A Statement by the Director General of Telecommunications
April 1998
Summary
Consultation details
Introduction
Chapter 1 Interoperability policy
Chapter 2 Implementation of policy
Chapter 3 Responses to the April 1997 Statement and Oftel's reaction to them
Annex A Draft licence condition to transpose RVTD Article 11.2
Annex B Draft Guidelines on Interconnection and Interoperability
Annex C Extracts from the Revised Voice Telephony Directive
Annex D List of respondents to the April 1997 Statement
Summary
S.1 This document is intended to update those within the industry who have followed the
extensive consultation on the regulation of interconnection and interoperability. It
describes how the proposed regulation will be implemented and seeks comments on the latest
version of the Guidelines which will support the regulations.
Policy
S.2 Oftel's policy on interconnection and interoperability has been developed through
discussion and consultation with interested parties. The main conclusions of this exercise
are:
- Technical specifications of interfaces between networks and CPE for Network Services must be published with sufficient notice before launch to enable other operators and equipment manufacturers to prepare. In addition, operators with interface control must provide technical specifications of proposed network-network interfaces for consultation in advance of publication.
- Technical specifications of interfaces between competing networks (network-network interfaces) for Network Services must be published with sufficient notice before launch to enable other operators and equipment manufacturers to prepare when such specifications are 'commonly provided' (ie generally available). In addition, operators with interface control must provide technical specifications of proposed network-network interfaces for consultation in advance of publication.
- An operator with market power should ensure that other operators are able to interconnect Network Services simultaneously with the launch of a its own corresponding retail service or, where there is no such retail service, when new functionality in the network becomes available for use.
Implementation
Licence condition requiring transparency of interface specifications
S.3 Requirements for publication of and consultation on technical specifications of
interfaces will be implemented, except for mobile and data services, through transposition
into the licences of public network operators of Article 11.2 of the Revised Voice
Telephony Directive (RVTD) – Directive 97/10/EC of the European parliament and of
the Council on the application of open network provision (ONP) to voice telephony and on
universal service for telecommunications in a competitive environment. A draft new
condition to achieve this is at Annex A to this Statement.
Requirements for mobile and data services cannot be implemented in this way because these
services fall outwith the scope of Article 11.2. Oftel and the DTI therefore intend to
broaden the scope of the new condition to cover these services as part of the process of
implementation of the Licensing Directive which will create harmonized licences. This will
be completed by the end of 1998.
Guidelines on Interconnection and Interoperability
S.4. A second draft of Guidelines on Interconnection and Interoperability is at Annex B to this Statement. The Guidelines explain Oftel's expectations
with regard to the availability of services for interconnection, and how it will approach
the resolution of disputes in this area. They also contain explanation of some of the
detailed aspects of operation of the system for publication of and consultation on
technical interface specifications. The Guidelines are backed by Oftel's powers to enforce
the following conditions in the licences of operators:
S.5 The draft Guidelines are published with this Statement for consultation. Oftel intends that they be published as a stand-alone document and will take effect in the summer of 1998. For details and timing of the consultative process, click here.
Consultation details
This Statement has two purposes:
1. To explain Oftel and the DTI's plan for addition of a new condition covering requirements for publication of interface specifications to the licences of telecoms operators initially through transposition of Article 11.2 of the Revised Voice Telephony Directive (RVTD).
2. Consultation on draft Guidelines on Interconnection and Interoperability.
1 Transposition of RVTD Article 11.2
This element of the document should be read in conjunction with the consultative document
on implementation of the RVTD to be published by the DTI. It provides explanation of how
the requirements of the RVTD Article 11.2 will be transposed into the licences of UK
operators. Oftel has decided to publish this detailed explanation separately from the
wider DTI document because it considers that it will be helpful to the industry following
the extensive consultation it has previously conducted on the issues involved. Details of
this consultation are set out in the Introduction.
2 Guidelines on Interconnection and Interoperability
The draft Guidelines at Annex B of this Statement explain how Oftel
will approach disputes about the availability of services for interconnection and
enforcement of requirements for publication of technical interfaces specifications. Oftel
intends to formally publish and promulgate these Guidelines in Summer 1998.
This draft is presented for consultation and Oftel would welcome comments on both the
policies explained in the Guidelines and the drafting of the Guidelines by Monday
8 June 1998. There will then be a further period up to Monday 22 June
1998 during which comments are invited on any submissions made to Oftel during
the initial period.
Written comments should be submitted to:
Chris Taylor
Network and Services Competition Branch
Oftel
50 Ludgate Hill
London EC4M 7JJ
Tel: 0171-634 8850
Fax: 0171-634 8924
E-mail: netcomp.oftel@gtnet.gov.uk
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.
Oftel has an free e-mail
based mailing list to help people stay informed about the work that Oftel is doing.
Introduction
I.1 This Statement sets out Oftel's conclusions following the consultative exercise it has
undertaken on requirements for regulation of interoperability in the UK both at network
network exercises, where network operators interconnect their systems, and at customer
network interfaces, between networks and customer premises equipment (CPE). It follows
these previous stages of consultation:
Policy framework
I.2 Interconnection and interoperability of services is important for customers who want
to be able to use services whether or not they are customers of the operator which has
launched the service, and whatever CPE they use.
I.3 Rules on interoperability are necessary to ensure that the existence of market power
in markets for interconnection of telecommunications markets and purchasing power in
markets for telecommunications equipment (refered to in this Statement and defined in the
draft licence condition at Annex A as 'interface control') do not distort the natural
commercial incentives for operators to make their services available to consumers
connected to networks controlled by other operators. Oftel's overarching goal is to secure
the best possible deal for customers in terms of quality, choice, and value for money and
it believes that this can best be achieved through efficient and effective competition. In
common with its general approach, Oftel therefore believes that it is undesirable to
regulate to ensure interoperability where markets can operate in an uninhibited way. The
measures set out in this Statement therefore concentrate only on those areas where the
normal operation of the market is distorted by the existence of market power or interface
control and, in those areas, they seek to mimic competitive pressures as closely as
possible.
Implementation
I.4 The Statement explains how measures to ensure interoperability where appropriate will
be implemented. This is the main area of change from previous proposals. The measures will
fall into two categories:
Guidelines on Interconnection and Interoperability
I.5 Oftel presents Guidelines on when services should be available for interconnection at
Annex B to this Statement. These Guidelines are published here for consultation (for
details of the consultative process, click here).
Following consultation on this draft, the Guidelines will be formally published. Oftel
therefore specifically invites comments on the draft Guidelines at Annex
B.
Licence condition to ensure transparency of interfaces
I.6 It is now intended to implement the bulk of measures regarding transparency of
interfaces through transposition into UK licences of the requirements of the EC Revised
Voice Telephony Directive (RVTD). A draft licence condition to achieve this is at Annex A. This will mean that modifications to the licences of
operators under Section 12 of the Telecommunications Act 1997 will not be made this year.
This change in the method of implementation does not mean that there will be any
significant change to operation of the measures which Oftel has proposed. Detailed
explanation of the implementation of interoperability policy is set out in Chapter 2. The
DTI will shortly be publishing a consultative document explaining the wider implementation
of the RVTD.
Interoperability policy
1.1 Oftel's policy on interoperability is explained in detail in the April 1997
Statement, Interconnection
and Interoperability: A Framework for Competing Networks. This Statement
contains proposals which are largely unchanged since then, and so does not repeat
the detailed analysis set out in the April 1997 Statement. The following is
therefore an overview of Oftel's policy.
1.2 Details of points raised in responses to the April 1997 Statement and of Oftel's
reaction to them are in Chapter 3.
1.3 Explanation of Oftel's plans for implementation of the policy which has resulted from
the consultative exercise is in Chapter 2.
The Director General's powers to enforce interoperability requirements
1.4 Oftel's consultative exercise has sought to construct a framework of guidance on when
and how it would expect to enforce the Director General's powers to require
interconnection of new services. These powers derive from the Director General's ability
to enforce the following conditions in the licences of operators:
Market power and interface control
1.5 Previous discussion and consultation on interconnection and interoperability has
considered the relevance of market power. This document considers the same concept of the
relative strength of individual operators or groups of operators and the remedies
explained in the document are largely the same.
1.6 Oftel has identified that there are two manifestations of this strength which affect
interoperability. The first is market power in markets for certain types of new telecoms
services which derives from an operator's control of exchange lines. This is the concept
which has been discussed at length in previous consultation on network interoperability
and it is explained in detail from paragraph 1.10 below. This measure
of market power is key to Oftel's approach on when new services should be available for
interconnection and is therefore central to the Guidelines on Interconnection and
Interoperability, a further draft of which is at Annex B to
this Statement.
1.7 The second manifestation is the ability of an operator to influence unduly the costs
or timing to other operators of introducing new functionality to their networks. This
usually derives both from an operator's purchasing power in markets for telecommunications
equipment, and from the inability of other operators, because of their reliance on the
network of the operator in question and lack of purchasing power in markets for
telecommunications equipment, to deploy alternative technical solutions to that chosen by
that operator. This form of strength is particularly important in considering the need for
transparency of interface specifications in advance of their implementation and so is a
trigger for additional obligations in the draft new licence condition at Annex A. It is defined in the draft condition as 'interface control'
and discussed in further detail from paragraph 1.19 below.
1.8 In fact, it is very likely that any operator which possesses interface control will
also have market power. This is because both control of exchange lines and buying power in
telecommunications equipment markets are functions of the size and ubiquity of networks.
Market power
1.9 The Guidelines at Annex B explain how Oftel will prevent abuse
of market power whilst leaving markets to operate freely where market power does not
exist. They will therefore act as a proxy for competitive pressure where markets are
distorted, and will not result in operators being required to make any offering which they
would not have felt some incentive to make anyway in a properly competitive market.
1.10 The definition of market power for the purpose of enforcing
licence obligations with regard to interconnection of services has involved
complex analysis of telecommunications markets and the characteristics which
confer market power on an operator in them. This has been particularly difficult
because some of the services to which these rules are likely to be applied are
new ones and it can be argued that it is impossible for market power to exist
in the market for a service which is not yet established or perhaps not even
launched (indeed some respondents to the April 1997 Statement
argued this). However, it should be borne in mind that market power can be transferred
from a related market, particularly where an input from the related market is
required for delivery of the service in question.
1.11 Oftel maintains its view that market power in markets for a new services is likely
to result directly from control of the means of access to 'addressable customers' (ie
users to whom calls can be made using the service in question). This means control of
exchange lines to customer premises. Services cannot be accessed by customers or delivered
to them without exchange lines and so interconnection is necessary to enable customers
directly connected to networks other than the one launching the service in question to be
able to use the service. To understand the concept of market power in this respect, one
needs to consider the respective positions of an operator controlling a large proportion
of the total number of exchange lines (the 'large operator') and hence with the ability to
exert market power, and an operator with a small proportion of the total number of
exchange lines (the 'small operator') both launching new services which are capable of
being used between competing networks.
1.12 The small operator does not have a very large number of directly connected customers
and so will want to interconnect with the large operator in order to provide its customers
with access and hence extend the market for its service. The large operator on the other
hand may have no need to extend the market for a service it launches because the directly
connected customers of the small operator are insignificant to it. Furthermore, the large
operator may actually want to weaken the position of the small operator by not making a
service available to its customers. Where an operator controls an overwhelming majority of
exchange lines as is the case with BT in the UK it is clearly questionable whether
it has sufficient incentive to provide interconnection of its new services without some
guidance to substitute for the commercial incentive it would feel in a competitive market.
1.13 It should be noted that, whilst access to addressable customers is
the key determinant of market power in this context, share of the totality of 'addressable
customers' in the UK may not always be the appropriate measure of market power for
example, access to addressable mobile customers might be the relevant market for the
assessment of market power for some services.
1.14 This analysis explains how market power affects the natural competitive operation of
markets between interconnecting operators and hence results in a need to ensure
interoperability at networknetwork interfaces. But the same market power can also
distort interoperability at customernetwork interfaces.
1.15 Customers need their customer premises equipment (CPE) to be capable of accessing
services irrespective of the network to which it is connected. Use of CPE which is not
compatible with networks other than that to which it is presently connected will act as a
disincentive to customers to move to another network provider. Thus the choice available
to that customer is restricted, and the ability of network operators to compete is
impaired. This means that there is an incentive for operators with market power at the
network level to control the specification of customernetwork interfaces so as to 'lock
in' customers to its network. This strategy is not available to operators without market
power because they do not have sufficient purchasing power to exert undue influence on the
adoption of standards by CPE manufacturers.
1.16 So there is a potential anti-competitive effect resulting from the existence of
market power in networks which manifests itself at customernetwork interfaces. This
market power can also distort CPE markets through undue discrimination or preference by
the network operator with market power in its provision of data on the specification of
customernetwork interfaces to CPE manufacturers. For example, the network operator may
be able to provide its specification solely to a 'favoured' manufacturer or give data to
that manufacturer before others. To avoid the possibility of distortion of CPE markets by
network operators with market power, it is therefore necessary to ensure that
specifications for customernetwork interfaces are transparent and published sufficiently
ahead of utilisation to enable other networks and CPE manufacturers to use them.
1.17 The above analysis of market power explains why it is necessary for regulation to
ensure that interoperability is not hampered by market failures resulting from the
existence of market power. But it is important to understand that regulation to ensure
interoperability of all services is not appropriate. As already stated, Oftel is only
concerned to rectify defects in the competitive operation of markets, and this means that
regulation must not interfere where operators legitimately choose not to share their
services. The crucial issue of how markets and services for which interoperability are
appropriate can be identified is explored from paragraph 1.25 below.
1.18 If requested, Oftel would consider whether an operator has market power
in the context discussed above. Oftel would not normally expect an operator
to be in possession of market power unless it controls at least 25% of exchange
lines, but it does not rule out possession of market power by an operator controlling
less than 25% of exchange lines. Oftel's consideration would involve detailed
analysis on a case-by-case basis and would not consist simply of market share
considerations. Consistent with the approach set out in Oftel's Guidelines
on the Operation of the Fair Trading Condition, the relevant factors
which Oftel would consider will include:
Interface control
1.19 Interface control is the ability of an operator to exert undue
influence on the decisions of other operators about technical specifications of interfaces
and when to deploy them. Such influence can therefore affect the cost to other operators
of building and developing their networks. Interface control derives from the purchasing
power operators have in markets for telecommunication equipment. Operators with large
networks will purchase more switching equipment and hence will have a greater say in the
specification of interfaces within that equipment. Other operators who wish to organise
interconnection and interoperability of their services with those of the large operator
will then have no choice but to deploy compatible equipment and will therefore have to
purchase equipment from the same supplier as the large operator or be sure that an
alternative supplier can provide interoperable equipment. This effect will be mitigated
where internationally defined or agreed standards are available and so consultation on
technical interface specifications will not be required where an internationally adopted
interface is being implemented (see paragraph 28 of the draft Guidelines at Annex B for further detail on this).
1.20 Interface control can distort interoperability both at networknetwork and
customer network interfaces. Transparency of networknetwork and customernetwork
interface specifications is therefore very important where the first mover has interface
control and hence interface control is an important trigger for additional obligations to
ensure that markets are not distorted in the draft new licence condition at Annex A.
1.21 In practice, operators with market power in terms of control of a proportion of all
exchange lines in the UK will also be able to exert purchasing power in markets for
telecommunications equipment as a result of the size and reach of their networks. They
will hence have interface control with regard to new interfaces for which there are no
internationally defined or agreed standards. Oftel would therefore expect to
determine that an operator has interface control if it has decided that an operator has
market power in terms of control of a proportion of all exchange lines in the UK.
Where operators have market power in markets defined differently from the totality of
exchange lines in the UK, they will not necessarily be in possession of interface control.
For example, the market for interconnection of a particular service may be defined as
being related to control of mobile or internet connections (as discussed in paragraph 1.13 above), but an operator with such market power would not
be likely to have interface control as a result because that market power would not give
the operator sufficient purchasing power with equipment suppliers.
Interoperability and innovation
1.22 The trade-off between interoperability and innovation has been a key part of the
analysis to identify where measures to ensure interoperability are required.
1.23 The development of innovative new services is a vital characteristic of a vibrant and
competitive telecommunications industry. Sometimes, operators legitimately seek
differentiation of their brand through exclusive provision of innovative services. Oftel
recognises that incentives to innovate could be inhibited if regulation of
interoperability forced operators to share such services, and has therefore taken care to
ensure that the rules will not impinge on them.
1.24 As explained above, measures to ensure interoperability will only apply where normal
operation of markets is distorted by the existence of market power and interface control,
and the effect of these measures will be to mimic competitive situations as closely as
possible. There will therefore be no effect on incentives to innovate as they exist in
competitive markets.
To which services should interoperability rules apply?
To Network Services
1.25 The distinction between Network Services and Enhanced Services is
now established in BT's Licence. Network Services is defined in Condition 18.3 of BT's
licence and this definition is set out in Fig 1.1.
1.26 The April
1997 Statement also established the distinction between Cooperative Network
Services and other Network Services.
1.27 Certain Network Services only need to work within one network because the
functionality of the service usually resides in the local exchange for example, 'Call
Waiting.' However other Network Services are reliant upon networks interconnecting in
order to work for calls crossing different networks for example, 'Ring Back when Free.'
The latter type of service is defined as a Cooperative Network Service. Whilst the
characteristic that Cooperative Services require interworking between networks is
technical, Oftel will also take account of the effect of market power in reaching a view
as to whether services should be made available for interconnection. For example, some
services may not require new or amended technical specifications for interworking between
networks in order to be interconnected, but commercial viability of the service will still
depend on access to the network of an operator with market power. Hence, the requirement
to interconnect Cooperative Network Services is the result not just of technical
arrangements but of the commercial characteristics of services also.
1.28 Interoperability of Cooperative Network Services is desirable for customers and for
the development of competition. Customers obtain the benefits of interoperability of these
type of services by being able to use the services available in calls to other users who
may not necessarily be connected to the same network. There are benefits to competition
both at the network level because the unavailability of such services may hinder the
ability of smaller networks to compete and also in markets served by independent
service providers (ISPs) because, without interoperability, their services will not be
available to all addressable customers. Without interoperability, ISPs are therefore
likely to use an operator with market power to ensure that their service is as widely
available as possible and thus lose the advantage of having choice of carrier. In
competitive markets, it is likely that operators would want to offer Cooperative Network
Services for interconnect so as to widen the market for them. But, where an operator has
market power in terms of control of 'addressable customers,' this may not be so. It is
therefore appropriate to ensure interoperability of Cooperative Network Services.
1.29 Interoperability of other Network Services at network-network interfaces is not an
issue because they cannot be made available across networks. However, it is necessary to
ensure that all Network Services can operate across customer-network interfaces so that
customers are able to use them irrespective of the CPE they have (unless the service has
specific CPE requirements, eg Caller Number Display can only be used on CPE with a visual
display). Measures to ensure interoperability of all Network Services at customernetwork
interfaces are therefore appropriate.
Not to Enhanced Services
1.30 For Enhanced Services, Oftel has concluded that, at least on existing telephony type
networks, there is no need for rules to ensure interoperability. Oftel has taken this view
because Enhanced Services usually consist of a Network Service or services plus some added
enhanced functionality provided by the service provider. This means that, for the service
to work across multiple public networks and their customer interfaces, only the underlying
Network Service needs to be interoperable. Aside from this, markets for Enhanced Services
are already competitive with direct competition in the provision of Enhanced Services
between telecommunications operators and also independent service providers. As stated,
Oftel will not intervene in an area of business where effective competition is
established. Ex-ante rules to ensure interoperability of Enhanced Service are therefore
not appropriate.
Enforcement
1.31 Measures to ensure interoperability of Network Services will fall into two
categories:
These categories are explained briefly below. Full detail on the method and programme
of implementation of rules on interoperability is contained in Chapter
2.
Guidelines on interconnection and interoperability
1.32. Oftel has discussed at length with operators how measures necessary to ensure interoperability of Cooperative Network Services (as explained above) should be codified.
This resulted in the drafting of Guidelines and the visual representation referred
to as the 'Decision Tree' in the April
1997 Statement. The 'Decision Tree' is reproduced at Figure 1.2.
1.33 The 'Decision Tree' illustrates the following key requirements:
1.34 These requirements have not changed, and Oftel has stated that failure to comply
with them could give rise to exercise of its enforcement powers with regard to conditions
in licences covering interconnection (through exercise of the dispute handling powers
conferred on the Director General by Regulation 6 of the Regulations which transposed the
ICD into UK licences), abuse of dominance, and undue discrimination, (see Chapter 2 for further detail). However, the Guidelines have been
substantially re-written to cover a wider range of interoperability issues and a draft is
attached at Annex B. It is intended that these Guidelines be published following
consultation on this draft. Oftel therefore specifically invites comments on this
draft (click here for full detail of the
consultative process).
Licence modifications to ensure transparency of interface specifications
1.35 The April 1997 Statement contained a draft new licence condition requiring
publication of and, for operators with interface control, prior notice of specifications
of networknetwork and customernetwork interfaces for Network Services. Implementation
of the RVTD means that Section 12 licence modifications will not be necessary for the bulk
of the required changes to licences. The programme for implementation of licence
modifications to implement interoperability policy is explained in detail in Chapter 2.
1.36 Oftel believes that requirements for publication of interfaces should be
as proposed in the April
1997 Statement and codified in the draft licence condition published with
that Statement, ie:
- 15 months in advance for new interfaces and withdrawal of existing interfaces, and
3 months in advance of amendments to existing interfaces.
1.37 The process explained in Chapter 2 will enable
implementation of this policy. There are some important concepts resulting from the
addition of the new licence condition through transposition of Article 11.2 of the RVTD
which require detailed explanation. In particular, Article 11.2 refers to 'commonly
available' interfaces. The meaning of this phrase is key to understanding of the effect of
the new condition and is fully explained in Chapter 2.
Industry cooperation on interconnection and interoperability issues
1.38 The April 1997
Statement noted the need for industry cooperation where there are generic
issues significant to the whole industry rather than between just two operators
or another limited grouping. The Statement considered particularly the need
for generic network upgrades where all networks will need to ensure interoperability
of new network platforms or capabilities. Oftel has actively sought to encourage
debate on such issues for example, through papers looking at issues associated
with interconnection of intelligent networks (IN) and Asynchronous Transfer
Mode (ATM) services and is developing its policy through the Future Interconnect
Project, details of which can be found in its Work Programme.
The Network Futures Group
1.39 The April 1997
Statement also noted the encouraging progress made by the industry in establishing
the Joint IPF/NICC Group to discuss generic interconnection and interoperability
issues associated with the launch of new services. A review of the functions
of the joint Group revealed that there was not consensus in the industry about
its remit. In particular, some operators felt that it was not an appropriate
forum to coordinate arrangements for individual service launch. The OLO Group
and BT have subsequently drafted a code of practice for launch of new services
(see paragraph 1.41 below). The decision was therefore taken
to convene another group to consider generic and future interconnection and
interoperability issues. A new group, the Network Futures Group (NFG) has therefore
been formed for this purpose.
1.40 Oftel has discussed at length with the industry the right membership of the NFG. The
group needs to be small enough for focussed discussion and to be able to make firm
recommendations, but it also needs a membership in which the whole industry can be
confident. Progress has not been as quick as Oftel had hoped, but Oftel is pleased to say
that the NFG held its first meeting in March 1998. Its Chairman is Dr. Keith Monserrat of
Scottish Telecom. Oftel would be interested to hear from any operator, not currently
represented on the NFG, interested in nominating a group member.
BT/OLO Group code of practice for launch of new services
1.41 As mentioned above, the OLO Group and BT has drafted
a code of practice containing the procedures they will follow to facilitate
interconnection of new services. Drafts of the code have been largely consistent
with the requirements set out by Oftel in the April
1997 Statement, this Statement, and the draft Guidelines on Interconnection
and Interoperability. Oftel welcomes the development of the code. The code of
practice can be viewed at BT's interconnection website: http//www1.btwebworld.com.interconnect
Implementation of policy
2.1 Oftel's policy on interoperability both at networknetwork and customernetwork
interfaces has not changed significantly since consultation on the Statement,
Interconnection and
Interoperability: A Framework for Competing Networks published in April
1997. Policy is explained in detail in Chapter
1. Much of the debate since consultation on the April 1997 Statement has
been about how to implement interoperability policy.
2.2 As stated in Chapter 1, there are two main strands to the
implementation of measures to ensure interconnection and interoperability of services
where appropriate:
Note however that the forthcoming Radio and Telecoms Terminal Equipment Directive
(RTTE) contains extra interface publication requirements aimed at providing a sufficient
level of detail for manufacturers intending to design equipment to any new interface.
Oftel believes that these two types of publication should remain separate so that
declarations aimed at users and telecoms managers remain easy to read.)
Guidelines on when services should be available for interconnection
2.3 Oftel's approach on the codification of rules on when services should be
available for interconnection has not changed significantly since consultation
on the April 1997 Statement.
2.4 That Statement contained draft Guidelines on Interconnection and Interoperability and
a visual representation of proposed rules known as the 'Decision Tree.' The key
requirements for interconnection of services are explained in Chapter
1.
2.5 Oftel has substantially redrafted the Guidelines on Interconnection and
Interoperability so that they cover a wider range of interoperability issues. A draft of
the Guidelines is at Annex B. It is proposed that these Guidelines
be published following consultation on the version at Annex B Oftel
would be grateful for comments on the draft Guidelines.
For details of the consultative process, click here.
2.6 Oftel will consider the circumstances of any failure to observe the requirements for
interconnection of services set out in the Guidelines. It is possible that such failures
will constitute breach of any or a combination or all of:
in which case Oftel will take necessary action to enforce compliance by the licensee
with its licence. In addition, action may be effected under the Director General's dispute
resolution and order making powers under Regulation 6 of the Telecommunications
(Interconnection) Regulations 1997 (the Regulations implementing the Interconnection
Directive (ICD)).
Rules to ensure transparency of interfaces
2.7 The April 1997
Statement included a draft new condition for addition to licences containing
detailed requirements for publication of new and existing networknetwork and
customernetwork interfaces where this is necessary for interoperability of
Network Services. Since consultation on the April 1997 Statement, much consideration
has been given to whether these requirements could be added to licences as part
of the transposition of the European Commission (EC) Revised Voice Telephony
Directive (RVTD). The April 1997 Statement
noted that Oftel's proposals for interoperability of customernetwork interfaces
had much in common with the RVTD. Oftel has reviewed this position together
with the DTI and it is now concluded that the RVTD provisions apply to networknetwork
interfaces as well as customernetwork interfaces. Oftel's plan for implementation
of rules on transparency and publication of interface specifications has changed
in the light of this conclusion, and the new plan is explained in detail below.
The Revised Voice Telephony Directive (RVTD)
2.8 The RVTD is required to be implemented in the UK (and other member states) by 30 June
1998. As stated above, there is considerable commonality between Oftel's interoperability
policy and the scope of the RVTD. In particular, Article 11.2 of the RVTD covers
publication of technical specification of interfaces and allows for periods of notice
prior to the introduction of new interfaces or changes to existing interfaces.
2.9 Oftel and the DTI have given a great deal of consideration to the question of whether
Article 11.2 could be transposed into licences to implement the requirements for
transparency and publication of interface specifications. As stated above, the conclusion
has been reached that the requirements of Article 11.2 apply to both networknetwork and
customernetwork interfaces.
2.10 The interfaces to which Article 11.2 applies are set out in Part 1 of Annex 2 to the
RVTD. This is reproduced at Annex C to this statement together with
the text of Article 11.2 itself. The first two tirets listed in the Annex cover
customernetwork interfaces for telephony (over analogue and digital lines) and ISDN. The
third tiret which covers 'any other interfaces commonly provided' includes
networknetwork interfaces.
'Commonly provided interfaces'
2.11 Transposition of RVTD Article 11.2 will effectively mean that all operators
will be required to publish specification of interfaces which are 'commonly
provided' both at the networknetwork and customernetwork levels. At first
sight this appears to be a significant change from the policy expressed in Chapter
2 of this Statement and previously in the April
1997 Statement where Oftel has set out its conclusion that publication of
interfaces at the networknetwork level should only be required of operators
with interface control. However, implementation of RVTD Article 11.2 will in
practice not be significantly different from this. This is because of the meaning
of the phrase 'commonly provided.'
BT (and other operators with interface control)
2.12 BT is obliged by Condition 13 of its licence to provide interconnection services
on non-discriminatory terms to all operators entitled to interconnect with BT, and Oftel
therefore takes the view that the interfaces over which BT provides interconnection are
'commonly provided'. Hence any new interface launched and any existing interface amended
or withdrawn by BT will be subject to the publication requirements for 'commonly provided'
interfaces.
2.13 In addition to the publication requirements, BT, and other operators with interface
control will be required to notify the Director General of new interfaces where there is
no internationally defined or agreed standard for that interface (see paragraph 28 of the
draft Guidelines at Annex B for further details) for a period of
consultation prior to its publication with a view to achieving industry consensus on the
interface specification. This obligation will be triggered under the new condition by
Determination by the Director General that an operator has interface control. The
conditions under which the Director General is likely to consider making such a
determination are explained in Chapter 1 and the draft Guidelines
at Annex B.
2.14 Where agreement cannot be reached, the process is backed by the Director General's
power to specify 'Essential Interfaces' (Condition 13B of BT's licence and equivalents).
The draft Guidelines at Annex B include explanation of when Oftel
would be likely to use this power and the factors it would be likely to take into account
in reaching a decision on an interface specification.
Other fixed network operators
2.15 Networknetwork interfaces launched by an operator without interface control
and used for interconnection with one other operator or within a small group
of operators will not fall within the category 'commonly provided' and so will
not be required to be published. Interfaces adopted as standard across the industry
(eg the C7 interface for call termination) would be 'commonly provided' and
so caught by the requirements of licence conditions transposing Article 11.2
of the RVTD. This is a change to the proposals set out in the April
1997 Statement where Oftel proposed that there is no need for requirements
on operators without interface control. However, there is in any case a strong
commercial incentive for such operators to ensure that their interfaces are
transparent and agreed by the industry, so as to prevent a larger operator from
introducing its own equivalent interface and thus rendering the first interface
obsolete. Oftel does not therefore regard a requirement for operators without
interface control to publish interface specifications where their interface
is generally available as unduly onerous. However, such a requirement will mean
that all operators must have the ability to publish interface specifications
according to the requirements of the directive (ie easily accessible to interested
parties). The draft condition sets out the categories of persons to whom notice
of publication should be brought. Within this framework, Oftel encourages the
industry to develop an easily accessible single medium for publication (eg an
Internet website) or to publish via the British Standards Institute for C7 specifications.
Services not covered by the RVTD
Mobile services
2.16 There has been some debate about whether mobile operators should be subject to
requirements for publication of interfaces. Article 11.2 of the RVTD does not cover mobile
networks or services, and so no obligations can be added to the licences of mobile
operators through transposition of Article 11.2. However, all four mobile licences
(Vodafone, Cellnet, One2One, Orange) contain licence conditions which can be enforced to
require publication of interfaces at the customernetwork and networknetwork levels.
2.17 For customernetwork interfaces, mobile operators have an obligation to publish
details of new interfaces on introduction (Condition 11.1 in the licences of Vodafone and
Cellnet, Condition 12.1 in the licences of Orange and One2One). Also, Oftel considers that
the standards and specifications for interfaces on mobile networks at the
customernetwork level are well established and transparent through international
publication. There is therefore unlikely to be an issue about publication of interfaces
for mobile operators at the customernetwork level.
2.18 Mobile operators also have a licence condition requiring notification of changes to
the applicable system (Condition 12.1 in the licences of Vodafone and Cellnet, and
Condition 17.1 in the licences of Orange and One2One) which could be enforced if necessary
to provide transparency of networknetwork interfaces.
Data services
2.19 Oftel considers that there is no reason why requirements for publication of
interfaces should not extend to those for data services. However, the RVTD does not cover
data services (other than voice band data) and so this cannot be achieved through
transposition of Article 11.2.
2.20 Publication of interfaces associated with data services could, if necessary, be enforced through existing licence conditions covering customernetwork interfaces and alterations to applicable systems contained in licences and explained in paragraphs 2.17 and 2.18 above with reference to mobile operators.
The Licensing Directive
2.21 The above explains how transposition of the RVTD will implement requirements for
publication of both networknetwork and customernetwork interfaces for voice services
on fixed networks. And how the same requirements for mobile and data services could be
enforced using existing licence conditions.
2.22 This will leave a rather untidy situation in licensing terms with the new condition
implementing the RVTD coexisting and overlapping with the pre-existing conditions.
2.23 The EC Licensing Directive requires consistency of licences except where
differences can be objectively justified by the end of this year. The process of
formulating a consistent suite of licence conditions will provide the opportunity to
rationalise licence conditions. Oftel and the DTI will include rationalisation of licence
conditions dealing with interoperability as part of the implementation of the Licensing
Directive. Precisely how it is intended to do this will be the subject joint Oftel/DTI
consultation later this year.
Summary
2.24 To summarise the process for implementation of requirements for publication of
interface specifications:
Specific requirements for publication of interfaces for voice services will be added to
licences through transposition of Article 11.2 of the RVTD. The requirements will apply to
those interfaces listed in Part 1 of Annex 2 to the RVTD which includes all
customernetwork interfaces and 'commonly provided' networknetwork interfaces.
But this will not include mobile or data (other than voice band data) services, so existing licence conditions will be enforced to ensure transparency of interfaces for mobile and data services if necessary.
Implementation of the Licensing Directive will enable rationalisation of licence
conditions dealing with interoperability by the end of 1998.
2.25 Oftel will review licence requirements for publication of interfaces following full
implementation of the Licencing Directive. Modifications to licences under Section 12 of
the Telecommunications Act will then be considered if necessary.
Responses to the April 1997 Statement and
Oftel's reaction to them
3.1 Oftel received 14 responses to Interconnection and
Interoperability: A Framework for Competing Networks published in April
1997 including one representing a group of telecommunication network operators.
A list of respondents is at Annex D of this document.
This chapter explains the main issues which were raised in the responses, and
gives Oftel's reaction to them. It identifies issues raised with regard to interoperability
generally, then those specifically with regard to interoperability at networknetwork
interfaces, and finally those with regard to interoperability at customernetwork
interfaces.
General issues
Incentives to innovate
3.2 A number of respondents, including the joint response from operators, stressed the
importance of ensuring that requirements for interconnection and interoperability do not
jeopardise incentives for operators to provide innovative new services and to
differentiate their products. There was a concern expressed that such requirements could
lead to homogenous service offerings from all operators with little scope or incentive to
produce innovative services tailored to an individual operator's customer base.
3.3 Oftel has been concerned from the start of its review of policy on interconnection
and interoperability to ensure that requirements do not act as a brake on innovation
and do not result in a market in which operators simply launch 'me too' services
following the lead of the dominant operator. This objective was clearly stated
both in the April 1997 Statement
and is repeated in this Statement. Both explain that Oftel's policy will only
require interconnection and interoperability in situations where the existence
of market power and interface control skews the operation of markets, and that
regulation will therefore not artificially hinder incentives to innovate
and differentiate services.
Symmetrical obligations
3.4 Some respondents to the April
Statement including BT suggested that requirements to interconnect new
services should be the same for all operators, with no additional requirements
on operators with market power. They advocate a symmetrical obligation for all
operators to interconnect a 'basic' set of services. This idea is closely related
to the debate on 'any-to-any' services which was explored in detail in the April 1997 Statement.
Oftel concluded that there is sufficient commercial incentive for operators
to provide basic services at both the retail and wholesale levels and that ex-ante
rules are therefore unnecessary except where such incentives are distorted by
the existence of market power. Oftel's expectation that operators with market
power will interconnect cooperative network services will, in practice, cover
all services included in the working definition of 'any-to-any' at Fig 3.1 below
(which was also included in the April 1997 Statement),
and so separate rules are unnecessary.
3.5 The statement also noted however that there are some exceptions to this incentive
circumstances in which operators might reasonably wish not to provide access to some
'any-to-any' services. An example of this is barring of international calls from analogue
cellular networks because of the risk of fraud. Oftel recognises that operators may bar
certain calls from their networks for legitimate reasons, but it will always consider the
implications for customers and for competition if called upon to investigate any such call
barring. In addition, Oftel expects operators to keep their customers fully informed of
any numbers which cannot be dialled from their networks.
3.6 Oftel is aware of one instance of call barring which has caused inconvenience
to customers. This is the unavailability of some important freephone numbers
(eg Helpline and charity services) from IPM public payphones and from private
payphones. In addition, indirect access numbers are not generally available
from payphones other than BT's. Oftel recognises that there may be difficulties
for payphone operators in providing access to freephone and indirect access
numbers because there will be no recompense of the costs they incur in originating
the call unless they arrange to receive a payment from the operator providing
the service. However, there is a legitimate public expectation that freephone
services should be available from all payphones, and so Oftel has consulted
on a proposal that such services be mandated from all publicly available payphones.
Full detail of this proposal and more generally on the issue is included
in Oftel's consultative document on
payphones published in February 1998 (available from the Oftel Website:
http://www.oftel.gov.uk or from Oftel's Research and Intelligence Department).
Market power
3.7 Respondents to the April 1997 Statement requested further clarity on both
the definition of the relevant market in which market power be measured and
the mechanism proposed by Oftel to trigger obligations on operators with market
power. Chapters 1 and 2 explain Oftel's
analysis of market power in interconnection markets for new services, and its
proposals, based on review of the position set out in the April 1997 Statement
in the light of UK implementation of the RVTD. Oftel has adapted its approach
to incorporate an 'interface control' trigger to be included in the new licence
condition on publication of and consultation on technical interface specifications.
Oftel maintains its view that market power in the interconnection of new Cooperative
Network Services derives from control of the means of access to customers (ie
the proportion of the total number of exchange lines which could carry the service
in question which are controlled by an operator), though it will take account
of other factors in assessing market power (see paragraph 1.18
for details). Interface control is the ability of an operator to exert undue
influence on the decisions of other operators about technical interface specifications
and when to deploy them.
Definition of Network Services
3.8 Some respondents questioned the definition of Network Services for the purpose of
deciding expectations for interconnection. In particular, BT suggested that use of the
definition contained in modifications to C18.3 of BT's licence as proposed at the time of
BT's response in conjunction with proposed interoperability requirements could mean an
obligation to interconnect some Enhanced Services. C18.3 has now been modified in slightly
amended form to that proposed at the time of BT's response, and Oftel and BT have
discussed the implications for interoperability. The drafting of Condition 18.3 ensures
that Enhanced Services will not be caught by rules requiring interoperability.
Definition of Cooperative Services
3.9 Some uncertainty about the definition of Cooperative Network Services was
expressed both in responses to the April
1997 Statement and at the workshop on interoperability held on 13 October
1997. At the workshop, Oftel was questioned about whether the definition was
primarily economic or technical. Whilst the characteristic that Cooperative
Services require interworking between networks is technical, Oftel will also
take account of the effect of market power in reaching a view as to whether
services should be made available for interconnection. For example, some services
may not require new or amended technical specifications for interworking between
networks in order to be interconnected, but commercial viability of the service
will still depend on access to the network of an operator with market power.
Hence, the requirement to interconnect Cooperative Network Services is the result
not just of technical arrangements but of the commercial characteristics of
services also.
'Future proofing'
3.10 One respondent to the April
1997 Statement suggested that any new system for regulation of interconnection
and interoperability should be capable of dealing with any relevant issues which
might emerge in the future possibly resulting from new technological developments.
3.11 Oftel agrees that a 'future proof' system is desirable and the proposals explained in
this document are designed to work for foreseeable situations. But there is a limit to the
extent to which the sorts of interoperability related issues which will face the industry
in years to come can be predicted. It would not be appropriate to let concern about the
future obstruct the putting in place of a system necessary to ensure fair trading in
today's market, and so Oftel will continue with implementation of the current proposals.
3.12 Oftel is thinking hard about the sorts of issues which may face the industry
and its regulator in the future, and is committed to a project 'future interconnect
issues' dedicated specifically to this. Details of this project can be found
in Oftel's Management Plan.
BT's behaviour
3.13 One respondent commented that BT should be mindful of the implications of competitive
rules for its dealings with other operators, and should therefore consider queries raised
by other operators before it launches any new service or product rather than await
regulatory action at a later stage.
3.14 Oftel agrees with this view and has consistently stated that BT should not solely
consider its regulatory obligations as the definitive procedure to which it must adhere
before launching any product or service. Oftel wishes BT's behaviour to reflect the
increasingly competitive nature of the markets in which it operates, and the company
should ensure that it provides sufficient notice to other operators before any new service
is launched. In a fully competitive market BT would have a strong commercial incentive to
ensure that its network was interoperable with other operators, and BT should act in a
manner representative of a fully competitive market now.
Publication requirements
3.15 Various respondents commented on the timescales suggested by Oftel (and included in
the draft licence condition) as minimums for advance publication of new networknetwork
and customernetwork interfaces. Some thought that these notice periods were too long and
some too short. It is important to understand that Oftel does not believe prescriptive
notice periods are appropriate – rather, obligations should be to provide sufficient
notice to meet fair trading obligations. Oftel maintains its view that the timescales it
proposes are appropriate as minimum periods of notice except when it is agreed that and
the Director General has directed that a shorter period is appropriate. This is discussed
further in detail, and Oftel's conclusions are set out in Chapter 1.
3.16 One respondent suggested that Oftel should take powers to delay retail launch of
services where publication requirements are breached. This is a situation that Oftel would
deal with on a case by case basis and, in doing so, would consider the relevance of the
breach to any likely distortion of the markets involved.
Issues related to interconnection and interoperability at networknetwork
interfaces
Generic upgrades
3.17 In the April
1997 Statement, Oftel set out its view that operators must have a collective
approach to interconnection and interoperability issues which need to be progressed
on all networks simultaneously or in close coordination. Generally, there was
support for this in responses. One respondent expressed the view that any process
for coordination of action on generic upgrades should ensure that the industry
is not forced by consensus to adopt a sub-optimal solution. Another suggested
that the industry should not necessarily be required to make upgrades simultaneously
solutions should be backwards compatible where possible.
3.18 Oftel remains of the view that the industry should move together where necessary and
that generic upgrades should be industry driven. However, it would not favour sub-optimal
solutions resulting from gaming. In practice, it expects it to be in the best commercial
interests of all industry players to cooperate on generic issues. However, in cases where
consensus is not achieved or is obstructed, the Director General could enforce
interoperability through determination of Essential Interfaces under Condition 13B of BT's
licence and equivalents in other licences.
Development of industry cooperation on interoperability and appropriate fora to
facilitate this
3.19 Oftel has been working together with the industry to facilitate an industry
forum for discussion and to provide advice on generic interconnection and interoperability
issues. The April
1997 Statement reported on the work of the joint IPF/NICC Committee which
was established with this sort of role in mind. A number of respondents to that
document commented on the remit and constitution of the Committee and it was
concluded that consideration should be given to setting up a new group with
revised terms of reference to take on some of the functions of the Committee.
A new Group the Network Futures Group (NFG) has now been established for
this purpose under the chairmanship of Dr Keith Monserrat of Scottish Telecom.
The NFG met for the first time in March 1998.
Industry code-of-practice for new services launch
3.20 The industry has developed a code of practice for interconnection arrangements at the
launch of new retail services. The code is very much consistent with Oftel's proposals as
set out in the draft Guidelines on Interconnection and
Interoperability, and the timescales for publication of and consultation on new
interface specifications set out in the draft licence condition. Oftel welcomes the
development of the code and anticipates that its observance will reduce the likelihood of
referral of disputes to Oftel. The code of practice can be viewed at BT's interconnection
Website: http//www1.btwebworld.com.interconnect.
Topological changes to networks
3.21 In the April
1997 Statement, Oftel asked respondents whether specific licence modifications
are required for forward declaration of topological changes to networks. Respondents
who commented on this issue thought that this would not be necessary. However,
a general requirement to provide on request information necessary to facilitate
conclusion of an interconnect agreement including changes planned to be implemented
during the next 6 months has been added to licences as a result of UK implementation
of the Interconnection Directive. Such information would include detail of topological
changes to networks.
Issues related to interoperability at customer interfaces
Terminal portability
3.22 The joint operator response to the April 1997 Statement
expressed the view that terminal portability (ie the ability of any piece of
CPE to be compatible with all networks) should be mandated for basic services.
Oftel remains of the view that the tighter regime for publication and advance
notice of interfaces, the manner in which new customernetwork interface specifications
tend to be the result of international consensus, and the fact that difficulties
have not occurred in the UK to date, mean that it is unnecessary for terminal
portability to be mandated in the UK. However, it will keep this position under
review in the light of market developments and EC policy on this matter.
Extension of 'Essential Interfaces' condition to cover customernetwork
interfaces
3.23 Some respondents suggested that Condition 13B of BT's licence and equivalents in the licences of other operators should be modified to incorporate a power to specify Essential Interfaces at customernetwork as well as networknetwork interfaces, and that this might be a good method to facilitate mandatory terminal portability. Oftel takes the view that modification of the Essential Interfaces condition as suggested would be inappropriate firstly because international standards for customernetwork interfaces mitigate the danger of proprietary standards distorting the competitive process in the UK, and secondly because different standards for specification of customernetwork interfaces will not result in difficulties with interoperability between networks to the same degree as different standards for specifications of networknetwork interfaces.
Draft licence condition to transpose RVTD Article 11.2
The following condition is in a form suitable for incorporation into the proposed set
of conditions implementing the Revised Voice Telephony Directive which will be included in
the forthcoming DTI consultation document, and is subject to slight drafting changes which
may appear in that document.
RVTD Condition 1 Interpretation
RVTD1
(a) Annex II, part 1 of the Directive shall have the meaning set out therein the relevant parts of which for the purpose of Condition RVTD7 are as follows:
"Technical characteristics of interfaces at commonly provided network termination points are required, including where applicable reference to relevant national and/or international standards or recommendations:
- for analogue and/or digitally presented networks:
(a) single line interface;
(b) multiline interface;
(c) direct dialling-in (DDI) interface;
(d) other interfaces commonly provided;
- for ISDN: (where provided)
(a) specification of basic and primary rate interfaces at the S/T reference points, including the signalling protocol;
(b) details of bearer services able to carry voice telephony services;
(c) other interfaces commonly provided;
- and any other interfaces commonly provided."."Approved Apparatus" means, in relation to any system, apparatus approved under section 22 of the Act for connection to that system;
"Call Office" means telecommunication apparatus not supplied by the Licensee to any particular person but made available for use by the public or a class of the public;
"Customer Interface" means the Technical Characteristics of each Interface at any Network Termination Point within an item of Network Termination and Testing Apparatus relating to fixed public telephone services provided by means of the fixed public telephone network;
"Customer Interface Specification" means a description of a Customer Interface;
"Interested Parties" means those persons, other than the Licensee, with whom the Director considers it appropriate to consult;
"Interface" means a Customer Interface or a Network Interconnection Interface, as appropriate, and "Interface Specification" shall be construed accordingly;
"Interface Control" means that the Director has determined that the Licensee has sufficient influence to affect competition adversely in the provision of publicly available fixed telephone services by its ability to influence the costs and timescales which would be incurred by another operator in adopting the Licensee's intended Interface Specification, or a comparable Specification provided by another party;
"Major Office" means the Licensee's registered office and such other offices as the Director, having consulted the Licensee, may direct;"Message" means anything falling within paragraphs (a) and (d) of section 4(1) of the Act;
"Network Connecting Apparatus" means telecommunication apparatus comprised in the Applicable Systems which is not Network Termination and Testing Apparatus and is connected to another system;
"Network Interconnection Interface" means the Technical Characteristics of each interface at any Network Termination Point within an item of Network Connecting Apparatus relating to fixed public telephone services provided by means of the fixed public telephone network;
"Network Interconnection Interface Specification" means a description of a Network Interconnection Interface;
"Network Termination Point" means any point:
(i) within an item of Network Connecting Apparatus at which energy of any of the forms specified in section 4(1) of the Act is conveyed directly to or from apparatus comprised in a telecommunications system other than the one in which that Network Connecting Apparatus is comprised; or
(ii) within an item of Network Termination and Testing Apparatus at which such energy is conveyed directly to any Relevant Terminal Apparatus;
"Network Termination and Testing Apparatus" means an item of telecommunication apparatus comprised in the Applicable Systems installed in a fixed position on Served Premises which enables:
(i) Approved Apparatus to be readily connected to, and disconnected from, the Applicable Systems; and
(ii) the conveyance of Message between such Apparatus and the Applicable Systems, and
(iii) the due functioning of the Applicable Systems to be tested;
but the only other functions of which, if any, are:(aa) to supply energy between such Apparatus and the Applicable Systems;
(bb) to protect the safety or security of operation of the Applicable Systems; or
(cc) to enable other operations exclusively related to the running of the Applicable Systems to be performed or the due functioning of any system to which the Applicable Systems are or are to be connected to be tested (separately or together with the Applicable Systems);
"Notifying Licensee's Interface Specification" means any Interface Specification which has been notified by any telecommunications operator, other than Licensee, pursuant to a condition in that operator's Licence which is similar to RVTD 7.
"Relevant Consulting Period" means:
(i) in the case of any Network Interconnection Interface Specification, six months from the date of notification to the Director,
(ii) in the case of any Customer Interface Specification, 60 days from the date of such notification to the Director, or
(iii) in the case of either Interface Specification, such other period agreed by the Director;
during this period the Director may consult with Interested Parties, and the Licensee shall, if so directed by the Director, consult with such Parties;
"Relevant Party" means any person whom the Licensee might reasonably anticipate from the facts known to it would or might be required to modify, replace or cease to produce or supply any item of telecommunication apparatus connected or to be connected to any of the Applicable Systems as a result of any new or modified Interface Specification;
"Relevant Terminal Apparatus" means:
(i) "Terminal Apparatus" that is to say any telecommunication apparatus installed on Served Premises by means of which Messages are initially transmitted or ultimately received except a Call Office; and
(ii) any other telecommunication apparatus directly connected to Terminal Apparatus (including apparatus which is Terminal Apparatus by virtue of this paragraph) which would, if it were run with such Terminal Apparatus and any other apparatus by means of which it is so connected, constitute a system authorised to be run by the person running that Terminal Apparatus under a Licence;
"Served Premises" means a single set of premises in single occupation where apparatus has been installed for the purpose of the provision of telecommunication services by means of the Applicable Systems at those premises; and
"Technical Characteristics" means the physical, electrical and other relevant characteristics and the network interworking and service management protocols;
RVTD Condition 7 Publication of commonly provided interfaces: Article 11.2
Publication of Commonly Provided Interfaces within 90 days
RVTD7.1 The Licensee shall, in relation to all Customer Interfaces and Network
Interconnection Interfaces described in Annex II, part 1 of the Directive, in use by the
Licensee at the time this Condition comes into force, notify such Interfaces to the
Director and publish Interface Specifications relating to such Interfaces within 90 days
of this Condition coming into force, in accordance with paragraph RVTD7.6 below.
Publication of new Commonly Provided Interfaces
RVTD7.2 Where the Licensee has Interface Control in relation to any new Interface
Specification described in Annex II, part 1 of the Directive, which the Licensee intends
to use, and which is not published under paragraph RVTD7.1:
(a) the Licensee shall notify such Interface Specification to the Director at the commencement of the Relevant Consulting Period;
(b) the Licensee may, during and after the Relevant Consulting Period, modify any such Interface in line with representations made and any advice offered by the Director to the Licensee relating to such representations;
(c) the Licensee shall, after the end of the Relevant Consulting Period, publish the Interface specification in accordance with paragraph RVTD7.6 below;
(d) the Licensee shall not make any modifications to the Applicable Systems conforming to the new Interface Specification until a sufficient period has elapsed after publication of the Interface Specification to enable any Relevant Party to have a reasonable period in which to make any appropriate modifications to apparatus connected to the Applicable Systems. Such period shall be not less than 15 months, except where the Director has consented to a shorter period following the written application of the Licensee.
RVTD7.3 Where the Licensee does not have Interface Control in relation to any new Interface Specification described in Annex II, part 1 of the Directive, which the Licensee intends to use, and which is not published under paragraph RVTD7.1 above:
(a) the Licensee shall notify such Interface Specification to the Director;
(b) the Licensee shall publish the Interface Specification in accordance with paragraph RVTD7.6 below;
(c) the Licensee shall not make any modifications to the Applicable Systems conforming to the new Interface Specification until a sufficient period has elapsed after publication of the Interface Specification to enable any Relevant Party to have a reasonable period in which to make any appropriate modifications to apparatus connected to the Applicable Systems. Such period shall be not less than 15 months, except where the Director has consented to a shorter period following the written application of the Licensee.
Modifications of Commonly Provided Interface Specifications
RVTD7.4 Where any Interface Specification to which paragraphs RVTD7.1, RVTD7.2 and RVTD7.3
above apply is modified by the Licensee:
(a) the Licensee shall notify such modification to the Director and publish such modification in accordance with paragraph RVTD7.6 below;
(b) the Licensee shall not make any modifications to the Applicable Systems conforming to the new Interface Specification until a sufficient period has elapsed after publication of the Interface Specification to enable any Relevant Party to have a reasonable period in which to make any appropriate modifications to apparatus connected to the Applicable Systems. Such period shall be not less than 3 months, except where the Director has consented to a shorter period following the written application of the Licensee; and
(c) the modification shall include any change in the description of any Interface which may affect the maintenance of effective interoperability of services by means of the Interface described in the relevant Interface Specification.
Withdrawals of Commonly Provided Interfaces
RVTD7.5 Where any interface described in any Interface Specification to which paragraphs
RVTD7.1, RVTD7.2, RVTD7.3 and RVTD7.4 above apply is withdrawn by the Licensee:
(a) the Licensee shall notify such withdrawal to the Director and publish such withdrawal in accordance with paragraph RVTD7.6 below; and
(b) the Licensee shall not make any modifications to the Applicable Systems conforming to the new Interface Specification until a sufficient period has elapsed after publication of the Interface Specification to enable any Relevant Party to have a reasonable period in which to make any appropriate modifications to apparatus connected to the Applicable Systems. Such period shall be not less than 15 months, except where the Director has consented to a shorter period following the written application of the Licensee.
Publication of Commonly Provided Interfaces
RVTD7.6 The requirements as to publication are that:
(a) the description of the Technical Characteristics must be such as to assist in securing the effective interoperability of telecommunication systems and apparatus, and to secure, in particular, (although without prejudice to the generality of the foregoing) the correct operation of terminal equipment;
(b) the Licensee shall ensure that each Interface Specification is published in a manner appropriate for bringing the matters to which the Interface Specification relates to the attention of:
(i) the persons mentioned in paragraph RVTD7.6(c) below,
(ii) any person whom the Director considers likely to be affected by or to have an interest in such matters and whom the Director has determined for the purpose of this sub-paragraph, and
(iii) any other person likely to be affected by or to have an interest in such matters;(c) the Secretary of State, the British Standards Institution, all persons to whom functions have been delegated pursuant to section 25 of the Act, all telecommunication operators with whom the Licensee is obliged to offer interconnection on request, appropriate representatives of suppliers and manufacturers of telecommunication apparatus and systems, and appropriate representatives of users or consumer interests; and
(d) where the Director considers it necessary to enable Interested Parties to obtain easy access to the information contained in Interface Specifications, he may direct the Licensee to send copies of any Interface Specification, or any class of Interface Specification, to any person specified by him for the purposes of this sub-paragraph.
Amendments of Interface Specifications directed by the Director
RVTD7.7 If, following any representation made to him, the Director concludes that any
Interface Specification contains insufficient information for its purpose he may direct
the Licensee to:
(a) amend the Interface Specification in order to remedy the defect, and
(b) publish the amended Interface Specification in accordance with the provisions of paragraph RVTD7.6 and in relation to any period specified by the Director which takes into account the need to ensure a sufficient period has elapsed after publication of the amended Interface Specification to enable any Relevant Party to have a reasonable period in which to make any appropriate modifications to apparatus connected to the Applicable Systems.
Draft Guidelines on Interconnection and Interoperability
When completed, these Guidelines will published as a stand alone document. It is
intended that this will take place in July 1998. Oftel would welcome comments on the draft
contained in this annex.
Introduction – scope of these Guidelines
1 These Guidelines contain explanation of how Oftel will approach enforcement of rules on
interoperability of services between separate networks and between customer premises
equipment (CPE) and networks. These rules cover requirements
• to make services available for
interconnection,
• to consult with interested parties concerning new or changed interfaces, and
• to publish interface specifications
and are backed by the following conditions in the licences of operators:
[NB It is hoped that the last three of the conditions listed above will be
rationalised as part of the process of consolidation of licencing conditions under the
Licensing Directive. This work is to be completed by the end of 1998. The Guidelines will
be amended to take account of this when the process is completed. Further changes to the
requirements for interface publication may occur when the forthcoming Radio and Telecoms
Terminal Equipment (RTTE) Directive is implemented.]
2 These Guidelines do not affect the scope of these licence conditions or any others. The
Director General will take them into account in applying the relevant conditions in
licences. He would normally expect to follow them and to give his reasons if he departed
from them. The Director General cannot legally fetter his discretion and he retains the
ability to depart from the Guidelines where the circumstances warrant it. The Guidelines
are therefore not legally binding on the Director General.
3 The Guidelines will be subject to review and amendment following consultation with
interested parties in the light of experience of their operation, of development in
telecommunications markets, and of any changes to UK or EC competition law.
Interconnection of new services
4 Condition 13 of BT's licence requires that it provides interconnection services to
other operators which are entitled to interconnection, and the licences of other operators
contain equivalent obligations. This requirement extends to the provision of
telecommunication services which the Director General may determine to be "reasonably
required (but no more than reasonably required) to secure that points of connection are
established and maintained and to enable the Operator effectively to provide the
Connection Services which it provides or proposes to provide" (Condition 13.1(b) of
BT's Licence).
5 This section of these Guidelines is largely about how Oftel is likely to enforce this
requirement. In doing so, he may, in addition to his Order making powers, use his dispute
resolution and direction powers under Regulation 6 of the Telecommunications
(Interconnection) Regulations 1997 (which implemented the Interconnection Directive (ICD))
(see paragraph 6 below). However, failure to provide an interconnection service may also
constitute an abuse of a dominant position or be unduly discriminatory and therefore
warrant enforcement action under the Fair Trading Condition or the prohibitions on undue
discrimination in licences respectively. In the event that enforcement action is
necessary, Oftel will decide the appropriate licence condition under which it should
proceed on a case by case basis depending on the individual circumstances of the
situation.
Exercise of the Director General's disputes resolution powers and powers of direction
under Regulation 6 of the Telecommunications (Interconnection) Regulations 1997
6 In exercising his powers under Regulation 6 of the Telecommunications (Interconnection)
Regulations 1997, the Director General is required to take account, inter-alia, of
7 Any direction made by the Director General to resolve such a dispute must represent a
fair balance between the legitimate interests of both parties. The direction shall be
notified to both parties and published in accordance with Regulation 8(3) of the
Regulations. The parties concerned will be given a full statement of the reasons on which
his direction is based.
Market power at launch of new services
8 Oftel has undertaken extensive analysis of distortions in the operation of
markets for new interconnection services which can result from the existence
of market power. This work has been carried out through discussion and consultation
with the telecoms industry, notably through consultation on the April 1997 Statement,
Interconnection and Interoperability: A Framework for Competing Networks,
and at the Interconnection Policy Forum (IPF) and through a Focus Group established
by the IPF to look specifically at interconnection of new services.
9 The existence of market power can mean that commercial incentives for operators to
interconnect services between their networks are skewed, resulting in harm to
However, in markets where there is no market power, customers are generally best served
through the uninhibited operation of market forces. Oftelwill therefore normally only seek
to require interconnection where such operation is hindered by the existence of market
power.
10 Definition of market power for the purpose of applying rules on interconnection has
involved complex analysis both of markets for telecommunication services and the
characteristics which confer market power on an operator in them, and of the classes of
service which are affected by the existence of that market power. Explanation of which
services are likely to be affected by the existence of market power is included in these
Guidelines starting at paragraph 15.
11 In enforcing licence obligations with regard to interconnection of services, Oftel
expects that it will generally be appropriate to consider an operator's control of the
means of access to customers in assessing the market power of an operator. This means the
proportion of the total number of exchange lines over which the service in question could
be delivered controlled by an operator. Oftel would not normally expect an operator to be
in possession of market power unless it controls at least 25% of exchange lines, but it
does not rule out possession of market power by an operator controlling less than 25% of
exchange lines. If requested, it would consider whether an operator has market power. Such
consideration would involve detailed analysis of on a case-by-case basis and would not
consist simply of market share considerations. Consistent with the approach set out in
Oftel's Guidelines on the Operation of the Fair Trading Condition, the relevant
factors which Oftel would consider will include:
12 To fully understand Oftel's approach to market power in this respect, one needs to
consider the respective positions of a large and small operator both launching new
services which are capable of being used between competing networks.
13 The small operator does not have a very large number of directly connected customers
and so will want to interconnect with the large operator in order to provide its customers
with access to customers of the larger operator and hence extend the market for its
service. The large operator on the other hand may have no need to extend the market for a
service it launches because the directly connected customers of the small operator are
insignificant to it. If its customers cannot access the comparatively few customers
directly connected to the smaller network, it probably is not a significant commercial
disadvantage to it. Furthermore, the large operator may actually want to weaken the
position of the small operator by not making a service available to its customers. Where
an operator controls an overwhelming majority of access lines to customers as is the
case with BT in the UK it is clearly questionable whether it has sufficient incentive
to provide interconnection of its new services without some guidance to substitute for the
commercial incentive it would feel in a competitive market.
14 At present, Oftel considers that only BT has market power in respect of delivery of
services to customers of fixed networks or to the totality of UK customers. However, share
of the means of access to the totality of UK customers or just customers of fixed networks
may not always be the appropriate measure of market power for example, access to
addressable mobile customers might be the relevant market for the assessment of market
power for some services.
Application of rules to Cooperative Network Services
15 Network Services are defined in Condition 18.3 of BT's licence which is reproduced at
Fig. 1 below. Certain Network Services are reliant upon networks interconnecting in order
to work for calls crossing different networks for example, 'Ring Back when Free.' To
work between networks, such services require a specific capability in both the originating
and terminating networks and at the point of interconnection. This type of service is
defined as a Cooperative Network Service. This explanation focusses on the technical
characteristics of services, but Oftel will also take account of the effect of market
power in reaching a view as to whether services should be made available for
interconnection. For example, some services may not require new or amended technical
specifications for interworking between networks in order to be interconnected, but
commercial viability of the service will still depend on access to the network of an
operator with market power. Hence, the requirement to interconnect Cooperative Network
Services is the result not just of technical arrangements but of the commercial
characteristics of services also.
16 Interconnection of Cooperative Network Services is desirable for customers and for
the development of competition. Customers obtain the benefits of interconnection of these
type of services by being able to use the services available in calls to other users who
may not necessarily be connected to the same network. There are benefits to competition
both at the network level because the unavailability of such services may hinder the
ability of smaller networks to compete and also in markets served by independent
service providers (ISPs) offering services over networks but not owning networks
themselves because ISPs are likely to use an operator with market power to ensure that
their service is as widely available as possible and so will lose the advantage of having
a choice of network operator. Operators in possession of market power would thus have a
powerful advantage in providing carriage for ISPs.
17 In competitive markets, it is likely that operators would want to offer Cooperative
Network Services for interconnect so as to widen the market for them. But, where an
operator has market power in terms of control of the means of access to customers, this
may not be so. Oftel is therefore likely to look very carefully at any failure by an
operator with market power to provide interconnection of a Cooperative Network Service.
18 In doing so, it will consider whether the operator with market power is launching the
service or whether another operator is launching the service and seeking to make it
available on the network of the operator with market power through interconnection. In
either scenario, Oftel's would expect the operator with market power to provide
interconnection. Where the service is launched by another operator, it is possible that
the network of the operator with market power will not be capable of carrying the service
without upgrade. In these circumstances, Oftel would expect the operator with market power
to make the necessary upgrade if it is reasonable for it to do so. In its consideration of
any complaint that an operator with market power has unreasonably failed to make an
upgrade to support a Cooperative Network Service requested for interconnection by another
operator, Oftel would normally take account of the following factors:
- likely to be offset by revenue earned as a result of the upgrade (see other factors listed below).
However, Oftel would not expect major investment to be undertaken solely for the purpose of providing interconnect unless there are compelling reasons for this to happen.
19 This is not an exhaustive list and Oftel may take other factors into account or
place greater or less weight on one or other factor depending on the circumstances of the
case. Oftel will always consult with interested parties during its consideration of these
issues and will always publish its conclusions except to the extent that this is prevented
because of legitimate concern about the commercial confidentiality of data.
20 Oftel is therefore likely to regard any failure by an operator with market power to
provide interconnection of Cooperative Network Services, both launched by itself and by
other operators except where the inability of its network to support the service means
it is unreasonable so to do as contrary to the requirements of any, a combination of,
or all of the conditions in its licence specified in paragraph 1 above. Where Oftel
concludes that this is the case, it will take appropriate act