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Chapter 7 - Discontinuing existing regulation, Statement on Wholesale Mobile Voice Call Termination consultation

Discontinuing existing regulation

Introduction

7.1 The publication of this Statement brings to a conclusion Ofcom's review of the markets for mobile voice call termination.

7.2 The new Directives allow Member States to carry forward some existing regulation until the market reviews have been completed, in order to avoid a regulatory gap. The power for Ofcom to do this (previously exercised by the Director) is contained in paragraphs 9 and 22 of Schedule 18 to the Communications Act 2003 (the 'Act'). Those provisions allow Ofcom to issue continuation notices to Communications Providers carrying forward conditions previously contained in telecommunications licences, and also interconnection directions made under the Telecommunications (Interconnection) Regulations 1997.

7.3 As detailed below, the Director issued such continuation notices to relevant Communications Providers, including the four MNOs, in July 2003. Now that the mobile call termination review has been completed, Ofcom is under a duty to discontinue continued conditions and directions which are relevant to this Review, in accordance with the requirements of the Act.

Continued regulation

7.4 Specified licence conditions were made to continue in force by a continuation notice given to the four MNOs on 23 July 2003. An interconnection direction relating to a dispute over Vodafone's credit vetting clause made on 16 July 2003 (the "Interconnection Direction") was made to continue in force by a continuation notice given to Vodafone Limited, ntl Limited ("ntl") and MCI Worldcom Limited ("MCI") on 21 July 2003. These continuation notices (referred from now on as the "Continuation Notices") are available as follows-

7.5 The Continuation Notices came into effect on 25 July 2003. Further details are contained in the Director's consultation document (http://www.ofcom.org.uk/static/archive/oftel/publications/licensing/
2003/cont0703.htm) and statement (http://www.ofcom.org.uk/static/archive/oftel/publications/
eu_directives/cont_notices/cont0903.pdf) on the continuation process. In that statement the Director set out his intentions with regard to the process for discontinuing regulation. He set out that he would discontinue provisions deemed relevant to a particular market for the purposes only of that market as the each market review was completed.

Next steps

7.6 Paragraph 9 (11) of Schedule 18 to the Act imposes a duty on Ofcom, as soon as reasonably practicable after giving a continuation notice, to take the necessary steps to enable it to decide whether or not to set a condition (including a SMP condition) for the purpose of replacing the continued condition, and to decide whether or not to exercise its power to set such a condition for that purpose. Similar duties apply in respect of interconnection directions under paragraph 22(9) of Schedule 18 to the Act. In relation to mobile call termination, this has entailed carrying out a market review of the relevant markets to identify relevant markets, to determine whether any person has SMP in those markets and to decide whether or not to set SMP conditions for the purpose of replacing the relevant continued provisions.

7.7 When Ofcom has made the decision required by paragraph 9(11), paragraph 9 (12) of Schedule 18 to the Act requires Ofcom to give a notice (a discontinuation notice) that the continuation notice ceases to have effect as soon as reasonably practicable after making the decision required by paragraph 9(11). Similar duties apply in respect of interconnection directions under paragraph 22(10) of Schedule 18 to the Act. As set out in this Statement, Ofcom has now made that decision and so the duty to discontinue relevant regulation has arisen.

7.8 However, under paragraph 9(12)(b) of Schedule 18 where Ofcom has decided to set a condition to replace the continued provision, it must not give the discontinuation notice before the coming into force of that condition. A similar requirement applies in respect of interconnection directions under paragraph 22(10)(b) of Schedule 18 to the Act. As detailed below for the purposes of discontinuing relevant continued regulation Ofcom has made an assessment of the continued provisions which are relevant to this review, and which of the SMP conditions it has set are for the purpose of replacing those continued provisions.

Relevant continued regulation

7.9 The Director issued a consultation document "Discontinuing licence conditions after 25th July 2003" published on 2 October 2003 (available at http://www.ofcom.org.uk/static/archive/oftel/publications/eu_directives/
2003/discont1003.pdf) (the "Discontinuation Consultation"), Ofcom consulted on the model discontinuation notice, the process for discontinuation and the appropriateness of discontinuing particular obligations including in respect of this particular market review. In that consultation it was explained at Annex 3 that the relevant continued provisions for this review were-

Conditions 70A and 70B (Control of Interconnection Charges: Fixed to Mobile and Control of Interconnection Charges: Mobile to Mobile respectively) (which were continued in the continuation notices for Orange and T-Mobile); and
Conditions 70B and 70C (Control of Interconnection Charges: Fixed to Mobile and Control of Interconnection Charges: Mobile to Mobile respectively) (which were continued in the continuation notices for Vodafone and O2).

In addition, it was explained that the Interconnection Direction (which was numbered 55) was relevant to this review. A statement "Discontinuing Licence Conditions" was subsequently published on 13 November 2003 (http://www.ofcom.org.uk/static/archive/oftel/publications/licensing/
2003/discontinue1103.pdf) (the 'Discontinuation Statement").

7.10 The Director received three responses to the Discontinuation Consultation, but none of the points raised were specific to the process of discontinuation of regulations relating to this market. In relation to Orange and T-Mobile, therefore, Ofcom has decided that the regulations to be discontinued in this market should remain as set out in the Discontinuation Consultation and confirmed in the Discontinuation Statement. In relation to Vodafone and O2, Ofcom notes that other conditions were also carried forward in relation to those MNOs which could potentially be relevant to this Review, namely Conditions 45, 47, 48 and 49. To avoid any possible duplication of regulation therefore Ofcom has decided to also discontinue those continued provisions in so far as they apply to the markets covered by this review.

7.11 In relation to Condition 57, which was also continued for Vodafone and O2, as was proposed in paragraph 11 of the Discontinuation Consultation it was not considered necessary to discontinue Condition 57 on a market-by-market basis as it will cease to apply when other obligations, such as Condition 45, are discontinued. No responses on that specific issue were received following the Discontinuation Consultation and therefore Ofcom has decided to follow that same approach in relation to this Review.

The replacement SMP conditions

7.12 Ofcom has now concluded that the SMP conditions set out in the Notification at Annex A to, and Chapter 5 of, this explanatory statement should apply in the markets covered in this review. In relation to continued provisions Conditions 70A and 70B (which currently apply to T-Mobile and Orange as set out above), and Conditions 70B and 70C (which currently apply to Vodafone and O2), Ofcom has concluded that, as these continued provisons are charge controls, they are replaced by the new charge charge controls (Conditions MD3 and MD4 for Orange and T-Mobile, and Conditions MC3 and MC4 for Vodafone and O2). The new charge controls come into force on 1 September 2004. In relation all other continued conditions identified above i.e. Conditions 45, 47, 48 and 49, and the Interconnection Direction, Ofcom considers that these are being replaced by the other SMP conditions being set, which come into force on the date of publication of the Notification at Annex A.

The Discontinuation Notices

7.13 The notices given under paragraph 9 of Schedule 18 to the Act to discontinue continued provisions Conditions 70A and 70B (for Orange and T-Mobile), and Conditions 45, 47, 48 and 49 and Conditions 70B and 70C (for Vodafone and O2) (the "Paragraph 9 Discontinuation Notices"), are included at Annex H to this explanatory statement. The effect of those discontinuation notices will be to discontinue the continued provisions set out in the notices in so far as they apply to the markets covered by this review .The notice given to Vodafone, ntl and MCI under paragraph 22 of Schedule 18 to the Act revoking the Interconnection Direction (the "Paragraph 22 Discontinuation Notice") is also at Annex H..

Service of the Notices

7.14 With regard to the Paragraph 22 Discontinuation Notice, the Notice is deemed to be effected a day after publication and posting of the Notice. This is because, as referred to above, paragraph 22(10)(b) of Schedule 18 to the Act states that where Ofcom has decided to set a condition, a notice under paragraph 22 of Schedule 18 to the Act cannot be given until that condition is in force. As explained above Ofcom considers that the Interconnection Direction is replaced by the SMP conditions coming into force on publication of the Notification at Annex A. The Notice is therefore given on the date of publication of the Notification and is deemed to be effective the day after.

7.15 With regard to the Paragraph 9 Discontinuation Notices, for those given to Orange and T-Mobile the Notices are deemed to be effected on 2 September 2004 which is the day after the new charge controls come into force. This is because, as referred to above, paragraph 9(12)(b) of Schedule 18 to the Act provides that where Ofcom has decided to set a condition to replace the continued provision, it must not give the discontinuation notice before the coming into force of that condition. As explained above, Ofcom considers that Conditions 70A and 70B are replaced by the charge controls which do not come into force until 1 September 2004. The Notice is therefore given on the date of publication of the Notification but is not deemed to be effective until the day after the charge controls come into force.

7.16 In relation to the Paragraph 9 Discontinuation Notices given to Vodafone and O2, similar to the approach taken for the Paragraph 22 Discontinuation Notice the Notice is deemed to be effected a day after publication and posting of the notice, save in relation to Conditions 70B to 70C which are being replaced by the charge controls which do not come into force until 1 September 2004.

7.17 In addition, in accordance with section 7 of the Interpretation Act 1978 and section 394 (7) of the Act, as the discontinuation notices are being served by post, they will be deemed to be effected a working day after posting (unless otherwise stated in the notice).

7.18 Whilst for the reasons set out above the Paragraph 9 Discontinuation Notices do not take effect until 2 September 2004 in so far as they discontinue Conditions 70A to 70B for Orange and T-Mobile, and Conditions 70B to 70C for Vodafone and O2, as they will be subject to the new charge controls from 1 September 2004 the four MNOs will not be expected to comply with the relevant conditions in the Continuation Notices (i.e. Conditions 70B and 70C for Vodafone and O2, and Conditions 70A and 70B for Orange and T-Mobile) as from 1 September 2004.

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