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
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
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
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 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.
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).
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
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
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.
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