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Published on ECO News.

Telework is of great importance to tackle outbreaks, which is why the Portuguese Government has decreed the obligation to adopt remote working during the covid-19 disease pandemic.

Finally, the telework.

Conceived in the 1970s by Jack Nilles to minimize the commuting in the United States of America, telework took a long time to spread.

In Portugal, it came up with the Labor Code of 2003.

At the time, I had the privilege of being part of the drafting committee of the Code and to drafting the provisions relating to teleworking. Alongside personality rights, telework was at the time innovative and not always well understood. It was even a laughingstock.

The strength of its advantages and the pandemic crisis we are experiencing ultimately, imposed it.

Teleworking brings several advantages.

For the worker, ensures the reduction of commuting, transportation and food expenses; better reconciliation of work and family life; easier demand for employment; and strengthens freedom of work.

As for the employer, it guarantees the reduction of operating costs in facilities and energy; the optimization of available spaces; the increase in the universe of staff recruitment; and greater resistance to external factors, such as strikes, acts of terrorism or natural calamities.

As far the whole communities, the advantages are even more clear: reduction in air pollution levels; decongestion in city centers; reducing disparities between urban and rural centres; and the creation of new jobs, particularly for people with physical disabilities.

Telework is also of great importance to tackle outbreaks, which is why the Portuguese Government, through Decree n.º 2-A/2020 of 20 March, has decreed the obligation to adopt remote working during the covid-19 disease pandemic, whenever the functions in question allow it.

Teleworking may, however, put in risk the privacy of the teleworker.

For this reason, the Portuguese Labor Code contains rules aimed at preventing this risk.

In the light of the Code, the employer must respect the worker’s privacy and the rest times of his family (art. 170). Where the telework is carried out at the worker’s home, any visits to the workplace should only be allowed to control of the work activity and can only be carried out between 9am and 7pm, with the assistance of the worker or the person indicated by him.

As a result of the massification of telework during the current pandemic, the National Data Protection Commission (“CNPD”) also clarified that the rule prohibiting the use of means of remote surveillance, in order to control worker performance, is fully applicable to telework. For this reason, technological solutions for remote control of worker performance are not allowed. For example,  software that logs the visited web pages, the location of the terminal in real time, captures the desktop image, observes and records when access to an application is initiated, controls the document you are working on, and records the time spent on each task, are prohibited. According to the CNPD, these tools collect excess personal data from workers. The work provided from home does not justify a greater compression of personality rights.

On the contrary, the CNPD considers it legitimate to record working time using technological solutions. Such solutions should, however, be limited to recording the start and end of work and the lunch break. Not having such tools, it is legitimate for the employer to fix the obligation to send e-mail, messaging or any other way that allows him to control working times.

The telework came, at last, to stay.

The last quarter of the 20th century announced it.

The current pandemic crisis has imposed it.

Society and the Law must now pay more attention to it to prevent this brave new world from becoming a violation of our privacy.

PS: it is true because I saw it. The Portuguese Employment State Agency (“ACT”) has asked a company to learn of the documentation regarding its Lay Off within 2(two!) days, with the warning that, not doing so, incurs in administrative offense and “in the crime of qualified disobedience”. The state of emergency justifies several things, but it cannot be an open door to the arrogance and arbitrariness of state inspectors. We must avoid Hayek’s “road to serfdom”.

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During the second half of the 1900’s, several generations followed the entertaining holiday adventures of Enid Blyton’s Famous Five through the English and Welsh countryside. In each of the twenty-one novels, turned TV shows, the intrepid Julian, Dick, Anne and Georgina (George) – and their dog Timmy, get caught up in an adventure involving villains and lost treasures.

In the late 2010’s, for those following the Portuguese communications market it seemed that another novel of a famous five was unfolding. This novel involved a cast of five – the four mobile service providers with 98% of market share[1] and their watchdog[2] - and evolved around another five, the 5G, whose full name is the dry IMT-2020 standard.

This market novel, began with a public consultation held in March 2018, regarding the implementation of 5G and became the fighting ground of an unusually bitter dispute between the Regulator and key market players, with the latter accusing the first of failing to create adequate regulatory conditions for its roll out and the ANACOM claiming that it was following the schedule agreed at EU level.

This dispute eventually subsided when, in February 2020, ANACOM published a consultation on a draft regulation to a 5G spectrum auction[3].

The long story of a closed market

It may be said that this is the latest of a three-decade long string of spectrum licensing procedures in which the Regulator attempted to reshape the market by bringing new players. 

Throughout the 1990’s, the award of spectrum licences for mobile services, either mobile telephony, paging or trunking systems[4] even for fixed wireless services[5] became a key instrument to gradually open the market communications to new services and players.

These award procedures were essentially beauty contests that awarded fixed price licenses based on mostly qualitative criteria.

With the full liberalization of fixed services, fixed spectrum licenses became redundant and, in the mobile segments, the supremacy of GSM, fuelled by pre-paid services and market consolidation, led to the gradual phase out of less versatile technologies.

By the end of the decade, with the award of a third mobile spectrum licence, three large communications conglomerates emerged and solidified their position.

With the market still expanding, in the early 2000, ANACOM attempted to use the introduction of 3G to bring a new player by awarding a fourth licence, again using the traditional beauty contest system. This time however conditions had shifted and in the adverse international context of the burst of the telecom bubble, lack of technology availability and a far more belligerent market highlighted the frailties of both the Regulator and the regulatory framework and the Portuguese new entrant suffered the same fate as most its 3G European new ventures – was shut down without a single customer.

The aftermath of this process virtually dictated the end of ANACOM’s attempts to reshape the market via the award of spectrum for nearly two decades.

In 2011, with the country in the middle of the sovereign debt crisis and in a recession-stricken market, a 4G auction was held. This time, it was meant to serve as little more than a way for an income starved State to increase fiscal revenues and alleviate the enormous financial burden it was facing: the auction started and ended without virtually no bids made above the reserve price.

We would have to wait for the second half of the decade for the Portuguese market to settle and show signs of change.

The Portuguese mobile markets share most of the characteristics of its European counterparts: there are decreasing growth rates as they reach near saturation in most segments, there is erosion of the traditional revenue streams caused by OTT providers, while, at the same time, there are particularities that should be noted, particularly for newcomers.

In the second half of the 2010 decade, two key events reshaped the market, the first was the takeover by Altice of the former incumbent PT Group, who was dragged into near bankruptcy by the collapse of its major shareholders, and the second, the merger between Optimus/ZON merger (i.e., the merger of the third mobile operator and the largest cable operator, who also had a small MVNO operation), creating the NOS group.

While battling a long recession throughout most of the decade, Portuguese operators were forced to look for innovative ways to counter the erosion of their traditional revenue base and the saturation of the market. In order to do so, they used a particular feature of the Portuguese market: the fact that all key players are horizontally integrated, i.e., they all own fixed and mobile networks, thus allowing them to bundle services and capturing revenue by diversifying their offer across market segments.

This strategy proved successful as, according to ANACOM, in 4Q2019, virtually all households (98,8%) subscribed to a multiple play bundle (double play or higher), more significant still is the fact that quadruple or quintuple play (i.e. an integrated offer of fixed telephony, fixed internet, television, mobile telephony and mobile internet services) account for nearly half of these bundles (48,8%).

In such a scenario, there aren’t many incentives for new entrants, which explains why MVNO’s account for only 1,8% of mobile voice traffic, and why, of the two major MVNO’s, only one is a stand-alone operation while the other is essential mobile arm of a triple play fixed operator.

Current 4G (and 4G+, or LTE) networks represent a considerable upgrade, after all, they are roughly 500 times faster than 3G, and are able to support high-definition mobile video streaming, video conferencing and much more. When a device is moving, as when one is walking with one’s phone or is in a car, the top speed can be 10s of mbps, and when the device is stationary, it can be 100s of mbps.

In Portugal, given both the market characteristics and the economic context mentioned above, 4G rollout became virtually unnoticed and ended up having only a marginal impact in the whole market structure.

The excessive market concentration has been voiced by several entities. As far back as 2012, the Competition Authority wrote that in comparison with its previous reports, the Portuguese mobile communications market “maintained the level of concentration as measured by the market share of the two major providers (…), who recorded a combined market share of 83%, close to the highest of the EU and far above its average. (…) This high concentration level is fostered by the marginal impact of MVNO, who have a market share of only 1,4%, by a low level of consumer mobility between operators and increased network effects”.[6]

Although this assessment was written almost a decade ago it could have been written today.

New winds…

Over the last two years, however, in an unprecedented change of mood, ANACOM not only voiced its displeasure with the status quo but also signalled its intention of actively intervening in the market in order to change its structure. As expected, these assertions were met with fierce resistance and disbelief by operators and was followed by an unprecedented vocal dispute between operators and the Regulator.

Considering that the technical features of 5G make it much more than a simple evolution of existing standards, it is not surprising that ANACOM is once again trying to use the spectrum award procedure for the new technology as a catalyst to foster a change in the market structure.

This explains the reason why for the first time in 20 years, ANACOM is actively pursuing the appearance of new players by providing clear incentives for new entrants. If in the 3G spectrum award procedure the sole incentive was a fourth license, in the current 5G auction draft regulation these incentives for new entrants only range from (i) direct discounts and deferred spectrum payments, to (ii) creating for incumbents the obligation to negotiate fair MVNO and national roaming and, (iii) in an attempt to prevent incumbents from buying off new competitors, a two year waiting period for spectrum resale.

In addition to the favourable spectrum award conditions of the 5G proposed regulation, new entrants will also be able from the externalities of the Government’s digital transition policies, a complete set of plans put forward to accelerate the use of electronic platforms throughout society as a whole.

As mentioned above, Portugal’s electronic communications networks are on par with the country’s EU partners, e.g., in 2019, more than 4/5 households had broadband access, while mobile broadband penetration rose to 84,1%, which compares reasonably well with the EU average.

From 2010 to 2019, the year-on-year growth rate of broadband penetration as a whole averaged 5,1% and currently nearly 99,6% of students and people who have completed secondary and tertiary education are internet users (96,9% and 98,7% respectively).[7]

Nevertheless, the availability of a good infrastructure evidenced by the investment made through the last decades hide a less favourable picture. In fact, at the same time as penetration rates grow steadily toward saturation only 76.2% of the whole resident population aged 16 to 74 (roughly the country’s active population) was an internet user and, more worryingly, only 38,7% used e-commerce.

Interestingly, almost half of the users limited their Internet activities, such as the purchase of products or services, internet banking or the ones implying the provision of personal data, due to security concerns. We mention this point because, considering that Portuguese Internet is not particularly more dangerous than anywhere else in Europe[8], security concerns do not justify per se why such high percentage of users refrain from making a wider use of digital services.

At the same time, we do not consider also that these concerns are mere wrong perception of reality either, these worries are real. However, we consider them as the consequence, rather than the cause, of the phenomenon: this is, arguably, a simple case of distrust of the unknown.

In fact, there is an ample perception that the Achilles heel of “digital Portugal” is a mix of digital illiteracy and resistance to change, worsened by an ageing and less educated population and a general lack of actual incentives to use electronic services.

For these reasons, over the last years of the 2010/2019 decade, successive Governments insisted on a series of initiatives to enhance the country’s digitalization. These initiatives targeted not only public administration, but also the private sector, both for individuals and businesses.

The latest example occurred, on March 5^th, 2020, the Government proposed an “Action Plan for Digital Transition”, which, according to its promoters is a cross-sector, multi-channel, ambitious, pragmatic, comprehensive and quantifiable plan to make Portugal as an international reference using the benchmark of the world’s best practices.

Therefore, with a Regulator keen on welcoming new players, a technology available to cater for new services and a Government willing to expand the usage of digital services to the whole population, 5G would be certainly be a natural and critical part of these plans.

It seemed that like the in Blyton’s famous five adventure, this “famous 5G” headed for a happy ending.

Until, suddenly, in the ides of March…

Unfortunately, less than a week after the presentation of this plan and while the consultation for the 5G auction was undergoing, the COVID19 pandemic made a dramatic appearance.

With the country in virtually complete lockdown, with operators trying to cope with the limitation on movements and, on the other hand, the additional strain on their networks caused by millions being suddenly forced to use their home communications for virtually every aspect of their lives, ANACOM, regrettably but understandably, decided to suspend the auction consultation until the end of the State of Emergency.

It is obvious that the short and midterm effects of the pandemic in the Portuguese economy (and in the worlds for that matter[9]) are as unknown as they are expected to be dire.

In Portugal, in the weeks from 6 to 10 April 2020[10], i.e., three weeks into the lockdown, a survey by Statistics Portugal confirms that nearly 69,3% of companies in the information and communications sectors expect a severe reduction in company turnover.

This percentage is naturally higher in other sectors that are currently suffering the greatest impacts, such as the accommodation and food services, as well as non-essential retail.

Nonetheless, when looking at the whole universe of businesses, only 2% of the companies declared they were definitively closed, i.e., the vast majority of businesses 98% remain in full or partial operation. More importantly, only 26% of the companies reported a reduction of more than 50% in the number of persons employed effectively working.

It is natural that the number of bankruptcies and liquidations will increase in the short term, as well as the unemployment rate, however, considering the severity of the lockdown measures it is a significant sign of hope that so many remain in operation.

Regarding the communications market, however, in the same period, ANACOM[11] reported an average growth of 1,5% in relation to the previous week, with the decrease of mobile voice and data (of respectively -1% and -7%) compensated by an increase in fixed voice and data traffic (respectively 3% and 7%).

While the impact of the crisis is unknown and volatility is expected in the coming quarters, one trend is emerging when discussing the post lockdown stage[12]: remote work in all roles that do not require physical presence and the usage of webinars and remote training (e.g., for schools and universities but also for in company training) will be greatly encouraged.

Moreover, the forced shutdown of most services open to the public have forced a significant number of persons to use overnight digital services, which they probably would never do otherwise, thus expanding the usage of digital platforms to unprecedented levels.

It may be possible that remote work, remote teaching and a population suddenly familiar with digital services, may provide in the near future the increased demand for electronic communications networks that the market will have to cater. How and when they will do it remains to be seen.

For more about the incoming Portuguese 5G auction read our paper on it here.

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The last century brought collective bargaining as an instrument of social peace and dignification of work. The 21st century  can establish it as a mechanism of social responsibility for companies.

Since the middle of the last century, Western countries assumed  that  collective bargaining promotes the improvement of working conditions and is a factor of economic competitiveness.

The United States of America (US) played a pioneering role in this area, from the moment when they realized that without collective bargaining the labor riots would paralyze the economy. It was in this context that in 1935 the  National Labor Relations Act  (NLRA) was approved, which enshrined the right to collective bargaining  (Sec. 7. [§ 157.]). The countries of continental Europe followed. In Portugal, the State expressly assumes its intention to promote collective bargaining  and the Labor Code  (LC) states that it collective contracts should apply to as many workers and employers as possible  (art. 485).

In both cases, collective bargaining, more than a right to bargain, came to be seen as a duty to do it. In the US,  the NLRA  establishes the obligation to bargain collectively; in Portugal, the LC determines that the recipient of a collective  agreement proposal has a duty to respond with a view to initiating negotiations. In both countries, the law  does not impose as a final result the conclusion of a collective agreement, but requires the parties  to negotiate it and to do so in good faith.

In the light of these rules, collective bargaining has enhanced over the years the  self-regulation of interests in various matters – organization of working time, retributive policies, job positions and career promotions, right to rest, or the exercise of trade union activities within the corporations.

The second decade of 21st century seems to bring a new dynamic and a new challenge to collective bargaining: to contribute to the promotion of the common good.

Once again, it is a movement that started in the US.

In the context of corporate social responsibility, civil society and trade unions have joined forces and created a new movement concept that has been imposing: the  BCG  -  Bargaining  for  the  Common  Good.

It is about assuming that more than benefiting workers with salaries and promotions, the collective labor agreement can bring benefits for other stakeholders, such as the  local community,  the most disadvantaged, and the environment. BCG bring a set of demands that benefit not just the bargaining unit, but also the wider community as a whole, expanding the scope of bargaining beyond wages and benefits. There are several examples of practices adopted by companies that have joined this movement: new equal pay policies;  scholarships for students; requalification  of  school centers; financing of municipal works; environmentally friendly practices; volunteering actions; real estate assets for rentals at social prices; support for ethnic minorities, among others.

The future of collective bargaining is here – to combine efforts between companies, unions and civil society, to seek benefits for the whole community and not just for unions and workers.

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The end of 2015 was difficult for the battered Portuguese banking sector. The Bank of Portugal and the European Central Bank wanted to clean up the house before the entry into force, on 1 January 2016, of the unified European bank resolution mechanism.

On 20 December, the Portuguese Government was forced to intervene in BANIF which was about to lose access to the ECB’s emergency liquidity funding. Although BANIF was a small bank it may end up costing Portuguese taxpayers over €3,000 million.

On 29 December, the Bank of Portugal adopted a second resolution in respect of BES ordering the "re-transfer" of certain Novo Banco senior notes worth approximately €2,000 million to BES, the bad bank that resulted from the collapse of the Espírito Santo Group.

As announced by the Bank of Portugal, this measure increased Novo Banco’s capital ratio to 13% making it more attractive to potential buyers.

In anticipation of the litigation that will certainly follow, the Bank of Portugal stated in its press release that its decision was due to the additional “losses arising from facts with their origin at Banco Espírito Santo, S.A. and prior to the date of the resolution [3 august 2014]"; in other words, the Bank of Portugal is arguing that the measure aims to solve a problem created before the incorporation of Novo Banco. The Bank of Portugal also states that the resolution was "necessary to ensure that, as set out in the resolution legal framework, the losses of Banco Espírito Santo, S.A. are absorbed, firstly, by the shareholders and creditors of this institution and not by the banking system or the taxpayers", which would justify the less favourable treatment given to the holders of the notes “re-transferred” to BES. Lastly, the Bank of Portugal concludes that this last decision "is the final and definitive change in the perimeter of assets, liabilities, off-balance sheet and assets under management transferred to Novo Banco" that was left open in the original resolution measure isnow “definitively closed" by this decision.

In contrast with the Bank of Portugal’s original resolution measure of 3 August 2014, which, we have always believed, would be hard to challenge in court, in this particular case investors have strong reasons to question the timing and the proportionality of the measure adopted.

As regards the timing, this last measure was taken one year and four months after the Bank of Portugal’s first intervention in BES, which took place on 3 August 2014. It is difficult to understand which facts occurred before August 2014 could justify such a serious measure. As is publicly known, since the adoption of the original resolution, Novo Banco approved its 2014 financial statements, which have been audited by its statutory auditors and reviewed by the Bank of Portugal in the exercise of their supervisory functions. Novo Banco also approved quarterly and semi-annual financial statements concerning the year 2015 and was subject to stress tests by the European Central Bank, which were announced by the Bank of Portugal on 14 November 2014.

The Bank of Portugal’s decision also breaches the principle of equal treatment of creditors within their respective rankings, as Novo Banco has repaid other notes with the same ranking in 2015 and assumed responsibility for other senior bonds issued by BES and/or vehicles of BES. Therefore, the decision favours other unsecured creditors of Novo Banco whose rights are not affected by the resolution now adopted in relation to the senior notes that were “re-transferred” to BES.

The banking resolution legal framework does not allow a differentiated treatment of creditors of the same ranking, with the exception of depositors that benefit from legal preference over other unsecured creditors and creditors essential to the continuation of the bank’s activities. It is therefore difficult to understand why this measure does not apply to the holders of other senior notes.

It is more than likely that harmed investors will take the matter to the courts and that they will have a strong case against the Bank of Portugal.

Significantly, the Bank of Portugal states in its press release that "it is the responsibility of the Resolution Fund to neutralize, by way of compensation to Novo Banco, the possible negative effects of future decisions, arising from the resolution procedure, which result in liabilities or contingencies"; in other words, the Bank of Portugal is impliedly accepting that some claimants may be successful in court and by this statement wants to assure potential buyers’ of Novo Banco that the bank will not be affected by litigation.

It is generally known that the ultimate responsibility that may arise from claims concerning the resolution of BES will have to be satisfied by the Resolution Fund. By stating it in its press release, the Bank of Portugal seems to indicate that the creditors affected by this latest measure have stronger chances of success when compared with the claims of subordinated creditors now in court.

The Bank of Portugal’s main goal with this measure was to improve Novo Banco’s financial ratios to facilitate its sale.

However, with this decision legal certainty is lost and investors may distrust the word given by the Bank of Portugal and the European Central Bank, which breach the laws that they should protect.

The question remains as to whether Novo Banco’s prospective buyers of should not be aware of a regulator that allowed (and required) a capital increase of a bank with serious internal problems that the same regulator would put into resolution only a few weeks after investors put their money into the bank and a regulator which reverted its own decision more than one year and four months later. Only time will tell.

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The announcement by the European Central Bank (ECB) of its quantitative easing programme met the applause, more or less enthusiastic, of those who have been advocating the end of the austerity programs across Europe and in Portugal.

It is expected that the ECB's quantitative easing programme will create a monetary stimulus by allowing banks and other investors to sell certain debt securities to the ECB, which will release funds to finance the economy.