ANACOM discloses an updated version of the analyses of telecommunications prices in Portugal, published on 27 February 2020, in the format of answers to the most frequently asked questions on to the evolution of these prices in Portugal and a comparison with all the other countries of the European Union (EU). europe most expensive telecommunications prices

The most recent data reveal that between the end of 2009 and April 2020, telecommunications prices in Portugal increased by 7.7%, while in the EU they fell by 10.4%.

All the studies produced by the European Commission, OECD and ITU demonstrate that the prices of bundled services and individualized fixed broadband and mobile broadband offers in Portugal are above the average of the EU. europe most expensive telecommunications prices

Summary of the results of international price comparisons – 2017-2019

The International Telecommunication Union (ITU), which annually measures the cost and accessibility of the mobile telephone service (STM), of fixed broadband (BLF) and mobile broadband (BLM), disclosed, last May, the most recent data of the study “Measuring Digital Development – ICT Price Trends 2019”. The results, presented as a percentage of the monthly average of the gross national income per capita (GNI p.c.), place Portugal in a very unfavourable light in the set of countries of the EU28:

• in 25th place of the ranking in the case of mobile broadband;
• in 21st place of the ranking in the case of fixed broadband;
• between the 11th and 18th place of the ranking, according to the services and usage profiles considered, in the case of mobile voice and internet on mobile phone services.

Unit: % of the monthly average of the GNI p.c., p.p.
Source: ITU, ICT Price Trends 2019

Including fixed telephone in bundled services increases monthly charges

The great majority of the telecommunications packages forcibly requires the hiring of the fixed telephone service, but only 65% of households actually use this service.

Although the use of fixed voice is not widespread and despite the fact that the inclusion of this service in a package could imply a lower marginal cost, the prices (i.e. monthly charges) of the package are affected by its inclusion therein, as illustrated in the table below (where STF is the fixed telephone service): europe most expensive telecommunications prices

Unit: Euros
Source: website of the providers

The figures in question may represent various percentage points of the monthly charge of the package.

More channels in the packages, higher monthly charges

Bundled services provide a very significant number of channels; however, the users tend to watch a rather limited number of channels regularly.

Although the cost of including additional channels in the packages is low for the providers, since ANACOM started analyzing the price of bundled services, the prices of these offers has always been positively correlated with the number of channels.

On the other hand, the actual offers of the providers reflect this relationship: the higher the number of channels, the higher the associated price (see the table below where TVS is the television service by subscription).

Unit: Euros
Source: website of the providers

To conclude, the more channels included in the offer, even if they are not directly useful to the consumer, the higher the monthly charge. Some packages include a number of channels that could approach 200; however, the users tend to watch a rather limited number of channels in a regular manner.

On the other hand, the voice and message traffic ceilings reach 3,500 minutes/messages, while, at the end of 2019, the monthly average traffic of mobile services, considering all effective uses and excluding M2M and PC/pen/tablet, was 204 minutes and 103 SMS (2019). Lastly, in the case of fixed voice, there are offers that provide a thousand minutes of international calls, but only five minutes per month are used on average.

ANACOM values diversity of choice, and recognises the need to streamline costs, but it also values freedom of choice and the affordability of prices. In this context, we recall the proliferation in some markets of the so-called skinny bundles¹, in which the number of channels is lower and so is the monthly charge. In these cases, there appears to be a greater balance diversity of choice, freedom of choice and affordability of prices.

The fact that there are no competitive options with lower usage levels cannot lead to the conclusion that the customers prefer offers with higher or “unlimited” service levels. In the case of bundled services, there are simply no packages with competitive prices that include a lower number of channels, less minutes, less internet traffic, or less SMS, for example, which does not mean that there are no users interested in these types of offers.

The evolution of prices and revenues can be divergent

The evolution of prices should not be mixed or confused with the evolution of unit revenues, especially when they are affected by exogenous factors (e.g. macroeconomic), as this would be a misconception, even a possible contradiction. It should be noted that:

• When the providers make “price adjustments” that have a real impact on the prices paid by the consumers at the time of this “adjustment” or upon the renovation of their loyalty period, we are witnessing a price increase;
• When the users adapt to these changes of the price of the services, or to changes in their disposable income or to macroeconomic conditions, and this gives rise to a reduction of the value charged, this is not a price reduction;
• If this adaptation of consumer behavior implies a reduction of total or unit revenues, this does not imply that prices are falling.