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Ovum view


On May 18, 2018, the Portuguese regulator, ANACOM, announced that following a public consultation, it had decided that there was no justification for designating a universal service provider of electronic communications in the fixed-line sector. This is because universal service providers are being paid to deliver services (fixed telephone services, public pay phones, and a full directory service) that are either already available on the open market or not being used by the public.

A fixed telephone universal service is no longer relevant in Portugal, but a USO for broadband could be adopted in the future

Over five years, the universal service in Portugal has cost €23.8m ($27.9m). In 2018 the cost will be €5m. Services included in the existing USO include fixed telephone (delivered by NOS until May 2019), public pay phones (delivered by MEO until April 2019), and a paper/telephone directory service (delivered by MEO until September 2018). This is funded through operator contributions, which are indirectly being passed on to all consumers, most of whom do not benefit from the USO.

ANACOM has noted that this money could be better spent on the cost-effective delivery of essential services or to provide broadband to the entire population. It could also be used to reduce the costs of communications services. Therefore, following a recent consultation, ANACOM has concluded that due to decreased usage levels, the cost of financing new USO designations (both for the market as a whole and for the end user) is disproportionate and totally unjustifiable. EU-wide, there are already six other member states that do not designate providers for any universal service component, including Germany, Estonia, Luxembourg, Poland, Romania, and Sweden. It is not surprising, therefore, that Portugal is taking this kind of decision, particularly as the country's fixed-line and mobile penetration rates are higher (at 45% and 166%, respectively) than many of the countries that no longer designate a universal service provider.

According to the regulator's review, all operators currently in the market meet the needs of consumers in all services that fall under the USO. Fixed networks cover the majority of the population (99.8% of households in 2016) and several operators provide this service – some even offering fixed-line services at a lower retail price than the universal service. Crucially, there are only two customers currently using the fixed-line universal service, and there are no instances of customers enjoying the special tariffs available to pensioners or the services for customers with special needs. This indicates that including fixed telephone services under universal services is inefficient and disproportionate.

Similarly, with public pay phones, the majority (58%) are operated by private operators outside the universal service. There is also very low usage of public pay phones. In 2016 and 2017, the average use of pay phones dropped to just two calls a day, with illicit and anonymous calls accounting for the bulk of usage. Meanwhile, the type of information telephone directories provide can be easily accessed using search engines, social networks, and services provided by operators to their customers in the "18XY" range. About 95% of numbers are not actually included in this database, and with the growing concern about data privacy, the number of citizens choosing to remain outside the directory is only expected to increase. Usage is equally low, with only one in 10 people accessing the electronic directory on one occasion in 2016 and fewer than 7,000 people requesting a hard-copy version of the directory per year.

ANACOM has said it will continue to monitor developments in the market to ensure its position remains relevant; in particular, it would like to initiate a review into the possibility of creating a broadband USO. ANACOM has concluded that although including broadband services in the USO might be a bit premature right now, it could be justified in the future. Broadband services are not currently part of the country's USO, so the regulator will consult on whether and how these services should be included (e.g. access, price, or a combination of the two). For this, it plans to collect and assess data on end-user access to broadband. So far, six EU member states have included broadband in their USO: the UK (10Mbps in 2020), Sweden (1Gbps, 2025), Finland (2Mbps, 2010), Belgium (1Mbps, 2014), Spain (1Mbps, 2011), and Croatia (1Mbps 2015). Portugal should be looking at introducing a USO for broadband with similar speeds.


Further reading

Universal Service Obligations for Broadband,TE0007-001038 (August 2016)

Portugal (Country Regulation Overview),TE0007-001154 (May 2017)

"Finalized USO design will bring the UK one step closer to widespread broadband coverage," GLB005-000047 (April 2018)


Sarah McBride, Analyst, Regulation

[email protected]