6.1 Oftel's view is that independent service providers can provide enhanced services in competition with BT and it is in customers' interests that they should do so. It is therefore important that BT does not discriminate between itself and independent service providers. A regulatory framework is already in place, designed to achieve this in that BT's SSB must pay retail prices for basic retail services from its SB.
6.2 If this regulatory principle is to be the guarantor of fair competition in the enhanced services market, it is crucially important that the right services fall into BT's SB and SSB respectively and appropriate terms and conditions apply.
6.3 Oftel believes that the following are the appropriate principles:
(a) All network services should be included in the SB;
(b) Network services should be offered from the SB and unbundled to meet the reasonable needs of independent service providers so that service providers only have to buy the service they want;
(c) All enhanced services should be in the SSB. Not only would existing enhanced services (eg messaging services, on-line information services, conferencing services and managed network services) reside in the SSB but, in addition, a range of voice-based enhanced services should also be so classified such as the number translation component (but not the conveyance of) 0800 and similar services, BT's Charge Card service and the enhanced part of BT's VPN and Centrex services (known as Featurenet). Were BT to launch a personal numbering service, this would also reside in the SSB.
(d) Unbundling of enhanced services with the underlying network service falling in the SB and the enhanced functions in the SSB. For example, Oftel has recently indicated that BT's launch of its "Meterlink" telemetry service should be linked with access for other service providers to the underlying "no ring" telephone call. The "no ring" call would be sold from the SB, the "Meterlink" service from the SSB which would have the retail price of the "no ring" call as one of its inputs. Oftel also believes that BT's Call Minder service should be unbundled between the SB and SSB, rather than being operated from within its SB alone. This service combines enhanced voice mail with free message pick-up using the short access code 1571, which would not generally be available to independent service providers. In the future, Oftel believes, a "message waiting" indicator using the "no ring" call feature is planned to be offered by BT. This is an example of BT combining network services with other elements, but using Condition 13 charges as the input prices and, in addition, using a network service that it does not make available to service providers at all, let alone on a non-discriminatory basis.
(e) Unbundling of data services.
At present the SSB includes all data services, whether basic or enhanced. Thus not only is packet data protocol conversion (eg Asynchronous PADs) included in the SSB, but so is the basic data conveyance, such as X25 packet switching. However, over time, this principle has become confused, so that while Frame Relay resides in the SSB, Switched MultiMegabit Data Service (SMDS) does not. BT argue that SMDS has no added value and indeed, it is a close substitute for a broadband private circuit. With the eventual migration of telecommunication networks to Asynchronous Transfer Mode (ATM), it will become increasingly difficult to justify different regulatory treatment of basic data and basic voice telephony, which of course forms the main part of the SB. Oftel therefore proposes that all data services should be separated between basic and enhanced functions. BT would be obliged to supply a range of basic data services from its SB which would form inputs to its own and others' enhanced data services. The services in the SB would be the basic conveyance services, with no enhanced functions such as protocol or content conversion. Thus SMDS and a basic form of Frame Relay would become SB services, while true enhanced services, such as EDI, would continue to reside in the SSB.
6.4 Oftel's specific proposals for clarifying the split between the SB and SSB are set out below.
6.5 As at present, the following services would fall into the SB:
In addition, the following services would also fall into the new SB as proposed by Oftel:
6.7 Oftel's intention is that all other services with a telecommunication service component would fall in the SSB, but for the sake of clarity, these would include the following broad groups of services. Services currently in the SSB:
6.8 Services to form part of the new SSB:-
6.9 Oftel's proposed definitions would need licence modifications if they were to be implemented as would the associated accounting requirements (see paragraphs 6.12 below).
Oftel would welcome views on its proposed split of the SB and SSB, the principles set out in paragraph 6.3 on how this split should be achieved and how VPN and Centrex services could be separated between basic and enhanced functions in a technology neutral way.
6.10 There is one other competition issue in the enhanced services market which Oftel believes needs consideration. There are apparent inherent advantages to BT as a network operator compared to other service providers. These advantages are in respect of certain enhanced services requiring number translation, often with two stages of call set-up. Such services include number translation services such as 0800, 0345, 0990; calling card calls; and calls dialled using personal numbers. These services require one complete call conveyance across the system if they are supplied by BT, but two if they are supplied by another service provider. In the case of a service provider, the first call is used to access the service provider's apparatus or system which provides the additional service element (eg number translation, billing to a calling card account etc), the second to convey the call from the service provider's system to its final destination. Sometimes, BT in providing such a service may need to use a specialist network or apparatus and would therefore be in a similar position to an independent service provider, so direct comparisons are sometimes difficult. However, Oftel believes that, in general, BT pays less for the network services component of such enhanced services, than an independent service provider does. Furthermore, almost all such services are today provided from within BT's SB and therefore obtain network services at a lower price than an independent service provider.
6.11 It would be possible to minimise the network costs of this type of service if BT made available transport services ("Controlled Routing Services") which allowed the service provider to indicate to which number the caller should be connected. This would minimise the network costs of this type of service as provided by an independent service provider and thereby allow competition to be based more on the comparative value of the enhanced features of the service, rather than the differential in conveyance costs. This would go some way to reducing the competitive disadvantage of other service providers, though it is not Oftel's intention that BT should be prevented from using its existing bundled network apparatus; thus in general only service providers would use Controlled Routing Services. New Controlled Routing Services would need to be provided for each new type of network service forming part of a BT enhanced service.
Oftel recognises that this proposal will raise some significant issues and there may be a number of different ways in which any excess network services costs could be eliminated. It will want to discuss these proposals further with BT and would welcome comments from other consultees on the principle and practicalities of providing Controlled Routing Services.
6.12 If Oftel is to use the SB/SSB split as a key regulatory
vehicle to ensure fair competition in the enhanced services market, more information will need to be published and audited in respect of BT's SB and SSB accounts. These requirements are likely to require licence modifications and will need further discussion with BT and the industry. The following are Oftel's initial views:
Oftel would welcome views on the appropriate accounting requirements for BT's SB and SSB if the split between them is to be effective in ensuring fair competition.