Imposing access obligations under the new frameworkKaren Hardy

2

Key changes in regime

• New framework is far wider in scope covering electronic communications not just telecommunications

• AID covers more products and features than the ICD (ICD subject to interpretation whereas AID is very clear)

• SMP operators will have an obligation to meet all reasonable requests for “access” whereas currently BT decides commercially whether it wishes or not to make a product available

• Successful functioning of the system will be dependent upon Oftel conducting timely market reviews and imposing appropriate access obligations

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Level of the market

• It is important to acknowledge that there are three key vertical markets:

• retail - bought by end-users

• wholesale - bought by SPs who then resell to end-users

• interconnection - bought by operators who combine networks to make wholesale and/or retail products

• The AID requires the provision of sufficiently unbundled products, therefore, the provision by an SMP operator of just retail or wholesale products is insufficient and non-compliant

4

Non discrimination

• The way that Oftel currently investigates [non-] discrimination must change

• If an Operator is found to be dominant, then by definition any discrimination will have a material impact on competition

• Oftel can choose when to impose non- discrimination, by doing so Oftel must consider discrimination to present a market risk

• Continuation of ex post investigations as to whether the discrimination has had a material impact on competition allows the SMP operator to play a regulatory game

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How should the process work

• Following a designation of SMP, Oftel should confirm that products already in the RIO must remain available

• Oftel should also state whether any other existing products should be made available as interconnection products

• Oftel should also specify the nature and type of additional products that should be provided if requested

• Oftel should also regulate the procedure through which an SMP operator must meet requests for new or modified products

6

The SoR process should be ‘regulated’

• The industry designed SoR process is failing to work. A new process should be included in the Guidelines, outlining:

• firm, fixed timescales for all parties throughout the process

• deadline dates for the provision of documentation including - • draft reference offers for indicative pricing, SLAs & SLGs• trial details• product launch detail

• maintenance of an SoR register (either public or lodged with Oftel)

• penalties for the SMP operator if process is not adhered to

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Benefits of a regulated SoR process

• The result would be properly documented negotiations between the parties, including:

• description of product requirements

• product design agreed by both parties

• SMP operator’s feasibility results

• documented reference offer

• This is the type of information required by Oftel when conducting interconnection disputes

• A ‘regulated’ process would assist Oftel in meeting the new dispute resolution timescales of 4 months

8

Technical feasibility

• Oftel states that products that are technically feasible should be provided but this needs further definition

• What happens if…..

• SMP operator has functionality within its network

• functionality is available from vendors and is ETSI-compliant

• functionality is available from vendors and is ETSI-compliant but SMP operator has deployed an alternative option

• functionality is available from vendors but is bespoke

9

Undue burden

• Oftel states that the provision of a product should not represent an undue burden, this needs further definition:

• how will required changes to operational support systems be regarded/managed?

• developments should avoid the creation of product-specific order processing systems

• what rates of return will Oftel consider appropriate if all the risk is on the SMP operator?

• how will the charges for a product change over time when demand becomes stable?

10

Innovative products

• What is innovation - technical or commercial (is repackaging of a product considered innovation e.g. FRIACO)?

• Innovative interconnection products must be provided on transparent, non-discriminatory and reasonable terms

• A relaxed approach to product description and transparency is NOT justified

• SMP operators must not be permitted to self-determine whether something would be regarded as innovative or not

• Retail minus pricing is not necessary to preserve incentives to innovate

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Terms and conditions

• It must not be forgotten that terms and conditions can determine the success of a product

• appropriate SLAs and SLGs have been the subject of recent disputes

• SLAs and SLGs must also suit end business products as well as those for residential users

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Pricing of access products

• LRIC, whilst involving more up-front work, does not require ongoing compliance monitoring (achieves best consumer outcome quickest) and is therefore preferable

• Retail minus charging creates uncertainty, generates ongoing disputes over charges and requires continuous compliance monitoring by Oftel

• Existing charge controls should continue and new products that use non competitive elements should also be charge controlled

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Summary

• Existing interconnect products must continue to be available

• The current SOR process does not work

• There should be some way of ensuring timely negotiations (and their conclusion)

• Clarity is needed on the interpretation of undue burden, technical feasibility, innovation etc.