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Executive summary

1.1 ”End-to-end connectivity” describes the process of enabling retail customers to make calls to other customers or services on the same network or other providers’ networks^(-1-). This is important for both competition generally and end-users individually. Competing communications providers need to be able to interconnect with other networks in order to provide a full service to their customers. Customers expect to be able to call every other retail customer irrespective of the network to which the called party is connected.

1.2 In November and December 2005, the Competition Appeal Tribunal’s (CAT) gave judgment^(-2-) and made an order^(-3-) on the appeal by H3G against Ofcom’s decision that H3G had significant market power in the market for mobile voice call termination on H3G’s network (case number 1047/3/3/04).The CAT remitted to Ofcom for reconsideration whether H3G has significant market power in the market for mobile wholesale voice call termination on its network taking into account the extent to which countervailing buyer power exists in BT and any other matters as are relevant at the time of Ofcom’s reconsideration.

1.3 In the context of reconsidering this issue, but also more generally, Ofcom considered the measures necessary to ensure end-to-end connectivity. In particular, Ofcom considered that the guidance published by Oftel on 27 May 2003 – End-to-end connectivity – Guidance issued by the Director General of Telecommunications^(-4-)(“the Oftel guidelines”) – were not sufficient to ensure end-to-end connectivity and that to ensure end-to-end connectivity, it would be necessary to propose an obligation to that effect.

1.4 In order to address these issues on 14 July 2006, Ofcom published a consultation document – End-to-End Connectivity^(-5-)(the “July consultation”).

1.5 In that document Ofcom proposed to introduce an access-related condition under Sections 73 and 74 of the Act. The proposed access-related condition applied to BT only, and would require BT:

• to purchase wholesale narrowband (fixed and mobile voice and narrowband data) call termination services from any Public Electronic Communications Network (PECN) provider that reasonably requests in writing that BT purchases such services (proposed condition 1.1);
• to ensure that the purchase of the wholesale narrowband (fixed and mobile voice and narrowband data) call termination services shall occur as soon as reasonably practicable and shall be on reasonable terms and conditions (including charges), and on such terms and conditions (including charges) as Ofcom may from time to time direct (proposed condition 1.2);
• to ensure that after purchasing wholesale narrowband (fixed and mobile voice and narrowband data) call termination services, BT will not be able to unreasonably change, withdraw or restrict access to an applicable Normal Telephone Number (proposed condition1.3); and
• to comply with any direction Ofcom may make from time to time under this Condition (proposed condition 1.4).

Consideration of responses

1.6 Ofcom received 12 responses to the consultation, of which two were confidential. Section 3 of this document sets out in detail Ofcom’s consideration of the responses received. In summary five broad issues were raised in the consultation responses:

• Whether there was a need for an end-to-end connectivity obligation;
• Whether the access-related condition included “new voice services”, such as Voice Over IP (VOIP) or Voice over Broadband (VOB);
• Whether the access-related condition should apply solely to BT or to all PECNs;
• How the various requirements in the access-related condition related to the concept of “reasonableness” would be interpreted by Ofcom; and
• The relationship of end-to-end connectivity obligation for countervailing buyer power (CBP) analysis.

1.7 Having considered the issues raised by the responses to the July consultation, Ofcom has decided that there is a need for an end-to-end connectivity obligation; that the access-related condition does not cover VOIP and VOB where not provided over narrowband; and that the access-related condition should apply solely to BT. Ofcom has also clarified how it might consider the concept of “reasonableness” in this context.

Conclusion

1.8 For the reasons set out in detail in Section 4, Ofcom considers among other things that it is objectively justifiable, proportionate, non-discriminatory and transparent to impose the access-related condition on BT.

1.9 Therefore, Ofcom revokes the Oftel guidelines and at Annex 1 there is a notification setting an access-related condition on BT.

Footnotes:

1.-“End-to-end connectivity means the facility – (a) for different users of the same public electronic communications service to be able to communicate with each other; and (b) for the end-users of different such services to be able, each using the service of which he is the end-user, to communicate with each other”, Section 74(3) Communications Act

2.-29 November 2005, http://www.catribunal.org.uk/documents/Jdg1047H3G281105.pdf

3.-16 December 2005, http://www.catribunal.org.uk/documents/Order1047H3G161205.pdf

4.-http://www.ofcom.org.uk/static/archive/oftel/publications/eu_directives/2003/endcon0503.htm

5.-http://www.ofcom.org.uk/consult/condocs/end_to_end/

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