Offers ''PT Destinations'', ''PT Timeslots'' and ''PT Groups''

Draft Decision relating to PTC?s Offer "PT Timeslots", "PT Destinations" and "PT Groups"

1. Autoridade Nacional de Comunicações (National Communications Authority) (ANACOM) has received, on 07/03/03 a claim from Onitelecom, Infocomunicações S.A, regarding a set of new commercial offers, namely, i) “PT Destinations”, which consists in the offer of packets of minutes for calls within PT Comunicações SA (PTC)’s network inside the national territory and for calls with destination Spain, United Kingdom, Germany, France, United States and Canada; ii) “PT Timeslots” – “Night and Weekend”, “After Hours” and “Part Time” -  which consists in the offer of three distinct packets of minutes for local and regional calls within PTC’s network and iii) “PT Groups” -  “Friends 1 to 1, 1 to 3 and 1 to 10” -  which consists in the offer of packets of minutes for calls within PTC’s network, for the set of 1, 3 or 10 destinations selected by the user.

2. At beginning, these offers have stirred up apprehension about the possibility i) of the telephone fixed service providers (FTS), which operate through indirect access, to be able to carry out similar offers, based on the prices charged by PTC for the interconnection service – the input necessary for the establishment of analogous offers, as recognized by that entity- and ii) of the same ones to be able to constitute an obstacle to the existence of conditions for a sound market competition. In this scope, ANACOM requested to PTC, in 13/03/03, additional information regarding the above mentioned offers, namely as for the demonstration of its compatibility with the applicable prescribed principles.

3. In reply to a request by ANACOM, PTC, in a dated letter of 20/03/03, has elaborated a set of commentaries on i) the innovative aspects of the offers, ii) the fulfilment of the principle regarding price orientation for the costs and iii) the compatibility of the offers with the interconnection prices, determined by the Board of Directors of ANACOM in 21/03/03 (see: Alterations to be introduced in the RIO 2003https://www.anacom.pt/render.jsp?contentId=418271).

4. In particular, PTC transmitted the following commentaries: 

4.1. That these services are rendered into benefits for the adherent consumers, given its innovative characteristics and the economical advantages provided;

4.2. That these services imply the payment of a monthly fixed amount associated to a maximum consumption, so that the principle regarding price orientation for the costs must be understood as the capacity of income to sufficiently remunerate the costs of accomplished traffic, generated by the packets of minutes. For this purpose, it suggests the comparison of the prices of packages of minutes with the costs of traffic for an average customer;

4.3. It also reports, that relatively to non cumulative packets of minutes, from day to day, it is not reasonable to admit the maximum consumption for each plan, for it understands the necessity of admitting a utilization tax of around 50%.  It still adds that this type of tariff creates, as its objective, more intense habits of consumption and recognizes that the full use of the minutes allows getting low unitary prices and substantial deductions in view of standard tariffs.

5. ANACOM understands that:

5.1. Recognizing the immediate benefits, generated by these offers, for the consumers, it is noticeable that conditions of sound and sustainable competition must be preserved, so that the interests of the consumers, at term, are not harmed;

5.2. Agreeing that the principle regarding price orientation for the costs generated by the packages of minutes is shown on the capacity of income to sufficiently remunerate the costs of accomplished traffic, the concrete approach presented in this case by PTC is inadequate. Indeed, the comparison between the income earned in a specific packet and the costs of an “average” customer of PTC, is not justified so that the verification regarding price orientation for the costs must be consubstantiated at established prices level and costs incurred into each one of the services or offers. As a matter of fact, it was this, the principle that presided over to the tariff rebalancing;

5.3. With respect to the admission of partial use rate (50%), for the purposes of evaluation of the providers capacity on indirect access services to be able to carry out analogous offers, it is important that i) the same one is not duly justified, ii) it is not consentaneous with PTC’s expectation that the plans of prices in analysis create more intense habits of consumption in the adherent customers,  and iii) it lacks incentives for the consumer to control consumption expenses, until the maximum consumption allowed by the packets of minutes is spent, for it must be admitted the integral use of the packets of minutes;

5.4. Without granting, it is noticed that even the presupposed partial use of the packets of minutes, which results in an improvement of the income rates relevant for the PTC, is not enough so that all the offers respect the applicable legal principles, namely the principle regarding price orientation for the costs. Indeed, considering the partial use suggested by PTC (50%), the income regarding the plan of prices “Night and Weekend”, “After hours” and “Friends 1 to 1”, are not enough to at least compensate the incurred direct costs.

6. ANACOM does not consider the possibility of the notified operator with significant market power, in the market of the fixed telephone service and/or of the fixed telephone network and in the national interconnection market, to exercise lower retail prices than the prices which are relevant for the interconnection. In this scope, the promotional offers with limited duration are excluded, which could lead to a casuistic approach.

7. In the following table, the comparison between generated income by the plans of prices in analysis and the minimum prices of interconnection global service provided by the historic operator ^{1https://www.anacom.pt/render.jsp?contentId=55129}, can be identified.

1. For comparison’s sake, for the local calls it has been considered an originating local call and an ending local call, for regional calls an originating local call and an ending call in simple transit and for the national calls, an originating local call and an ending call in double transit. The distribution of the number of minutes by the various types of calls was carried out on the basis of relative weight of the same calls in the relevant traffic, having been considered the calls of average duration.  IVA excluded.

8. Thus, considering namely that:

i) Pursuant to article 8 of Decree Law nr. 415/98, of 31/12, PTC, in its capacity as entity with significant market power, is committed to comply with non-discrimination principle in the interconnection offer which is translated, namely, in its obligation to offer the conditions and information that it applies to its own services, subsidiaries or associated companies to the interconnection applicants that offer similar services and that are in similar conditions and that the article 33 of the Regulations for the Operation of the Fixed Telephone Service contains analogous disposal;

ii) The use and access prices of the fixed telephone network and the FTS, to be charged by the respective operators and or providers that have significant market power, must comply with the principle of orientation for the costs, pursuant to article 34 of the Regulations for the Operation of the Fixed Telephone Service;

iii) The FTS providers, that operate through indirect access, do not have the possibility to carry out, on the basis of the prices charged by PTC for the interconnection services - input necessary to the  constitution of analogous offers, as recognizes that entity - competing offers with “PT Destinations”,  “PT Groups - Friends 1 to 1”  and “PT Timeslots” offers, except for the “Part-Time” plan;

iv) The prices of the offers referred in iii), with the exception of plan “PT Destinations” -  to Spain, United Kingdom and United States of America -  are not compatible with the principle of orientation for the costs;

v) That does not exist available information on the plans of prices “Friends 1 to 3” and “Amigos 1 to 10”,

a) The Board of Directors of ANACOM, in a meeting held on 10/04/03, resolved approve the interruption or, in the cases where the commercialization had not yet started, the suspension of launching of the following offers:

1. “PT Timeslots”: “Night and Weekend” and  “After Hours”;
2. “PT Groups”: “Friends 1 to 1”
3. “PT Destinations”: Portugal, Spain, Germany, France, United Kingdom, United States and Canada.

9. Wanting, the interested entities will be able to pronounce themselves on the present decision project, pursuant to article 100 and subsequent of the Rules of Administrative Procedure, in the period of 10 days time.