Decision on the distribution and broadcasting service of the terrestrial television signal
I. Background
1. The Price Convention approved in 01/07/97 between the Instituto da Comunicação Social (ICS), the Autoridade Nacional de Comunicações (then known as Instituto das Comunicações de Portugal), the Direcção-Geral do Comércio e Concorrência (DGCC) and PT Comunicações, S.A. (PTC), back then Portugal Telecom, S.A., pursuant to paragraphs 1 and 2 of article 17 of Decree-Law no. 122/94 of 14/05, has defined the price regime for the distribution and broadcasting service of the terrestrial television signal, provided by PTC. According to paragraph 1 of clause 2 of the referred Convention, the price determination of that service should take into account the principles of transparency, non-discrimination and cost orientation. Clause 3 defined the maximum prices for the terrestrial television signal distribution and broadcasting service, to be applied in 1997, and provided that in 1998 the prices would be updated up to the maximum value of the average variation rate of the IPC, expected for that year in the State Budget. By determination of ANACOM of 25/01/01, the mentioned Convention remained in force.
2. Between 1998 and 2002, inclusive, the prices for the distribution and broadcasting service of the terrestrial television signal were not updated.
3. On 17 February 2003, Decree-Law no. 31/2003 (Amending agreement of the concession contract for the telecommunications public service) was published. Paragraph 3 of article 16 of the Bases of Concession approved by Decree-Law 31/2003 of 17 February establishes that it is incumbent upon ANACOM to ensure that the price regime for the access to the network of the television signal transport and broadcasting complies with the principles of transparency, non-discrimination and cost orientation, having heard the ICS. The Convention thus disappears.
4. On 18 March 2003, ANACOM received a letter from Radiotelevisão Portuguesa S.A. (RTP) concerning the prices of the terrestrial television signal distribution and broadcasting service, applied by PTC. RTP took the view that the prices applied by PTC, as to the referred service, were far above the costs, requesting an intervention from ANACOM, pursuant to paragraph 3 of article 16 of the Bases of Concession approved by Decree-Law no. 31/2003, of 17 February.
II. Analysis
5. According to the recent available information regarding the results of the cost accounting system (CAS) of PTC, concerning the first half of 2002, the terrestrial television signal distribution and broadcasting service provides a significant profit margin, upon deduction of costs, which were fully allocated, capital return included, a situation which is deemed to be incompatible with the principle of cost orientation of prices.
6. For the present, there is no other operator providing a service that, as far as quality, coverage and price are concerned, can be regarded as an alternative offer to the terrestrial television signal distribution and broadcasting service provided by PTC.
III. Determination
7. Therefore, having regard to:
a) The fact that, pursuant to paragraph 3 of article 16 of the Bases of Concession approved by Decree-Law no. 31/2003, of 17 February, the prices of the terrestrial television signal distribution and broadcasting service should comply with the principles of transparency, non-discrimination and cost orientation, being incumbent upon ANACOM to ensure the respect for these principles, having heard the ICS;
b) The fact that the current service profit margin, as the results of the CAS of PTC suggests, is significantly high;
c) The need to promote swiftly and sustainably a higher degree of adherence between the principle of cost orientation of prices and the tariffs of the terrestrial television signal distribution and broadcasting service provided by PTC, particularly considering the social consequences of that service and its relevance in the global context of the development of the Information Society;
d) The dominant position of PTC as the provider of the terrestrial television signal distribution and broadcasting service, without prejudice to the market analysis which is to be carried out in the scope of the implementation of the new regulatory framing (emerging from the publication in the Official Journal of the European Communities of 24 April 2002 of the four Directives and the Decision approved by the European Parliament and the Council on 7 March 2002, which integrate the “99 Review” package);
e) The position of ICS, which was heard on the draft decision of ANACOM, pursuant to paragraph 3 of article 16 of the Bases of Concession approved by Decree-Law no. 31/2003, of 17 February;
f) The results of the hearing granted to the interested entities, inquired pursuant to articles 100 et seq. of the Code of Administrative Procedure, on the draft decision of ANACOM;
g) The impact on service costs of the acquisition of basic network of the State by PTC, having deducted the amount of the rent paid to the State for 2002;
h) The price reduction arrived at by PTC in March 2003, with retroactive effect as from January 2003,
8. The Board of Administration of ANACOM, at the meeting held on 3 July 2003, determined that PTC:
a) shall satisfy ANACOM, within a period of thirty days, that the tariff alteration carried out in March 2003, with effect as from January 2003, represents an annual nominal variation of –14,06% regarding the tariffs in force in 2002, presenting the reasons thereof;
b) is required to carry out, as from 1 June 2003, an additional real reduction of prices currently in force, not lower than 1,2 %. This value may be revised where the provision of point a) has not been complied with;
9. For the purpose of establishing the real variation referred to in paragraph 8, the inflation value shall correspond to the inflation expected by the Government for 2003, and entered as such in the respective State Budget Report. Where an interval of the expected inflation variation is entered in the referred State Budget Report, the inflation to be taken into consideration shall correspond to the average of that interval.
