Reformulation of PT Comunicações S.A's leased lines offer
By resolution of 29 November 2001, the following decision was taken and justification given below, in relation to reformulation of the leased lines of PT Comunicações, S.A.:
The leased lines market is an essential pillar for the development of electronic communications, assuming a significant importance in the appropriate development of the Information Society and the "e-Europe".
Within this context, ICP has paid close attention to the supervision of this market, with a view to identifying factors that favour its sound development, and, when necessary, adopting regulatory measures that, when applicable, effectively contribute to the pursuit of the principles of transparency, non-discrimination, cost-orientation, promotion of healthy competition and safeguarding of the interests of users.
In particular, a series of circumstances has recently been observed that has contributed to a reanalysis of the conditions that have been moulding the supply of leased lines by PT Comunicações (PTC), as the concessionaire of the basic network and operator notified with significant market power in accordance with and for the purposes of the Regulations for the Operation of Public Telecommunications Networks.
Within this scope, the following should be emphasised: (a) the investigation currently being undertaken by the European Commission on the state of competition in the leased lines markets of various Member-States (including Portugal) and the results of various studies carried out by ICP related with (b) present and predictable conditions of the development of competition in this market; (c) any eventual impact resulting from the operativity of third generation mobile networks; (d) the evolution of the domestic prices of circuits and relative positioning of Portuguese prices in comparison with other EU countries (with an impact on the overall competitiveness of the economy); (e) past and future predictions of variations in costs and margins associated with supply; (f) the evolution of quality of service conditions; (g) a series of preoccupations expressed by different entities concerning the supply conditions; and; finally, (h) the conducting of an audit in relation to the service quality indicators for the supply of leased lines by PTC.
Based on the analysis carried out and with the objective of satisfactorily complying with the previously mentioned principles, PTC should reformulate its leased lines offer, sending a new offer project to ICP until 14/12/01, which should take into consideration the following aspects in particular:
(a) In the light of the principles of transparency, non-discrimination and cost-orientation, it is considered essential to revise the system of discounts in force, with a view to simplifying the same and always bearing in mind the inevitable relationship between discounts provided and cost savings effectively achieved, independently of their nature.
(b) It has been recognised that in a liberalised environment, the end-to-end supply of circuits is important for the full satisfaction of users' needs. For the purpose, several operators still depend on the supply of leased lines (especially the short distance and the local ends) from a limited number of operators (mainly the historic operator). This situation is particularly crucial in the case of connections between the installations of the customer and the other operator. Thus it is convenient to ensure a series of conditions that enable an appropriate offer by the generality of operators in the above-mentioned conditions, with particular emphasis on cost saving which, should not be considered negligible, given the "wholesale" nature of the supply and the inherent dispensability of certain costs related to activities such as sales and marketing, as recognised by the European Commission.
(c) In general, in face of past and predictable results concerning national digital circuits with capacity equal to or above 2 Mbps, a significant reduction in prices is desirable to be satisfactory compatible with the principle of cost orientation. In particular, it is considered that such a price variation should take place with greater emphasis in the case of local ends.
(d) With emphasis on the need to comply more closely with the cost orientation principle, which is also important within the scope of the development of an "e-Europe", the common market and the overall competitiveness of the domestic economy, it is important to considerably reduce the prices of circuits with a capacity between 64 Kbps and 2 Mbps.
(e) Considering growing needs regarding the increase in bandwidth arising from the internet, the development of the contents industry, and the dynamisation of e-commerce and the provision of "on line" services, it is also appropriate to consider the dynamisation of the supply of high capacity circuits. This should involve appropriate conditions regarding prices, quality of service and the promotion of the supply itself (particularly in conformity with articles 13, paragraph c), 14 and 19 of Decree-Law no. 290-A/99, of the 30th of July, which approves the Regulations for the Operation of Public Telecommunications Networks).
