15th APDC congress debates the future of telecommunications
Friday, November 11, 2005
The 15th Communications Congress took place between 8th and 10th November. During this congress under the theme “The Future of Telecommunications – A Network society and an Economy based on Know-how”, the discussion on regulations was once again brought up. Accompany on éPT! the unfolding of the congress
The 15th APDC Communications Congress, this year under the theme “The future of Telecommunications – A Network Society and an Economy based on Know-how”, commenced on 8th November with a panel dedicated to the evolution of regulation within the domestic market.
The new communication technologies are currently one of the great sectors of the Portuguese economy and Portugal has the conditions to develop at the same rhythm as the developed countries. This is the opinion of the chairman of the association for the Development of Communications (APDC), Norberto Fernandes. “This is a vast sector of the Portuguese economy and in many aspects we are very well positioned in comparison to other European markets ", he states and defends that, "the spirit of the sector is good and there is reason to believe in development similar to the one felt in big countries. The introduction of yet more new technologies will bring about a wave of investment within the sector ".
The chairman of the congress, Pedro Sampaio Nunes, showed less optimism as to the development of the sector in Portugal and revealed some expectations as to the effects of the Technological Plan in the development of new communication technologies. "The minister in front of this sector has taken, in a balanced manner, the measures deemed necessary for development now one must just await for the long announced Technological Plan and the impact within the sector ", he states.
 | In the opening session, the Minister for Science, Technology and Higher Education explained that the Government chose not to extend fiscal support for the acquisition of PC’s for communications, because these "rather expensive and there isn’t an ideal competitive environment yet". In his opinion, “it is absolutely necessary to reinforce the conditions for competition in Portugal. I do not feel it is wise for the Government to contribute directly towards the reduction of communication costs at this moment unless it is to encourage competition between the telecommunications operators or in the investment of said operators to afford broadband at good prices to all Portuguese citizens”. Mariano Gago still added that “when all conditions have been met, in terms of regulation, then it will be possible to include connection within fiscal benefits”.
This congress also contemplated the future of electronic communications and Internet and the convergence issues and then went on with Citizenship where issues such as the author’s rights, hacking or the Know-how society were discussed.
The 7th Framework programme and reinforcement of investment of the European Community in the Information Society, the European Trends in the Area of Infrastructures and in the Area of Integrated Offers were also discussed.
 | In “European Trends within the Area of Integrated Offers”, Portugal Telecom was represented by the Executive Director, Iriarte Esteves, who presented the new offers for new life styles.
Due to the increasing rhythm at which producers render available technology, according to the Executive Director, the challenges to those within the business are also increasing. “The challenge is therefore to overcome the existing gap between what technology allows and what users want”, he added.
Home, work, movement and leisure are examples of the various synergies which will allow us to choose within which context we wish to be and to which Technologies we want to connect to, concluded Iriarte Esteves.
Dilemmas of the regulatory framework
The last day of the congress started with the theme “A New Organization of Markets” where the impact of regulation was debated. The moderator for this discussion panel was, João Confraria, a professor in the area of regulation economy who contemplated the need to avoid double regulamentation and its impacts. He went on to exemplify with the case of retail regulation which is unnecessary for there is already access regulation.
Pertaining to cable, reference was made to the property of the two networks by Portugal Telecom as the original sin of the system, however, he stated that “it hasn’t been proved that the alternative solutions as to separation are better. In fact any gain in short-term price reduction can lead to a new consolidation phase in the future”.
João Confraria draws attention to the fact that in 2005 we are discussing decisions which were taken in 1991 and that success and innovation ought to be rewarded. In the meantime he notes that “initiatives such as triple play and the AR Telecom solution have not been too successful and haven’t been supported by the Government”.
António Robalo de Almeida, Manager of Regulation for the PT Group, defended that today there is excessive regulation nowadays which is an important factor in the conception of markets. He referred to services such as VoIP. “What the regulator does will be a determining factor for the success of this technology”, he said.
 | The Manager of Regulation of the PT Group stated that “today we live within a regulatory framework that should have been concluded in 2003. Even so, Portugal is one of the most advanced countries of the European Union in the implementation of this regulatory framework. No Member State of the European Union has completed this work. The current regulatory framework has been a complete failure”. Robalo de Almeida notes that there are 18 relevant markets and various emerging markets that lead to situations of micro-regulation.
He adds that “priority should be given to wholesale regulation and only then, if it didn’t result, go onto retail. There is thus an excess of remedy. Retail regulation is curious seeing that PT already offers all the possible wholesale packages”. He still says that there is no regulation that obliges the separation of retail and wholesale.
Note that within this industry, return is only accomplished via innovation and investment. The cable network was carried out within a regime of complete competition, “with no subsidy and with PT capital. Besides, there is nothing that refers that the property of the two networks has affected the development of broadband. The penetration levels in Portugal, highly positioned in European terms, are good evidence”.
To conclude, Robalo de Almeida defends that the regulatory weight should be adjusted to each country’s needs and note that excess regulation can penalize commercial activity. In addition, “without universal service there is no information society. Proceeds to renovate the networks are fundamental otherwise we will go against the regulation ideal which is the well-being of the consumer”.
Approach between the post office and telecommunications
On the last day of the congress the afternoon session opened with the habitual stat of affairs, a panel which joins the chairmen of the main telecommunications companies. Luís Nazaré, Chairman of CTT spoke of the common aspects between the post Office and telecommunications. “There are coincidences and the future will reveal some surprises in the approach between the post line and the telecommunications line”, he says. An example of this will be the launch of the post box in 2006.
Luís Nazaré admits that the physical correspondence business will drop. So various initiatives are already being taken attempting new markets (specially in Eastern Europe) and new businesses. The Chairman of CTT does not put aside the possibility of embarking into the mobile telephony sector, via virtual mobile operators, if the adequate regulatory framework is found.
Diogo da Silveira, Executive Chairman of Oni, approached the broadband issue as an opportunity for consumers and operators drawing attention to the fact that price is a fundamental element, be it at a PC acquisition level or at Internet level. Diogo da Silveira mentions powerline technology as “the most efficient for areas with less population and adequate for distant regions, at a lower cost that ADSL technology”.
Miguel Horta e Costa alerts towards the risks of over regulation
The Executive Chairman of the Portugal Telecom Group enhanced that the telecommunications sector is at a level of what is deemed more important at European level. During his speech, Miguel Horta e Costa recalled some of the points that marked his intervention at the 2004 Congress. “Pertaining to broadband, considered a key factor, we launched new products at lower prices and covered the whole country. We were the third country in Europe and the first national group with total coverage. In the mobile we astonished the market with the launch of UZO and presented a strategy for the dynamism of the third generation which will afford benefits to all Portuguese”.
Miguel Horta e Costa underlined that the PT competitors have more favourable conditions that their European counterparts to compete. According to the Executive Chairman of the Portugal Telecom Group, this reflects “that the wholesale conditions of the Portuguese market are good. It is the innovative services that give competitors the capacity of gaining market share”.
As to the issue of the separation of copper and cable networks, Miguel Horta e Costa defended that this measure would result in more negative effects that positive ones and that it could influence investment availability of other companies. “Time is needed to understand the effects of the regulation that has been implemented, within the scope of the definition of relevant markets. To proceed with new measures before knowing the effects of these will intensify the risks of over regulation.” he stated.
Pertaining to said risks, Miguel Horta e Costa added that when he informed the regulator of his intention to launch an aggregated offer of minutes to the base price of his offer he was advised to launch instead an offer of a rented line. “After we did it we were told that we now have to gather 150 thousand accesses in the wholesale offer to be able to proceed. This type of protection is depriving users of new services”, he concluded.
The Executive Chairman underlined the need of orientation towards the clients, more leadership and less costs. “We are hostages of the discussion of the separation of cable, mobile and fixed. The client just doesn’t care. What he wants is trustworthy and cheap services”, he concluded.
 | António Carrapatoso, Chairman of Vodafone Portugal, said that telecommunications in Portugal rose 5.1% similarly to economy. Between 2005 and 2008 there will be a growth of 4% in average terms. Data has significant weight on the fixed and rose 22.6% between 2002 and 2005. Until 2008 it should rise 17.3%. “Telecommunications is one of the fundamental points of the technological plan as it constitutes a differentiating factor within corporate competitiveness”, he said. According to António Carrapatoso, the regulator also has to be competitive in order to avoid situations of over regulation.
 
Portugal Telecom also marks its presence in the business lounge, a privileged area for communication and interaction for companies and clients which intends on presenting solutions and products that companies within the sector wish to present. Examples of this are PT Inovação’s developments such as triple play on ADSL technology or PicoDslam8 which will allow Portugal Telecom to cover the whole country with broadband.
 
 
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