Whereas:

1 Regulation 17(2) of the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 ("the Regulations") requires the Director General of Telecommunications ("the Director") to ensure that public operators authorised to run a fixed public telephone system provide to the Director:

• details of technical interface specifications as identified in Schedule II to the Regulations;
• details of changes in existing network interface specifications, including information on new network interface specifications in advance of implementation; and
• details of any particular network characteristics which are found to affect the correct operation of terminal equipment.

2 The Revised Voice Telephony Conditions ("RVTDs") were inserted into relevant licences by Regulation 39 of the Regulations;

3 RVTD 1 provides for the Director to determine that the Licensee has sufficient influence to affect competition adversely in the manufacture of telecommunication apparatus by its ability to influence the costs and timescales which would be incurred by another telecommunications operator, or supplier of telecommunication apparatus, including a manufacturer, in adopting the Licensee’s intended interface specification, or a comparable specification provided by another party, and therefore the Licensee has Interface Control as defined in RVTD 1.

4 RVTD 7 requires a Licensee who runs a fixed public telephone system and has Interface Control in relation to any new Interface Specification described in Annex II, Part I of Directive 98/10 which the Licensee intends to use and which it has not already published inter alia to notify such Interface Specification to the Director at the commencement of the relevant consulting period, and, if so directed by the Director, to consult with interested parties on the interface specification which the Licensee intends to adopt during the relevant consulting period.

NOW THEREFORE the Director, in pursuance of Regulation 17(2) and RVTD 1 and 7, hereby makes the following Determination:

1. The following public operator, being an operator which provides both a fixed public telephone system and voice telephony services is hereby determined to have Interface Control for the purposes of Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 and in particular RVTD 1 and 7 in relation to telephony services provided over the telephone and ISDN networks across new technical interfaces which do not conform to interface specifications which have been adopted as standards by

The following European standardisation bodies: the European Telecommunications Standards Institute (ETSI) or the European Committee          for Standardisation/European Committee for Electrotechnical Standardisation (CEN/Cenelec), or

          the International Telecommunications Union (ITU), the International Organisation for Standardisation (ISO) or the International Electrotechnical             Commission (IEC):

                     (ii) British Telecommunications plc.

5 This Determination shall come into force on 18 January 1999.

(A person authorised under paragraph 8 of Schedule 1 to the Telecommunications Act 1984)

14 January 1999

1 Oftel’s Statement Interconnection and Interoperability of Services over Telephony Networks published in April 1998 explained why interoperability of services is important. Customers want to be able to use services launched on networks other than the one from which they make their calls. Competing operators want to make their own services available as widely as possible, and provide their customers with access to services provided from other networks. Oftel will shortly be publishing its Guidelines on Interconnection and Interoperability (a draft of which was published for consultation in Interconnection and Interoperability of Services over Telephony Networks) which explain the operation of licence conditions covering interconnection and interoperability and how Oftel is likely to approach any competition investigations arising from disputes in these areas.

2 A condition ensuring interoperability of key services has now been added to licences through implementation of the Revised Voice Telephony Directive (RVTD). The new condition means the Director General can determine that an operator has Interface Control in the supply of a service or services.

3 The Director General has determined that British Telecommunications plc (BT) has Interface Control in the supply of telephony services provided over the telephone and Integrated Services Data Network (ISDN) networks in the UK. This means that BT will be required to consult on any new interface it proposes to introduce relating to these services which has not been adopted as a standard by the international standards organisations listed at paragraph 18 below. The determination was made following consultation with interested parties through a consultative document published on 4 July 1998. The Director General is grateful to respondents for their comments on the consultative document and has take account of them in making the determination.

4 The reasons for the determination are explained below.

5 Interface Control is defined as:

6 Operators determined as having Interface Control will be required to notify the Director

General of proposed new interfaces as follows:

• in the case of customer-network interfaces, at least 60 days in advance of publication of the specification, and
• in the case of network-network (ie interconnection) interfaces, at least 6 months in advance of publication of the specification, or
• in the case of either customer-network or network-network interfaces, such other period as the Director General agrees.

7 Notification is followed by a period for consultation on proposed interfaces prior to publication. Such consultation should be conducted through the Network Interoperability Consultative Committee (NICC). Oftel has opened discussion with relevant NICC interest groups to ensure that consultation can be effectively conducted in the required timescales.

8 In concluding that BT has Interface Control, Oftel has taken account of the following factors.

9 BT has the largest and most ubiquitous telecommunications network in the UK. No other single network operator can match BT in its ability to directly access customers anywhere in the UK. Competing networks have limited geographic coverage compared to BT’s. They were built to serve either the long distance or local markets and, for most calls, rely on interconnection for end-to-end connectivity. Whilst consolidation of the UK telecommunications industry has created networks capable of delivering end-to-end calls seamlessly without interconnection, these networks do not cover the whole of the UK because of their coverage of a limited number of cable franchise areas, and because their trunk networks are not so mature as BT’s.

10 Hence, BT’s network is both larger and more ubiquitous than any competing network in the UK. It is presently directly connected to around 86.7% of exchange lines connecting both business and residential customers in the UK.

11 The size and ubiquity of its network means that BT is the major purchaser of telecommunications equipment in the UK. This affects markets for telecoms equipment and telecoms services.

12  Interface Control derives from an operator’s influence on markets for telecommunications equipment. There is a close relationship between markets for equipment and services. An analysis of markets for services is therefore key in considering the scope of Interface Control.

13  Telecommunications equipment markets are affected because BT’s position as the major purchaser of equipment necessary for interoperability of certain services gives it a unique relationship with equipment suppliers in the UK. The relationship with suppliers has the following characteristics:

• BT is the most valuable customer to a supplier because its orders constitute a large proportion of the total market.
• BT is the only UK customer capable of placing an order large enough to generate sufficient revenue for suppliers to justify the design and build of interfaces to a customer specific design.

14 This purchasing power in the equipment market can be leveraged directly into markets for certain telecommunications services because BT’s unique ability to order interfaces designed to its own specifications means that other operators must use equipment with the same or comparable interfaces if services are to be interoperable between their network and BT’s.

15  This means that BT has a degree of influence on both:

• the costs incurred by other operators because their reliance on BT for delivery of calls means that they will need to adopt the same or a comparable interface specification, and
• the timing of adoption of the interface in question, and consequently the ability of operators to provide services over it. Other operators are reliant on BT to provide sufficient advance notice of interface specifications if they are to be able to provide interoperable services over the new interface.

16  Suppliers serving operators other than BT will have to provide interfaces to the same specification as BT’s supplier(s) to enable services to interoperate between BT’s and other networks. Hence, the costs and timescales of suppliers as well as operators are affected where BT has Interface Control.

17 The Director General has determined that BT has Interface Control of any new interface specification which it intends to use relating to telephony services provided over the telephone and ISDN networks.

18 Oftel considers that BT’s purchasing power is mitigated where an internationally recognised standard is adopted. Therefore, BT does not have Interface Control with regard to services provided over new interface the specifications for which have been adopted as a standard by:

• the following European standardisation bodies: The European Telecommunications Standards Institute (ETSI) or the European Committee for Standardisation (CEN) or the European Committee for Electrotechnical Standardisation (CENELEC), or
• the International Telecommunications Union (ITU), the International Organisation for Standardisation (ISO) or the International Electrotechnical Commission (IEC).

19 The consultation required of operations with Interface Control only relates to new interfaces. It is therefore helpful to define what a new interface is. This is not self-evident as a new interface may result from changes made to an existing interface rather than introduction of a completely new one. Oftel is providing the following guidance to assist compliance and will also cover this issue in its Guidelines on Interconnection and Interoperability which are due for publication early in 1999.  

20  In enforcing the requirement that operators with Interface Control consult on new interfaces, Oftel will regard new interfaces as any interface not conforming to specifications which have been adopted as standards by:

• the following European standardisation bodies: The European Telecommunication Standards Institute (ETSI) or the European Committee for Standardisation (CEN) or the European Committee for Electrotechnical Standardisation (CENELEC), or
• the International Telecommunications Union (ITU), the International Organisation for Standardisation (ISO) or the International Electrotechnical Commission (IEC)

and which are:

• instituted in a public network for the first time, or
• result from significant change to an existing interface.

A significant change is any change which involves modification to protocols which will affect the interoperability of Network Services, and:

• relates to the introduction of a new Network Service, or
• results in changes to an interface which has previously conformed to standards adopted by the international standards organisations listed above such that it no longer so conforms.

21  BT has purchasing power in markets for equipment necessary for interconnection and interoperability ofthe services over the telephone and ISDN networks. Thislisted at paragraph 19 gives BT influence over the costs and timescales of equipment suppliers and other operators wishing to adopt the same interface specification as BT sufficient to affect competition adversely.

22  The Director General has therefore determined that BT has Interface Control with regard to any new interface specification which it intends to use relating to these services which does not conform to a standard recognised by any of the international standards organisations listed at paragraph 18.

Where a public telecommunications network is connected to a customer s network or apparatus (at the Network Terminating Point) the network and the customers system must each be able to understand the technical operation of the other in order for services to interoperate across the connection boundary. The customer’s system and the network must both provide an interface at the point of connection and only where these interfaces are matched will there be interoperability. The technical characteristics that allow for that understanding is the customer-network interface.

Interconnection means the physical and logical connection of two operators’ networks thereby allowing customers of one system to connect with customers of the other, or to access services provided from the other system.

Interoperability means the technical features of a group of interconnected systems (‘systems’ includes equipment owned and operated by the customer which is attached to the public telecommunication network) which ensure end-to-end provision of a given service in a consistent and predictable way. Interoperability is defined here in terms of the functional delivery of services across networks - it does not necessarily imply that component parts of the systems over which such services are delivered are interchangeable

ISDN is a network based on the existing digital Public Switched Telephone Network which provides digital links to customers and end to end digital connectivity between them.

Where two operators networks are interconnected, each must be able to understand the technical operation of the other in order for services to interoperate across the interconnection boundary. The technical characteristics that allow for that understanding is the network-network interface. Each network must provide an interface at the point of connection and only where these interfaces are compatible will there be interoperability.

A committee set up to advise the Director General and provide guidance to standards bodies on interoperability.