Portugal is getting ready for the third-generation mobile communications system and the Communications Institute of Portugal (ICP) (the Portuguese regulatory authority) has already approved the main principles regarding the licensing of universal mobile telephone services (UMTS).

The ICP will award four licences through a public tender process during the third quarter of 2000. The licences are expected to be granted a few months later during the first quarter of 2001. UMTS should be available from January 1 2002.

The licences will be valid for an initial period of 15 years and will be renewable. They will grant use of 15 megahertz (MHz) of shared spectrum on frequency bands 1920-1980 MHz/2110-2170 MHz and five MHz of non-shared spectrum on frequency band 1900-1920 MHz.

Like the tender process used in Spain, the selection of licensees in Portugal will take the form of a competitive tender. However, the actual criteria to be used to evaluate licence applications have not yet been decided. Nevertheless, the public tender will impose limitations on shareholding; none of the bidders will be allowed to hold, directly or indirectly, any participation in the share capital of another bidder. Bidders will also be required to assure debits above 128 Kbps (kilobits per second) and roaming supply.

According to the ICP, the Portuguese government will approve legislation encouraging the sharing of UMTS network infrastructure in order to promote competition and protect consumer's rights.

The forthcoming public tender is creating a high level of expectation among telecommunications operators, mainly due to the new business opportunities the third generation system creates. Based on connection speeds of up to two megabytes per second, the new system allows mobile network operators to transmit data, images and video as well as offer clients a wide range of internet multimedia and e-commerce applications.

As the three existing mobile operators are expected to each win a licence, the only real competition will be for the fourth. Many Portuguese and foreign operators are expected to fight for the fourth licence as Portugal has one of the highest penetration rates of mobile telephony in Europe - about 45% (which is greater than that of fixed telephony).

For further information on this topic please contact Margarita Couto at Vieira de Almeida Advogados by telephone (+351 1 311 3400) or by fax (+351 1 354 89 39) or by e-mail ([email protected]).
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