Determination on termination on OLOs networks
1. By ICP-ANACOM’s determination of 17/12/041https://www.anacom.pt/render.jsp?contentId=55129 concerning the imposition of obligations on the wholesale call origination and termination markets of calls on the public telephone network at a fixed location, a price control obligation was imposed on notified operators with significant market power (SMP) in the call termination market on the public telephone network at a fixed location, with the exception of PT Group companies (OLOs).
2. As mentioned in the referred determination, ICP-ANACOM believes that, without regulatory measures, the OLOs would tend to fix excessively high call termination prices. Since the competing operators cannot refuse to purchase call terminations, it is important to ensure that excessively high termination prices do not result in abnormally high retail prices charged for off-net calls as this would undercut the network externality effect and would be prejudicial for the end-users.
3. Consequently, and taking into account the main interconnection guiding principles, especially with regard to the promotion of the interoperability of telecommunication services for public use; to the need to maximise the economic value and the benefits of the users; and to encouraging the transparency and forecasting of the functioning of the market, ICP-ANACOM has determined that the price control to be applied to the OLOs should be based on a “delayed reciprocity” principle. It has been determined that the prices to be charged by the OLOs should be based on a maximum difference of 20% in relation to the prices practiced by the PT Group for call termination on its network.
4. In its determination of 17/12/04, ICP-ANACOM also decided that the difference between the termination prices practiced by the PT Group and by the OLOs should take into consideration a suitable weighting of the level in question and the traffic volume.
5. In a letter dated 01/06/05, PT Comunicações, S.A. (PTC) sent this Authority a tariff proposal for communications aimed at direct clients of other telephone service fixed location providers, alleging that in this regard there are reasons to believe that the price control rule for the termination tariffs of the OLOs was not being complied with by most of the operators.
6. It is emphasized that the average termination revenue (considering local termination, in simple and double transit and according to PTC’s invoicing data of the first quarter of 2005), per minute, of PTC is about 0.730 Euro cents (excluding VAT). Therefore, the average maximum termination revenue per minute that the OLOs can receive is 0.876 Euro cents (excluding VAT).
7. Based on the information made available by PTC in its letter of 01/06/05, it is possible to compare the average prices associated to the lowest interconnection level used by each OLO with local PTC termination. The results are shown in the graph below.
Graph 1. Average termination prices.
8. It is further emphasized that the invoicing data sent by PTC with regard to the first quarter of 2005 corroborate the conclusions referred to above since most of the OLOs receive from PTC average income, per minute, for call termination that is more than 20% higher than those of PTC.
9. Thus, the Board of Directors of ANACOM, in the context of the jurisdiction provided for in Article 6, Item 1, Sections b), h) and n) of the Statutes, approved by Decree-Law no. 309/2001, of 7 December, carrying out its duties foreseen in Article 9, Sections b) and g) of the referred Statutes and taking into account the regulation objectives foreseen in Article 5, Item 1, Sections a) and c) of Law no. 5/2004, of 10 February, hereby determines the following in carrying out the determination of 17/12/04, in relation to the application of the obligations of the wholesale call origination and termination markets on the public telephone network at a fixed location:
a) All notified operators with SMP on the call termination market on the public telephone network in a fixed location (with the exception of the PT Group operators) that are not complying with the price control obligation in the terms of the referred ICP-ANACOM determination of 17.12.04, must, within 10 working days, establish and apply a new call termination tariff which fulfils the obligation in question. In other words, the prices of the new tariffs to be charged by the OLOs will be based on a maximum difference of 20% in relation to the prices practiced by the PT Group for call termination on its network. The average maximum termination revenue per minute will thus be 0.876 Euro cents (excluding VAT);
b) The operators must send ICP-ANACOM, within 15 working days, the respective properly justified call termination tariff, demonstrating that this fulfils the price control obligation to which the operators are bound in the terms of the ICP-ANACOM determination of 17.12.04.