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Annex A - Notification under section 48(1) and section 79(4) of the Communications Act 2003, Statement on Wholesale Mobile Voice Call Termination consultation

Notification under section 48(1) and section 79(4) of the Communications Act 2003

The identification of certain services markets, the making of market power determinations in relation to those markets and the setting of SMP services conditions in relation to 3, Inquam, O2, Orange, T-Mobile and Vodafone under section 45 of the Communications Act 2003

WHEREAS:

(A) the Director General of Telecommunications (the "Director") made, in accordance with regulation 6 of the Electronic Communications (Market Analysis) Regulations 2003 (S.I. 2003/330), proposals for identifying certain services markets, making market power determinations in relation to those markets and the setting of SMP services conditions in relation to 3, Inquam, O2, Orange, T-Mobile and Vodafone by way of publication of a notification on 15 May 2003 (the "First Notification");

(B) by virtue of the Communications Act 2003 (Commencement No. 1) Order 2003 (S.I. 2003/1900 (C. 77)) made under sections 411 and 408 of the Act:

certain provisions of the Communications Act 2003 (the "Act") were commenced on 25 July 2003 for the purpose only of enabling the networks and services functions under those provisions to be carried out by the Director; and
those provisions of the Act are to have effect as if references to the Office of Communications ("Ofcom") were references to the Director;

(C) having considered all responses duly made to the First Notification and revised certain of his proposed proposals in the light of those responses, the Director issued a further notification pursuant to sections 48(2) and 80 of the Act setting out his proposals for the identification of services markets, the making of market power determinations in relation to those markets and the setting of SMP services conditions in relation to 3, Inquam, O2, Orange, T-Mobile and Vodafone on 19th December 2003 (the "Second Notification");

(D) a copy of the Second Notification was sent to the Secretary of State for Trade and Industry (the "Secretary of State") in accordance with section 50(1)(a) of the Act, and to the European Commission and to the regulatory authorities of every other member State in accordance with sections 50(3) and 81 of the Act;

(E) in the Second Notification and the accompanying explanatory statement, the Director invited representations about any of the proposals set out therein by 6th February 2004, which was later extended to 10th February 2004;

(F) on 29 December 2003, Ofcom took over the responsibilities and assumed the powers of the five former regulators it has replaced, including the Director. In particular, by virtue of section 408(5) of the Act, anything done by or in relation to the Director during the period beginning on 25th July 2003 and ending on 29th December 2003 for the purposes of, or in connection with, the carrying out of networks and services functions is to have effect as if it had been done by or in relation to Ofcom.

(G) by virtue of section 80(6) of the Act, Ofcom may give effect to any proposals to identify a market for the purposes of making a market power determination or any proposals for making a market power determination set out in the First Notification, with or without modification, where:

they have considered every representation about the proposals made to them within the period specified in the Second Notification; and
they have had regard to every international obligation of the United Kingdom (if any) which has been notified to them for this purpose by the Secretary of State; but
Ofcom's power to give effect to such proposals is subject to sections 82 and 83 of the Act;

(H) by virtue of section 48(5) of the Act, Ofcom may give effect to any proposals to set SMP services conditions set out in the Second Notification, with or without modification, where:

they have considered every representation about the proposals made to them within the period specified in the Second Notification; and
they have had regard to every international obligation of the United Kingdom (if any) which has been notified to them for this purpose by the Secretary of State;

(I) Ofcom received eleven responses to the Second Notification and have considered every such representation duly made to them in respect of the proposals set out in the Second Notification and the accompanying explanatory statement; and the Secretary of State has not notified Ofcom of any international obligation of the United Kingdom for this purpose;

(J) the European Commission has not made a notification for the purposes of Article 7(4) of the Framework Directive as referred to in section 82 of the Act and the proposals do not relate to a transnational market as referred to in section 83 of the Act; and

NOW, therefore:

1. Ofcom identify, in accordance with section 79 of the Act, the following six services markets for the purposes of making market power determinations in relation to each of these markets:

wholesale voice call termination provided by 3 (such termination being provided via 3's mobile network);
wholesale voice call termination provided by Inquam (such termination being provided via Inquam's mobile network);
wholesale voice call termination provided by O2 (such termination being provided via O2's 2G and 3G mobile network);
wholesale voice call termination provided by Orange (such termination being provided via Orange's 2G and 3G mobile network);
wholesale voice call termination provided by T-Mobile (such termination being provided via T-Mobile's 2G and 3G mobile network); and
wholesale voice call termination provided by Vodafone (such termination being provided via Vodafone's 2G and 3G mobile network).

2. Ofcom make, in accordance with section 79 of the Act, the following market power determinations that the following persons each have significant market power:

in relation to the market in sub-paragraph (a), 3;
in relation to the market in sub-paragraph (b), Inquam;
in relation to the market in sub-paragraph (c), O2;
in relation to the market in sub-paragraph (d), Orange;
in relation to the market in sub-paragraph (e), T-Mobile; and
(f) in relation to the market in sub-paragraph (f), Vodafone.

3. In accordance with sections 48(1) and 79 of the Act, Ofcom hereby set pursuant to section 45 of the Act the SMP services conditions on the persons referred in paragraph 2 above as set out in Schedules 1, 2, 3 and 4, respectively, to this Notification to take effect, unless otherwise is stated in those Schedules, on the date of publication of this Notification.

4. The effect of, and Ofcom's reasons for the decisions referred to in paragraphs 1 to 3 above are contained in the explanatory statement accompanying this Notification.

5. In making the decisions referred to in paragraphs 1 and 2, Ofcom have taken due account of all applicable guidelines and recommendations which have been issued or made by the European Commission in pursuance of a Community instrument, and relate to market identification or analysis, as required by section 79 of the Act.

6. In making the decisions referred to in paragraphs 1 to 3, Ofcom have considered and acted in accordance with the six Community requirements set out in section 4 of the Act and their duties in section 3 of the Act.

7. Ofcom consider that the SMP services conditions referred to in paragraph 3 above comply with the requirements of sections 45 to 50 and sections 78 to 92 of the Act, as appropriate and relevant to each such SMP services condition.

8. Copies of this Notification and the accompanying explanatory statement have been sent to the Secretary of State in accordance with section 50(1)(a) and section 81(1) of the Act and to the European Commission in accordance with sections 50(2) and 81(2) of the Act.

9. Save for the purposes of paragraph 1 above of this Notification and except as otherwise defined in this Notification, words or expressions used shall have the same meaning as they have been ascribed in the Act.

10. In this Notification (including its recitals):

"3" means Hutchison 3G UK Limited (registered company number 3885486) including any of its subsidiaries or holding companies, or any subsidiary of such holding companies, all as defined by section 736 of the Companies Act 1985, as amended by the Companies Act 1989;
"Act" means the Communications Act 2003;
"Inquam" means Inquam Telecom (Holdings) Limited (registered company number 4244115) including any of its subsidiaries or holding companies, or any subsidiary of such holding companies, all as defined by section 736 of the Companies Act 1985, as amended by the Companies Act 1989;
"O2" means O2 (UK) Limited (registered company number 1743099) including any of its subsidiaries or holding companies, or any subsidiary of such holding companies, all as defined by section 736 of the Companies Act 1985, as amended by the Companies Act 1989;
"Ofcom" means the Office of Communications;
"Orange" means Orange Personal Communications Services Limited (registered company number 2178917) including any of its subsidiaries or holding companies, or any subsidiary of such holding companies, all as defined by section 736 of the Companies Act 1985, as amended by the Companies Act 1989;
"T-Mobile" means T-Mobile (UK) Limited (registered company number 2382161) including any of its subsidiaries or holding companies, or any subsidiary of such holding companies, all as defined by section 736 of the Companies Act 1985, as amended by the Companies Act 1989; and
"Vodafone" means Vodafone Limited (registered company number 1471587) including any of its subsidiaries or holding companies, or any subsidiary of such holding companies, all as defined by section 736 of the Companies Act 1985, as amended by the Companies Act 1989.

Philip Rutnam

A person authorised by Ofcom under paragraph 18 of the Schedule to the Office of Communications Act 2002

28 May 2004

SCHEDULE 1

The SMP services condition imposed on 3 under sections 45 and 87 of the Communications Act 2003 as a result of the analysis of the services market set out in paragraph 1(a) of this Notification in which 3 has been found to have significant market power ("SMP condition")

Part 1: Application, definitions and interpretation relating to the SMP condition in Part 2

1. The SMP condition in Part 2 of this Schedule 1 shall, except insofar as it is otherwise stated therein, apply to the market set out in paragraph 1(a) of this Notification.

2. In this Schedule 1:

"2G Public Electronic Communications Network" means a mobile Public Electronic Communications Network which operates using spectrum within the bands 880 to 915 MHz, 925 to 960 MHz, 1710 to 1785 MHz, or 1805 to 1880 MHz;

"2G Call" means a circuit switched conveyance of a speech teleservice only (as defined in the relevant standards of the European Telecommunications Standards Institute) which

originates in a Public Electronic Communications Network (whether fixed or mobile);
is conveyed via the gateway mobile service switching centre of the Dominant Provider and the 2G Public Electronic Communications Network of another Communications Provider (the "2G Provider");
is terminated using the GSM air interface of the 2G Provider, or by agreement, of another Communications Provider; and
terminates on a GSM mobile handset of a Customer of the Dominant Provider.

For the purposes of this definition:

"the relevant standards of the European Telecommunications Standards Institute" means the European Telecommunications Standard (ETS) of ETS 300 905 (GSM 02.03 version 5.3.2), Third Edition, January 1998, which has been produced by the Special Mobile Group of the European Telecommunications Standards Institute; and
"GSM" means the Global System for Mobile communications, as defined in the relevant standards of the European Telecommunications Standards Institute;

"3G Public Electronic Communications Network" means a mobile Public Electronic Communications Network which operates using spectrum within the bands 1900 -1980 MHz or 2110 -2170 MHz;

"3G Call" means a circuit switched conveyance of a speech teleservice only (as defined in the relevant standards of the 3rd Generation Partnership Project) originating in a Public Electronic Communications Network (whether fixed or mobile) and which terminates on a mobile handset which is connected to the 3G Public Electronic Communications Network of the Dominant Provider.

For the purposes of this definition "the relevant standards of the 3rd Generation Partnership Project" means the following standards of the 3rd Generation Partnership Project-

3G TS 22.001 V3.2.0 (2000-03) (Technical Specification: Digital cellular telecommunications system (Phase 2+), Technical Specification Group Services and System Aspects, and Principles of circuit telecommunication services supported by a Public Land Mobile Network (PLAN)) (Release 1999);
3GPP TS 22.002 V3.6.0 (2001-03) (Technical Specification: Technical Specification Group Services and System Aspects, and Circuit Bearer Services (BS) supported by a Public Land Mobile Network (PLMN)) (Release 1999);
3G TS 22.003 V3.3.0 (2000-06) (Technical Specification: Technical Specification Group Services and System Aspects, and Circuit Teleservices supported by a Public Land Mobile Network (PLMN)) (Release 1999); and
3GPP TS 22.101 V 3.17.0 (2004-03) (Technical Specification: Technical Specification Group Services and System Aspects, Service aspects and Service principles) (Release 1999);

"Access Charge Change Notice" has the meaning given to it in Condition MA1.2;

"Access Contract" means a contract for the provision of Network Access;

"Act" means the Communications Act 2003;

"Call" means a 2G Call or a 3G Call;

"Charging Period" means any of the current charging periods published by the Dominant Provider;

"Dominant Provider" means Hutchison 3G UK Limited whose registered company number is 3885486 and any Hutchison 3G (UK) Limited subsidiary or holding company, or any subsidiary of that holding company, all as defined by section 736 of the Companies Act 1985 as amended by the Companies Act 1989;

"Network Access" means those services, facilities or arrangements which are necessary to terminate a 2G Call; and

"Ofcom" means the Office of Communications; and

"Quarterly Period" means a consecutive three month period, the first of which begins on 1 July 2004.

3. For the purpose of interpreting the SMP condition in Part 2 of this Schedule 1:

except insofar as the context otherwise requires, words or expressions shall have the meaning ascribed to them in paragraph 2 above and otherwise any word or expression shall have the same meaning as it has in the Act;
the Interpretation Act 1978 shall apply as if the SMP condition were an Act of Parliament; and
headings and titles shall be disregarded.

Part 2: The SMP condition

Condition MA1 - Requirement to notify charges and call volumes

MA1.1 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish charges and act in the manner set out below.

MA 1.2 The Dominant Provider shall send to Ofcom and to every person with which it has entered into an Access Contract a written notice of any amendment to the charges on which it provides Network Access or in relation to any charges for new Network Access (an "Access Charge Change Notice") not less than 28 days before any such amendment comes into effect.

MA1.3 The Dominant Provider shall ensure that an Access Charge Change Notice includes:

a description of, and the proposed new charge for, the Network Access in question;
where applicable, the current charge for the Network Access in question; and
the date on which or the period for which any amendments to charges will take effect (the "effective date").

MA1.4 The Dominant Provider shall not apply any new charge identified in an Access Charge Change Notice before the effective date.

MA1.5 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall send to Ofcom no later than three months after the end of each Quarterly Period a written notice of:

the volume of minutes of 2G Calls by Charging Period; and
the volume of minutes of all Calls by Charging Period, terminated during the Quarterly Period in question.

SCHEDULE 2

The SMP services condition imposed on Inquam under sections 45 and 87 of the Act as a result of the analysis of the market set out in paragraph 1(b) of this Notification in which Inquam has been found to have significant market power ("SMP condition")

Part 1: Application, definitions and Interpretation of these conditions

1. The SMP condition in Part 2 of this Schedule 2 shall, except insofar as it is otherwise stated therein, apply to the market set out in paragraph 1(b) of the Notification.

2. In this Schedule 2:

"Access Charge Change Notice" has the meaning given to it in Condition MB1.2;

"Act" means the Communications Act 2003;

"Dominant Provider" means Inquam Telecom (Holdings) Limited, whose registered company number is 4244115 and any Inquam Telecom (Holdings) Limited subsidiary or holding company, or any subsidiary of that holding company, all as defined by section 736 of the Companies Act 1985 as amended by the Companies Act 1989; and

"Ofcom" means the Office of Communications.

3. For the purpose of interpreting the SMP condition in Part 2 of this Schedule 2:

except insofar as the context otherwise requires, words or expressions shall have the meaning ascribed to them in paragraph 2 above and otherwise any word or expression shall have the same meaning as it has in the Act;
the Interpretation Act 1978 shall apply as if the SMP condition were an Act of Parliament; and
headings and titles shall be disregarded.

Part 2: The SMP condition

Condition MB1 - Requirement to notify charges

MB1.1 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish charges and act in the manner set out below.

MB1.2 The Dominant Provider shall send to Ofcom and to every person with which it has entered into an Access Contract a written notice of any amendment to the charges on which it provides Network Access or in relation to any charges for new Network Access (an "Access Charge Change Notice") not less than 28 days before any such amendment comes into effect.

MB1.3 The Dominant Provider shall ensure that an Access Charge Change Notice includes:

a description of, and the proposed new charge for the Network Access in question;
where applicable, the current charge for the Network Access in question; and
the date on which or the period for which any amendments to charges will take effect (the "effective date").

MB1.4 The Dominant Provider shall not apply any new charge identified in an Access Charge Change Notice before the effective date.

SCHEDULE 3

The SMP services conditions imposed on O2 and Vodafone under sections 45, 87 and 88 of the Act as a result of the analysis of the market set out in paragraph 1(c) of this Notification, in which O2 has been found to have significant market power, and the market set out in paragraph 1(f) of this Notification, in which Vodafone has been found to have significant market power ("SMP conditions")

Part 1: Application, definitions and Interpretation of these conditions

1. The SMP conditions in Part 2 of this Schedule 3 shall, except insofar as it is otherwise stated therein, apply to the markets set out in paragraphs 1(c) and 1(f) of the Notification.

2. In this Schedule 3:

"Access Charge Change Notice" has the meaning given to it in Condition MC6.2;

"Access Contract" means a contract for the provision of Network Access;

"Act" means the Communications Act 2003;

"Base Year" means:

for the First Relevant Year, the period of 7 months ending on 31 March immediately preceding that Relevant Year;
for the Second Relevant Year, the period of 12 months ending on 31 March immediately preceding that Relevant Year;

"Call" means a circuit switched conveyance of a speech teleservice only (as defined in the relevant standards of the European Telecommunications Standards Institute) originating in a Public Electronic Communications Network (whether fixed or mobile) and which terminates on a GSM mobile handset using the GSM air interface for the conveyance of that speech call, which is connected to the 2G Public Electronic Communications Network of the Dominant Provider.

For the purposes of this definition:

"the relevant standards of the European Telecommunications Standards Institute" means the European Telecommunications Standard (ETS) of ETS 300 905 (GSM 02.03 version 5.3.2), Third Edition, January 1998, which has been produced by the Special Mobile Group of the European Telecommunications Standards Institute; and
"GSM" means the Global System for Mobile communications, as defined in the relevant standards of the European Telecommunications Standards Institute;

"Charging Period" means any of the current charging periods published by the Dominant Provider;

"Director" means the Director-General of Telecommunications as appointed under section 1 of the Telecommunications Act 1984;

"Dominant Provider" means:

O2 (UK) Limited, whose registered company number is 1743099;
Vodafone Limited, whose registered company number is 1471587;

and any subsidiary or holding company of the companies listed in (a) to (b) above, or any subsidiary of that holding company, all as defined by Section 736 of the Companies Act 1985 as amended by the Companies Act 1989;

"Fixed-to-Mobile Call" means a Call originating in a fixed Public Electronic Communications Network only excluding any Calls to Ported-In Numbers;

"Fixed-to-Mobile Interconnection Charge" means the published charge made by the Dominant Provider for the Interconnection of a Fixed-to-Mobile Call, excluding any discounts offered by the Dominant Provider, whether in respect of any particular Customer or any category of Customers or any category of Calls;

"Functional Specification" shall have the same meaning as in Condition 18 of the General Conditions of Entitlement;

"General Conditions of Entitlement" means those general conditions set by the Director by way of publication of a Notification under section 48(1) of the Act on 22 July 2003;

"Mobile-to-Mobile Call" means a Call originating in a mobile Public Electronic Communications Network of another Communications Provider excluding any Calls to Ported-In Numbers;

"Mobile-to-Mobile Interconnection Charge" means the published charge made by the Dominant Provider for the Interconnection of a Mobile-to-Mobile Call, excluding any discounts offered by the Dominant Provider, whether in respect of any particular Customer or any category of Customers or any category of Calls;

"Network Access" means the provision of Interconnection to the 2G Public Electronic Communications Network provided by the Dominant Provider, together with any services, facilities or arrangements which are necessary for the provision of Electronic Communications Services over that Interconnection;

"Ofcom" means the Office of Communications;

"Ported-In Number" means a Subscriber Number which has been passed to or ported to the Dominant Provider;

"Relevant Year" means either of the following

the period of 7 months beginning on 1 September 2004 and ending on 31 March 2005 (the "First Relevant Year"); or
the period of 12 months beginning on 1 April 2005 and ending on 31 March 2006 (the "Second Relevant Year");

"Retail Prices Index" means the index of retail prices compiled by an agency or a public body on behalf of Her Majesty's Government or a governmental department from time to time in respect of all items (which is the Office for National Statistics at the time of publication of this Notification);

"Subscriber Number" shall have the same meaning as in the Functional Specification; and

"Third Party" means a person providing a Public Electronic Communications Network.

3. For the purpose of interpreting the SMP conditions in Part 2 of this Schedule 3:

except insofar as the context otherwise requires, words or expressions shall have the meaning ascribed to them in paragraph 2 above and otherwise any word or expression shall have the same meaning as it has in the Act;
the Interpretation Act 1978 shall apply as if each of the SMP conditions were an Act of Parliament; and
headings and titles shall be disregarded.

Part 2: The SMP conditions

Condition MC1 - Requirement to provide network access on reasonable request

MC1.1 Where a Third Party reasonably requests in writing Network Access, the Dominant Provider shall provide that Network Access. The Dominant Provider shall also provide such Network Access as Ofcom may from time to time direct.

MC1.2 The provision of Network Access in accordance with paragraph MC1.1 shall occur as soon as reasonably practicable and shall be provided on fair and reasonable terms, conditions and charges and on such terms, conditions and charges as Ofcom may from time to time direct.

MC1.3 The Dominant Provider shall comply with any direction Ofcom may make from time to time under this Condition.

Condition MC2 - Requirement not to unduly discriminate

MC2.1 The Dominant Provider shall not unduly discriminate against particular persons or against a particular description of persons, in relation to matters connected with Network Access.

Condition MC3 - Control of Fixed-to-Mobile Interconnection Charges

MC3.1 Except in so far as Ofcom otherwise consent under paragraph MC3.9 below, the Dominant Provider shall take all reasonable steps to secure that, during any Relevant Year, the Average Interconnection Charge does not exceed the Target Average Charge for any such Year.

MC3.2 In this Condition, the Average Interconnection Charge means the average of the Fixed-to-Mobile Interconnection Charges during the Relevant Year in question, which shall be weighted according to:

the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the Base Year.

MC3.3 For the purposes of calculating the Average Interconnection Charge where any Fixed-to-Mobile Interconnection Charges are in force during a part only of the Relevant Year (commencing or ending at a date in the course of the Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the corresponding part of the Base Year.

MC3.4 For the purposes of this Condition, the Target Average Charge means:

for the purpose of the First Relevant Year, 5.63 pence per minute; and
for the purpose of the Second Relevant Year, 5.63 pence per minute multiplied by the Weights Adjustment Factor.

MC3.5 In paragraph MC3.4:

the Weights Adjustment Factor means the Average Revenue divided by the Average Interconnection Charge in the First Relevant Year; and
the Average Revenue means the average of the Fixed-to-Mobile Interconnection Charges during the First Relevant Year, weighted according to:
1. the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
2. the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as Ofcom otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the First Relevant Year.

MC3.6 For the purposes of calculating the Average Revenue where any Fixed-to-Mobile Interconnection Charges are in force during a part only of the First Relevant Year (commencing or ending at a date in the course of the First Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as the Director otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in that part of the First Relevant Year.

MC3.7 The Dominant Provider shall not make any Fixed-to-Mobile Interconnection Charge for:

a Fixed-to-Mobile Call which terminates on a recorded announcement provided by the Dominant Provider informing the caller of an inability to complete that call so as to establish a two-way path where the mobile handset used by the called party is switched off, or rings and remains unanswered, or where coverage is not available from the Dominant Provider's 2G Public Electronic Communications Network; and
an unanswered Fixed-to-Mobile Call which is diverted in respect of the period before that call is answered.

MC3.8 Notwithstanding (and without prejudice to the generality of) the obligation imposed on the Dominant Provider by paragraph MC3.1 above:

if the Dominant Provider has failed to secure that the Average Interconnection Charge has not exceeded the Target Average Charge for the First Relevant Year, the Dominant Provider shall make such adjustments to its Fixed-to-Mobile Interconnection Charges and by such day in the Second Relevant Year as Ofcom may direct for the purpose of remedying that failure. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MC3.1 above in that Relevant Year;

and

if it appears to Ofcom that the Dominant Provider is likely to fail to secure that the Average Interconnection Charge for the Second Relevant Year does not exceed the Target Average Charge for that Year, the Dominant Provider shall make such adjustments to its Fixed-to-Mobile Interconnection Charges and by such day in that Year as Ofcom may direct for the purpose of avoiding that failure.

MC3.9 Where the Average Interconnection Charge is less than the Target Average Charge for the First Relevant Year, the Dominant Provider shall not make such adjustments to its Fixed-to-Mobile Interconnection Charges in the Second Relevant Year to recover the difference between the Average Interconnection Charge and the Target Average Charge for the First Relevant Year, unless Ofcom have given their prior written consent to such adjustments. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MC3.1 in that Relevant Year.

MC3.10 In this Condition:

'Average Interconnection Charge' has the meaning given to it in paragraph MC3.2;

'Average Revenue' has the meaning given to it in paragraph MC3.5;

'Target Average Charge' shall have the meaning given to it in paragraph MC3.4; and

'Weights Adjustment Factor' has the meaning given to it in paragraph MC3.5.

Condition MC4 - Control of Mobile to Mobile Interconnection Charges

MC4.1 Except in so far as Ofcom otherwise consent under paragraph MC4.9 below, the Dominant Provider shall take all reasonable steps to secure that, during any Relevant Year, the Average Interconnection Charge does not exceed the Target Average Charge for any such Year.

MC4.2 In this Condition, the Average Interconnection Charge means the average of the Mobile-to-Mobile Interconnection Charges during the Relevant Year in question, which shall be weighted according to:

the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the Base Year.

MC4.3 For the purposes of calculating the Average Interconnection Charge where any Mobile-to-Mobile Interconnection Charges are in force during a part only of the Relevant Year (commencing or ending at a date in the course of the Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the corresponding part of the Base Year.

MC4.4 For the purposes of this Condition, the Target Average Charge means:

for the purpose of the First Relevant Year, 5.63 pence per minute; and
for the purpose of the Second Relevant Year, 5.63 pence per minute multiplied by the Weights Adjustment Factor.

MC4.5 In paragraph MC4.4:

the Weights Adjustment Factor means the Average Revenue divided by the Average Interconnection Charge in the First Relevant Year; and
the Average Revenue means the average of the Mobile-to-Mobile Interconnection Charges during the First Relevant Year, weighted according to:
1. the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
2. the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as Ofcom otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the First Relevant Year.

MC4.6 For the purposes of calculating the Average Revenue where any Mobile-to-Mobile Interconnection Charges are in force during a part only of the First Relevant Year (commencing or ending at a date in the course of the First Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as the Director otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in that part of the First Relevant Year.

MC4.7 The Dominant Provider shall not make any Mobile-to-Mobile Interconnection Charge for:

a Mobile-to-Mobile Call which terminates on a recorded announcement provided by the Dominant Provider informing the caller of an inability to complete that call so as to establish a two-way path where the mobile handset used by the called party is switched off, or rings and remains unanswered, or where coverage is not available from the Dominant Provider's 2G Public Electronic Communications Network; and
an unanswered Mobile-to-Mobile Call which is diverted in respect of the period before that call is answered.

MC4.8 Notwithstanding (and without prejudice to the generality of) the obligation imposed on the Dominant Provider by paragraph MC4.1 above:

if the Dominant Provider has failed to secure that the Average Interconnection Charge has not exceeded the Target Average Charge for the First Relevant Year, the Dominant Provider shall make such adjustments to its Mobile-to-Mobile Interconnection Charges and by such day in the Second Relevant Year as Ofcom may direct for the purpose of remedying that failure. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MC4.1 above in that Relevant Year;

and

if it appears to Ofcom that the Dominant Provider is likely to fail to secure that the Average Interconnection Charge for the Second Relevant Year does not exceed the Target Average Charge for that Year, the Dominant Provider shall make such adjustments to its Mobile-to-Mobile Interconnection Charges and by such day in that Year as Ofcom may direct for the purpose of avoiding that failure.

MC4.9 Where the Average Interconnection Charge is less than the Target Average Charge for the First Relevant Year, the Dominant Provider shall not make such adjustments to its Mobile-to-Mobile Interconnection Charges in the Second Relevant Year to recover the difference between the Average Interconnection Charge and the Target Average Charge for the First Relevant Year, unless Ofcom have given their prior written consent to such adjustments. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MC4.1 in that Relevant Year.

MC4.10 In this Condition:

'Average Interconnection Charge' has the meaning given to it in paragraph MC4.2;

'Average Revenue' has the meaning given to it in paragraph MC4.5;

'Target Average Charge' shall have the meaning given to it in paragraph MC4.4; and

'Weights Adjustment Factor' has the meaning given to it in paragraph MC4.5.

Condition MC5 - Requirement to publish Access Contracts

MC5.1 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish its Access Contracts and act in the manner set out below.

MC5.2 The Dominant Provider shall, within 28 days of the date that this Condition comes into force, send to Ofcom its existing Access Contracts.

MC5.3 Without prejudice to Condition MC6, the Dominant Provider shall send to Ofcom any amendments to its existing Access Contracts and any new Access Contracts within 28 days of the date on which those amendments, or new Access Contracts, come into force.

Condition MC6 - Requirement to notify charges

MC6.1 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish charges and act in the manner set out below.

MC6.2 Save as is otherwise provided in paragraph MC6.5 the Dominant Provider shall send to Ofcom and to every person with which it has entered into an Access Contract a written notice of any amendment to the charges on which it provides Network Access or in relation to any charges for new Network Access (an "Access Charge Change Notice") not less than 28 days before any such amendment comes into effect.

MC6.3 The Dominant Provider shall ensure that an Access Charge Change Notice includes:

a description of, and the proposed new charge for the Network Access in question;
where applicable, the current charge for the Network Access in question; and
the date on which or the period for which any amendments to charges will take effect (the "effective date").

MC6.4 The Dominant Provider shall not apply any new charge identified in an Access Charge Change Notice before the effective date.

MC6.5 The Dominant Provider shall send to Ofcom and to every person with which it has entered into an Access Contract a written notice of the charges which will be in effect on 1 September 2004 on which the Dominant Provider provides Network Access no later than 28 days after the date this Condition comes into force.

SCHEDULE 4

The SMP services conditions imposed on Orange and T-Mobile under sections 45, 87 and 88 of the Act as a result of the analysis of the market set out in paragraph 1(d) of this Notification, in which Orange has been found to have significant market power, and the market set out in paragraph 1(e) of this Notification, in which T-Mobile has been found to have significant market power ("SMP conditions")

Part 1: Application, definitions and Interpretation of these conditions

1. The SMP conditions in Part 2 of this Schedule 4 shall, except insofar as it is otherwise stated therein, apply to the markets set out in paragraphs 1(d) and 1(e) of the Notification.

2. In this Schedule 4:

"Access Charge Change Notice" has the meaning given to it in Condition MD6.2;

"Access Contract" means a contract for the provision of Network Access;

"Act" means the Communications Act 2003;

"Base Year" means:

(a) for the First Relevant Year, the period of 7 months ending on 31 March immediately preceding that Relevant Year;

(b) for the Second Relevant Year, the period of 12 months ending on 31 March immediately preceding that Relevant Year;

For the purposes of this definition:

"the relevant standards of the European Telecommunications Standards Institute" means the European Telecommunications Standard (ETS) of ETS 300 905 (GSM 02.03 version 5.3.2), Third Edition, January 1998, which has been produced by the Special Mobile Group of the European Telecommunications Standards Institute.
"GSM" means the Global System for Mobile communications, as defined in the relevant standards of the European Telecommunications Standards Institute.

"Charging Period" means any of the current charging periods published by the Dominant Provider;

"Director" means the Director-General of Telecommunications as appointed under section 1 of the Telecommunications Act 1984;

"Dominant Provider" means:

Orange Personal Communications Services Limited, whose registered company number is 2178917;
T-Mobile (UK) Limited, whose registered company number is 2382161;

and any subsidiary or holding company of the companies listed in (a) to (b) above, or any subsidiary of that holding company, all as defined by section 736 of the Companies Act 1985 as amended by the Companies Act 1989;

"Fixed-to-Mobile Call" means a Call originating in a fixed Public Electronic Communications Network only excluding any Calls to Ported-In Numbers;

"Functional Specification" shall have the same meaning as Condition 18 of the General Conditions of Entitlement;

"General Conditions of Entitlement" means those general conditions set by the Director by way of publication of a Notification under section 48(1) of the Act on 22 July 2003;

"Mobile-to-Mobile Call" means a Call originating in a mobile Public Electronic Communications Network of another Communications Provider excluding any Calls to Ported-In Numbers;

"Ofcom" means the Office of Communications;

"Ported-In Number" means a Subscriber Number which has been passed to or ported to the Dominant Provider;

"Relevant Year" means either of the following

the period of 7 months beginning on 1 September 2004 and ending on 31 March 2005 (the "First Relevant Year"); or
the period of 12 months beginning on 1 April 2005 and ending on 31 March 2006 (the "Second Relevant Year");

"Subscriber Number" shall have the same meaning as in the Functional Specification; and

"Third Party" means a person providing a Public Electronic Communications Network.

3. For the purpose of interpreting the SMP conditions in Part 2 of this Schedule 4:

except insofar as the context otherwise requires, words or expressions shall have the meaning ascribed to them in paragraph 2 above and otherwise any word or expression shall have the same meaning as it has in the Act;
the Interpretation Act 1978 shall apply as if each of the SMP conditions were an Act of Parliament; and
headings and titles shall be disregarded.

Part 2: The conditions

Condition MD1 - Requirement to provide network access on reasonable request

MD1.1 Where a Third Party reasonably requests in writing Network Access, the Dominant Provider shall provide that Network Access. The Dominant Provider shall also provide such Network Access as Ofcom may from time to time direct.

MD1.2 The provision of Network Access in accordance with paragraph MD1.1 shall occur as soon as reasonably practicable and shall be provided on fair and reasonable terms, conditions and charges and on such terms, conditions and charges as Ofcom may from time to time direct.

MD1.3 The Dominant Provider shall comply with any direction Ofcom may make from time to time under this Condition.

Condition MD2 - Requirement not to unduly discriminate

MD2.1 The Dominant Provider shall not unduly discriminate against particular persons or against a particular description of persons, in relation to matters connected with Network Access.

Condition MD3 - Control of Fixed-to-Mobile Interconnection Charges

MD3.1 Except in so far as Ofcom otherwise consent under paragraph MD3.9 below, the Dominant Provider shall take all reasonable steps to secure that, during any Relevant Year, the Average Interconnection Charge does not exceed the Target Average Charge for any such Year.

MD3.2 In this Condition, the Average Interconnection Charge means the average of the Fixed-to-Mobile Interconnection Charges during the Relevant Year in question, which shall be weighted according to:

the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the Base Year.

MD3.3 For the purposes of calculating the Average Interconnection Charge where any Fixed-to-Mobile Interconnection Charges are in force during a part only of the Relevant Year (commencing or ending at a date in the course of the Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the corresponding part of the Base Year.

MD3.4 For the purposes of this Condition, the Target Average Charge means:

for the purpose of the First Relevant Year, 6.31 pence per minute; and
for the purpose of the Second Relevant Year, 6.31 pence per minute multiplied by the Weights Adjustment Factor.

MD3.5 In paragraph MD3.4:

the Weights Adjustment Factor means the Average Revenue divided by the Average Interconnection Charge in the First Relevant Year; and
the Average Revenue means the average of the Fixed-to-Mobile Interconnection Charges during the First Relevant Year, weighted according to:
1. the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
2. the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as Ofcom otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the First Relevant Year.

MD3.6 For the purposes of calculating the Average Revenue where any Fixed-to-Mobile Interconnection Charges are in force during a part only of the First Relevant Year (commencing or ending at a date in the course of the First Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Fixed-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Fixed-to-Mobile Calls (except in so far as the Director otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in that part of the First Relevant Year.

MD3.7 The Dominant Provider shall not make any Fixed-to-Mobile Interconnection Charge for:

a Fixed-to-Mobile Call which terminates on a recorded announcement provided by the Dominant Provider informing the caller of an inability to complete that call so as to establish a two-way path where the mobile handset used by the called party is switched off, or rings and remains unanswered, or where coverage is not available from the Dominant Provider's 2G Public Electronic Communications Network; and
an unanswered Fixed-to-Mobile Call which is diverted in respect of the period before that call is answered.

MD3.8 Notwithstanding (and without prejudice to the generality of) the obligation imposed on the Dominant Provider by paragraph MD3.1 above:

if the Dominant Provider has failed to secure that the Average Interconnection Charge has not exceeded the Target Average Charge for the First Relevant Year, the Dominant Provider shall make such adjustments to its Fixed-to-Mobile Interconnection Charges and by such day in the Second Relevant Year as Ofcom may direct for the purpose of remedying that failure. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MD3.1 above in that Relevant Year;

and

if it appears to Ofcom that the Dominant Provider is likely to fail to secure that the Average Interconnection Charge for the Second Relevant Year does not exceed the Target Average Charge for that Year, the Dominant Provider shall make such adjustments to its Fixed-to-Mobile Interconnection Charges and by such day in that Year as Ofcom may direct for the purpose of avoiding that failure.

MD3.9 Where the Average Interconnection Charge is less than the Target Average Charge for the First Relevant Year, the Dominant Provider shall not make such adjustments to its Fixed-to-Mobile Interconnection Charges in the Second Relevant Year to recover the difference between the Average Interconnection Charge and the Target Average Charge for the First Relevant Year, unless Ofcom have given their prior written consent to such adjustments. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MD3.1 in that Relevant Year.

MD3.10 In this Condition:

'Average Interconnection Charge' has the meaning given to it in paragraph MD3.2;

'Average Revenue' has the meaning given to it in paragraph MD3.5;

'Target Average Charge' shall have the meaning given to it in paragraph MD3.4; and

'Weights Adjustment Factor' has the meaning given to it in paragraph MD3.5.

Condition MD4 - Control of Mobile to Mobile Interconnection Charges

MD4.1 Except in so far as Ofcom otherwise consent under paragraph MD4.9 below, the Dominant Provider shall take all reasonable steps to secure that, during any Relevant Year, the Average Interconnection Charge does not exceed the Target Average Charge for any such Year.

MD4.2 In this Condition, the Average Interconnection Charge means the average of the Mobile-to-Mobile Interconnection Charges during the Relevant Year in question, which shall be weighted according to:

the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the Base Year.

MD4.3 For the purposes of calculating the Average Interconnection Charge where any Mobile-to-Mobile Interconnection Charges are in force during a part only of the Relevant Year (commencing or ending at a date in the course of the Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as Ofcom otherwise consent in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the corresponding part of the Base Year.

MD4.4 For the purposes of this Condition, the Target Average Charge means:

for the purpose of the First Relevant Year, 6.31 pence per minute; and
for the purpose of the Second Relevant Year, 6.31 pence per minute multiplied by the Weights Adjustment Factor.

MD4.5 In paragraph MD4.4:

the Weights Adjustment Factor means the Average Revenue divided by the Average Interconnection Charge in the First Relevant Year; and
the Average Revenue means the average of the Mobile-to-Mobile Interconnection Charges during the First Relevant Year, weighted according to:
1. the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
2. the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as Ofcom otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in the First Relevant Year.

MD4.6 For the purposes of calculating the Average Revenue where any Mobile-to-Mobile Interconnection Charges are in force during a part only of the First Relevant Year (commencing or ending at a date in the course of the First Relevant Year), the weighting shall be derived from:

the profile by Charging Period of the Dominant Provider's minutes of Mobile-to-Mobile Calls; and
the volumes by month or part-month of the Dominant Provider's minutes of Mobile-to-Mobile Calls (except in so far as the Director otherwise consents in writing that the weighting shall be derived from the sum of minutes of Fixed-to-Mobile Calls and Mobile-to-Mobile Calls),

in that part of the First Relevant Year.

MD4.7 The Dominant Provider shall not make any Mobile-to-Mobile Interconnection Charge for:

a Mobile-to-Mobile Call which terminates on a recorded announcement provided by the Dominant Provider informing the caller of an inability to complete that call so as to establish a two-way path where the mobile handset used by the called party is switched off, or rings and remains unanswered, or where coverage is not available from the Dominant Provider's 2G Public Electronic Communications Network; and
an unanswered Mobile-to-Mobile Call which is diverted in respect of the period before that call is answered.

MD4.8 Notwithstanding (and without prejudice to the generality of) the obligation imposed on the Dominant Provider by paragraph MD4.1 above:

if the Dominant Provider has failed to secure that the Average Interconnection Charge has not exceeded the Target Average Charge for the First Relevant Year, the Dominant Provider shall make such adjustments to its Mobile-to-Mobile Interconnection Charges and by such day in the Second Relevant Year as Ofcom may direct for the purpose of remedying that failure. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MD4.1 above in that Relevant Year;

and

if it appears to Ofcom that the Dominant Provider is likely to fail to secure that the Average Interconnection Charge for the Second Relevant Year does not exceed the Target Average Charge for that Year, the Dominant Provider shall make such adjustments to its Mobile-to-Mobile Interconnection Charges and by such day in that Year as Ofcom may direct for the purpose of avoiding that failure.

MD4.9 Where the Average Interconnection Charge is less than the Target Average Charge for the First Relevant Year, the Dominant Provider shall not make such adjustments to its Mobile-to-Mobile Interconnection Charges in the Second Relevant Year to recover the difference between the Average Interconnection Charge and the Target Average Charge for the First Relevant Year, unless Ofcom have given their prior written consent to such adjustments. Such adjustments in the Second Relevant Year shall not be relevant for the purpose of establishing compliance with paragraph MD4.1 in that Relevant Year.

MD4.10 In this Condition:

'Average Interconnection Charge' has the meaning given to it in paragraph MD4.2;

'Average Revenue' has the meaning given to it in paragraph MD4.5;

'Target Average Charge' shall have the meaning given to it in paragraph MD4.4; and

'Weights Adjustment Factor' has the meaning given to it in paragraph MD4.5.

Condition MD5 - Requirement to publish Access Contracts

MD5.1 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish its Access Contracts and act in the manner set out below.

MD5.2 The Dominant Provider shall, within 28 days of the date that this Condition comes into force, send to Ofcom its existing Access Contracts.

MD5.3 Without prejudice to Condition MD6, the Dominant Provider shall send to Ofcom any amendments to its existing Access Contracts and any new Access Contracts within 28 days of the date on which those amendments, or new Access Contracts, come into force.

Condition MD6 - Requirement to notify charges

MD6.1 Except in so far as Ofcom may otherwise consent in writing, the Dominant Provider shall publish charges and act in the manner set out below.

MD6.2 Save as is otherwise provided in paragraph MD6.5, the Dominant Provider shall send to Ofcom and to every person with which it has entered into an Access Contract a written notice of any amendment to the charges on which it provides Network Access or in relation to any charges for new Network Access (an "Access Charge Change Notice") not less than 28 days before any such amendment comes into effect.

MD6.3 The Dominant Provider shall ensure that an Access Charge Change Notice includes:

a description of, and the proposed new charge for the Network Access in question;
where applicable, the current charge for the Network Access in question; and
the date on which or the period for which any amendments to charges will take effect (the "effective date").

MD6.4 The Dominant Provider shall not apply any new charge identified in an Access Charge Change Notice before the effective date.

MD6.5 The Dominant Provider shall send to Ofcom and to every person with which it has entered into an Access Contract a written notice of the charges which will be in effect on 1 September 2004 on which the Dominant Provider provides Network Access no later than 28 days after the date this Condition comes into force.

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Annex A - Notification under section 48(1) and section 79(4) of the Communications Act 2003, Statement on Wholesale Mobile Voice Call Termination consultation

Notification under section 48(1) and section 79(4) of the Communications Act 2003

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