For Portugal the question is about the speed of rebalancing. Owing to the limits of the proposed price cap regime, Portugal claims that Portugal Telecom needs about five years to implement decreases in long-distance and international call charges and increases of installation and monthly rental charges, i.e. from 1996 to 2000.
Price cap method of regulation: overall, price caps are a regulatory device which limit or "cap" the price that a telephone company may charge for a particular basket of services. This form of regulation encourages telephone companies to operate more efficiently by allowing the company to increase its profits by becoming more productive. Price cap regulation will replace earnings or rate of return regulation for services in the Utility segment in 1998.
