On 26 March, ANACOM was faced with the publication of Decree-Law no. 57/2008, which has the aim of setting out the legal regime applicable to the unfair business-to-consumer commercial practices of companies, occurring prior to, during, or following a commercial transaction with respect to a product or service, transposing into national legislation Directive no. 2005/29/EC of the European Parliament and of the Council of 11 May concerning unfair business-to-consumer commercial practices in the internal market.
Despite the horizontal nature of the law, the declarations published herein focus on its application to the electronic communications sector, specifically with respect to the provisions of point q) of article 8, which prohibits as an unfair commercial practice, being considered "a misleading act under all circumstances", "(… ) rounding up price, duration or other factors, directly or indirectly, connected to the supply of goods or to the provision of services where this does not have exact and direct correspondence in the effective expenditure or use by the consumer and which leads to an increase in the price paid by the consumer".
It should be noted from the outset that the above provision is not contained within Directive no. 2005/29/EC, which Decree-Law no. 57/2008 was designed to transpose, not having relation to any of the actions set forth in the exhaustive list set out in this directive.
Taking into account that this decree-law is applicable to electronic communications, on 1 April, the date that the law entered into force, ANACOM affirmed that, given the complexity of the problems arising from this new legal framework, it had become necessary to formulate an appropriate definition of the solutions necessary for the supervision of its application in the sector. ANACOM committed itself to the definition, within a period of 30 days but without prejudice to the immediate application of the law, a set of rules for determining compliance with this law by the operators of electronic communications.
As a starting point it is fundamental to seek an imperative meaning for this rule and, having achieved this meaning, to verify compliance therewith on the part of the operators. Accordingly, the analysis of what should be understood by "rounding up duration" becomes particular pressing in view of the tariff models existing in electronic communications and of the reading which has been advanced publically for the interpretation of this rule.
In the interpretation of the provision, the following must be taken into consideration from the outset:
a) The concept of unfair practice contained in the law, which presupposed the existence of the element of misleading inducement of consumers in order to lead them to a decision to contract which, otherwise, they would not have taken;
b) The fact that currently, the services of electronic communications are very diverse, as are, consequently, the respective tariff models.
- Firstly, the tariff models adopted by the operators are based on the costs which they incur, which costs are not limited to the costs of the actual communications: there are fixed sign up / installation costs and costs in respect of the establishment of calls, for example;
- Secondly, the costs of a communication do not necessarily depend on its duration, as in services which are billed in accordance with the respective volume of traffic and not according to a billing unit of time.
- Thirdly, in light of the convergence of various services, there are tariffs which basically offer availability, as is the case with "triple-play". In this regard, the notion of each provided service being used singularly does not make sense. The consumer purchases "capacity" and chooses the most suitable service.
It may naturally be concluded therefore that this law, in respect of the rounding up of duration, is applicable only to those electronic communication services where this factor might have implications for the prices of the service, whereby such is restricted practically to the telephone service (voice) and to the dial-up internet service1.
It is noted that even the voice telephone service, which from a technical point of view (of the offer) might be a homogeneous product, in truth might represent various "economic products", depending on the type of consumer, with distinct units of measurement which are not necessarily periods of time (packages, capacities, etc,) nor definite periods (seconds, tens of seconds, minutes, months, etc.).
In electronic communications, especially in the telephone service at a fixed location, there was a move, almost a decade ago, away from billing per impulse (only unit of measurement used at the time) and towards call billing "to the second" (while always maintaining an "initial period" or an "initial price with credit of time"). Now it is less certain as to whether the rule now published, as it is worded, imposes the adoption of a time-based unit of specific billing.
It is important moreover to verify whether in such tariffs of electronic communications (voice and dial-up internet) there is objective equivalence between the initial periods of the calls and the utility made by consumers, in view of the effective use of the service, seeing that this correspondence is a central demand of the rule under analysis.
This is because it appears evident that no consumer can be obliged to pay for more than they used or they intended to use; yet the consumer should be free to opt for a tariff whereby, for example, a package of minutes is acquired and the price does not vary, whether or not all the minutes are "spent", if the consumer believes this tariff to be the most advantageous. The issue is that there should be no obligation to purchase something that is not wanted, due to lack of alternative.
The tonic is always that of tariff freedom on the part of the operator, as guaranteed by the Electronic Communications Law (LCE), and freedom of choice for the consumer.
In this context it is the position of ANACOM that the value of use of the consumer cannot be disconnected from the real costs for the operator of providing for this use.
The costs for the operators in supplying the service of calls are not linear, that is to say, it does not cost the operators 30 times more to provide conditions that allow for a 30 second call of than it does to provide for a one second call (if indeed a call of this duration makes sense). On the contrary, the cost of a hypothetical 1 second calls will have, in relative terms, much higher costs than a 30 second call, due to the existence of significant fixed costs.
These fixed costs have to be recovered by the operators and it is the way that each one of them envisages this recovery that is in accordance with tariff freedom - itself constituting a true driver of competition.
Accordingly, the existence of tariff plans with a fixed initial period does not have to configure, in principle, any illegitimate exploitation of the consumer, whereby it is alleged that consumers are paying for more than they use. The crux of the issue is that there is an objective correspondence or equivalence between that paid and that used or even that for which there is a right to use.
This right of use, which in certain tariffs is proposed by the operator, does not, provided such is correctly divulged, constitute any abuse of the consumer and provides choice. A different issue is that of tariff transparency, which is always to be demanded, and by which operators are bound to provide appropriate disclosure of their tariffs in order that consumers may make an informed choice as to the model that best meets their needs.
ANACOM will pay special attention to the obligation for transparency and will supervise compliance therewith on the part of the operators, particularly in terms of objective and duly publicised clarification of the existence of initial prices and of the billing unit applicable under each tariff.
Therefore, consumers would ideally have a wide choice, without fear of deception, being able to choose, at any time, the option which best suits them, presupposing the freedom to choose between tariffs, without restriction, except where, contractually, and again as a result of conscious decision, the consumer has chosen, in exchange for something (for example equipment subsidy) to be bound by a contract for a given period of time.
In this context, the Chairman of the Board of Directors of ANACOM decided to seek the opinion of the Advisory Council of this Authority, which council met on 23 April to discuss the application of said Decree-Law no. 57/2008, in respect, particularly, of the provision whereby it is considered that the "rounding up price, duration or other factors, directly or indirectly, connected with the supply of goods or with the provision of services where this does not have exact and direct correspondence in the effective expenditure or use by the consumer and which leads to an increase in the price paid by the consumer" is an unfair commercial practice.
The principles set out above in respect of the interpretation of the provision in question were presented at this meeting, meriting general acceptance by the Advisory Council, in which there is representation of operators of electronic communications, individual consumers of electronic communication services by designation of consumer associations and various members of the Government, including with responsibility for the economy.
In summary, ANACOM is of the position that it does not make sense to consider that there are calls which last 1 second. There is a minimum period which constitutes what can be called a "voice product". It satisfies, at one time, a minimum need of the consumer and the minimum unit by which the fixed cost could be allotted or, more probably, part of this fixed cost. It is not an obligatory minimum consumption and much less an activation fee. Following this minimum period, which satisfies these conditions, it then makes sense, in order to comply with the rule in question, that billing should be per second, that is to say without rounding up of the call duration being imposed obligatorily on the consumer. It is the position of ANACOM, that this is the meaning of the rule - that is, that operators have available, for the choice of consumers, and as such, in alternative to other models, a tariff of this nature.
Therefore, the fact of all the operators having a tariff of this nature - that is, with a single initial period followed by billing per second - which could constitute a logic of "opt-in" in view of all of existing tariffs, appears to be the best form of guaranteeing balance between the demands for tariff freedom as provided for in the LCE and the concerns set out by the law now being appraised.
In this context it makes sense for consumers to be able to opt for tariffs of this nature without any charge, including in respect of any possible lock-in period to which they might be bound, when as a result of this position of ANACOM tariffs are introduced by operators which do not now provide them.
This is without prejudice to the reminder that ANACOM does not have any power to regulate retail prices, except in respect of verification that the obligations of operators with SMP in narrowband retail markets are being fulfilled and in respect of the regulation of the prices of the universal service.
Taking the above into account, the operators of electronic communication shall, within a period of one month, act in accordance with the present position of ANACOM in respect of the application of the rule set forth in point q) of article 8 of Decree-Law no. 57/2008, whereas any difficulties in the implementation of this deadline shall be justified and presented in advance to this Authority.
1 There is no need in this demand, to impose a different reading in the cases of SMS and Broadband; roaming; special calls to specific numbers such as calls to short numbers, customer service numbers, shared costs or premium rate services; public pay phones; corporate tariffs.
