Portugal

Author: | Published: 2 Feb 2000
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By By Luiz Pais Antunes and Daniel Reis of PLMJ - Sociedade de Advogados, Lisbon

Due to an additional implementation period, Portugal has had the benefit of seeing how several other member states have implemented the liberalization measures imposed by Directive 90/388/EEC1, as amended by Directive 96/19/EC2. This fact, however, has not led to a problem-free implementation of these measures.

Liberalization

With regard to the abolition of exclusive rights for the provision of fixed voice telephony, imposed by Article 2 of Directive 90/388/EEC, as amended by Directive 96/19/EC, Portugal requested by letter an additional implementation period on June 25 1996. The arguments presented by the Portuguese government were that Portugal Telecom, the incumbent, should significantly rebalance its tariffs, and that telephone density is low. Given the fact that tariff rebalancing would take five years, Portugal claimed that the opening of the market beforehand would disturb this rebalancing. As to telephone density, Portugal argued that new operators would concentrate on high usage areas and thus there would be no significant telephone penetration with the advent of competition. The Commission agreed with these arguments and granted an additional implementation period of two years. The liberalization date for Portugal is therefore January 1 2000. The Telecommunications Framework Law was published on August 1 1997 (Law 91/97). Articles 7 and 11 of this law establish the fundamental principle underlying the framework: the liberalization of telecoms services and of the establishment and provision of telecoms networks. This principle will be further developed in subsequent legislation. With regard to fixed voice telephony, Law 91/97 provides for an exception in Article 20. The principles contained in this law will only apply to fixed voice telephony from January 1 2000.

The Portuguese National Regulatory Authority (NRA) — the Instituto das Comunicações de Portugal (ICP) — announced in May 1999 that it would consider fixed voice telephony licence applications as from June 15, to allow operators to offer services from January 1 2000. As of November 30 1999 the NRA has granted eight licences and is currently reviewing several applications.

Licensing of new operators

Decree-Law 381-A/97, of December 30, governs the authorization procedure for the establishment and/or operation of telecoms networks and the provision of telecoms services, thus implementing Directive 97/13/EC3. The NRA is responsible for the general authorizations and the licensing procedure, except when there is a tender procedure for the use of radio frequencies, as in this case the member of government in charge of communications is responsible.

The provision of fixed voice telephony services and the establishment and provision of a network that supports fixed voice telephony services is subject to a licensing procedure. As a result, an operator intending to build its own network must obtain two licences, and, accordingly, pay two licence fees. Of the eight licensed operators, six have so far applied for and have been granted network operator licences.

A decision on licence applications not subject to a tender procedure must be reached 30 working days after the submission of the application. This timeframe, however, is not always respected, as the NRA is prone to requesting further information from the applicant, which interrupts the term until such information is submitted.

Fixed Wireless Access

The NRA understood the importance of Fixed Wireless Access (FWA) technologies for the promotion of competition in the local loop. As a result a tender procedure was launched in July 1999 for licences to use radio frequencies for FWA. A total of 11 licences were available, distributed among the following frequency bands: three licences for the 3600-3800 MHz band; six licences for the 24.5-26.5 GHz band; and two licences for the 27.5-29.5 GHz band.

A bias for the new fixed line telephony operators was apparent in multiple aspects of the tender procedure. The tender rules did not permit the creation of a FWA operator, stating that the FWA must be a part of a network that involves other infrastructure, "namely fixed line telephony". This bias was explicitly contained in Article 15, number 4 of Administrative Rule 465-B/99, as the first criterion for selection in the 27.5-29.5 GHz band was the absence of the incumbent in the applicant's share capital.

The results of the tender procedure are equally indicative of this bias. The incumbent applied for a licence in each frequency band, but was not successful in any. Nine of the 11 licences were granted to fixed voice telephony licence holders or applicants. The other two (27.5-29.5 GHz band) were CATV companies.

The FWA licences will be an important factor permitting the new fixed voice telephony operators to reach the local access market. These licences are particularly significant as there has been no measure so far of unbundling the local loop in Portugal.

The fact that the tender procedure was launched so close to the liberalization date, however, means that telecoms services supported by the FWA will not be offered on January 1 2000, but only later on during the year.

Interconnection

Interconnection is a significant problem for new operators, especially because interconnection negotiations are in general very slow. The NRA has been criticized for not being more proactive in intervening in interconnection negotiations. Decree-Law 415/98, of December 31, which implements Directive 97/33/EC4, grants the NRA the right, in Articles 16 to 20, to intervene in negotiations, alter interconnection agreements, impose interconnection and solve disputes between operators. The NRA has not exercised these rights.

The NRA has, however, altered Portugal Telecom's reference interconnection offer (RIO) for 2000, namely lowering the interconnection prices, in accordance with Article 13 (1) of Decree-Law 415/98. This may be an indication of a shift in attitude by the NRA.

Carrier pre-selection

With regard to carrier pre-selection, an obligation introduced by Directive 98/61/EC5, which altered Directive 97/33/EC, Portugal must implement it by January 1 2002. In this sense, Article 32 of Decree-Law 415/98 provides that the NRA will define the date after which fixed voice telephony service/network operators will be obliged to offer end users the choice of pre-selecting the carrier, with selective call barring, by dialling a short code.

The NRA has defined the dates for carrier pre-selection. Operators will be obliged to offer call-by-call for national and international calls by January 1 2000; carrier pre-selection with selective call barring for national and international calls must be offered by July 1 2000; mobile operators must offer call-by-call selection for international calls by April 1 2000.

The NRA has already attributed, in August 1999, the access codes for carrier selection. Several numbers have been reserved for new operators that may wish to apply for them until June 1 2000. Call-by-call selection and carrier pre-selection with selective call barring will not be available for local calls. This fact is particularly significant for new market operators which will offer voice telephony and internet access, since they will not be able to offer users internet access with their network (users will be forced to use the incumbent's network, when there is no direct access with the new operator).

Number portability

The new National Numbering Plan which entered into effect on November 1 1999 permits non-geographical number portability. The NRA, however, has not announced all the technical aspects for number portability. This is evidently a matter of concern as number portability is an essential issue for new operators.

Universal service

Decree-Law 458/99 of November 5 has set out the rules concerning universal service. Universal service will be provided by one or more entities following a tender procedure. This procedure, however, will only be launched once the present concession contract with the incumbent reaches its term. The present contract was signed in 1995 with Portugal Telecom and its term is 30 years. In the interim, Portugal Telecom has been designated as the universal service provider.

Article 12 of Decree-Law 458/99 states that the universal service provider has the right to be compensated for any losses that result from universal service provision. To process such compensations a compensation fund is to be created. This fund, however, has not been created, and Decree-Law 458/99 merely states that the minister responsible for telecoms will define the rules that will govern the fund. This creates a potential problem for new operators, as they cannot predict the amounts, if any, that they will be obliged to contribute. The NRA is responsible for the auditing of the universal service provider's accounts and defining the amounts due. The entities obliged to contribute towards the fund shall be telecoms networks operators, fixed voice telephony service providers and mobile operators.

Final Remarks

The incumbent has predicted that in the year 2000 it will lose around 10% of its market share to the new operators. The new operators, on the other hand, point to a figure closer to 20%. Whatever the correct figure is, the creation of a competitive market depends on several factors. Portugal has liberalized fixed voice telephony, generally complying with the European rules, but several issues may create problems. Interconnection, access to the local loop and effective number portability will demand special attention from the NRA to ensure effective competition.

Contact Details:

PLMJ - AM Pereira Saragga Leal Oliveira Martins Judice & Associados

Edificio Eurolex

Av da Liberdade No. 224

Lisbon 1250 148

Portugal

Tel: +351 1 319 7321

Fax: +351 1 319 7319