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NGCS – Commercial Group 17th June 2011 – meeting No.1

Attendees:

Sean Hartley (BT), Kieran James (Zimo Communications), Jim Moulder (Global Crossing), David Lee (4D Interactive), Nick Morgan (4D Interactive), Pete Farmer (Gamma), Louise Lancaster (Magrathea), Justin Hornby (C&W Worldwide), Sandra Reid (Virgin Media), Alistair Dixon (Colt), Mike Barford (118118), Nick Pike (Daisy Group), Matthew Walters (Ofcom), Elizabeth Gannon (Ofcom), Liz de Winton (Ofcom), Yulia Kossykh (Three), Andy Martin (IVR), Matt Peake (Verizon), Lee Alloway (Verizon), Don Wilson (Vodafone), Marcus Webb (Vodafone), Paul Lees (PowWowNow), Steve McGeary (Via Vox), Markham Sivak (Ofcom), Kath Embleton (BT), Lawrence Wardle (Telefonica UK), Kim Hilton (Everything Everywhere), Grant Forsyth (bskyb).

Terms of Reference

The purpose of this group is to assist Ofcom with practical implementation matters relating to the proposals set out in our NGCS consultation. These are issues in relation to which industry has greater hands-on knowledge and experience than Ofcom, and we consider it important to understand the different perspectives that you may have in relation to the practical impact of our proposals, in order that we are able to make informed decisions in the future on this policy.

As a national competition authority Ofcom, like the members of the WG, are very mindful that you are each others competitors and therefore need to be very careful not to engage in discussions which could constitute breaches of competition law. To be clear, this group is only being asked to discuss practical issues of implementation related to our proposals. It should not discuss pricing levels, margins, or anything that might affect or disclose the commercial decisions which you may make in the future all such decisions are for you to take unilaterally.

To the extent that any pricing issues can be discussed, this can only be in the form of hypothetical examples to illustrate practical implementation issues. Any such discussion may not inadvertently (or on purpose) stray beyond the hypothetical into real life examples. If we at any point consider that there is a danger that discussions are straying into unlawful territory, we will terminate the meeting immediately. We would also invite you to raise any concerns you have at any time in this regard.

Finally, I would note that as you know, it is for Ofcom as the national regulatory authority to decide, under its powers under the Communications Act and EU legislation, what regulatory conditions, if any, to put in place, including as to price. Those decisions will be made by Ofcom without direct input from stakeholders, save in the form of responses to our consultations which we will consider in the usual manner before making any decisions.

The following items had been proposed as an agenda;

  • Migration POLOs to Service Charges
    • Granularity
    • TOD Variations
    • Internationally Originated
  • AIT and Fraud
  • Assumed Point of Handove
    • Ownership of Traffic
    • Transit
  • Porting
  • Access Charge
  • Maximum Prices
    • Termination Rates
    • E2E Connectivity

It was agreed that it wasnt practical to discuss all the issues in detail in one meeting and that a series of meetings would be set up to discuss each item in detail and establish any issues.

In addition it was agreed that each item would need a basic description explaining the current situation so that all participants could understand where the discussions were starting from.

However there was some short discussion around each of the topics above. The main points coming friom that were:

Migration

Service Charge (SC) structure how VAT is accounted for in the SC. If, for example, the service is promoted as for example 5ppm plus an Access Charge does the 5ppm include VAT (meaning that the TCP/SP will receive ~4.17ppm) or does the TCP/SP receive the full 5ppm with the VAT being added along with the Access Charge (AC)?

Granularity what level of granularity should charge bands go down to. e.g. currently 0844 is capped at 5ppm/ppc from a BT line with pricepoints of 1p, 2p, 3p, 4p and 5p available. Will that level of granularity be required with Unbundled tariffs? (Currently there are around 150 different price points available across 0844/0871/09.)

TOD need to consider whether SC should vary across Day, Evening, and Weekend. And take into consideration the fact that different CPs apply different TODs.

Internationally originated NGCS these currently result in different outpayments to TCPs/SPs. For example, an 0845 call pays out a ppc and a ppm elements; internationally originated 0845 only pays out the ppm element. Any changes in the UK system cannot automatically be applied to internationally originated calls. Greater variance between the two sets of rate could lead to greater incidences of fraud. This area may need the attention of the technical group.

Changes and Change Management some thought needs to be put into how much of this is managed post-migration. It should not be seen as just preparing for Day 1. For example, how would a TCP/SP change an SC?

Chargebands; Mapping current (POLOs) to SCs: POLOs are currently calculated to 4 decimal places. For promotion and advertising purposes these are unlikely to be suitable in their current form.

Migration will be the topic discussed at the next meeting on the 30th June.

Assumed Point of Handover

There was some confusion over what was meant by ownership of traffic and transit. With NTS the principle has always been that the TCP owns the traffic. The TCP knows where the call will ultimately be terminated so the most efficient way of routing a call is for the OCP to hand the call over to the TCP at the earliest opportunity. This can be at: the DLE (local exchange), Single Tandem (first trunk switch), or Double Tandem (second trunk switch at a short medium or long distance). The further the OCP carries the traffic the greater its network costs so the lower the POLO the TCP receives.

For unbundled tariffs the appropriate handover point will need to be set i.e. the point at which the TCP receives the full Service Charge. Where calls are handed over at other points in the network there will need to be some methodology of adjusting Service Charges.

Transit i.e. where an OCP sends a call via a third party rather than directly to the TCP, has evolved into a situation where for some services (0871/0844/0870/080) the transit charges are paid by the TCP whilst for others they are paid by the OCP. The Ofcom consultation states that it may be appropriate to review transit so that either the OCP always pays or the TCP always pays.

Access Charge

The debate on Access Charges centred around what operator billing systems could and couldnt do and what they could support.

Payphone Access Charges (PAC) are also a factor

Maximum Prices

The maximum prices option would effectively mean greater regulation as all CPs would have to adhere to the National Telephone Numbering Plan (NTNP). The Retail Origination market, the Wholesale Origination market, and the Wholesale Termination market would all require regulating.

Deterrents and grounds for action would also need to be established.

Future Meetings

The next meeting will follow on from the NGCS Focus Group on the 30th June 2011.

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