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133 years of Telecommunications Universal Service in Portugal Raquel Castro Madureira*, A. Manuel de Oliveira Duarte*, Raquel Matias-Fonseca** Campus Universitário de Santiago, Aveiro, 3810-193 AVEIRO Portugal *Departamento de Electrónica, Telecomunicações e Informática **Departamento de Economia, Gestão e Engenharia Industrial Aveiro, Portugal e-mails:,, Abstract — This paper presents an overview of the implementation of the telecommunications universal service in Portugal. An historical approach will be followed, showing the evolution over the last 130 years along with the legislative changes. Special attention is devoted to the impact of the European Union influence in Portuguese legislative framework. Finally this paper raises a number of questions concerning the evolution of the telecommunications universal service concept in the emerging context of new generation networks. Index Terms — Telecommunication History, Universal Service, New Generation Networks, Portugal

I.INTRODUCTION This paper summarizes the main issues in telecommunications history in Portugal since its beginning in 1877 as a public service and describes the most significant landmarks that characterised the pathway followed until present day, emphasising the efforts to achieve telecommunications universal service. In this paper, Universal Service (US) is defined as the minimum set of regulated services that at least one operator is obliged to provide by law, one example being the telephonic voice service which citizens can request at affordable prices independently of their geographic location. For the last 100 years the telecommunication systems became part of our life and turned into an utility, closely related to the development level of modern societies. Because governments became aware of this reality, at a certain point in history, US emerged also as an instrument used to minimize the access shortages to telecommunication networks and consequent make its benefits more widely available. Before the appearance of European Union (EU) Universal Services’ frameworks recommendations, in Portugal there was already some concern about this subject. Yet the legislative recommendations concerning telecommunication public service only appeared by mid 90’s, of the XX century. Meanwhile, the telecommunications sector became more complex and the Regulator´s had to balance all the new variables concerning the universal access as a foundation for equity development and the market opening to competition to provide a bigger offer and lower prices to consumers. For most part of the last 100 years each type of telecommunication service delivered (as telephone,

telegraph, radio and television), had an unique infrastructure. With the advances in technology things changed and nowadays the boundary between the capabilities of each network and the diversity of services that each offers are not so evidently defined. Today copper networks traditionally used for voice are delivering internet and mobile operators complement the voice services offering data and television, into a clear convergence of different sector players. Also as an answer to the public growing demand, the telecommunications market is providing alternative broadband infrastructures that are emerging and developing fast. All around the world and namely in Europe, there is a new era of massive deployment of new generation telecommunications networks (NGN)[1]. In this context it is relevant to observe how the telecommunications´ market regulatory framework has evolved along time in Portugal and try to conjecture the regulation adjustments for the new infrastructures. The first section of this paper presents an historical summary of the Portuguese telecommunications background with biggest focus on the universal service motivations and legislative evolution. Finally a section with considerations about the future of the telecommunications universal service in the new generation networks era will be presented. II.PORTUGUESE TELECOMMUNICATIONS BACKGROUND Portugal is one of the oldest countries in Europe (since 1143) and a European Community, EC, member situated in the south-western Europe with also Madeira and Açores Islands at the Atlantic North. The population is concentrated in the continent along near 1230Km of coast and mainly in two major cities- Lisbon in the south and Porto in the northand several small towns in the Atlantic West coast and in the Mediterranean Sea in Algarve in the South. Inland the population is sparse in smaller towns and villages. Like many other European countries, the telecommunication history in Portugal can be seen a two distinct phases: the incumbent monopoly and the market liberalization - Fig 1 illustrates these two phases and also identifies several important stages inside each phase.

All these stages were followed in parallel by the technological development and such as the emergence of the Web in the beginning of the 90´s. As an answer to the public

growing demand, the telecommunications market is providing alternative broadband infrastructures that are emerging and developing fast.

Monopoly Around 120 years

Open market 10 years

Law of telecommunications 91/97




First twisted pair networks

Nacional fix network

State Regulator ICP




State Portugal Telecom

Law of the Electronic Communications nº05/04

1997 ONP

Open competition


2002 ORAC

ANACOM Independent Regulator

PT Privatization PT(except golden share)

Law of Infra-structure share nº123/09



Optical Fiber at Access network

NGN at Rural enviroment

Universal Service Law

Telegraph and Telephone



Modems/ RDIS


TV Cable network

Mobile Phones

Fiber Acess Network


Fig. 1 Brief Summary of the Portuguese Telecoomunication History over the last 133 years. Source author.

All around the world and namely in Europe, there is a new telecommunications sector. This subject is a transversal era of massive deployment of the New Generation issue for several countries in the world; however it is also telecommunications Networks (NGN). In this context it is relevant to identify the individual characteristics and highly relevant to observe how the telecommunications´ constraints country reality. For this reason this paper has its market regulatory framework has been evolving along time focus on one particular European country- Portugal. in Portugal and to extrapolate the predominant needs of The most relevant legislation concerning the universal these new infrastructures. service rules is presented in Table I. The shape taken by regulation can have a strong impact in the success or the failure of this new stage in the TABLE I SUMMARY OF PORTUGUESE UNIVERSAL SERVICE LEGISLATIVE MILESTONES Law number Decree-Law 40/95 [2] Law 23/96 [3] Law 91/97 [4]

Law name Public Telecommunications Concession Essential Public Services Law

Decree-Law 458/99 [5]

Essential Public Services Law

Law 29/202 [6] Law 05/04 [7] Law 12/08 [8]

The Law Public telecommunications service concession The Law of Electronic Communications Amend to Essential Public Services Law


The Telecommunications Law

Universal Service impact Basis for the public telecommunications service. Exploitation given to PT as well as US obligations and financing, until 2025. Protect users of public services such as: water, electricity, gas and telephone, however not necessarily universal. The public network was open to competition but still state property (ONP). Thought the US obligation must be guarantee by PT. Transposition of the CE directive 97/33/EC [21] concerning universal service and the 98/10/EC [5] concerning interconnection in telecommunications through application of ONP. First amendment to Law 91/97. Determined the evolution of the concept of SU. Allow users to functional internet access. The word “telephony” was replaced by “electronic communications”.

A. From Bell´s to the 90´s Liberalization Portugal had its first private telecommunications networks in 1877 connecting the two major cities, Lisboa and Porto within Edison Gower Bell Telephone Company of Europe Limited. In 1877 the licensing agreement changed to The Anglo Portuguese Telephone Company (APT) and in the beginning of the XIX century the Posts, Telegraph and Telephone (CTT) expanded the fixed telephony network all over the country, while Companhia Portuguesa Rádio Marconi (CPRM) provided the wireless long range communications. As long CTT provided the expansion and interconnection of all the cities in the country and abroad, a new company was born in 1968, Telefones de Lisboa e Porto (TLP) concerned the two major cities, Lisboa and Porto. By this time Portugal had a single operator monopoly; indeed there were several companies providing the vocal telephony service but with clearly defined target regions. An experimental communication connection with optical fibber was made between Lisbon and Aveiro by the late 60’s. In the following decades the telephone twisted copper pair network grew and reinforced its place in the national economy. From a technological point of view the telephone central offices became automatic and by the 80´s digital. Meanwhile in 1957 there was the first television broadcast with the public channel RTP1 in the VHF band, followed by 3 more channels in the UHF band, the RTP2 in 1968, the RTP Madeira in 1972 and the RTP Açores by 1975. The service of television was considered essential and repeaters and transmitters were deployed almost everywhere to ensure full access along the national territory. The first colour broadcast started in 1979, but only in 1980 and with the European Song contest, the transmissions became regularly in colours. With the pacific political revolution of 1974 most of the economic sectors pass through several nationalizations and telecommunications was not an exception - CTT became a public company as many others. Soon in 1981 the telecommunications regulator, Instituto das Comunicações de Portugal (ICP) was established by the Decree-Law 188/81 [9] and has been endowed with approved statutes since 1989. In 1989, ICP provided the licence agreement to the three communications operators: TLP in Lisboa and Porto, Telecom Portugal responsible for the fixed communication all over the country (except Lisboa e Porto) and Marconi for international communication traffic. In order to create a strong telecommunications operator, with the size and structure needed to provide services with variety and quality, Portugal Telecom, PT, the incumbent was born in 1994 [10]. In 1995 and by the Decree-Law 40/95 [2] there were approved the basis for the public telecommunications service. The exploitation of the state telecommunications network was granted by Law to PT, until 2025 as well as several obligations. These obligations included the provision of public telecommunications services and the concession in terms of universal service in the whole country without showing preference or discrimination, in relation to any

natural or legal person who requests the telecommunication service. Influenced by the liberalization directives from Europe, PT starts the privatization in 1996 becoming Portugal Telecom, SGPS, S.A. The full process would end by the end of 2005, with the exception of one share retained by the state (“golden” share). The Law n.º 23/96 [3] created legal mechanisms to protect users of public services such as: water, electricity, gas and telephone. The Law did not include the word “universal” and was not a universal telecommunication direct measure but ensured the state´s concern about the effective need to provide citizens with a minimum set of services to improve daily life and the overall economic development of the country. The Law nº 91 of the 1st of August 1997 was called the Law of Telecommunications [12] and replaced the old Law nº88/89 to surpass the profound technological and institutional changes that have driven the development of global telecommunications by opening the public network provision (ONP) to other operators. The most relevant article concerning universal service issues was at article 8 that mentions that it is the state responsibility to ensure the existence of a universal voice telecommunications service based on a twisted copper pair network. During the privatization process of the incumbent, new approaches to full market came from Europe and in 1999 the Portuguese Law 458/99 [4] applied the use of the open network provision to voice telephony as the European Commission recommended in directive 98/10/CE [5]. New players appeared in the fixed market enabling best customer services and prices to go down.

Fig. 2 – Trimestral evolution of the fix telephone access in Portugal between 2000 and 2009, Source: ANACOM.

The public network was opened to competition, even though the public infra-structure was still state property. The use by other operators of the twisted copper pair from the public network allowed the growth of the number of players within the sector, as well as the growth in quality and quantity of services offered based in the xDSL1 technologies (the basis of the today’s massive internet usage). B. From the 90´s Liberalization towards the New Generation Networks By 2001 the former regulator ICP changed its name to Autoridade Nacional de Comunicações (ICP-ANACOM) 1

Digital Subscriber Line (DSL) is a family of technologies that provides digital data transmission over the wires of a local telephone network

and became an independent regulatory authority relieving the status of public institution with the Decree-Law 309/2001 [7]. In 2002, the Law 29/2002 [8], determined the decommissioning of the network from the public domain and as a consequence the “rules” became more balanced to all operators and from the 3rd quarter 2002 the market share began to move from the incumbent towards the other operators, as it can be seen in the previous Fig. 2. The Electronic Communications Law 5/2004 [7] transposed several EC directives [7] ,[8], [9],[10] and [11] determined the existence of condition for users to make and receive local, national and international communications, facsimile and data communications at rates sufficient to enable the functional internet access. Several regional contests to deliver internet everywhere were open under the program Portugal Digital. In order to ensure a healthy completion among all operators and to answer the strong pressure by the non incumbents operators, the Regulator decided to open the access to all conducts (ORAC). With this measure PT was somehow forced to open their conducts, towers, masts or other to infrastructure and service operators that required so. The liberalization context and the new fixed operators led to fixed telephone market fragmentation. Moreover at the same time the mobile technology entered as a non expected competitor causing serious damages in the so far faithful fixed network. Fixed operators started using the internet as an application to retain subscribers with double play offers or even triple play but it apparently it was not enough, as subscribers started to abandon fixed telephony towards mobility. This trend can be observed in Fig. 3, presenting the fixed telephone access per 100 inhabitants, since 2000 until 2008. It is relevant to note that in the island Açores, where the mobile network roll out is slower and scattered, this drift is less noted confirming the global trend of the consumers’ new behaviour. 45 40 35 30 25 20 15 10 5 0 2000







2005 Açores





Fig. 4 – Telephone fixed acess for 100 inhabitants in Portugal, from 2000 to 2008 . Source INE, 2010.

By 2005 Portugal (and most of the Western countries) became to be under a strong economical pressure and the TIC´s2 appear to be one of the drivers of the economy. A new plan called “Portugal Tecnológico” [11] was introduced to approach citizens to the technology and the


TIC – Technologies of Information and Communication.

internet from the young children and the elderly. The seed of new generation networks was launched. The Decree-Law 68/2005 [12] created the first legal framework for infrastructures sharing among operators. This occurred by the time optical fibber technological solution for the access networks, between the central offices and the subscribers, started to become a reality. The concept in the next generation is broadband and the optical fibber at the access network is one of the answers. Portugal has already given the first steps in the fibre roll out network expansion and the regulatory framework with Law 123/09 [10] was quite innovative in the European context. This latest framework defined strategic guidelines such as an effective and non-discriminatory access to ducts and other infrastructures, and the adoption of solutions aimed at eliminating or reducing vertical barriers to the roll out of fibre optics, so as to prevent the first operator from monopolizing the access to buildings.

Fig. 3 - Percentage of FTTH/B Homes Passed in total hoseholds in Europe. Dash line the European average. Source IDATE, 2009.

By December 2009 and only one year after roll out, Portugal presented 1.06% of homes passed with optical fibber, corresponding to 1.2 millions of houses. The number of connected homes (FTTH/B) with internet is around 54 000[13], with a semester evolution of more than 78%. The number of connected homes with TV is around 58 000 [14]. Against most of the expectations in Portugal the driver for the fibber subscription is not broadband internet but the HD and 3D television offer. In 2010 the contest for deployment of optical fibber among rural zones [15] was opened due to National Strategic Reference Framework (NSRF) [16] and the Regulator ANACOM applied another innovative solution. After the identification of the 140 zones without any type of broadband coverage, they were catalogued by economic forecast revenue and the roll out licenses were divided among operators, each one getting a “good” forecast revenue and a “bad” forecast revenue. Meanwhile in Portugal and in Europe several funds have been allocated by contest to regions in order to implement the broadband network in geographic areas that are usually economically disadvantaged. It is a requirement of these contests a minimum coverage of 50% of the population, it is a relevant effort to reduce asymmetric development but it does not guarantee the universal access [15, 17, 18].

III. THE CHALLENGES OF THE UNIVERSAL SERVICE After more than 100 years of telecommunication history, the existence of a juridical figure called universal service was needed by the time the sector monopoly was out of the state domain. Until this time, there was a certain notion public service should be provided by the State [19]. The US was defined based on three pillars: its cost funding, the services provided (and the technology underneath) and the provider. A. Net costs of the universal service provision, USNC The existence of US oblige at least one operator (in the UK there are two) to provide a minimum set of telecommunication services to all citizens, no matter where they live in the national territory. This obligation, among others, as public telephones and paper directories, may lead to huge investments without a certain financial return. In this case it is understood as an investment in intangible returns, like social benefits and population well being. For this reason, several European countries, including Portugal, assume financing part of US costs when there are clear evidences of extra expenses.

The US is limited in the technology used and service provided. It is defined as the transport of voice and low data rate data over the twisted copper pair [5]. The two main issues in this auscultation were the technological neutrality and the extension to broadband, as already suggested by some authors in the past [24-26]. Both of the approaches were postponed and not included in the US definition as it was considered there was no risk of info exclusion for the citizens. This resulted from the observation of the competitiveness model of the mobile communications that brought a certain type of universal access. On the other hand, by the time, the broadband was used just for a small percentage of the population. Meanwhile, in 2010, several countries like Australia and Finland restored this issue assuming a broadband extension to the US obligations of 1Mbps. C. The US provider In September 2009, the Portuguese government determined the purpose to discuss with PT the USP contract. In fact, this task was given to PT by 2001, but according to the Law 91/97 [4] there should be equal opportunities to all the operators to apply to PSU. This happened as a consequence of the 2008 public auscultation from regulator ANACOM, considering the interest of other operators to become PSU [27]. Despite most of them answered affirmatively, the PSU contest is still pending, not onlydue to the sensitiveness of the issue but also to the new context of NGN with some open regulatory aspects. IV.CONCLUSION

Fig. 5 - The Universal Service swing concept, .Source: the author.

Since 2001, by the time PT became a private company and defined as the national US provider (USP), it claims that the US obligation is a financial burden and that it should have some financial support (as determined by the nº1, art. 5º from CE Directive 97/33/CE[20], transposed by DecreeLaw 458/99[5]). The regulator ANACOM did not acceptethe claim, as there were no conditions to accept the net costs of the universal service provision (USNC) estimates for 2003nor the estimate reviews for 2001 and 2002 presented by PT [21]. The Board of ICP-ANACOM also decided to start a process for the detailed specification of the methodology to be applied in reckoning the USNC and the definition of the conditions under which its provision may represent an extra expense for the corresponding provider, thus justifying the creation of a compensation mechanism. This question is still pending. B. The technology evolution According to the Law 29/2002 [6] the concept of universal service must evolve to keep pace with advances in technology, market development and changes in user demand, its scope being altered whenever justified by the mentioned advances. In 2005 ANACOM made the first public auscultation to revaluate the scope of US [22] as required by the CE [23].

Portugal presents a long history in the telecommunication sector with more than 130 years. In the last 20 years major transformations occurred in the country and in the world, both in the technology, social or financial fields. From a monopoly to a wide open competitive telecommunications market, several milestones were accomplished to regulate it all along this evolution process History shows that Portugal is quite open to new technologies and services and quite prompt to adapt to new forms of communication. The regulation time line however is slower but with a clear effort to follow technology. On the other hand the time line of the player´s behaviours is even slower and things sometime take a little more time to be applied in reality than expected. By this time there are good perspectives to the evolution of the use of data communication by more and more citizens. In parallel the New Generation Networks became part of the new economic plans for many operators, nevertheless there are no guarantees that 100% of the citizens will have access to broadband, despite the plans for the rural zones,. The Universal Service concept seemed over past by the 90’s and by the time of the mobile massification that nearly ensured more than 80% of population´s coverage. With the advent of the NGN´s it jumped again into the European debate table. The Universal Service history apparently has not ended but though entering a new chapter.

ACKNOWLEDGEMENT The authors wish to acknowledge to National Fundação da Ciência e Tecnologia (FCT) the scholarship granted to the PhD student Raquel Castro Madureira. REFERENCES 1.CE (2009) IP/09/1332: Auxílios estatais: a Comissão adopta Orientações para as redes de banda larga. Europa Press Release Rapid on line. 2.Assembleia_da_República, Decreto Lei 40/95, de 15 de Fevereiro de 1995, in DR nº39/95 (Série I-A) 1995, DR. 3.Assembleia_da_República, Lei 23/96, 26 de Julho de 1996, in D.R n.º 172 (Série I) 1996. 4.Assembleia_da_República, Decreto Lei 91/97, de 1 de Agosto de 1997 - Lei de Bases das Telecomunicações in D.R. n.º 176 (Série I - A), DR, Editor. 1997. 5.Assembleia_da_República, Decreto Lei 458/99 de 5 de Novembro de 1999, in DR n.º 258 (Série I - A). 1999. p. 5. 6.Assembleia_da_República, Lei 29/2002, de 6 de Dezembro de 2002, in DR (Série 1) A Nº.282 2002.12.06. 2002. 7.Assembleia_da_República, Lei 5/2004 de 10 de Fevereiro de 2004 Lei das Comunicações Electrónicas, in DR nº34 (Série A), C.D.E.A.D. Directive 2002/19/EC (Access Directive), Council Directive 2002/21/EC (Access Directive), Council Directive 2002/22/EC (Access Directive), Editor. 2004, Diaro da Republica I 10/02/2004 num: serie A nr 34: JO L108 de 24-42002. 8.Assembleia_da_República, Lei n.º 12/2008, de 26 de Fevereiro, in D.R. n.º 40 (I Série). 2008. p. 4. 9.Assembleia_da_República, Decreto Lei 188/81 de 14 de Maio de 1981 - Criação do ICP (Revogado, com excepção do Artigo 7º) in D.R. n.º 149 (I Série), de 2 de Julho de 1981. 1981: Publicado no D.R. n.º 149 (I Série), de 2 de Julho de 1981. 10.Assembleia_da_República, Decreto Lei 122/94 de 14 de Maio de 1994 - Termos em que a Telecom Portugal, SA, os Telefones de Lisboa e Porto, SA e Teledifusora de Portugal, SA, criarão, por fusão, a Portugal Telecom, SA in D.R. n.º 112/94 (Série I-A). 1994. 11.Grilo, R., Mobile Broadband to bridge the Digital Divide, in Workshop on “Regulatory policies on universal access to broadband services” ITU-D Study Group 1, Question 7-2/1, I.T.S.G. 1, Editor. 2008: 8 September 2008, ITU Headquarters (Room C2), Geneva, Switzerland. 12.Assembleia_da_República, Decreto Lei 68/2005 de 15 de Março de 2005, in DR (Série1) nº52. 2005, Diário da Republica I 15/03/2005 num: 52 I serie A 13.ANACOM, Serviço de Acesso à Internet - 1.º trimestre de 2010. 2010. 14.ANACOM, Serviço de Televisão por Subscrição - 1º trimestre de 2010. 2010. 15.MOPTC, Redes de Nova Geração - a evolução das telecomunicações em Portugal e os concursos para as zonas rurais 2009. 16.QREN, Sistemas de Incentivos à Investigação e Desenvolvimento Tecnológico (SI&IDT) associada a Redes de Nova Geração, Projectos I&DT empresas individuais e em copromoção. 2009. 17.Português, G., Orçamento do Estado para 2010, M.d.F.e.d.A. Pública, Editor. 2010. 18. MOPTC. Redes de Nova Geração, Governo lança concursos para as Redes de Nova Geração nos Açores e na Madeira. 2009; Available from: 19.Pedro Hespanha, S., Os sistemas de protecção social. 1990, Univ. de Coimbra, Portugal. 20.CE, Council Directive 97/33/EC 9 de Junho de 1997, "on interconnection in Telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision (ONP) " 1997.

21. ANACOM, Decision on the evaluation of net costs incurred through the provision of Universal Service. 2008. 22.ANACOM, Comentários da ANACOM à Comunicação da Comissão sobre a Revisão do Âmbito do Serviço Universal COM(2005)203 2005. 23.CE, COM (2008) 572 Communication on the second periodic review of the scope of universal service in electronic communications networks and services in accordance with Article 15 of Directive 2002/22/EC. 2008. 24.Xavier, P., Should broadband be part of universal service obligations? info, 2003. 5(1): p. 17. 25.Bauer, J.M., Universal service in the European Union. Government Information Quarterly, 1999. 16(4): p. 329-343. 26.Hudson, H., Universal Service in the Information Age. Telecommunications Policy, 1994. 18(8): p. 658-667. 27.ANACOM, Relatório Final de Consulta Pública relativa ao procedimento de designação de prestadores do serviço universal. 2008, ANACOM.

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133 years of Universal Service in Portugal  

This paper presents an overview of the implementation of the telecommunications universal service in Portugal. An historical approach will b...

133 years of Universal Service in Portugal  

This paper presents an overview of the implementation of the telecommunications universal service in Portugal. An historical approach will b...