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NGCS Commercial Group – 28 July 2011, 2.00pm Ofcom

Meeting notes & Actions

Attendance

  • Sean Hartley, BT Wholesale (Chair)
  • Justin Hornby, Cable&Wireless Worldwide
  • Laurent Pariat, C&W Worldwide
  • Colin Rochester, BT
  • Elizabeth Gannon, Ofcom
  • Peter Farmer, Gamma
  • Sandra Reid, Virgin Media
  • Andrew Wileman, Virgin Media
  • Matthew Peake, Verizon
  • Kim Hilton, Everything Everywhere
  • Robin Vernon, O2
  • Steve McGeary, Via-Vox
  • Andy Martin, IV Response
  • Kath Embleton, BT Wholesale
  • Nicola Robbins, BT Retail
  • Don Wilson, Vodafone
  • Sarah Godfrey, 4D Interactive
  • Joe Moore, Sky
  • Grant Forsyth, Sky
  • Yulia Kossykh, Three
  • Louise Lancaster, Magrathea (on the phone)
  • Lesa Green, Kcom (on the phone)
  • Colin Scott, C&W (on the phone)
  • Lee Alloway, Verizon (on the phone)
  • Simon Grossman, The Number UK (on the phone)

Minutes of previous meeting & action points

The minutes of the previous meeting were noted and agreed. In terms of the action points, Sean noted that Colin Rochester (BT) had drafted a list of questions for the technical group and that this would be circulated after the meeting for comments from the group.

Elizabeth Gannon (Ofcom) noted that several group members had submitted data relating to the use of chargebands and she was just working on collating that data so it would be ready for the next meeting.

Sean noted that he had not yet completed the issues register but would aim to circulate something the following week. Matt Peake (Verizon) questioned whether the issues register would be what would be presented back to Ofcom at the end of September to confirm the outcomes of the groups work. Sean confirmed that that was the intention and said he aimed to have a discussion of that issues register at the final meeting to get the groups agreement to all the points of issue that had been raised and that it wanted Ofcom to consider.

Discussion Maximum Prices

Pete Farmer (Gamma) introduced the slides on maximum prices which had been circulated to the group. He noted that there was a question about what maximum prices meant in practice. He said he had included a reference to the extension of the BT Origination Condition in the slides but he understood that this was not necessarily an option that was open to Ofcom.

Elizabeth Gannon (Ofcom) noted that Ofcom considered that there would be significant difficulties in pursuing an SMP route in this market and it therefore this was not one of its preferred options.
There was some discussion as to what prices in particular would need to be set under maximum prices. Colin Rochester questioned whether there would be limits on the duration of calls, or rules on how calls were rounded up. He noted that this was one of the questions he had included in the technical brief because it would have an impact on billing systems. He noted that if there were different rounding rules for the AC and the SC it could cause difficulties from a billiung perspective.

Pete Farmer (Gamma) said in Gammas view, under this option, Ofcom would have to make changes to the Numbering Plan and take control of the chargebands, including the allocation of any new price points (including DQ), taking over that from BT. He noted there was an argument that this would restrict the ability of DQ services to compete on price but he noted that under the current system, several operators did not charge all of the 126 DQ price points anyway. Under a more restricted system, there would be fewer price points but these would be enforced and would have certainty, therefore they would be able to compete on those prices because they would have a greater level of control.

Pete noted that under maximum prices the biggest issue was negotiating rates between OCPs, SPs, and TCPs and the question was whether there was a mechanism for making that process work more effectively. He noted that the existing mechanism used to set the Call Origination Condition, and some of the principles within that, e.g. the retail uplift and bad debt allowance, could be used as a starting point.

Kath Embleton (BT) highlighted that the origination condition only allowed the recovery of costs.

Kim Hilton (EE) noted that the NTS Retail Uplift and Bad Debt statement had taken Ofcom several years to conclude and that only applied to a single company, therefore it was questionable whether appling the same type of regulation to the entire industry was ever going to be practical.

Pete Farmer (Gamma) noted that without some form of regulation at the wholesale level, the maximum prices model was unworkable. The group generally agreed with this position and noted that none of its members were in favour of the model of maximum prices set out by Ofcom in the December consultation.

Capped Access Charge

Colin Rochester (BT) noted that under the unbundled tariff where both the AC and the SC were capped (which was a form of maximum prices anyway), then it was clear what would flow through to TCPS through the divide of the AC and the SC.

Pete Farmer (Gamma) noted that the same inputs flowed on capping the AC as having maximum prices overall.

Grant Forsyth (Sky) noted that Ofcoms proposal was to allow competition to determine the price of the AC, and if that was not allowed for, then there was an onerous task for Ofcom to decide how to regulate and from an implementation point of view it would be very complicated.

Elizabeth Gannon (Ofcom) confirmed that in its December Consultation Ofcom did not propose to regulate the AC, however, a number of stakeholders had suggested Ofcom review that position. She noted that one particular option which Ofcom was considering was whether there was a need for a safeguard cap on the AC as an interim measure.

Don Wilson (Vodafone) noted that in its view Ofcom did not have the legal powers to regulate the AC and it had set out that view in its consultation response. Elizabeth noted that Ofcoms legal advisors had been reviewing those arguments and would respond to them in its next consultation.

PRS definition

Pete Farmer (Gamma) highlighted that another relevant to maximum prices was the potential for 0844 to be sucked into the PRS definition (if the price was set at over 5p).

Porting differential

Sean Hartley (BT) introduced the slides relating to the porting differential. He noted that there were wider issues with porting and that this problem was not an issue that was specific to any proposed changes to NGNs, however, he suggested that it would be preferable not to introduce a known problem into any new regime and the group should look to resolve that problem under the unbundled tariff if possible.

Sean noted that NGN differentials were created today and they were limited to fixed calls. He noted that the problem was rcreated by the outpayment systems caused by the Origination condition but that if the porting differential didnt exist then the problem wouldnt exist.

Sean asked whether, if the SC was constrained to the 10k or 100k number block then there would not be a problem with porting differentials. The group agreed and it was noted that it wasnt currently possible to port between chargebands currently in any case. Pete Farmer (Gamma) noted that there would be a mechanism for controlling SC within the chargebands, and without that mechanism then there would be a porting differential.

Colin Rochester (BT) noted this was one issue he had raised in his technical brief. He had suggested a move to donor pays all (DPA), which was used in mobile, as a way of resolving the problem but noted that setting the SC by chargeband would also address the issue.

Kim Hilton (EE) noted that setting the SC by chargeband would restrict the ability of SPs to compete on price. Grant Forsyth (Sky) noted that if the SP wanted to adverise a different price, under this model, they would have to change numbers.

Pete Farmer (Gamma) suggested that the whole porting issue needed reviewing more generally but it was noted that this was not the appropraite forum for that discussion.

Next Commercial and Technical Group meetings

It was agreed that the next meeting (11 August) would be a combination of both the commercial and technical groups and the brief put together by Colin Rochester would be discussed, as well as further consideration of the number of chargebands.

It was noted that there was a NGCS Focus Group meeting on 1 September and this could be used as the next Commercial Group meeting, with a further two meetings in September. Elizabeth Gannon (Ofcom) said she would confirm those additional dates for September.

AOB

Andy Martin (IV Response) noted that all the discussions that had been had in the working group so far had been focussed on those providers that were directly connected, and he wanted to highlight that resellers would need to be considered and taken into account.

He noted that there may be an issue if the SC was set at a certain level, the reseller would not be able to charge a margin on top of that. Don Wilson (Vodafone) noted that everything downstream of the TCP would subject to commercial negotiation and arrangement.

Pete Farmer (Gamma) noted that there was a question about whether the TSP would have an ability to impse a wholesale access charge, if the reseller was buying calls at the SC rate. He noted , however, that the same competitive pressures existed today and it would not be an issue that was made worse under unbundling.

Kim Hilton (EE) noted that the SC would include additional reseller costs that would not be obvious to the consumer.

Date of next meetings: 11 August 2.00pm, Ofcom

1 September, 2.00pm, Ofcom
14 September, 2.00pm, Ofcom
29 September, 2.00pm, Ofcom

Action points

  • Sean Hartley (BT) to circulate issues register for comment ahead of next meeting
  • Sean Hartley (BT) to circulate questions for technical group and all to submit comments.
  • Elizabeth Gannon (Ofcom) to confirm September dates for meetings.

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