charged to new operators by PT will be set at 11.32 euros in accordance with a draft determination approved by the regulator. This is nearly 7% lower than the 12.13 euros proposed by the incumbent. The regulator has also stipulated to PT that the Subscriber Line Resale Offer activation price may not exceed the maximum price to activate pre-selection, or 5.6 euros, 25% lower than the 7.54 euros which the historic operator wanted to charge for SLRO activation.
The regulator's decision not to accept PT's proposed monthly SLRO payment amount stems from the fact that it is so close to the monthly subscription amount that PT charges its customers, 12.66 euros, which would detract from new operator margins in providing PT's subscriber line resale to customers. Through the SLRO, which allows billing of the network line and traffic, new operators will be able to launch innovative commercial offers and diversified services. The SLRO also promotes the existence of a single bill, an essential element in fostering increased market competition.
With a price now defined, the regulator intends to set the SLRO's monthly payment amount between the monthly subscription amount which PT charges its customers for the telephone line and the monthly payment amount which alternative operators pay PT for the local loop when they opt for infrastructure investments, since ANACOM aims to encourage business models favoring investment. With regard to the local loop monthly payment, 9.72 euros, the monthly SLRO payment is 14% higher, although it is still 11% below the monthly subscription price charged by PT.
This choice with regard to the SLRO price reflects the regulator's belief that encouraging competition in service provision is compatible with encouraging competition in infrastructures. This is because an organization may initially opt for a business model based on service provision or resale with lower risk and capital expenditure, then subsequently evolve toward an integrated service production/provision. Further, the same operator may pursue the two models since it may make sense for certain operators to invest in infrastructures in more densely populated regions and focus on a service provision or resale model in less populated areas.
The regulator also believes the SLRO can increase margins and business opportunities for operators who only provide indirect access services. The Reference Unbundling Offer (RUO), although requiring higher operator investments in infrastructure, now gives operators the potential for enhanced business opportunities, more diversified services and higher profitability over time.
The regulator's draft determination, submitted to public consultation for a period of 30 days, also specifies that the SLRO's activation process begins with an order sent electronically to PT Group companies, which then must make the Subscriber Line Resale Offer available within a maximum period of five working days.
SLRO beneficiary companies must, however, request signed documents from their customers to be forwarded to PT Group companies. Each month companies must deliver documentation for SLRO activations from the previous 30 days.
At the same meeting, the regulator also approved a draft regulation for operator selection and pre-selection. In addition to streamlining the activation process (in tandem with the same SLRO process), the primary anticipated enhancement is the extension of eligible traffic to include calls to non-geographic numbers (not including emergency services and Internet access).
Regulator defines conditions for the launch of offers which bundle traffic and subscription
ICP-ANACOM has defined the conditions under which PT Group companies may proceed with offers which bundle traffic and the network line in a single price. These consist of three cumulative requirements: 1) PT may only launch these offers when 150,000 SLRO accesses have been activated; 2) PT Group companies must request that SLRO beneficiaries perform billing and collection for all services provided over SLRO accesses, whether by PT Group or other companies, but billed through PT, and; 3) PT Group companies must provide Basic and Primary ISDN accesses.
In addition to these requirements, future PT Group retail offers must fulfill obligations involving price orientation toward costs and non-discrimination.
Consequently, although PT Comunicações' provision of a network line wholesale offer (SLRO) is an essential condition for the existence of bundled traffic and subscription line offers (without it, these offers could not be replicated by alternative operators), the regulator will not allow the PT Group to launch these offers automatically, but instead will make their existence conditional upon a specific level of market development.
The SLRO's deployment in other countries has not been easy, both due to the technical complexity of the process as well as the operator with significant market power having, as a rule, little incentive to carry it out. In Portugal's case, it is believed that PTC offers which bundle traffic and the subscription amount should be conditional upon the SLRO's development and effective deployment. The activation of 150,000 accesses under the SLRO is considered an adequate foundation for the first bundled offers to appear. Even so, the two remaining conditions must also be ensured: 1) PT must request that SLRO beneficiaries perform billing and collection for services provided over SLRO accesses as a means of ensuring the highest possible number of single bills, since the existence of two bills (one for traffic and another for subscription) has been identified as a barrier to increased market competition; and, 2) PT must provide Basic and Primary ISDN accesses for activation of the SLRO.
According to the regulator's draft decision, the 150,000 SLRO accesses to be activated can be quickly achieved. PT estimates indicate 807,000 accesses under the SLRO at the end of 2006, of which 75,000 will be from PT, so that the 150,000 accesses set by the regulator equal 20% of this number.
The regulator's draft decision will undergo a public consultation for 30 working days.
