WRITTEN QUESTION E-0280/03

by Sérgio Sousa Pinto (PSE) to the Commission

(7 February 2003)

Subject: Liquidation of the operator OniWay in Portugal

Can the Commission provide information on a possible breach of Community legislation governing competition in the telecommunications sector in connection with the liquidation of the operator OniWay?

The liquidation of the fourth operator OniWay will clearly harm the interests of consumers and have an adverse effect on diversity, competitive emulation and innovation. OniWay held a UMTS licence but played no part in the GSM generation, and it was hoped that the operator would have a lever effect with regard to the new UMTS generation technology, breaking with the approach geared to maximising profits which tended to prevail among established operators.

The third generation was affected by delays caused by factors which affected the whole of Europe and were aggravated by the lack of interest shown by the three established operators. The regulator then authorised OniWay to provide GPRS services on the basis of a roaming agreement with another established operator, TMN, thereby preventing an early closure of the company. The remaining operators launched a boycott, resisting the interconnection rights granted by the regulator.

With the change of government, the new minister decided to block an administrative order from the regulator ordering physical interconnection among the networks. The operator was paralysed, the company's fate was sealed and it was decided to sell off its assets to the remaining operators. Now that OniWay has been killed off to the benefit of its competitors, the government intends to share out the spectrum assigned to OniWay, which paid around EUR 100 million for the rights, among the remaining operators.

A further interesting detail is the fact that news of the sale of OniWay's assets led to a marked improvement in the stock market position of the companies holding a share in the firm, particularly Electricidade de Portugal (EDP).

The operation will have a negative impact on consumers and conditions of competition in the sector, and clearly favours the established operators. A study should therefore be made of whether there has been a breach of Community rules applying to the telecommunications sector.

Given that the radiophonic spectrum is a public good which is in scarce supply, the above situation could represent a closing of the market. Moreover, the possibility that one of the operators (TMN) might end up holding significant market power also needs to be investigated.

Answer given by Mr Monti on behalf of the Commission

(20 March 2003)

The Commission is aware of the allegedly abusive refusals by the mobile operators Vodafone and SonaeCom (Optimus) to conclude interconnection agreements with OniWay. In July 2002 OniWay submitted two complaints to the Commission against those two operators, in parallel with its proceedings pending before the Portuguese regulator (Anacom).

Contrary to the three GSM mobile operators in Portugal, OniWay had only third generation (3G) frequencies and had not yet deployed its network. It was, therefore, seeking an agreement with the existing operators to provide services making use of their networks. OniWay reached a commercial agreement with TMN, the mobile subsidiary of Portugal Telecom. On 20 June 2002 Anacom determined that the two other mobile operators, Vodafone and Optimus, should conclude interconnection agreements with OniWay. However, they refused to comply with this decision arguing that they were under Portuguese law not obliged to interconnect to OniWay as long as the latter did not operate its 3G service.

For this reason, OniWay subsequently filed the above complaints with the Commission under Article 82 of the EC Treaty at the end of July 2002.

However, on 24 September 2002 Anacom required Vodafone and Optimus by decision to provide interconnection to OniWay within 15 calendar days.

The decision of Anacom seemed to guarantee interconnection and the related termination access which was the subject of OniWay's complaints to the Commission, and OniWay was therefore asked whether it still maintained its complaints. The Commission, however, never received an answer to this question.

In November 2002 the Commission learned informally about the liquidation of OniWay.

The Commission does not have any indication to conclude that such liquidation constitutes a possible breach of Community Competition Law.