June 1997

Contents

Foreword

1 Introduction

Table of Oftel's work programme

2 Getting the policy framework right

3 Rule changes

4 Rule enforcement

5 Consumer protection

6 Internal projects and services

7 Performance measures

8 Resources

Annex A: Oftel's senior staff

Annex B: Useful Oftel contact details

Glossary

FOREWORD

This is the third Management Plan that Oftel has published. It sets out in some detail Oftel's work programme for 1997/98 and beyond. Publication of this Plan is a central plank in my attempt to improve the transparency of Oftel's work by keeping the industry and customers informed of what we are intending to do over the coming year.

Underpinning all the work described in this Plan is our goal to get the best possible deal for the customer in terms of quality, choice and value for money. We deliver this goal through delivery on five high level objectives:

• promoting fair, efficient and sustainable network competition;
• promoting fair, efficient and sustainable services competition;
• securing licence enforcement and fair trading;
• securing a fair distribution of the benefits of competition between different groups of customers;
• protecting consumer interests, especially where effective competition is not yet fully developed.

These have not changed. What has changed is the balance of Oftel's work. This Plan heralds more effort going into thinking about the policy framework within which we work. As competition spreads, the market becomes increasingly international and telecommunications, IT and broadcasting converge. There is much less on detailed rules, but, I believe, appropriate vigilance on pursuing anti-competitive behaviour and on consumer protection where competition is not yet effective.

I am interested in your feedback on this shift in priorities, as well as any comments on the work we are undertaking, our priorities, our proposed timescales, our performance, the format and usefulness of this Plan, and what other information you might like about Oftel's work. Comments should be sent to Keith Loader at Oftel.

DON CRUICKSHANK

Director General of Telecommunications

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CHAPTER 1 INTRODUCTION

The Director General and his Office, Oftel, operate under statute - the Telecommunications Act 1984, section 3 setting out their main duties which are shared with the Secretary of State. Sections 3(1) and (2) specify two primary duties and eight other ones. The section offers no guidance to the relative weight to be attached to each of the latter duties.

In the light of these duties, Oftel's primary focus is on customers. That focus translates into Oftel's goal:

"To provide the best possible deal for the customer in terms of quality, choice and value for money".

Five high-level objectives

Oftel delivers this goal through five high-level objectives aimed at promoting effective competition in the telecommunications industry and, in parallel, protecting consumers (particularly those who are vulnerable or disadvantaged) where effective competition has yet to develop. These objectives are:

• promoting fair, efficient and sustainable network competition;
• promoting fair, efficient and sustainable services competition;
• securing licence enforcement and fair trading;
• securing a fair distribution of the benefits of competition between different groups of customers;
• protecting consumer interests, especially where effective competition is not yet fully developed.
  

Oftel believes that its goal pursued through these five high-level objectives delivers its statutory duties in the most effective way.

The paragraphs above will be very familiar to readers of Oftel's previous Management Plans. None of this has changed. And Oftel does not expect its goal and its key objectives to change in the future. They are firmly centred on the promotion of competition wherever possible and consumer protection where necessary.

However what Oftel has to do to deliver its goal and these objectives is changing quite rapidly. This can be seen in the chapters that follow setting out the work plan for the next eighteen months or so. There is a different emphasis to the work and a different allocation of time and resources. Nevertheless, the performance measures against which Oftel is to be judged do not change. They are essentially about the rate of introduction of competition and improvements in services for consumers.

The first very evident change in the content of the Plan is that there is very much more work, mainly in the form of projects, on getting the policy framework right as the UK telecommunications market becomes more competitive and complex (Chapter 2). This is an amalgam of things Oftel itself has to do and the formulation of advice for others, both in the UK and at EU level. Of particular importance are:

• Influencing EU and international thinking. With the establishment of a single market in telecommunications in Europe from January 1998 and the successful conclusion of the recent World Trade Organisation telecommunications talks, the market will become more international. In particular, more of the policy framework will be in the form of EU directives. Getting the structure, the precise detail and the implementation of these directives and international regulation right is critical to delivering benefits to UK consumers.

• Convergence and broadcasting issues. This is in part a reflection of new Oftel responsibilities in relation to digital broadcasting networks but this project also looks across the whole issue of access to digital networks and competition issues arising in the new communications industry and as a result of the development of the Internet.

• Effective competition review. The aim of this work is for Oftel to understand better the state of competition in a range of separate telecommunications markets so that it can deregulate wherever possible. Regulation where there is effective competition is destructive both to competition and to innovation.

• Service providers. Here Oftel is paying special attention to this very important class of consumers of network services, so as to encourage competition in services over networks provided by independent service providers, as well as by those building networks.

• Use of the radio spectrum. Much future competition and a high proportion of benefits to consumers will come from more effective use of the radio spectrum.

• Licensing policy. This reflects the need to draw together the EU directives and experience in the UK over the years to put in place a simpler, consistent and stable licensing framework reflecting the state of competition in different market segments in the UK.

Another important feature in this chapter is the project on Improving Oftel's accountability which aims to move Oftel's procedures and processes further in the direction of more transparency, firmer accountability and to provide input into any wider review of the UK regulatory framework.

Chapter 2 is therefore about changes in the policy framework. Chapter 3 is about the things Oftel is doing within the framework that now exists to get the precise rules right, including, crucially, reducing the number and complexity of these rules. Of particular importance are:

• International services and facilities. This is about delivering over the course of 1997, the right rules to regulate the international market in varying degrees of liberalisation and competition, and in particular to prevent anti-competitive behaviour which could distort competition in the UK market.

• Network charge control review. This aims to allow BT more freedom in the crucially important area of pricing of network services; to move to a more rational economic price basis for these services; and to procure continued efficiency improvements, while preventing anti-competitive behaviour.

Another important project here is Future interconnection issues which moves Oftel from the detail of the interconnection of basic services to identification and resolution of interconnection in an increasingly complex world including intelligent networks, ATM etc.

Oftel's work on getting the rules right shown in this chapter, is considerably reduced from previous years. In contrast, work on rule enforcement and Oftel's role as a competition authority (Chapter 4), represents a much higher proportion of Oftel's resources and focus. This reflects the move to more competitive markets and Oftel's determination to get out of detailed rule making wherever possible. Of particular importance are:

• Competition casework. Here we are seeking continuous improvements in Oftel's procedures and consistency of approach to competition investigations. Changes to the regulatory framework coming about as a result of investigations will also involve the new Advisory Body on Fair Trading in Telecommunications.

• Guidelines and Oftel's analytical framework. It is very important to seek clarity as to what is competitive and what is anti-competitive, but difficult to achieve. Oftel will continue consulting with the industry on existing and new guidelines designed to help it get the balance right, and smooth the evolution to a competitive market place by enabling operators and others to have an understanding not only of Oftel's procedures, but also of how specific issues can be expected to be dealt with. There will be particular emphasis on ensuring that Oftel's approach to its work as a competition authority is consistent with developments in competition law and policy at UK and EU level.

The provision of information from the industry, especially financial information, is crucial to effective rule enforcement. This is the subject of another key project.

Chapter 5 looks at consumer protection and reflects a continued vigilance on behalf of consumers - especially those who are part of market segments where competition is not yet effective. Of particular importance are:

• Use of customer information. This work seeks a new and fiercer focus on the use, and potential misuse, of information for all types of customers including BT's interconnecting competitors.

• Universal Service. This covers the final steps in setting up robust Universal Service arrangements to safeguard the interests of the vulnerable and disadvantaged.

Chapter 5 also covers Oftel's very important work with the Education and Public Access Points Task Force (to progress the delivery of affordable wideband services), Oftel's handling of consumer complaints and enquiries, and also the challenge for Oftel of working well with its various advisory committees.

For completeness, Chapter 6 sets out the key internal tasks that Oftel believes it needs to undertake in 1997/98 to make it work better. These range from changes in personnel policy to information systems.

In Chapter 7, there is highlighted the continuing need to pay special attention to answering the question "How would anyone know whether Oftel was doing a good job?" This is a particularly difficult question to answer in all areas of public policy - no less so for Oftel. It is through the work set out in this chapter that Oftel attempts to ensure that getting the best deal for customers and delivering on its objectives are firmly defined as the outputs of everyone who works at Oftel, and that there are appropriate indicators in place to measure performance.

The main yardsticks against which Oftel measures its performance are necessarily those which are relevant to consumers - evidence of more choice, higher quality and better value for money from the increasingly wide range of telecommunications services available. Underpinning these however, at an individual project level, are measures of outputs which relate directly to specific project objectives - and while it is not meaningful to report on these as outputs in themselves, they are useful in helping to review and shape the direction and emphasis of Oftel's work.

Finally, Chapter 8 describes the financial and staff resources available to Oftel to deliver the work programme set out in this Plan.

This document sets out Oftel's future work programme. Oftel's activities during 1996 are set out in its 1996 Annual Report which is published by The Stationery Office Limited, ISBN 0-10-274097-6, price £20.00, House of Commons Cmd 379.

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CHAPTER 2 GETTING THE POLICY FRAMEWORK RIGHT

INTRODUCTION
The work outlined in this chapter is aimed at setting the right policy framework to encourage:

• the continued rapid development of the UK telecommunications market, through increasing the level of competitiveness of telecommunications markets both in the UK and across the world.

• the rapid development of a 'communications' world with the convergence of telecommunications, broadcasting and IT.

In pursuit of its overall goal, Oftel will strive to ensure that UK customers get the maximum benefit that these important developments will bring, the delivery of which will be shown by the experience of UK consumers over the next few years, in terms of increased choice and the wide availability of new converged services, in comparison to consumers overseas.

PROJECTS

Project objectives: To ensure that Oftel has a major influence and input in the development of telecommunications policy in Europe, in order to promote market opening in the EU and the interests of UK industry in Europe. To promote in particular the key UK themes of liberalisation, competition, effective enforcement and benefits to the customer.

Fit with Oftel's objectives: This supports Oftel's objectives of promoting fair, efficient and sustainable network competition; promoting fair, efficient and sustainable services competition; securing fair trading; and protecting consumer interests.

Input, with DTI, to remaining negotiations on draft EU 1998 liberalisation legislative package, principally remaining negotiations on the Amending Voice Telephony Directive. Ongoing

Input, with DTI, into negotiations on further EU telecommunications legislation or other EU legislation with implications for telecommunications, including the Third Terminal Equipment Directive, the Transparency Directive and any legislation relating to numbering. Ongoing

Maintain the successful operation of the operators' (OLOs) forum discussing and inputting into European issues. Ongoing

Develop policy views on strategic EU issues including convergence, services competition and European level regulation. Ongoing

Programme of meetings/visits with key Commission officials, MEPs and Member States. Ongoing

To support DTI in preparation for UK Presidency of the EU for six months from 1 January 1998. May 97

Project objective: To promote international best practice in telecommunications regulation and the development of effective competition in telecommunications markets across the globe, and to understand key global market developments through co-operation and dialogue with key regulators abroad. To ensure that Oftel is properly briefed on international issues.

Fit with Oftel's objectives: This project supports the promotion of network and services competition in the international arena through the promotion of regulatory best practice and co-operation with other regulators. It therefore also supports consumer interests which are best served in the long run by open, liberalised and well regulated telecommunications regimes globally.

Advise Oftel how best to promote relationships with other regulators and competition bodies. Ongoing

Respond to requests from foreign regulators/governments for visits and information. Ongoing

Advise foreign regulators and competition authorities in relation to the UK regulatory regime in the context of their considerations of mergers or joint ventures involving UK companies. Ongoing

Advise the relevant UK authorities in respect of Oftel's view of the implementation of GATS/WTO agreement. May 97

Advise the relevant UK authorities in respect of Oftel's view of the implementation undertaken by other countries. Ongoing

Project objectives: To equip Oftel to resolve issues arising from the convergence of telephony, broadcasting and IT and specific issues arising for Oftel from developments in broadcasting markets.

Fit with Oftel's objectives: This project supports the objectives of promoting network and services competition aimed at maximising benefits to consumers.

Monitor/facilitate negotiations on conditional access and transcontrol. Ongoing

Formulate Oftel approach to conditional access pricing and subsidy issues to ensure fair and non-discriminatory conditional access services. May 97 onwards

Consideration of the competition issues relevant to Oftel's responsibilities in relation to British Interactive Broadcasting and the development of digital networks served. Ongoing

Develop Oftel policy on electronic programme guides and ensure Oftel and ITC policies are compatible. to December 97 and beyond

Develop understanding of principal technical issues relating to conditional access. Ongoing

Extend regime for digital conditional access to cover non-television services. As soon as possible

Review of licensing arrangements for terrestrial broadcast transmission, including review of provisions on site rentals. Summer 97

Review licensing regime for terrestrial broadcasting transmission. September 97 and beyond

Develop links with the European Commission on broadcasting and convergence issues and seek to influence its thinking where relevant to Oftel's responsibilities. Ongoing

Process competition cases in the broadcasting field in accordance with standard Oftel procedures. As required

Project objectives: To review Oftel's methodology for assessing competition and, against that background, to measure the development of competition in the UK telecommunications and related broadcast market as a whole. To review remaining regulatory restrictions and privileges in the UK telecommunications market and in particular, to advise the Government on the broadcast ban.

Fit with Oftel's objectives: This project promotes the development of network and services competition by ensuring that the regulatory framework is appropriate to match the level of competition in markets. Where competition is effective, detailed regulation can pull back.

Statement on assessment of current development of competition in UK telecommunications market, including a look forward to early 1999. May 97

Overview paper on the remaining restrictions and privileges in the telecommunications market. May 97

Explore the likely impact on BT, competitors and competition in the UK of possible lifting of the broadcast ban. Consider the implications for broadcast market and provide advice to Government. As appropriate

Project objective: In consultation with the industry through the newly established Independent Service Provider Forum, to develop and implement regulatory policies aimed at encouraging the growth of a sustainable competitive market in services delivered over fixed and mobile telecommunication networks.

Fit with Oftel's objectives: This project will promote fair, efficient and sustainable services competition, in a way that does not jeopardise investment in the development of network infrastructure.

Publish Guidelines on implementation of "Relevant Connectable System" policy. June 97

Implement new Independent Service Provider pricing policy, including modifications to Condition 15 of BT's licence. June 97

Incorporate new definition of Systems Business and Supplemental Services Business in BT's licence to become effective in April 1998. June 97

Identify and consider areas where BT's SSB may have an unfair advantage over ISPs, with the help of the Independent Service Provider Forum. July 97

Conduct statutory consultation on licence modifications proposed in Fair Trading in the Mobile Telephony Market to harmonise fixed and mobile regulatory regimes. September 97

Identify and consider remaining differences between regulatory framework for service providers in fixed and mobile regimes. October 97

With DTI, review class licences under which independent service providers operate in light of EU Licensing Directive and other regulatory developments. December 97

Conduct investigations of complaints relating to ISPs in accordance with standard Oftel procedures. As required

Project objectives: To influence Radiocommunications Agency and DTI policies to ensure that spectrum allocation policy and the implementation of spectrum pricing proposals reflect the needs of the telecommunications industry and users arising from growth and from the emergence of new technologies, services and customer demands.

Fit with Oftel's objectives: It is important to ensure that availability of spectrum does not present an unreasonable constraint on entry into the telecommunications market or constrain delivery of new services, both of which fit with Oftel's objectives of encouraging network and services competition.

Review, with DTI and RA, industry and consumer response to spectrum pricing proposals. Close liaison with RA on drafting of Bill and secondary legislation which will establish new arrangements. Ongoing

Consider and assess, with DTI and RA, the potential impact on niche markets. May 97

Participation in the DTI/RA/Industry 3rd Generation Technologies group and input into DTI consultation. Ongoing

Project objective: To ensure a consistent framework for licensing appropriate to the needs of an increasingly competitive market. The focus of regulation is increasingly on the application of general flexible power to control anti-competitive behaviour, and away from detailed form based rules. It must also facilitate the application of consistent harmonised regulation across the industry as a whole, rather than on individual rules applying to single companies, while recognising that companies with market power merit different treatment from those without it.

Fit with Oftel's objectives: This project is directed towards Oftel's objective of retreating from detailed prescriptive regulation and promoting fair trading.

Provide input to DTI on the introduction of legislation to implement Licensing Directive. by November 97

Develop and implement new fees strategy. by December 97

Introduce the Fair Trading Condition into individual licences. by July 97

Excise further conditions from BT's and other licences. by August 97

Complete review of Mercury's WEO (Well Established Operator) status in all markets. by August 97

Modify Mercury's licence. by December 97

Modify AT&T's licence. by August 97

Modify cable licences. by July 97

Modify mobile PTO licences. by September 97

Modify mobile non-PTO licences. by December 97

Advise DTI on combining IFL/domestic/ISR licences. 1998: precise timetable to be agreed with DTI

Project objective: To equip Oftel to better anticipate and respond to key international and market developments and any proposals for regulatory reform.

Fit with Oftel's objectives: This project supports all of Oftel's five objectives and underpins many of its projects.

To monitor what is likely to be the most significant developments in telecommunications and related markets over the next 4-5 years, and to assess how these developments might affect the work of Oftel. Outcomes to be disseminated to relevant personnel in Oftel. Ongoing

To understand the role and strategies of the various operators in the UK telecommunications market through an ongoing programme of discussions with them. Ongoing

To consider important market developments relating to enhanced usage of existing networks including development of Internet and mobile networks. Ongoing

To assess developments in international telecommunications markets with particular regard to international alliances. Ongoing

To assess how far regulatory instruments meet the needs of the developing market and to consider any changes required. Ongoing

Project objective: To ensure that, as a converged fixed/mobile services market emerges, it is as fully open and competitive as possible and operates within an appropriate regulatory environment.

Fit with Oftel's objectives: This project is designed to contribute to Oftel's objectives of developing network and services competition, increasing customer choice and ensuring fair trading.

Update on market developments - competition issues scoping paper. May 97

Overview paper on technical issues. May 97

Investigate, for competition purposes, the relationship between BT, Cellnet and BT Mobile. June 97

Assess competition issues in relation to BT's joint billing, marketing and use of customer information. June 97

Project objective: To meet Oftel's need for statistical information on the telecommunications market by collecting information from suppliers of services, updating and expanding the collection as necessary. To produce analysis and interpretation of the information collected for use within Oftel and to place as much information as appropriate into the public domain.

Fit with Oftel's objectives: This project provides information which is used throughout Oftel for monitoring how well its five objectives are being met. The information is also published to enable users and those within the industry to make better informed decisions, thus promoting efficient network and services competition.

In support of the 'International services and facilities' project, information will be collected quarterly on traffic volumes from resale carriers from January 1997 and from facilities based carriers from April 1997. Quarterly

Following consultation with information providers, put forward proposals for reducing the delay in the publication of quarterly information from 6 months to 4 months. September 97

Project objective: To consult on how Oftel could further improve its own transparency and accountability within the statutory framework in which it operates.

Fit with Oftel's objectives: An essential part of Oftel's development as a competition authority and regulator for the UK telecommunications market.

Publish consultative document which reviews existing processes and procedures and suggests areas for further improvement. June 97

Review responses. October/November 97

Publish statement of revised policies, processes and procedures. January 98

SERVICES AND FUNCTIONS

International services

Oftel undertakes the following international work, in addition to that already described:

• Active participation in the international telecommunications policy community through representation at a range of international meetings, conferences and other fora, eg EU Council Working Groups, ONP Committee, ECTRA, ACTE as well as bilateral workshops with representatives of other countries.
• Liaison with other branches of Government on international matters, primarily DTI.
• Overseas visits by Oftel officials.
• Receiving overseas visitors from developed and developing countries. Over 100 programmes are arranged a year.

Advice on the granting of licences

Oftel has the function of advising on Telecommunications Act licensing generally. The Secretary of State is required by the Act to consult the Director General before granting telecommunications licences and the Director General discharges that role in respect of the granting of and conditions to be attached to PTO individual licences. Oftel provides advice to DTI and to the public, on questions concerning licensing and licence conditions. It also provides advice to licensees and end users on the interpretation of the two main class licences under which most private networks and value added services are carried out, the Telecommunication Service Licence and the Self Provision Licence.

Oftel also undertakes ongoing work in respect of existing licences, for example, monitoring compliance with build obligations and taking necessary action where obligations are not met; issuing determinations requiring licensees to provide public emergency call services and regulating the supply by licensees of customer apparatus. In addition, Oftel provides advice to the ITC on the award of Local Delivery franchises and processes applications for satellite master antenna television (SMATV) systems.

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CHAPTER 3 RULE CHANGES

INTRODUCTION

Oftel believes that the promotion of competition at all levels in the supply chain of telecommunications services will ultimately give the customer the best deal. As competition develops it is necessary to adjust the level and detail of regulation to match it. Where effective competition exists, Oftel will pull back from prescriptive rule making.

This chapter outlines the work that Oftel is carrying out to ensure that the regulatory rules reflect the degree of competition achieved and provide the right climate to encourage further investment in the industry. It therefore looks at areas in which the regulator may now able to adopt a lighter approach by reducing the number and complexity of rules.

The output measures for this work will be the extent to which companies:

• continue to enter and invest in the UK telecommunications market; and

• respond positively to lighter regulation by offering UK consumers a wider range of innovatively priced and packaged services.

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PROJECTS

Project objectives: To ensure that international liberalisation is effective in the UK; to monitor development of international traffic flows; to review policy towards the development of international competition in the light of market developments.

Fit with Oftel's objectives: An appropriate regulatory framework for international telecommunications is central to the promotion of international facilities and services competition.

UK licence enforcement

Establish an effective UK enforcement regime and procedures. Publish document setting out proposed mechanisms and procedures and/or conduct industry workshop. May 97

Collect and analyse data on international traffic flows and accounting rates. Quarterly

Publish traffic minutes and accounting rates. Every 6 months (starting June 97)

Review enforcement of proportionate return and monitor accounting arrangements conditions in licences. Proactive follow up to traffic data figures and investigation of complaints. Ongoing

Enforce other conditions in IFL and ISR licences and investigation of complaints put to Oftel. Ongoing

UK interconnection/network competition

Provide input to network charge control on international issues. May - September 97

EU interconnection issues: Consider with DTI, the effect of Interconnection Directive on cross border intra-EU interconnection. May - September 97

Collect and analyse information relating to the spread of competition in the international facilities market and facilitate the removal of remaining barriers to entry. Deal with ongoing international interconnection issues. Collect information informally every 4 months

Review policy implications twice a year

Project objective: to replace the current network charge control determination arrangements with a new system based on incremental costs and price cap approach on 1 October 1997.

Fit with Oftel's objectives: to encourage network competition by introduction of charges based on incremental costs; to foster deregulation, withdrawing controls where competition provides market discipline; to promote efficiency by introducing incentive regulation (RPI-X control) to controlled network charges.

Publish Consultative Document. May 97

Final statement and statutory consultation on licence modifications and guidelines. July 97

New arrangements in place. October 97

Project objective: To think ahead to scope the type of interconnection problems which new technologies and new services will bring; in particular to review charging principles which should be applied for future interconnection.

Fit with Oftel's objectives: Fair rules for interconnection are at the centre of the promotion of network competition. Appropriate charging principles at the network level are also needed to promote the development of services over networks. Current charging principles could deter investment in new services.

Consideration of circumstances in which end-charging might be appropriate for new innovative services. October 97

Retail/Wholesale balance: More services will involve revenue splitting between originating and terminating operators. Consideration of who sets retail prices for these services and development of NTS principles. Summer 97

ATM: Consideration of interconnection implications. Autumn 97

Intelligent networks: Consideration of interconnection issues. Summer 97

Indirect access: Ongoing policy work.

EU Interconnection Directive: Implementation (with DTI). from May 97

NICC/IPF Joint Group: Follow interconnection/interoperability issues. Ongoing

Review of Oftel/Industry Fora: Overview of whether the current arrangements of the IPF, NICC/IPF Group address all needs. July 97

Reliance on BT's Network: Scoping paper setting out the future issues of continuing reliance on BT's network underpinning the development of competition in the UK. Autumn 97

Project objectives: To bring the regulatory regime applying to Kingston up to date and consistent with that applying elsewhere in the UK and to ensure that EU Directives are implemented. The aim is to allow as much flexibility as possible (ie. minimum ex ante detailed regulatory intervention) consistent with the need to ensure that the conditions are in place for the development of effective competition.

Fit with Oftel's objectives: This supports Oftel's goal of ensuring that customers receive choice, quality and value for money.

Publish Consultative Document. by end July 97

Publish Statement and follow-up action. late 97/early 98

Project objectives: To develop a framework for Oftel to anticipate and respond to UK and European Community Merger Regulation (ECMR) mergers and to ensure that it has appropriate input to, and effective influence on, the treatment of mergers by the competent authorities. To equip Oftel to do this in an efficient and consistent way.

Fit with Oftel's objectives: This project supports the promotion of fair, efficient and sustainable competition in telecommunications markets and the protection of consumer interests.

Produce draft guidance note for assessment of telecommunications mergers, joint ventures and related work (economic and legal analysis, licence modifications). June 97

Produce draft code of rules and procedures for effective input to decisions on mergers. June 97

Agree code with DTI/OFT. August 97

Liaison/co-ordination with competent/designated authorities (OFT, MMC, DTI, EC) on merger cases in line with agreed policies. Ongoing

Review of project in light of completed mergers work. September 97

Project objectives: To implement policy set out in January 1997 Statement on the National Numbering Scheme and to ensure that number allocations support fair and effective competition. To ensure that all types of numbers are portable between operators and service providers.

Fit with Oftel's objectives: This project supports Oftel's objectives of promoting network and services competition, securing fair trading and protecting consumer interest.

Implementation of National Numbering Scheme

Develop, in consultation with the operators, service providers and users, detailed implementation plans for:

• geographic code changes in the year 2000. September 97
• migration of mobile and paging services to 07. December 97
• the introduction of 08 and 09 ranges ensuring migration of existing ranges on a fair and equitable basis. December 97

Develop proposals for a Corporate Numbering Range with industry/user study team; publish:

• Consultative Document. June 97
• draft Convention. December 97

Establish, with DTI, licensing or other means to allow direct allocations of numbering capacity to service providers and end users. December 97

Ensure operators provide revised Numbering Plans in accordance with new Conventions for Oftel approval. by November 97

Carry out review of Numbering Convention on access codes. December 97

Contribute to formation of European Numbering Policy through ECTRA and EU bodies and make any necessary amendments to UK Numbering Scheme and Conventions. throughout 97

Review future arrangements for number administration. throughout 97

Number Portability

General

Monitor BT provision of portability. Ongoing

Licence Modifications

Complete modifications to BT and OLO licences (follow-up to April 97 Statement on 'Number Portability: modifications to fixed operators licences'). June 97

Future BT Portability charge controls

Consult on introduction of incremental cost basis and charge caps for portability charges. May 97

Make any appropriate modifications to BT licence. September 97

Non-geographic number portability

Trials begin between BT and other operators. May 97

Operators commence roll-out. July 97

Produce determination of non-geographic portability charges. August 97

Propose technical, administrative and charging arrangements for 08 database. December 97

Mobile Number Portability

Economic evaluation of mobile number portability by external consultants. by May 97

Consult on draft licence modifications. June 97

Complete licence modifications. October 97

Personal Numbering

Begin technical evaluation of portability of personal numbering. July 97

Publish proposals. November 97

SERVICES AND FUNCTIONS

Interconnection Policy Forum

Oftel co-ordinates regular meetings (six weekly) of an industry/Oftel working group - the Interconnection Policy Forum (IPF) - which considers current interconnection issues. This provides a very valuable way of allowing Oftel to explain emerging thinking and take the industry's views. The Forum has agreed to set up special Focus Groups to deal with particular issues in depth and then report back. Focus Groups were established to look at the terms on which retail services involving interoperability between networks should be interconnectable and to consider ISUP Migration and use of International ISDN Prefix and Rerouting. Further Groups have been established to look at Non-Geographic Number Portability and Mobile Portability.

Joint IPF/NICC Group

This new advisory group has been set up to define a high level strategic framework for network evolution and interoperability in the UK, recognising that there is a need for collaboration between all network operators present in the UK telecommunications market to ensure that their networks operate seamlessly to provide services to customers. The advisory group is made up of invited members, with substantial senior level commercial and technical experience. It meets monthly.

Numbering

The Numbering Unit in Oftel is responsible for policy on the National Numbering Scheme and on number portability; for allocating codes and blocks of numbers to licensed operators in accordance with agreed policy as set out in the 'Numbering Conventions'; for monitoring reservations and allocations; for auditing the efficiency of number utilisation; and for producing regular briefing information on the Numbering Scheme and number allocation for the industry and others with an interest. Oftel is advised on numbering matters by the Director General's Numbering Advisory Group, comprising representatives of users, operators and suppliers.

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CHAPTER 4 RULE ENFORCEMENT

INTRODUCTION

During the transition to a fully competitive market, there will be some anti-competitive behaviour by firms whose position in some, or all, aspects of that market makes such activity possible. Oftel is committed to taking quick and effective action against such behaviour to allow competition to flourish in a fair market. The work set out in this chapter is aimed at:

• ensuring that licensees and other interested parties have a proper understanding of Oftel's analytical framework and how it interprets and enforces licence conditions; and
• improving Oftel's procedures for dealing with anti-competitive behaviour.

The effectiveness of this work will be judged through the increasingly widespread recognition and use of the guidelines by all parties, leading over time to a reduced number of competition investigations and quicker resolution times.

PROJECTS

Project objectives: To generate a consistent approach to competition casework across Oftel so that effective links are drawn between casework and the policy issues to which they give rise resulting in casework outcomes and policy decisions being aligned. To ensure that competition cases are dealt with in a speedy and effectively manner.

Fit with Oftel's objectives: This project supports the promotion of network and service competition, by seeking to deliver solutions to market failures through specific cases where possible, relying on these in place of detailed regulation.

Implement relevant and timely changes to the regulatory framework or instruments where market developments from casework and market analysis dictate. Ongoing

Establish current and prospective casework programme handling cases within target times. Ongoing

Develop procedures blueprint for casework handling and external communication of case progress and decisions. by June 97

Implement office wide adoption of procedures guide and casework database. May-June 97

Communicate schedule for addressing policy based cases to complainants. June 97

Project objective: A number of guidelines already exist or are being developed both in relation to specific licence conditions (for example, Fair Trading Condition, Conditional Access, and Network Charge Controls) and more general issues (for example, third party promotions/affinity deals and trials of new products and services). The purpose of the project is to ensure that there is a comprehensive set of mutually consistent up-to-date guidelines covering all relevant issues. The guidelines will deal not just with Oftel's procedures but also on how specific competition issues will be dealt with. They will all be subject to consultation before final publication. Topics for new guidelines will be fed in from the Competition Casework project and from the industry itself. The guidelines and other information on Oftel's analytical framework will be made publicly available, in a single place, on Oftel's Internet web site.

Fit with Oftel's objectives: This project will help to promote fair, efficient and sustainable competition and secure fair trading by ensuring that licensees have a proper understanding of Oftel's analytical framework and how it interprets and enforces licence conditions.

Establish need for and development of new guidelines. Ongoing

Revise guidelines, following consultation with industry, in the light of market/regulatory developments. Ongoing

Develop existing guidelines (ensuring conformity/consistency). June 97

Establish "resource point" for guidelines on Internet web site. June 97

Project objectives: To ensure that Oftel is able to get appropriate and timely information from BT's financial information systems in order to deal effectively with competition cases and to investigate complaints about interconnection charges; to ensure that BT's systems development fully addresses regulatory information requirements.

Fit with Oftel's objectives: The ability of BT's financial systems to produce sufficiently disaggregated information quickly is crucial to Oftel being able to handle effectively complaints about anti-competitive practices and thus to promote fair competition. The promotion of network competition requires that BT's interconnection charges are fairly derived from underlying costs. It is a central part of the new Network Charges arrangements that Oftel will have sufficient information to be able quickly to investigate complaints of unfair charges.

Development of BT systems:

• Provide BT with statement of Oftel's regulatory information needs. May 97
• Review implications of other organisational or systems changes for provision of regulatory information. Autumn 97

Review of current business and activities definitions in financial statements: Review of operation of condition 20B.15 in BT's licence. June 97

Financial statements - improving transparency: Review of each set of Financial Statements. Consideration of requirements for new Network Charge Control arrangements and of what information should be published to underpin the new Incremental Cost Interconnection Charging framework. May 97

LRIC - Network:

• Review of the main elements of the BT top-down LRIC model including an analysis of the documentation, methodology and key assumptions and models used. from May 97
• Extend LRIC work to cover other Network components not yet included. from October 97

LRIC - Retail: Explore with BT how it intends to develop a LRIC approach to retail costs. June 97

DAMs: Continue detailed review of HCA and CCA DAMs. The CCA DAM is the prime data source of the LRIC model and also is used extensively to derive cost volume relationships Ongoing

BT Regulatory Accounting: Development of Oftel information databank. from July 97

SERVICES AND FUNCTIONS

Competition Investigations

Oftel conducts investigations into possible anti-competitive practices, abuses of market power or alleged breaches of the fair trading provisions in all relevant licences. This activity has grown significantly over recent years as a result of the increasing number of new licensed operators and BT becoming more aggressive in competing with new entrants. Therefore, enforcement work is given a high priority in order to deal with a wide variety of complaints from external sources (usually licensed operators, independent service providers and major business customers) and also policy and generic competition issues that Oftel decides to investigate on its own initiative. Typically, there are about 45-50 live cases at any one time: 4 or 5 major cases, 10-15 complex cases and 25 more straightforward cases.

To investigate complaints of anti-competitive behaviour, Oftel adopts a two stage process: the Preliminary Enquiry Phase, when initial consideration is given to determine whether there is a case to answer and whether to proceed to an investigation; and the Investigations Phase, when more detailed information is gathered, analysed and assessed to decide whether enforcement action is needed. The target of the complaint may, however, be given the opportunity to remedy the situation first.

Oftel is committed to expeditious complaint handling, systematic investigation and effective compliance action. The duration of an investigation will however vary; some complaints will be complex to resolve but a successful and speedy resolution is more likely when a complainant provides Oftel with all relevant information. Oftel is committed to introducing greater transparency in its procedures and a number of initiatives are now in place to meet this commitment. Upon completion of an investigation, both the complainant and the target of the complaint are advised of Oftel's findings and an "Assessing Complainant Satisfaction" questionnaire is sent to ask the complainant to comment on the way its complaint has been dealt with. Oftel also publishes the initiation, and conclusions, of competition investigations together with more information about enforcement actions and requests for input from the industry in its quarterly Competition Bulletin. This makes work in relation to competition policy and casework more visible and provides a record of results. Oftel also holds monthly competition 'surgeries' and operates a competition hotline (0171-634 8833) to give easier access for complainants.

Regulation of private networks and telecommunications standards

Oftel undertakes activities on the regulation of private networks and telecommunications standards. Activities include issuing Site Specific Approvals, General Approvals, and General Variations to enable equipment to be connected where there is no alternative approval route. In this domain Oftel liaises with other interested parties- DTI, British Approvals Board for Telecommunications (BABT) and British Standards Institute (BSI) and participates in UK and European fora such as European Telecommunications Standards Institute (ETSI), Approval Committee for Terminal Equipment (ACTE) and Telecommunications Regulations Applications Committee (TRAC). Oftel also participates in European and other voluntary standards making activities, in particular ETSI, in order to promote consistency with regulatory policy.

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CHAPTER 5 CONSUMER PROTECTION

INTRODUCTION

Protecting consumer interests is central to Oftel's goal. This involves both enabling consumers to protect their own interests by exercising choice wherever possible and by preventing abuses of market power where effective competition is not yet available. This is achieved through both