Declaration of Significant Market Power in the Mobile Telephone Networks Market and or Mobile Telephone Services

A fundamental aspect of Decree-Law nr. 415/98 dated December 31st, which establishes a regulatory framework for interconnection between public telecommunications networks in an enviroment of open and competitive markets, is the concept of significant market power and, in the materialisation of those powers specifically attributed to the Instituto das Comunicações de Portugal, the declaration of the entities which have such power. Depending upon their categories, these entities are subject to different types of obligations duly explained in Decree-Law nr. 415/98.
Under the terms of nr. 2 of article 7 of this diploma, an organization shall be presumed to have significant market power when it has a share of more than a 25% of a particular telecommunications market in the geographical area within which it is authorized to operate. However, the Instituto das Comunicações de Portugal may, using the additional criteria established in nr. 4 of the same article 7, decide that a given entity has significant market power regardless of whether it has a 25% market share or not.

To this end, it shall fall upon Instituto das Comunicações de Portugal, following a prior statement by the Directorate-General for Trade and the Competition, to decide, declare and publish yearly a list of entities which have significant market power in the relevant market. In accordance with that laid down in this diploma, namely in article 6, nr. 1, the following markets may be considered: mobile telephone networks and or mobile telephone services; fixed telephone networks and or fixed telephone services; leased lines; inter-connection.
Under the terms of the Declaration of Significant Market Power made by the ICP on 16/04/1999, Portugal Telecom, S.A. was notified as having significant market power (a) in the interconnection market, (b) in the fixed telephone networks and or fixed telephone services market and (c) in the leased lines market, indicating at the time that the declaration of significant market power in the mobile telephone networks and or mobile telephone services market would be subject to a complementary analysis within the legal terms.
Thus, and bearing in mind that market shares in the mobile telephone networks and or mobile telephone services market are calculated on the basis of the sales volume of companies in this market, the said analysis produced the determination of the entities which have significant market power in the mobile telephone networks and or mobile telephone services market.

Hence, TMN - Telecomunicações Móveis Nacionais, S.A. and Telecel - Comunicações Pessoais, S.A. have a market share significantly higher than 25% in the mobile telephone networks and or mobile telephone services market, and therefore have significant market power in this market, being subject to all the essential obligations foreseen in Decree-Law nr. 415/98 for operators with significant market power in the mobile telephone networks and or mobile telephone services market.

The consideration of the additional criteria foreseen in nr. 4 of article 7 of Decree-Law nr. 415/98 does not contradict and, on the contrary, strengthens the presumption that those entities have significant market power, which resulted from the calculation of the respective market shares.
The Instituto das Comunicações de Portugal also considers that the regulatory framework applicable to the entities now notified as having significant market power, namely in relation to:
1. the availability of access to the network, including access at points other than those network terminal points offered to the majority of final users;
2. respecting the non-discriminatory principle in the supply of interconnection;
3. the availability, through requests for inter-connection from applicants, of all information and specifications necessary for inter-connection;
4. respecting the confidentiality of the information made available by applicants for inter-connection, using it exclusively for the purpose it is destined;
Will maintain and create strong incentives for the further development of competitive conditions in the communications sector, with the expectation that this will bring benefits for the final user.
Bearing in mind the swift evolution of the mobile communications market, the significant competitive dynamic of the mobile operators and the potential effects in 1999 resulting from the recent entry of a third mobile operator in the market, the Instituto das Comunicações de Portugal may soon make a reevaluation of the significant market power situation in the mobile telephone networks and or mobile telephone services market.