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: rcmadureira@ua.pt, duarte@ua.pt, rfonseca@ua.pt

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 north-
and 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 growing demand, the telecommunications market is
technological development and such as the emergence of the providing alternative broadband infrastructures that are
Web in the beginning of the 90´s. As an answer to the public emerging and developing fast.

Monopoly Open market

Around 120 years 10 years

Law of Law of the Electronic Law of Infra-structure

telecommunications Communications share nº123/09
91/97 nº05/04

1877 1975 1981 1986 1994 1997 2001 2002 2008 2009

ONP ORAC
First ANACOM Optical
State State Fiber at NGN at Rural
twisted Nacional fix Independent
pair Regulator CEE Portugal Access enviroment
network Telecom Regulator
networks ICP Open competition PT Privatization network
PT(except golden
share)

Universal Service
Law

Telegraph Modems/ Fiber

Micro- TV Cable Mobile
and Television Internet Acess NGN
Telephone electronics RDIS network Phones 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
era of massive deployment of the New Generation
telecommunications Networks (NGN). In this context it is
highly relevant to observe how the telecommunications´
market regulatory framework has been evolving along time
in Portugal and to extrapolate the predominant needs of
these new infrastructures.
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
telecommunications sector. This subject is a transversal
issue for several countries in the world; however it is also
relevant to identify the individual characteristics and
constraints country reality. For this reason this paper has its
focus on one particular European country- Portugal.
The most relevant legislation concerning the universal
service rules is presented in Table I.

Law number Law name Universal Service impact

Decree-Law Public Telecommunications Service Basis for the public telecommunications service. Exploitation
40/95 [2] Concession given to PT as well as US obligations and financing, until 2025.
Law 23/96 Essential Public Services Law Protect users of public services such as: water, electricity, gas
[3] and telephone, however not necessarily universal.
Law 91/97 [4] The Telecommunications Law The public network was open to competition but still state
property (ONP). Thought the US obligation must be guarantee
by PT.
Decree-Law Essential Public Services Law Transposition of the CE directive 97/33/EC [21] concerning
458/99 [5] universal service and the 98/10/EC [5] concerning
interconnection in telecommunications through application of
ONP.
Law 29/202 The Law Public telecommunications First amendment to Law 91/97. Determined the evolution of the
[6] service concession concept of SU.
Law 05/04 [7] The Law of Electronic Communications Allow users to functional internet access.
Law 12/08 [8] Amend to Essential Public Services Law 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 broadband coverage, they were catalogued by economic
0 forecast revenue and the roll out licenses were divided
2000 2001 2002 2003 2004 2005 2006 2007
Portugal Continente Açores Madeira
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
2
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
2008 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.
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 Decree-
Law 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].
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
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 21. ANACOM, Decision on the evaluation of net costs
incurred through the provision of Universal Service. 2008.
The authors wish to acknowledge to National Fundação da 22.ANACOM, Comentários da ANACOM à Comunicação da
Ciência e Tecnologia (FCT) the scholarship granted to the Comissão sobre a Revisão do Âmbito do Serviço Universal
PhD student Raquel Castro Madureira. COM(2005)203 2005.
23.CE, COM (2008) 572 Communication on the second periodic
review of the scope of universal service in electronic
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