Chapter 2: Telecommunications from January 1998 in the European Union
Chapter 3: Criteria for inclusion in Annex II
Chapter 4: Who will qualify for Annex II
Chapter 5: Process for inclusion in Annex II
Appendix 1 Annex II of the Interconnection Directive
Appendix 2 Annex I of the Interconnection Directive
Appendix 3 Explanatory note on ‘bearer capabilities’
Written comments should be submitted to:
Sally Trebble,
Oftel
50 Ludgate Hill
London
EC4M 7JJ
e-mail: netcomp.oftel@gtnet.gov.uk
Comments should be copied to Philippa Lloyd, CII Directorate, DTI, 151 Buckingham Palace Road, London SW1W 9SS
Written comments will be made publicly available in Oftel’s Research and Intelligence Unit except where respondents indicate that their response or parts of it are confidential. Respondents are therefore asked to separate out any confidential material into a confidential annex which is clearly marked as such. In the interests of transparency, respondents are requested to avoid confidentiality markings wherever possible.
The DTI consultative document of 24 October 1997 on implementation of the ICD is available on the DTI web site (click here)
Comments on this document can also be sent to Oftel by the Internet (if they are relatively short). Oftel intends to set up a link between this document on Oftel’s pages and any responses placed on respondents own Internet pages. Please contact Cate MacLaurin at Oftel by e-mail or on 0171 634 8752 to arrange this.
Oftel has said it expects the impact of these changes to be small; this view tends to be supported by the small number of applications from operators who are not eligible for RCS status received to date for inclusion in Annex II of the Directive which specifies which operators have rights and obligations to interconnect.
The ICD imposes a system of symmetrical rights and obligations. Thus some operators who at present only have rights to interconnect will under Annex II also have obligations (see paragraph 20).
Inclusion in Annex II depends on the services which an operator provides rather than the licence they hold.
If, in the light of consultation, Oftel/DTI go ahead with the proposals set out here, there will be a number of operators whose Annex II status (and rights to Condition 13 terms for interconnection) will need to be positively confirmed. Oftel will write to such operators in due course. This is explained in paragraph 59. This is a development of proposals in the October consultation document on the implementation of the Interconnection Directive.
Changes made to the current interconnection regime as a result of this consultation will be put into effect along with the changes which are being made to all existing licences to implement the Licensing Directive (97/13/EC) in the course of this year.
2 DTI and Oftel propose that responses to this document will inform the drafting of conditions to be included in the new template licences and in actual new licences as well as the drafting of amendments to existing licences. The responses to this document will enable Oftel to advise the Secretary of State on the revised interconnection regime.
3 The ICD replaces existing UK rules governing who has rights and obligations to interconnect and the terms on which it should take place. The framework set out in the Directive applies to all operators included in Annex II of the Directive. It is based on the principle of ensuring that those operators who have bottleneck control of access to customers should interconnect with one another to ensure universality of service and interoperability between different networks. The framework is reciprocal: those who have these obligations also have rights to interconnect. Eligibility for interconnection rights depends on the services which an operator actually provides, and not on the terms of authorisation or particular conditions in individual licences. This is a very important change for some operators. Under pre-ICD UK rules, operators had rights to interconnect because they had individual licences but no obligations to do so unless they were PTOs. Some non-PTOs, such as mobile data and PAMR operators are now automatically included in Annex II and will for the first time have obligations to interconnect. Others, such as ISR operators, are not automatically included in Annex II, but rather they have a choice whether to be included or not. If they do so they will also have obligations to provide interconnection as well (see paragraphs 21 and 41).
4 Annex II operators are eligible for special terms from operators with Significant Market Power (SMP), on whom particular obligations are imposed by Articles 4, 6, 7, and 8 of the Directive. SMP operators are obliged to behave in a transparent and non-discriminatory way and, most importantly, to offer cost orientated charges for interconnection with their networks. In the UK, the operators who have been determined by the Director General to have SMP in the provision of fixed networks and services and leased lines are British Telecommunications Plc (BT) and Kingston Communications (Hull) Ltd with Hull City Council as Joint Licensee (Kingston), and in the provision of mobile networks and services they are Vodafone Ltd (Vodafone) and Telecom Securicor Cellular Radio Ltd (Cellnet). All 4 operators have rights and obligations to interconnect with all other Annex II operators. Vodafone and Cellnet are not obliged by the Directive to offer cost orientated charges because the Director General has taken the view that they do not have SMP on the national market for interconnection, the relevant market for this purpose.
5 For most UK operators, the most important consequence of inclusion in Annex II is access to cost orientated charges for interconnection with BT and Kingston. In BT's case, this means charges calculated in accordance with the methodology set out in Condition 13 of the BT licence. For Kingston a methodology which is comparable in effect is being developed. For the avoidance of doubt, the ICD does not require cost orientated charges to be offered by operators who are included in Annex II but who are not determined by the Director to have SMP in the relevant market. Nor does it require that the other SMP specific rules in Articles 4,6,7 and 8 apply to operators not determined to have SMP in the relevant market.
6 For the purposes of implementing the ICD, inclusion in Annex II, not RCS status (the current determinant of rights to interconnect, granted by individual operator licence, see paragraphs 11 to 14) will determine who has rights and obligations to interconnect. However, references to RCS in existing licences remain, pending the outcome of this consultation. Interconnection, and interconnection charges are not the only areas of the UK regulatory framework where ‘RCS’ is significant. Oftel is currently considering the overall impact of removal of the term ‘RCS status’ from all licences. However, discussion of the replacement of RCS status in this document is solely for the purposes of establishing who has rights and obligations to interconnect, and is therefore without prejudice to what impact the disappearance of RCS status would have elsewhere.
8 Each Member State, together with its National Regulatory Authority (NRA) is responsible for fleshing out the detail of EC Directives and ensuring that they are complied with by the operator(s) concerned. Within the national market, Member States are required to ensure that operators, regardless of their origins in the Community, are offered similar terms, conditions and charges for similar services by operators with Significant Marker Power. This will include the former incumbent monopolist who in most Member States provides a ubiquitous network, but the same obligations are imposed on any other operator who is deemed by the National Regulatory Authority to have Significant Market Power (SMP). New operators generally need to interconnect with such operators to be able to run a business.
9 The main principles of the EC telecoms framework are non-discrimination, objectivity and transparency. These requirements are placed on NRAs in performance of their obligations under the framework in the pursuit of harmonisation, liberalisation and the creation of a single market.
Non-discrimination
Within a Member State, similar operators should be treated in a similar way (and, where appropriate, dissimilar operators treated differently) by the NRA to the extent necessary to attain the aims of the Directive. The obligation under the Treaty not to discriminate on grounds of nationality or national origin applies.
Objectivity
The decisions of the NRA must be justifiable on an objective basis according to the requirements of competition and EC law but allowing for the permissible objectives of domestic policies which are consistent with EC obligations.
Transparency
The Member State’s decision making process must be properly documented and understood and must be seen to follow the applicable rules.
10 Because, in the UK, rights and obligations to interconnect are granted by way of a licence, the Licensing Directive is relevant to application of the ICD. The Licensing Directive requires Member State licensing to be non-discriminatory, objective and transparent in accordance with the main principles of the framework. Oftel and DTI have considered whether existing licensing practice and policy are sufficient to meet these requirements. It has been concluded that it would be very difficult to make RCS policy (especially as applied in practice) meet the requirements of the Licensing Directive for the reasons which follow.
RCS Status and Asymmetry
11 In the UK, regulation has generally been framed in terms of obligations on PTOs to provide interconnection. Operators with individual licences – PTOs and non-PTOs – have been able to enforce these obligations by being given ‘Relevant Connectable System’ status. Non-PTOs with RCS status have not had such obligations to provide interconnection to their systems, but only rights to interconnect with PTOs. Thus the RCS system is asymmetric.
12 RCS status also entitles the licence holder to interconnection charges from BT which are cost based, and which (since October 1997) are being set on a long run incremental cost basis under Condition 13 of BT's licence (C13 charges). In principle, whether an operator has been granted rights and obligations to interconnect under UK policy has, up to now, depended on whether they intended to invest in infrastructure. Because RCS status was primarily intended for only those operators making a significant contribution to network competition, it has effectively operated as an incentive to build competing infrastructure.
13 Under this policy, any operator with an individual licence authorised to sell telecoms services to the public was deemed to have RCS status unless the Director General determined otherwise. There are many hundreds of individual licences, covering a wide range of provider, from the large network operator at one extreme to the small service provider at the other. Oftel’s statement Promoting competition in services over telecommunication networks, published in February 1997, made clear that this latter type of licensee could not assume that they would keep RCS status unless they were making a "significant contribution to the construction of competing networks" or they were making a significant contribution to the development of competition in international telecoms.
14 Experience has shown however, that it is difficult to give an objective definition of a 'significant' contribution in a way which gives sufficient certainty to enable the term to continue to be used to draw a distinction between those operators who are entitled to interconnection at C13 rates and those only entitled to network access at commercially negotiated rates. It would therefore be increasingly difficult to make the RCS approach fit with the Licensing Directive criterion of objectivity. In addition, the Licensing Directive encourages a shift towards class licences and that in itself makes it difficult to justify the current limitation on access to C13 charges and other RCS benefits to those with individual licences.
The ICD and reciprocity
15 The criteria for entitlement to rights and obligations to interconnect are as set out in Annex II of the Directive. Article 4(1) of the Directive states:
"Organisations authorised to provide public telecommunications networks and/or publicly available telecommunications services as set out in Annex II shall have a right and when requested by organisations in that category, an obligation to negotiate interconnection with each other for the purpose of providing the services in question, in order to ensure provision of these networks and services throughout the community.”
Annex II is set out in full at Appendix 1. Its key provision is that it defines operators who can be included in it as operators who:
provide switched and unswitched bearer capabilities to users upon which other telecommunications services depend; and either
have bottleneck control of one sort or another, such as controlling the means of access to network termination points or having special or exclusive rights; or
are operators permitted to interconnect according to domestic Member State licensing rules.
These Annex II rules are discussed in detail in chapter 4 below.
16 The ICD thus imposes reciprocal rights and obligations to interconnect on all operators in Annex II. The only circumstances in which non-reciprocal obligations are imposed is between SMP and non-SMP operators and concerns the terms on which interconnection takes place. And, unlike RCS, Annex II rules contain no requirement to make a significant contribution to building network infrastructure, but rather, depends on whether an operator, judged by the criteria set out in Annex II, runs a system and provides services which make interconnection obligations necessary to ensure any-to-any delivery of services. Thus, making a significant contribution to infrastructure competition will no longer be the principal determinant of whether or not an operator interconnects at C13 rates.
The effect of the proposed changes
17 DTI and Oftel set out in the October consultation document the interpretation of Annex II which should be adopted in the UK. It proposed that any operator, including those who operate under a class licence, should be eligible for inclusion in Annex II, so long as they meet the relevant Annex II criteria. The net effect could be to give interconnection rights and obligations to some operators who would not be eligible for RCS status under existing domestic rules. Oftel did not anticipate this change being significant in practice or its effect being a cause for concern. However, network operators were concerned that this approach would significantly broaden the category of operators who could interconnect with PTOs such as BT and they argued that such a policy would remove the incentive to build alternative infrastructure and run alternative networks. This is because it would give access to C13 interconnection rates to some operators – eg service providers – with no networks of their own.
18 In Oftel’s view, although the category of operator eligible for interconnection rights at C13 rates would be broader under this proposal, the net effect is not likely to be significant. A number of specific tests have to be separately satisfied. Oftel has so far received only 8 requests for inclusion in Annex II from operators who would not have been eligible for RCS status. The criteria for inclusion as interpreted by Oftel and DTI are specific, and can be applied in an objective and transparent way. Inclusion brings obligations and may not be appropriate for some types of operator who are unwilling or unable to meet those obligations. In some cases the Annex II criteria may lead to operators who are not entitled on any objective basis to use BT's network at C13 rates to lose the right to do so (see paragraph 22 and Chapter 5).
19 Annex II operators are those who have rights and obligations to negotiate interconnection with each other under Article 4(1) of the Directive for the purpose of providing publicly available telecommunications services (PATS). Whether a service is ‘publicly available’ is likely to be a question of fact and judgement which will depend on all the circumstances. As a minimum, it is likely that a telecommunications service will be publicly available if it is “on offer” to anyone who is prepared to pay for it (probably with standard terms and conditions). In some circumstances, however, this criterion may not be sufficient. Public accessibility of the network over which the service is provided may also need to be taken into account. Annex II further states that these organisations will also be those which provide switched or unswitched bearer capabilities to users upon which other telecommunications services depend. This is essentially the same distinction as is already drawn in the UK regime between Network Services and Enhanced Services. Bearer capabilities were described in Annex C of the previous consultative document and reproduced here at Appendix 3. Interconnection is defined in the Directive as ‘the physical or logical linking of telecommunication networks...’ The term ‘telecommunication networks’ is defined as ‘transmission systems and, where applicable, switching equipment and other resources...’
The four categories described in Annex II
20 It is very important that operators are aware of the distinctions between categories 1 to 3 and category 4 of Annex II of the Directive. New obligations are imposed on certain operators or classes of operator by the Directive. If an operator meets the criteria of categories 1 to 3, they are automatically included in Annex II. It is anticipated that PTOs, including mobile, broadband cable and local delivery licensees, who are included in Category 1 of Annex II (see paragraphs 29 to 31) would be unaffected by proposals for replacing RCS status with rights and obligations to interconnect according to the criteria in Annex II because they already have both rights and obligations. Other operators included in categories 1 to 3 who have RCS status but who are not PTOs, such as mobile data licensees, radio paging licensees, and public access mobile radio licensees would have obligations to interconnect which they did not have before. Their rights to interconnect with PTOs remain unaffected.
21 Operators in Category 4, however, do not control access to end customers. Therefore, some operators eligible for category 4 do not have to be included in Annex II, unlike those in categories 1 to 3 and may be excluded if they do not wish to be subject to the obligations of the Directive.
22 Some operators who currently have RCS status may not meet the criteria for any of the categories, under the proposals, in which case they would be removed from Annex II (see Chapter 5).
Categories 1 to 3
23 All operators who provide the networks and services referred to in Annex 1 of the Directive are automatically included in categories 1 to 3 of Annex II. Annex I covers fixed networks and services, leased lines services and mobile networks and services (the text of Annex 1 is at Appendix 2). The criteria set out in Categories 1 to 3 of Annex II clearly specify certain types of operator according to their activities and the services they provide. Thus Oftel and DTI have no discretion over the operators who should be included in these categories. PTOs who supply services direct to end users are described in category 1. Few operators who are not already in category 1, meet the requirements of category 2 although there is no restriction which would prevent the provision of this type of service. Category 3 does not describe any operator now offering service in the UK because special and exclusive rights for the services described have been abolished. Operators covered by categories 1 to 3 automatically have rights and obligations to interconnect.
Category 4 and competitive neutrality
24 Category 4, however, does allow Member States considerable discretion to give rights and obligations to interconnect to operators who it is deemed appropriate should have such rights and obligations under national licensing rules. Oftel and DTI propose that this category should be defined in a way which ensures non-discrimination in the way that rights and obligations to interconnect in the UK are granted. In particular it should reflect the level of liberalisation and technological diversity which now exists in the UK. This means ensuring that operators who provide services covered by the ICD are not put at a competitive disadvantage by the technology which they employ to deliver their services. Nor should they be disadvantaged by particular decisions taken in the UK but not in other Member States. This requires both technical neutrality and market neutrality.
Technological Neutrality
25 Traditionally, telecommunications networks have been divided up by the services they have provided or the technology they used voice networks, data networks, packet switched networks, ATM networks etc. Technological developments (including digital transmission of all forms of information) means that the services that would benefit from interconnection can be delivered by different forms of network (both in terms of technology and topology). Thus, in order to maintain maximum benefits to customers, interconnection rules should not be dependent on the use of any particular technology or network topology. The objective should be to interconnect those networks where interconnection delivers consumer benefits.
26 Technological neutrality requires that, where services running over these different types require interconnection, then the interconnection rules need to be similar. Otherwise differential regulation will be likely to distort the use of technology, which is in turn likely to make services more expensive for customers. One immediate impact will be that the rules as applied to conventional PSTN networks should also apply to data networks, including the Internet.
Market neutrality
27 This means that operators in one Member State should be put in a position which is competitively neutral compared to operators offering the same or similar services from another Member State. In particular, category 3 of Annex II includes operators who offer international services who have special or exclusive rights. Such rights were abolished in the UK in 1996 and thus UK operators do not meet the criteria. However, international services have yet to be fully liberalised in most other Member States and so providers of international services with special or exclusive rights will be included in Annex II elsewhere and will thus be entitled to cost-orientated interconnection rates from operators with SMP. Should comparable UK operators not be included in Annex II because they do not have special or exclusive rights for the provision of the same services, they would be put at a competitive disadvantage compared to their EU competitors. Thus, to ensure competitive neutrality between the UK and other Member States, Oftel and DTI propose to exercise their discretion under the Directive to include operators who provide either international facilities or international simple voice resale in Category 4.
29 Category 1
This is defined as those operators who:
‘provide fixed and/or mobile public switched telecommunications and/or publicly available telecommunications services and in doing so control the means of access to one or more network terminating points identified by one or more unique numbers in the national numbering plan.’
This includes all those Public Telecommunications Operators (PTOs) who have directly connected customers, access to whom is made via numbers from the national numbering plan. It will also include some non-PTO operators who similarly control access to customers via numbers, eg X25 data network operators, mobile data network operators, radio-paging operators and Public Access Mobile radio (PAMR) operators. Thus these operators will in future have obligations to interconnect with others as well as the rights to interconnect which they have now.
30 There are some networks, such as dial-up X25 networks and dial-up mobile data networks, where the network terminating point is not owned by the operator concerned, but the customer access is still uniquely controlled by the operator via the numbering plan. Dial-up access is therefore included in Category 1.
31 However, it is important to define the control exercised through the numbering plan. Oftel and DTI therefore propose that consistent with the Notes to Annex II, Category 1 operators will be those directly allocated one or more unique numbers from the Specified Numbering Plan by Oftel (or any successor Numbering Administrator). This is to ensure that Annex II rights cannot be gained solely by being made a sub-allocation of numbers by another operator, as for example occurs with premium rate service providers and some personal number service providers.
32 Category 2
This is defined as:
‘those who provide leased lines to users’ premises.’
This is intended to include operators who construct facilities to users’ premises and through such facilities lease lines to the user. It does not include operators who resell others’ leased lines. There are very few operators who qualify under Category 2 who are not already covered under Category 1, but there are a handful of operators providing infrastructure as ‘Carriers’ and who do not provide switched services. However, such operators must be selling leased circuits to users and not raw infrastructure, such as ‘dark fibre.’
33 Category 3
This is defined as:
‘Organizations which are authorised in a Member State to provide international telecommunications circuits between the Community and third countries, for which purposes they have exclusive or special rights’
In most Member States, the provision of international communications infrastructure is still limited to the incumbent PTT. The purpose of this category was to ensure that such operators, who possessed this special or exclusive right, could not restrict extra-Community access by virtue of their control of a bottleneck facility. However, in the UK, international facilities have now been completely liberalised and around 70 International Facilities Licences (IFL) have been granted. Hence no IFL operator can qualify under Category 3. This is addressed below in Category 4.
34 Category 4
This is defined as:
‘Organizations providing telecommunication services which are permitted in this category to interconnect in accordance with relevant national licensing or authorization schemes.’
This last category recognised that as a matter of fact, there would be a number of further operators in addition to those falling within Categories 1-3 which had rights to interconnection under national arrangements. In particular, the Commission recognised that, in the UK, some other Relevant Connectable Systems had such rights.
35 Many respondents to the October consultative document suggested that Annex II operators should be limited to those constructing their own transmission infrastructure, in line with previous interconnect policies. Such an approach would be difficult to apply objectively, as discussed above in paragraph 14. It would not be in line with the non-discriminatory approach which Oftel and DTI are required to take in applying the Annex II criteria. Categories 1 to 3 of Annex II are non-discretionary and automatically include within them certain types of operator depending on the nature of the services they provide; some of these operators may well have chosen to buy leased lines rather than build their own infrastructure. In defining who should fall within category 4 of Annex II, a distinction should not be drawn which is not drawn in categories 1 to 3.
36 Since DTI/Oftel decided to consult further on the proposals set out in the October consultative document, the approach which has been adopted in the UK, pending the outcome of this consultation, has been to include all other operators who currently have RCS status in Category 4. However, as explained above, the discriminatory basis on which RCS is defined makes it very difficult to meet the tests for objectivity and non-discrimination required by the Licensing Directive. It is therefore necessary to define Category 4 so as to provide an objective, transparent, and non-discriminatory definition of those who should have the rights and obligations of Article 4(1) of the Directive.
37 A number of issues were considered. Firstly, it is Oftel’s belief that the market will (and should) move to a situation where the price paid for a service depends on the type of service requested, rather than the type of organisation requesting it. This was set out in Oftel’s statement Promoting competition in services over telecommunications networks (February 1997). The range of operators able to obtain preferential charges is thus likely to broaden over time and it would not make sense to narrow it now. For this reason the October document proposed that, rather than remove rights to interconnect from those PTO operators that have not provided their own transmission infrastructure, these operators should be included in Annex II. To maintain technical neutrality any other operator leasing transmission capacity and providing their own switching capability (including packet switching) should also be eligible for inclusion in Annex II.
38 It could be argued that giving entitlement to inclusion in Annex II in this way would be unfair on those operators who have 'build obligations' in their licences since entitlement to the advantage of C13 prices from BT might be regarded as counterbalancing such build obligations. However, these build obligations now only apply to those having access to scarce resources such as fixed or mobile radio based networks or a special or exclusive right for non-telephony services, such as a cable franchise. As was pointed out above, in defining who should fall within Category 4, Oftel and DTI have opted for an objective non-discriminatory definition which builds on the criteria set out in the Directive specifying operators who are automatically included in categories 1 to 3 of Annex II. No distinction should be made between those who have 'build' obligations in their licences and those who do not.
39 A further reason for the proposal to remove the qualification relating to the building of infrastructure arises from the consideration of cross-border interconnection. UK Annex II operators must negotiate interconnection, where requested, with any Annex II operator in another Member State. The effect of this means that if the UK limited Annex II only to those building their own infrastructure, other types of service provider might well migrate to nearby countries in the Community with different rules, so as to avail themselves of lower prices available on a cross-border basis. Such migration of economic activity to other Member States is not in the UK interest.
40 Against this background it is necessary to develop a consistent set of criteria for inclusion in Annex II. Many operators will qualify automatically under the terms of the Directive, but there is discretion to include more operators in Category 4, and it is through that route that technological neutrality can be achieved. As a matter of policy, therefore, it was decided that, wherever possible, no organisation currently being provided with Standard Interconnect Services (at C13 charges) should lose that right, although it is recognised that there may be some exceptions. In other words, there should be a presumption that Annex II should broadly encompass all those who currently have RCS status. On the other hand, the coverage of Annex II is not intended to be materially wider than currently permitted or absolutely required by the Licensing Directive. It is therefore proposed that the following 4 types of operator should qualify under Category 4 of Annex II.
41 Type A
It was noted above that no IFL operator qualifies under Category 3, because the UK has eliminated all special and exclusive rights in international infrastructure. Also, as many IFL operators do not have directly connected end-users, they do not qualify under Category 1 either. This could lead to a situation where UK IFL operators were disadvantaged compared with European operators who would qualify according to the way in which Annex II was implemented in their respective Member States. In addition, Oftel considered that ISR operators, who have been an important source of international competition in recent years and who have rights of interconnection, should not have these withdrawn at this stage, as long as they meet the minimum requirements for Annex II listed above. Oftel therefore proposes that all operators who provide international circuits (ie who lease an IPLC, and provide the last point of connection within the UK mainland for outbound calls or the first for inbound calls and thus control access to international facilities). Those merely reselling ISR who do not control such access, do not qualify for this category.
42 Type B
The predominant growth in public data services is now occurring via the Internet, which operates via a worldwide addressing scheme, which in turn depends on a worldwide numbering scheme (the 4 byte address under IP version 4). In order to preserve technological neutrality in the provision of UK data services, it is therefore proposed that operators providing publicly available Internet services, and controlling customers via the internationally recognised numbering and addressing plan, should be included in this category.
43 Type C
Category 1 operators control the means of access to users via unique numbers identifying the network terminating point(s). In the UK, competition has promoted the emergence of operators providing personal numbering services, which by virtue of their individual licences, have obtained RCS status. A number of these operators and ISR operators too, are now additionally providing other forms of Number Translation Services (eg 0800). These services all depend on number translation to route calls to the required network terminating point, which will itself have a regular access number. It is therefore proposed that since such operators require interconnection with other PTOs to ensure that their customers can be obtained on those numbers by any customer connected to the PSTN, they should be included in this category.
44 It is proposed that such operators would have to be granted numbers directly by Oftel, (or any successor number administration organization) and would not include those who merely seek a sub-allocation of numbers from an operator with rights to a direct numbering allocation from the numbering administrator. It is recognised that increasingly many number ranges will support number portability through individual allocation to end-users; therefore inclusion in Type C of Category 4 will depend on the operator demonstrating that it is a bona fide operator of number translation services and not a reseller or end-user.
45 Type D
Category 2, as described above, includes those providing leased lines to users’ premises. This is taken to include operators’ premises too, as the Directive defines users to include anyone using or requesting publicly available telecommunications services. This would therefore mean that ‘Carriers’ providing leased circuits for or between other operators' sites would qualify under Category 2. However, some ‘carriers’ may be providing other important forms of ‘transit’ interconnection between other operators, such as PSTN (including ‘targeted transit’), ATM based services and IP backbone service. To ensure technological neutrality in the provision of such carrier services, it is intended to include in this category any operator providing a publicly available switched or unswitched bearer service between public telecommunications networks.
Services covered by ICD Article 4(1)
46 These proposals for implementing the Directives do not widen the set of interconnection services available from BT at C13 rates. Any interconnection services which are ‘reasonably required’ and thus available at C13 rates should be available to operators interconnecting in accordance with Article 4(1) of the ICD. This means the services which are currently included in BT's List of Standard Services (as well as Telex and data services), including new services added to the list by BT from time to time and those new services determined by Oftel to be reasonably required under C13 of BT's licence. Article 4(1) (as implemented by the Interconnection Regulations) will not apply to services which are not considered by Oftel to be interconnection services nor to those which are interconnection services but which are not reasonably required or which fall within the exceptions set out in Article 4(1). Services which appear to be required for only a single operator, or a very small total volume of traffic, may not be reasonably required, but each case will need to be considered on its merits.
47 Parties who do interconnect must ensure that in so doing they do not compromise the overall network integrity of the UK network. Those interconnecting at the C7 signalling level will need to demonstrate this via appropriate tests, as has been past practice.
End to end services
48 Oftel considers that as the Directive was designed to facilitate interconnection between public networks, it does not cover the provision of end-to-end services by one network operator to another, thus these remain available at the normal retail or Service Provider prices which apply to such services provided by BT. Consistent with existing practice, therefore, BT leased circuits will not be subject to the same interconnect pricing methodology as BT Standard Services. End-to-end calls, as used for example to provide ‘dial-up’ access to data networks, will also remain at normal retail prices.
Enhanced service providers
49 Those who provide only enhanced services will not qualify under Annex II, as they do not provide publicly available bearer services. In practice, they may obtain special service provider terms from BT or commercially negotiated rates from other Annex II operators.
Implications of the proposed new definition of Annex II compared to RCS.
50 The practical impact of the change in policy from that set out in the Oftel Statement of February 1997 to that contained in this document should be small, notwithstanding the fact that the legal basis of the policy has changed materially by removing the requirement to build alternative infrastructure as a pre-requisite of being granted rights and obligations to interconnect. For practical purposes, this means that , those creating networks from leased lines and switches (of any sort) should be eligible for inclusion in the category of operators who can purchase interconnection services. At first sight, it might appear that the proposed new definition of those qualifying for rights to interconnect could widen the number of operators and thereby might have a major impact on the market. Clearly there will be some impact from this change, but Oftel believes that the effect will not be significant, for a number of reasons.
51 The new definitions will allow some operators, currently operating under the Telecommunication Services Class Licence (TSL) to qualify for inclusion as an Annex II operator. However, many such operators have been applying for individual ISR licences and using them to provide many other types of service, such as Personal Numbering and Number Translation services with the rather artificial result that operators were granted ISR/IFL licences to achieve RCS status even if that was not the business that they really wished to be in. The present RCS scheme has thus already allowed a wide group of operators to qualify. Oftel and DTI are proposing to move from a position where RCS rights were attached to having a particular sort of licence, to one where it is essentially the services being provided that determine if an operator will fall into Annex II.
52 Under the new Directive, all Annex II operators have both rights and obligations to interconnect. However, operators whose activities are not included in Annex I but who are eligible for inclusion in Category 4 of Annex II would be under no obligation to be included under Oftel’s proposals indeed they should consider carefully whether they wish to accept the obligation to negotiate interconnection as well as the right to obtain it under Article 4(1). Operators who now have RCS status and who would meet the proposed category 4 criteria but who do not wish to be included in Annex II would need to contact Oftel.
53 Oftel believes that the policy as now set out will continue to encourage infrastructure competition, will not distort competition between different technologies for the provision of telecommunication services and ensure that telecommunication networks in the UK remain effectively and efficiently interconnected so as to deliver maximum benefits to UK consumers.
54 This consultative document concerns the principles upon which operators would be granted or refused inclusion in the Annex II list of operators. In the light of the comments received in response to this consultation, changes to the current interconnection regime will be given legal effect by a Statutory Instrument (SI) under the Licensing Directive. The SI will amend the interconnection condition set out in Condition ICD2.1 of Schedule 6 of the implementing Telecommunications (Interconnection) Regulations 1997. The Annex II list currently posted on Oftel’s web site will then be amended to give effect to these revised proposals. A draft licence condition will be published shortly for comment. It is suggested that respondents wishing to be notified of the publication of the draft condition should seek inclusion on Oftel’s e-mail based mailing list (see the consultation section at the beginning of this document).
55 Oftel has no discretion about which operators should go into categories 1 to 3 as explained in paragraphs 20 to 23. Operators who meet these criteria will automatically be on the list even though this imposes new obligations on non-PTO operators in these categories.
56 Operators who at present are on the Annex II list because they seemed to meet the criteria for inclusion in the proposed Category 4, would nevertheless have to justify their continued inclusion on the basis of their actual activities. Oftel believes that to ensure that inclusion in Annex II takes place on an objective, non-discriminatory and transparent basis, those operators who do not in fact meet the proposed Annex II criteria would have to be excluded from the list. As explained above, they would no longer be entitled to C13 interconnect charges directly from BT, (nor cost-orientated rates from other SMP operators under this Directive nor rights to interconnect with other Annex II operators). Those who are already on the Annex II list but whose eligibility would not be clear under the proposed category 4 would be contacted by Oftel after consultation is complete in May.
Applications for inclusion in Annex II
57 Operators who do not have RCS status but who believe they should be included in the Annex II list will need to contact Oftel after implementation, providing details of how they consider they comply with the general and specific category qualifications of Annex II as described above. Further details will be made available from Oftel or DTI on request on completion of this consultation.
58 The Interconnection Guidelines which Oftel has drawn up in cooperation with the industry will, depending on the outcome of this consultation, be amended to include details of procedures for inclusion in Annex II. These will identify what information and evidence Oftel/DTI require when considering an application for inclusion in Annex II.
Removal of Annex II Status
59 Under present circumstances, there could be cases where operators seek, and are granted, a licence on the grounds of the services which they plan to offer and then for whatever reason, proceed to offer different services instead, which do not in fact justify RCS status under the present policy. Similarly, from 1 January 1998, there are likely to be applicants whose service proposals appear to meet the Annex II criteria but who do not, in the event, offer such services. As under the existing rules, mere licensing status will not be enough to safeguard indefinitely such operators' interconnection rights: operators who are not entitled to inclusion in Annex II by virtue of the services they are actually providing, will be removed. This requirement does not preclude inclusion in Annex II at a later date should this be warranted. This action is necessary to ensure that the different rights and obligations of Annex II operators and non-Annex II operators are respected.
60 Operators who are systemless resellers will not qualify for inclusion in Annex II, neither would national switch based operators (eg least cost routers) unless they control access to customers by virtue of a number allocation made to them by Oftel. Payphone operators, who until now have technically qualified as RCS, would no longer do so. However, as they do not purchase interconnect services this would have no practical impact.
The cost-based charges, set in accordance with Condition 13 of BT’s licence, at which BT must supply interconnection services to operators with rights to interconnect.
Class Licence
A licence granted under the Telecommunications Act 1984 to all persons or to persons of a class, as distinct from an individual licence which is granted to a particular person.
Cost-orientated charges
Charges in which all elements of the charge can be related to costs.
Dial up X-25
Access to X25 data networks via the PSTN
End-to-End network services
Those network services provided to customers other than network operators as part of a basic retail service.
Enhanced services
All services with a telecommunications component but containing some function over and above basic retail services. They are made up of basic retail services plus additional elements that add value and are generally capable of being supplied by independent service providers.
Frame Relay Service
A packet switched data service providing for the interconnection of local area networks (LANS) and access to host computers at higher speeds (up to 2Mbit/s) than those provided by an X.25 service.
Incremental costs ( referred to as long run incremental costs or LRIC)
The costs that arise as a result of the provision of the 'increment.' In this document the increment refers to a service. In contrast to fully allocated costs, the incremental costs of a service include only those costs that are directly caused by the provision of the service.
National numbering scheme
Numbering Scheme is a scheme for the allocation and reallocation of telephone numbers.
Numbering administrator
Body designated to make allocations an reservations of numbering capacity from the National Numbering Scheme in accordance with Numbering Conventions.
Numbering conventions
Conventions are a set of rules and principles published by Oftel relating to the management of the National Numbering Scheme.
Network services
“Network Service” means any service which is provided by the Licensee by means of the Applicable Systems in relation to which the following provisions apply:
(a) the service consists in the provision of a Basic Conveyance Service and any other service necessarily incidental thereto; or
(b) the service consists entirely of one or more elements which elements could not practicably be provided to any End-user in identical form by anyone other than the Licensee because those elements are dependent upon the Licensee's provision of a Basic Conveyance Service to that End-user; or
(c) the service is one specified on the list of category (c) Network Services as agreed between the Director and the Licensee on 1 April 1998 and as amended from time to time by the Licensee following the consent of the Director provided that no service may be specified on the list unless Interested Parties have been consulted;
‘Basic Conveyance Service’ means a service consisting in the conveyance of Messages including switching incidental to such conveyance;
‘End-user’ means any person running a telecommunication system authorised to be connected to the Applicable Systems, not being a person running a telecommunication system under a licence granted individually by the Secretary of State under section 7 of the Act;
‘Interested Parties’ has the meaning given in Condition 13.42.
Publicly available telecommunications services
Whether a service is ‘publicly available’ is likely to be a question of fact and judgement which will depend on all the circumstances. As a minimum, it is likely that a telecommunication service will be publicly available, if it is ‘on offer’ to anyone who is prepared to pay for it probably with standard terms and conditions. In some circumstances, however, this criterion may not be sufficient. Public accessibility of the network over which the service is provided may also need to be taken into account.
Interconnection services purchased from BT by other operators under the terms of Condition 13 of BT’s licence.
A statement of recommended allocation of transmission impairments (eg loss or delay) across multiple PTOs to ensure satisfactory end to end transmission performance on calls.
Relevant Connectable System (RCS)
Defined in all PTO licences. In essence it means a telecommunications system run under an individual licence, authorised for the provision of connection services for reward to the general public. Its significance is that it allows an operator who has RCS status to connect to BT's system at condition 13 charges (essentially ‘cost plus’). The main categories of licensee with RCS status are PTOs, International Simple Resale operators and personal numbering operators.
X.25
A widely available, low speed, packet switched data service operating at speeds below those offered by frame relay.
ORGANIZATIONS WITH RIGHTS AND OBLIGATIONS TO NEGOTIATE INTERCONNECTION WITH EACH OTHER IN ORDER TO ENSURE COMMUNITY-WIDE SERVICES
referred to in Article 4(1)
This annex covers those organizations which provide switched and unswitched bearer capabilities to users upon which other telecommunications services depend.
Organizations in the following categories have both rights and obligations to interconnect with each other, in accordance with Article 4(1). Interconnection between these organizations is subject to additional supervision by national regulatory authorities, in accordance with Article 9(3). Special interconnection charges, terms and conditions may exist for these categories of organizations in accordance with Article 7(3).
(1) Organizations which provide fixed and/or mobile public switched telecommunications networks and/or publicly available telecommunications services, and in so doing control the means of access to one or more network termination points by one or more unique numbers in the national numbering plan. (See notes below)
(2) Organizations which provide leased lines to users’ premises.
(3) Organizations which are authorized in a Member State to provide international telecommunications circuits between the Community and third countries, for which purpose they have exclusive or special rights.
(4) Organizations providing telecommunications services which are permitted in this category to interconnect in accordance with relevant national licensing or authorization schemes.
Control of the means of access to a network termination point means the ability to control the telecommunications services available to the end-user at that network termination point.
Control of the means of access may entail ownership or control of the physical link to the end-user (whether wire or wireless), and/or the ability to change or withdraw the national number or numbers needed to access an end-user's network termination point.
SPECIFIC PUBLIC TELECOMMUNICATIONS NETWORKS AND PUBLICLY AVAILABLE TELECOMMUNICATIONS SERVICES (referred to in Article 3(2))
The following public telecommunications networks and publicly available telecommunications services are considered of major importance at European level.
Organisations providing the public telecommunications networks and/or publicly available services identified below which have significant market power are subject to specific obligations with regard to interconnection and access, as specified in Articles 4(2), 6 and 7.
Part 1
The fixed public telephone network.
The fixed public telephone network means the public switched telecommunications network which supports the transfer between network termination points at fixed locations of speech and 3, 1 kHz bandwidth audio information, to support inter alia.
The fixed public telephone service according to Directive 95/62/EC of the European Parliament and of the Council of 13 December 1995 on the application of open network provision (ONP) to voice telephony.
The fixed public telephone services means the provision to end-users at fixed locations of a service for the originating and receiving of national and international calls, and may include access to emergency (112) services, the provision of operator assistance, directory services, provision of public pay phones, provision of service under special terms and/or provision of special facilities for customers with disabilities or with special social needs.
Access to the end-user is via a number or numbers in the national numbering plan.
Part 2
The Leased lines service
Leased lines means the telecommunications facilities which provide for transparent transmission capacity between network termination points, and which do not include on-demand switching (switching functions which the user can control as part of the leased line provision). They may include systems which allow flexible use of the leased line bandwidth, including certain routing and management capabilities.
Part 3
Public mobile telephone networks
A public mobile telephony network is a public telephone network where the network termination points are not at fixed locations.
Public mobile telephone services
A public mobile telephone service is a telephony service whose provision consist, wholly or partly, in the establishment of radiocommunication to one mobile user, and makes use wholly or partly of a public mobile telephone network.
Switched and unswitched bearer capabilities are connection services which provide a path across telecommunications networks and allow transparent end-to-end communication according to a particular protocol, such as voice, telex, ISDN 64 kbit/s data or packet mode data. ‘Transparent’ means that the content of the messages is not altered between the end points, though the format of delivery may vary (eg analogue in, digital out). These services provide essentially a ‘real time’ communication service, any delays being limited to the propagation, processing and statistical delays inherent in the mode(s) of communication used.
These bearer services may include supplementary features which cannot technically or economically be provided in identical form separately from the bearer service. They do not include enhanced services which are capable of being provided separately over bearer services and which include one or more components which are not bearer services. Such enhanced services include messaging, transaction services, directories, navigation services and the provision or processing of content. This implies that the interconnection services which Annex II operators provide will be the same as Network Services as defined in Oftel’s Statement Promoting competition in services over telecoms networks (February 1997) and being those services which BT and other operators with SMP provide from their Systems Businesses.
For connection-oriented packet mode services, bearer capability is taken to mean up to OSI layer 3 (network layer), while for connectionless services, it is taken to comprise routing of datagrams only, since the transport function is provided by the terminal equipment and not the network.
It should be noted that while the Network Services provide simple end-to-end communication between Network Terminating Points, the protocol at the interconnection interface may be more complex, such as CCITT7 signalling for voice and X75 for X25 packet services. For Internet Protocol (IP) services, it may include services necessary for the efficient routing of packets within the worldwide Internet, such as Border Gateway Protocol. Thus the definitions of bearer capabilities and Network Services refer to the connection service provided between customers and not the more complex protocols that may be used between interconnection gateways.
Bearer services can be provided over a variety of link layer and physical layer services. Some bearer services can be provided over other bearer services. For example, a leased line can be provided over an ATM virtual circuit. Similarly, an unswitched Internet bearer can be provided over a switched PSTN connection. The fact that a bearer service may be provided over a bearer service does not mean that the service is regarded as an enhanced service, since an enhanced service must additionally contain one or more components which are not bearer services.