Portugal

New concepts have been introduced in Portugal: "interactive services", "thematic channels", advanced television services, digital cable, satellite and terrestrial television broadcasting, conditional access services for digital television, including scrambling and encryption, among others.

1.1 Regulatory development in the Cable TV sector

As a development of the new Basic Law (nr. 91/97 of 1^st August) and new Television Law (nr. 31 - A/98 of July 18^th), the Government has approved on September 18 a Decree-Law (nr. 241/97) which intends to regulate the activity of cable operator distribution network for public use. This Decree-Law now allows the cable operators to rent their infrastructures, to produce their own programs and to step into interactive services, "pay TV", "Internet", etc.

The new Television Law was approved by the National Parliament on June 18 1998. This Law intends to regulate the operation of television activities on the Portuguese national territory, by revoking the previous legal regime. Article 7 sets out that television channels might be thematic and of conditional access. Nevertheless, this legal diploma grants the concession for the public television service.

A Decree-Law was discussed and approved in Ministers Council on June 25 1998 under the terms of the New Television Law. This Decree-Law intends to regulate the procedures of granting licences and authorisations concerning the access and exercise of television activities in the Portuguese national territory.

The transposition into the internal law of some provisions of Directive 95/47/EC of October 24 1995, regarding the use of the European Television Standards Directive and of Directive 97/36/EC of June 30 1997 has been partially done by the entry into force of Decree-Law of September 18 (nr 241/97) and of the New Television Law. They aim to create a clear, stable and effective regulatory framework which will provide the necessary climate for investment in new digital services and to promote the development of effective competition at all parts of the market in new media and telecommunications services in the domain of Information Society.

1.2 The new Basic law of August 1997 and Decree-Law of December 1997 on competition

The new Basic Law of August 1997 on the establishment, management and exploitation of telecommunications networks and the provision of telecommunications services establishes the need to develop the principles of free establishment of public telecommunications networks and the provision of the public use of telecommunications services.

More precisely, this legal diploma regulates the forms of access to the market of the entities that intend to provide telecommunications services and sets up the corresponding rights and duties.

Portuguese Government requested additional implementation periods for the EU telecommunications regulatory package on the basis of the Commission Directives 96/2/EC and 96/19/EC. Concerning this request, by Commission Decision adopted on February 1997, Portugal was authorised to postpone until the 1^st of January 2000 the abolition of the exclusive rights currently granted to Portugal Telecom, the national "incumbent operator", regarding the provision of fixed telephone service and the establishment and provision of public telecommunications networks.

As a development of the legal regime established by this New Basic Law, a Decree-Law of December 30 1997 (nr. 381 –A/97) transposed, substantially, into the internal legal framework the European Directive 96/19/EC of March 1996 concerning the introduction of full competition in the telecommunications markets, namely in what concerns alternative networks of telecommunications. The main articles of this Decree-Law are the following:

• under the terms of Article 36, "Until the 1st of January 2000, no licenses shall be granted under this diploma for the provision of the fixed telephone service, as well as for the installation, establishment and exploitation of the supporting telecommunications networks".

• The same principle applicable to public network operators is laid down in its Article 37 establishing the same deadline: "Until the 1st of January 2000 (..."). This legal provision requires also that licenses shall be granted under the terms of paragraphs a), b), c) and d) of this Article, namely in order to became operator of public telecommunications networks, such as, operators of mobile public use telecommunications services and satellite network services operators, cable distribution networks operators or radio and television operators.

• On the other side, the Decree-Law sets out that previous Decree-Laws (nr. 346/90 of 3^rd November, 147/91 of 12^th April and 329/90 of 23^rd November) are hereby revoked. However, Decree-Law nr. 120/96 of August 7 1996, remains into force until a new legal framework concerning the issue of an exploitation, regulation of satellite networks operators and of via satellite service providers is completed.

• Under the terms of Article 38, it is set out that the rights and duties of the entities that hold licenses and authorisations issued under previous Decree-Laws remain applicable and the exploitation regulations of the various services remain effective until the issue of new exploitation regulations.

1.3 Recent developments

As a development of the Decree-Law of December 1997, three projects of Decree-Laws are now under consideration in the framework of Consultative Council of ICP. They should be approved by the government during the first months of 1999. These proposals intend to regulate the installation and exploitation of public and private networks and the provision of public and private telecommunications services. They should contribute to create a coherent legal framework to the holders of alternative networks and to "SRPV’s", like COMNEXO or MAXITELCOM.

Directive 97/33/EC "Interconnection Directive", amended by the European "Numbering Directive" (98/61/EC) has been transposed to the internal framework with the approval of Interconnection Decree-Law on 15^th November 1998 by the Government.

In this new Decree-Law, some relevant principles have been laid down : freedom of interconnection agreements, exemption of Private Network Service Providers, number portability and pre-selection have been postponed until 2002, the obligation to contribute for the financing and provision of Universal Service, obligation to publish the terms and conditions of Reference Interconnection Offer (until now, PT had not published a Reference Interconnection Offer for those organisations operating in a liberalised sector). There is no mention in this Decree-Law to the offer local access unbundling.

With its entry in force, it is very important to create new legal mechanisms in order to implement the above mentioned principles. In Portugal, interconnection charges are among the highest in the European Union, even if the charges of communications fixed-to-mobile are among the lowest in the European Union. This will change with the approval of the Interconnection Decree-Law. More precisely, with the entry in force of this legal diploma, issues like significant market power, Reference Interconnection Offer (RIO), Cost Accounting System and the terms and conditions of interconnection agreement are set up.

The legal regime for authorisation procedures for voice telephony and public telecommunications networks is not yet applicable to Portugal, although the Government and the national regulatory authority must guarantee that a Reference Interconnection Offer is published covering interconnection for already liberalised services, namely, mobile and cross-border interconnection.

Portugal has not notified to the European Commission a list of operators with significant market power. On the other side, Portugal Telecom has not published a Reference Interconnection Offer for those organisations operating in a liberalised sector.

Portugal Telecom will operate an analogue cellular service until 2007, through its subsidiary, TMN. Two GSM 900 licences were granted in October 1991 and March 1992 and were amended in March 1998 to allow access to the 1800 MHz band, following the award in December 1997 of a third GSM 900/DCS 1800 licence.

In paging there are four national networks and two regional ones (Madeira and Azores), based on the POCSAG standard. Three of the national analogue networks are also entitled to use the FLEX standard.

Although licensing conditions have not been created for fixed telecommunications services, because they have the benefit of a deferral of liberalisation until 2000, with the approval by the Council of Ministers of the Interconnection Decree-Law and the preparation of three projects of Decree-Law and respective administrative Rules (concerning the exploitation and licensing of public telecommunications networks, the exploitation of public telecommunications services, exploitation and licensing regime for Closed User’s Groups), one might conclude that Portuguese legal framework has substantially changed.

Until now, the basic Law did not distinguish between interconnection and special access and did not define which organisations are entitled to interconnection and which have been identified in this new Decree-Law about Interconnection, namely its Article 6.

With regards to national reach and number of points of interconnection, it can be concluded that Portugal has sufficient legal instruments for Portugal Telecom’s RIO to be published by July 1st 1999. Portugal has been awarded a deferment until January the 1^st, 1999 for direct interconnection at international level.

1.4 Administrative Acts

In accordance to this legal regime, some administrative acts have been revoked and others approved, such as:

• Administrative Rule of July 4 1997 (nr. 443-A/97) which changes the Regulation for the Exploitation of Complementary Telecommunications Services - Land Mobile Service
• Administrative Rule of July 7 1997 (nr. 447-A/97) which approves the Regulations of the Public Tender for the attribution of a Licence for the Provision of the Complementary Mobile Telecommunications Service - Mobile Service;
• "MAIN ROAD, S.A. – Telecomunicações, S.A.", also denominated "Optimus", is a result of the consortium of the five following entities: SONAE, ETG, FRANCE TELECOM, MAXITEL and IPE. It has been licensed by national NRA to operate as the third mobile telecommunications operator in Portugal public mobile telecommunication’s service, on both 900 MHz GSM, and the 1800 MHz technologies. This third operator corresponds to the entry into force of Notice nr. 3542 -A/97, of 9^th July, which declares open the Public Tender for the attribution of a Licence for the Provision of the Complementary Mobile Telecommunications Service - Mobile Service;
• Executive Order of July 21 1997 (nr. 7480/97) which determines the procedures for a demonstration of interest concerning the provision of DECT;
• Notice published in the press for the public consultation requesting the demonstrations of interest concerning the introduction of DVB-T, finished on October 30 1998;
• Notice published in the press for the public consultation requesting comments by the interested parties concerning "The Convergence Green Book";
• Administrative Rule of April 15 1998 (nr. 7025/98) which sets up the map of available frequencies, regarding the opening of a new public tender for the granting of permits for the activity of sound broadcasting (Common Rule of May 14 1998 (nr. 363/98) which published this public tender’s regulation);
• Decree-Law of April 21 1998 (nr. 100/98) which modified Decree-Law of August 23 1989 which approved the statutes of Portuguese Institute of Communications;
• Notice published in Official Journal of the Parliament which published the frequencies for the Land Mobile Service – DCS 1800;
• Notice published in Official Journal of the Parliament which adopted the technical prescriptions and specifications for the installation of broadcasting reception and distribution equipment and materials.

2. Infrastructures

Some public service companies, although not acting in the specific Telecommunication’s field, have their own voice, data, telecontrol and telemeasure networks which actually place them in an important position in what concerns the capability to use and expand their basic infrastructures to support, in a near future, the exchange of information of private users.

Other public service companies, already acting in specific telecommunications branches, namely mobile and cable TV, have their own networks, which give them the capability to compete with the existing suppliers of basic telecommunication’s services. The following public service operators display this trend:

2.1 EDP - Electricidade de Portugal, SA

This public utility, is by far the largest producer and distributor of electric energy in Portugal. In June 1997, 30 % of its capital was sold to private investors. On the 28th June 1998, a further share of 17,75% was also sold to private investors.

EDP intends to become the second National Telecommunication’s operator with a fixed network, as soon as the Portuguese law opens to the competition the operation of fixed telecommunication’s networks. To be prepared for that opportunity, EDP formed with Transgas and Gas de Portugal a consortium named ETG.

EDP defined in 1997 its strategy concerning the telecommunications sector: to enter into the market as a full service provider. So, in July 1997, EDP created the first telecommunications company, named "EDINET, Empresa de Telecomunicações Globais, SA.", which is at present already licensed to operate in liberalised areas such as data transmission, satellite telecommunications, closed users groups and Internet services.

On its turn, ETG created a new company, named "093X" which, together with SONAE, MAXITEL, FRANCE TELECOM and IPE - (Investimentos e Participações Empresariais), applied to the Government’s bid of offer for a new public mobile telecommunication’s service licence, and became the third mobile telecommunication’s operator in Portugal.

By the end of 1997, ETG created another company, named "E3G", with the objective to be prepared to become a fixed network operator in the field of general telecommunication’s services. They intend to be prepared to rent telecommunications circuits before the end of 1998.

Meanwhile, ETG has been extinguished and replaced by a new holding company, named "OPTEP, Empresa de Telecomunicações Globais, S.A.", which co-ordinates the different companies integrating the global telecommunications project.

2.2 CP - Caminhos de Ferro Portugueses, SA

CP is the only Railroad Company, operating in Portugal. It owns a private telecommunications network, used for signalling control, data and voice transmission, interconnecting all railway stations, partially with fibre optical cables. CP is a potential competitor in the telecommunication’s business.

2.3 BRISA - Auto-Estradas de Portugal

This company builds and explores main roads throughout all the country. Until November 1998, 35 % of its capital belonged already to private investors. At the beginning of November 1998, the Government sold 31% more of BRISA's capital to private investors being, at present, its capital share 34% public and 66% private,

BRISA owns a national wide telecommunication’s network for emergency communications, using radio links and optical fibre cables. It is also a potential competitor in the framework of future Information Society infrastructures. They are looking for a partner already in the telecommunications business. There are rumours that, with this purpose, they already started negotiations with the second most important Cable-TV Holding operator, CABOVISÃO.

2.4 Cable TV Operators

By now, 18 companies are operating in cable TV distribution in the Portuguese territory. The most important group, joins in the same holding, TV Cabo Portugal, 9 regional operators, having about 2,000,000 households already wired and over half a million clients.

The new legal framework permits now the cable operators to rent their infrastructures, to produce their own programs and to step into interactive services, "pay TV", "Internet", etc. During the first quarter of 1999, some Cable TV Operators will start to deliver to their clients, at extra cost, access to Internet.

Three channels of "Pay-TV" are already accessible to the Cable-TV clients: Two of them are 24 hours film channels, and the third one is a sport channel:

• "Premium TV", which will have two codified thematic channels, entitled "Telecine 1" and "Telecine 2". The social capital of this company is composed by TV Cabo with 42%, Portusat (a consortium between SIC and TV Globo), also with a share of 42%, "Sport TV" with 8% and "Lusomundo" with 8%.

• "Sport TV", as a result of a consortium between "RTP", the public television service provider in Portugal, "PPTV", a company which belongs to "Olivesdesportos", "TV Cabo" and "Premium TV" with 8% of its social capital.

At present the majority of shares of TV Cabo Portugal are detained by Portugal Telecom, SA, still the only legal fixed network operator in the Portuguese territory. It is predictable that, in a near future, they will become a competitor in voice or data transmission. Portugal Telecom S.A. has announced its intention to sell, in a near future, 40% of this holding company. Mid-December 1998, it sold 6% of TV CABO POTUGAL to institutional shareholders, and they intend to sell 35% more, at the beginning of 1999. Anyway, TV Cabo Portugal already owns a network that, in a different scenario, could eventually become the most serious competitor in the field of fixed telecommunications services.

Since mid September 1998, DTH (digital television) directly received from a satellite, is being supplied at extra cost, to clients living in areas which, for technical or economical reasons, are not covered by the Cable-TV networks.

2.5 Mobile operators

In the Portuguese territory there are now three public mobile telecommunications operators, covering over 90 % of the country. Two companies, TMN and TELECEL are already operating both with DCS 1800 and DCS 900. They share the 2,000,000 clients, about half and half. The third company, named "OPTIMUS", was licensed in 1997, and started to operate in September 1998 on both GSM 900 and DCS 1800 MHz.

2.6 Others

Other companies, like Metropolitano de Lisboa, ANA - Aeroportos e Navegação Aérea, SA, and JAE -Junta Autónoma das Estradas, have also their own telecommunications networks for private use. It is not expected that, in a near future, they will be able to operate a public telecommunications service.