Draft Direction under the provisions of regulation 6(6) of the Telecommunications (Interconncection) Regulations 1997 of a dispute between British Telecommunications plc ("BT") and the operators listed in the schedule to this Direction over BT’s proposal to charge for NTS call origination using INCA and CLI

Issued by the Director General of Telecommunications

15 November 2001

Contents

Draft Direction under the provisions of regulation 6(6) of the Telecommunications (Interconnection) Regulations 1997 of a dispute between British Telecommunications ("BT") and the operators listed in the schedule to this direction over BT’s proposal to charge for NTS call origination using INCA and CLI

(A) The Secretary of State granted to British Telecommunications on 22 June 1984 a licence (the "BT licence") under section 7 of the Telecommunications Act 1984 ("the Act") for the running of telecommunications systems specified in that Licence;

(B) By virtue of section 109 of paragraph 20 of Schedule 5 of the Act the BT licence has effect as if granted to British Telecommunications plc ("BT");

(C) The Secretary of State has granted to each of the operators listed in the Schedule, a licence under section 7 of the Act for the running of telecommunications systems specified in that Licence;

(D) Regulation 6(6) of the Telecommunications (Interconnection) Regulations 1997 ("the Regulations") provides that where there is a dispute concerning interconnection between organisations, the Director General of Telecommunications ("the Director") shall, at the request of either party, take steps to resolve the dispute within six months of the date of the request. The Direction which the Director makes to resolve the dispute must represent a fair balance between the legitimate interests of the parties, and must be notified to the parties in accordance with Regulation 8(3). The parties are entitled to a full statement of the reasons on which the Direction is based;

(E) The operators listed in the Schedule have entered into a Standard Interconnect Agreement with BT on the dates shown in the Schedule;

(F) BT charges operators for BT originated calls for Number Translation Services ("NTS"). Following a direction of November 1999 entitled Direction concerning BT’s NTS Conveyance these charges are calculated using the concept of Network Charge Differentials ("NCD");

(G) On 7 November 2000 BT issued an Operator Charge Change Notice ("OCCN") proposing that, from 3 January 2001, the charges for BT originated calls to other operators’ NTS, using the Caller Line Identity ("CLI"), will be obtained from the call records made by BT’s billing system called Inter-Network Call Accounting ("INCA");

(H) The operators listed in the Schedule have been unable to agree BT’s OCCN of 7 November 2000 and are in dispute;

(I) On 2 January 2001, in accordance with the provisions of Regulation 6(6) of the Regulations, BT referred this dispute to the Director for resolution;

(J) The Director has considered inter alia, the information provided by the parties and the matters set out in Regulation 6(8) of the Regulations. The principal points are summarised in the Explanatory Memorandum which accompanies, and is published with, this Direction;

(K) The Director issued a draft of this Direction and the Explanatory Memorandum which contains the Director’s reasons on 15 November 2001 and responses were invited by 14 December 2001;

(L) Comments were received from ………………as summarised in ……………of the explanatory memorandum published with this Direction. These comments have been taken into consideration by the Director in making this Direction; 

Therefore:

Pursuant to Regulation 6(6) of the Regulations, and having considered the views of the parties and those matters set out in Regulation 6(8) of the Regulations, the Director makes the following Direction to resolve the dispute between BT and the operators listed in the Schedule:

1. The operators listed in the Schedule to this Direction are not required to accept the proposals contained in BT’s OCCN issued on 7 November 2000 and may continue to use the NCD billing methodology for BT originated calls to other operators’ NTS until such time as the parties agree otherwise or the Director determines otherwise.

2. For the purposes of this direction references to "NCD" shall have the same meaning as in the November 1999 Direction concerning BT’s NTS Conveyance until such time as the parties agree otherwise or the Director determines otherwise.

3. The other terms defined or described in the recitals to this Direction shall have the meaning so defined or described. All other words or expressions used in this direction shall have the same meaning as in the Regulations, the Act, the BT licence or the interconnect agreement as appropriate.

4. The parties shall modify their interconnect agreements to give effect to this Direction.

Keith Long

Director of Compliance

A person authorised under Paragraph 8 of Schedule 1 to the Telecommunications Act 1984

XX XXXX 2001

Explanatory Memorandum

Chapter one

Summary

1.1 The Director General of Telecommunications ("the Director") has issued a draft direction, in accordance with the provisions of Regulation 6(6) of the Telecommunications (Interconnection) Regulations 1997 ("the Regulations"), in proposing to resolve a dispute over BT’s proposal to introduce its automated Inter-Network Call Accounting (INCA) wholesale billing system for calls to other operators’ Number Translation Services (NTS) from 3 January 2001.

1.2 On 7 November 2000 BT issued an Operator Charge Change Notice (OCCN) proposing that charges for BT originated calls to other operators’ NTS using the Caller Line Identity (CLI) will be obtained from INCA call records, with effect from 3 January 2001. A number of operators, listed in the Schedule to this draft direction, either rejected or did not respond to BT’s proposal and are therefore in dispute with BT. Following the end of the specified negotiation period, BT referred the dispute to the Director on 2 January 2001.

1.3 At the time of BT’s proposal the method used by BT to calculate its NTS charges was that directed by Oftel in November 1999 in the "Direction concerning BT’s NTS Conveyance". This direction introduced the concept of a Network Charge Differential (NCD) which consists of a sliding scale giving a percentage uplift above single tandem charging according to the number of points of interconnection (POIs) an operator has with BT.

1.4 Since BT’s referral Oftel has sought operators’ reasons for rejecting BT’s proposals both in writing and via the NTS Focus Group and has, in turn, sought BT’s comments on the responses received. BT has offered some proposals for short, medium and long term updates to INCA in order to address shortcomings identified by operators. These have also been copied to a number of operators for comment and their responses have been considered in making this draft direction.

1.5 From the submissions made to Oftel it is clear that many operators do not consider that INCA is currently able to provide information which is sufficient or in such format to enable them to construct billing invoices for terminating NTS traffic. This applies equally to BT originated traffic and BT transit traffic originated by other operators. BT, on the other hand, believes INCA is suitable for BT originated traffic but acknowledges that there are problems with non-BT originated traffic.

1.6 Oftel has considered two broad options in making this direction. First to direct that INCA should continue to be used but with a clearly defined programme of upgrades to improve its functionality. The second option is to direct that INCA should not be used until its functionality can be demonstrated to satisfy industry requirements.

1.7 From submissions made to Oftel operators claim that the output provided by INCA is in a format that cannot be used by operators’ billing systems (of which there are a variety) to compile accurate invoices. In the circumstances, it is not considered reasonable that use of INCA should be mandated if operators can not use its data.

1.8 The Director’s draft decision is detailed in Chapter 3 of this document. He is minded to resolve this dispute by directing that operators may choose whether to use INCA data to compile invoices for NTS outpayments or to continue to use the NCD methodology directed by Oftel in November 1999 (see 1.3 above). On the evidence available, the Director currently considers that further work needs to be done to INCA to improve its interoperability with other operators’ billing systems and to address transit related issues. When this has been completed to the satisfaction of the industry BT may then re-propose that operator’s payments should be calculated using INCA data. However, the Director also considers that those Operators who do not wish to continue to use NCDs may, at any time as a matter commercial negotiation with BT, agree to use INCA data.

1.9 If the Director confirms his proposed decision, he also currently proposes to reconsider the NCD charges and what action, if any, would be appropriate.

Chapter two

Background

NTS

2.1 In previous determinations of NTS charges Oftel has given a detailed description of the NTS revenue sharing arrangements and how they were arrived at. Most operators are now familiar with this narrative and consequently only a brief description is given in this section. Anyone wishing to read the detailed description can refer to Oftel’s earlier NTS directions (see References).

2.2 Oftel conducted a lengthy consultation in 1995 over the revenue sharing arrangements and charges that should apply to ‘non-geographic’ calls to services hosted by BT and other terminating operators. The industry believed that the payment arrangements which applied for person to person geographic calls provided little incentive for the development of value added, usually telemarketing, services. These arrangements provide only for a cost based charge to be paid by the originating operator for call termination and for any retail benefit from the calls to be retained by the originating operator.

2.3 Terminating operators held that, as owners of the value added services, they should receive a greater share of the retail price for the calls to cover both their own network costs and to help fund the services. As a result of the consultation Oftel published what has become known as "the NTS Determination" made in January 1996.

2.4 The NTS Determination set the charges that BT and operators should pay for access to BT’s own services. It also established the basis for the calculation of the payments BT should make to operators for terminating calls destined for their (or their service providers’) services. These payments are calculated by taking the retail price paid by customers less BT’s regulated retention for originating these calls. BT’s retention, in turn, is the sum of the element based charge for call origination and conveyance across its network to the point of handover to the operator’s network, plus an allowance for the costs of relevant retail activities undertaken by BT.

BT’s Charge for Call Origination and Conveyance

2.5 At the time of the "NTS Determination" it was acknowledged that BT’s origination and conveyance charges to different operators would vary according to the amount of its network that was used. However, BT was unable to provide a detailed breakdown of those charges on a call-by-call basis. The "NTS Determination" stated that all operators would be charged at the same single tandem rate until such time as BT could provide evidence of the charge that should apply in each case.

2.6 As it had no automated means of measuring its actual conveyance costs, BT subsequently sampled a proportion of calls terminated on each operator’s network and used this to set ‘route factors’ which gave the average of single and double tandem conveyance used in carrying an operator’s traffic. It then proposed to revise each operator’s conveyance charges using this "route factor" methodology.

2.7 A number of operators rejected BT’s proposals on the grounds that the sample sizes used were unrepresentative and relied on measurements of the actual routing of calls taking no account of least cost routing. This is the measurement of the shortest path to an operator’s POIs rather than measuring calls that have had to be re-routed across BT’s network to avoid congestion or other problems.

2.8 Oftel, meanwhile, recognised that the continued use of a single tandem average conveyance charge removed any incentive for operators to interconnect efficiently with BT. Operators found they could rely on very few points of presence and still be charged at the same rate. This meant that as the number of interconnecting operators grew the likelihood of BT failing to recover its costs of NTS conveyance increased since, in general, only established operators had built networks that could interconnect efficiently with BT.

2.9 In the summer of 1998 Oftel, through the Operator Policy Forum (OPF), established the NTS Focus Group to address the growing number of issues that were being identified with the NTS arrangements. This group was used to advise Oftel in a number of disputes that had arisen from BT’s proposals to refine the assumptions that had been built into the original 1996 NTS determination. One of the issues was the dispute that had arisen from BT’s proposals to de-average its NTS conveyance charges using route factors produced from its sampling of calls.

2.10 After having discussed and proposed a number of complementary and alternative methods to BT’s ‘route factors’, the NTS focus group finally agreed to apply a sliding scale which gave a percentage increase above the single tandem charge which decreased with the number of POIs an operator had with BT. The ‘uplift’ in the single tandem charge produced by the sliding scale was known as the Network Charge Differential or NCD. Details of the direction which introduced this new methodology can be found in Oftel’s "Direction concerning BT’s NTS Conveyance" ("the NTS Conveyance Direction") in November 1999.

2.11 The level of uplift used in the NCD sliding scale was set so that those operators with few POIs would not suddenly face unreasonably large increases in their charges. Were it not for the NCD sliding scale an operator with only one POI could find that the majority of their calls used two BT tandem switching stages resulting in a near 100% increase in their charges.

2.12 Whilst work on the NTS Conveyance Direction was underway BT announced that it was developing its INCA billing system which, using the caller’s CLI, would be able to operate for NTS traffic. BT estimated INCA would be ready for use by April 2000.

2.13 INCA is BT’s automatic interconnection billing system used to derive its charges and payments to other network operators for call origination, conveyance and termination. Charges are compiled using the EBC (Element Based Charges) matrix of components of BT’s network. INCA measures how much of BT’s network has been used and the duration of calls enabling BT to invoice operators for its costs and to provide information to operators enabling them to invoice BT for call termination payments.

2.14 The CLI (Caller Line Identity) is the signal generated by every exchange line when originating calls, enabling terminating networks to identify the source of calls for caller display and interconnection billing purposes. The combination of INCA and CLI information is designed to enable interconnecting networks to assess charges and payments between each other.

2.15 The NTS Conveyance direction was made in November 1999 and Oftel believed that the period leading to INCA’s introduction would allow operators time to optimise the interconnection of their networks with BT. This meant that, when INCA was introduced, operators would not face large increases in their conveyance charges. They would also enable operators, accustomed only to single tandem charges, to become used to paying for what they actually used.

2.16 However, two factors served to upset these assumptions. First, INCA was delayed for several months and, when ready for launch, BT announced it could only be used for BT originated traffic. Second, BT announced its proposals to reverse the ownership of NTS traffic terminating on operators’ networks. This led to Oftel’s "Determination of a dispute between BT and a number of operators regarding a proposal to charge for NTS links from January 1 2001" made on 28 June 2001, known as the "NTS Links Direction".

2.17 BT announced that it would be ready to conduct a trial of INCA from 1 November 2000 with a view to full introduction in January 2001. BT sought volunteers to take part in the trial and a small number of operators agreed. BT was unable to provide any output from INCA during the trial period but proceeded with its plan to introduce INCA in any event. BT issued OCCNs to 137 operators on 7 November 2000 proposing to introduce INCA with effect from 3 January 2001. A total of 89 operators (as listed in the Schedule to the draft direction) rejected BT’s proposal leading to the dispute which is the subject of this direction.

Reasons for rejecting INCA

2.18 Oftel has notified the dispute to the operators referred by BT and sought comments on why they had rejected BT’s offer. Relatively few comments were received but those that were are summarised as follows:

1. Core Telecommunications said that it was concerned that, despite having increased their number of POIs, it was not confident BT was delivering NTS traffic to the nearest point of handover owing to datafill errors and delays. It added that, at the time, NTS traffic was still considered as BT’s responsibility and the routing often used second and third choices. BT’s charges were unlikely therefore, to be based on least cost routing principles.
2. Rateflame said that it was unable to accept BT’s INCA based charging proposals because they included BT’s proposed increase of 16.8% for the NTS Discount which was, at that time, also in dispute. The dispute over the NTS discounts has now been determined by Oftel in its Determination relating to BT's proposal to increase NTS discounts made on 3 September 2001.
3. Easynet said that it had understood that INCA was to be introduced from April 2000. However, it submits that it was not ready even for trial until November 2000 and that by January 2001 had still failed to produce any data owing, according to BT, to technical difficulties. Easynet believed early implementation of INCA was essential as it considered that it was being unfairly charged under NCD principles. However, in the absence of any verifiable data it could not accept BT’s proposal. Furthermore, as BT was proposing to continue to use NCD for transit traffic, Easynet considered that this perpetuated the unfair charges that it was receiving.
4. World Online also objected to BT’s inclusion of its disputed discount in the proposed INCA charges. It welcomed the implementation of billing by INCA but not until BT had guaranteed that the system will work accurately and explained what needed to be done to develop World Online’s billing system to interface with INCA.
5. London Digital objected to INCA owing to the amount of computer processing and human time needed to use INCA data. It was submitted that this represented too great an overhead for an operator with NTS traffic minutes below a threshold of, say, one million per month.
6. Thus echoed the comments about BT’s inclusion of its disputed NTS discounts. It also objected strongly to BT’s use of NCD for transit billing especially as it considered that it took no account of how the originating operator interconnected with BT. It was submitted that most operators interconnect at single tandem yet BT was paying POLOs (Payments to other Licensed Operators or NTS outpayments) based on the terminating operator’s NCD before invoicing its transit charge.
7. Energis did not dispute the introduction of INCA to replace NCDs but, like Thus, it objected to the continued use of NCDs for transit especially as BT was relating the originating operator’s call origination charge to the terminating operator’s network architecture.

2.19 Since receiving operators’ initial comments Oftel received other representations regarding INCA both directly and via the NTS Focus Group. These are summarised below.

2.20 Some operators expressed concern that BT’s disputed NTS Links proposals had prevented any action being taken to optimise their networks in order to minimise their INCA charges. It was submitted that uncertainty about the likely outcome of that dispute meant that operators were unwilling to risk further investment in network infrastructure until they knew what Oftel’s eventual decision would cost them.

2.21 The NTS Links direction was made in June 2001 by which time INCA had been in operation for several months. Operators’ charges were, in the case of the parties to the dispute, continuing to be calculated using the NCD process.

2.22 Oftel has continued to receive comments on the operability of INCA at NTS focus group meetings. The belief that INCA call records were not widely usable was being confirmed in practice. In addition concerns were voiced at the inability of INCA to distinguish non-BT originated calls. These include calls from cable and indirect access operators, including those using Carrier Pre-Selection, and from numbers that had been ported from BT to other operators. One operator also complained that, in overcoming this failing in INCA, BT had incorrectly applied NCDs as a manual alternative.

Transit Issues

2.23 In practice, BT makes the same POLO payment to terminating operators regardless of where calls originate. It then invoices the terminating operator for its transit charges. Where the terminating operator has an NCD greater than single tandem, this arrangement takes no account of the likelihood that the originating operator’s origination costs may only be single tandem on its network. This has led some terminating operators to believe they may be receiving less than they should for non-BT originated calls, assuming the originating operator’s retail prices are the same as BT’s.

2.24 In reality, other originating operators’ retail prices often differ from BT’s. Nevertheless, BT invoices the originating operator for an amount equal to the POLO it pays to the terminating operator plus its transit charge. It then pays the full amount to the terminating operator and submits its transit invoice at a later date. BT does not retain any more revenue than it should and any risk of over recovery of costs rests with the originating operator.

2.25 Oftel believes the best solution to this problem would be for originating and terminating operators to establish their own billing and payment arrangements leaving BT to collect only its transit charge.

2.26 In the absence of such arrangements, Oftel believes BT’s use of the terminating operator’s NCD in calculating NTS payments for transit traffic in the absence of INCA is the simplest and most reasonable option. BT receives no payment for invoicing and passing revenue between other operators and should not be expected to work out another originating operator’s charges and then adjust the corresponding terminating operator’s payments.

2.27 Despite having rejected INCA the operators party to this dispute have still been supplied with data from INCA by BT. Initially the output was inconsistent and it took several months for the issues with INCA to be fully identified. As a consequence it was not until September 2001 that Oftel was able to put the issues raised by operators to BT for comment. BT’s response included a description of the data provided by INCA, guidance on how least cost routeing is achieved and proposals for a series of upgrades to INCA designed to address the issues surrounding non-BT originated traffic over the short, medium and longer terms. BT’s proposals are attached at Annex A.

2.28 Oftel’s initial view is that BT’s response appeared to offer a positive way forward to resolving the transit related issues but made no mention of operators’ inability to use INCA data in general. Oftel copied BT’s response to the NTS focus group and sought operators’ views. These have been considered by Oftel in reaching this draft decision.

2.29 Operators have advised Oftel that the information produced by INCA is not in a format that many of the varied industry billing systems can use. The data may be entirely accurate but are meaningless if they can not be processed by the operator to produce the billing invoices or check call records against BT’s. Oftel recommends that the industry needs to resolve interconnection billing interoperability as a matter of urgency, possibly through looking at practice in other countries. It may also be that the NICC could be asked to extend its remit to look at this issue.

2.30 In summary, however, the consensus from the representations made to Oftel is that BT attempted to introduce INCA without any proper testing of its abilities or regard to its compatibility with operators’ billing systems. This applies equally to both BT and non-BT originated traffic and the general conclusion is that INCA is not ready for use.

Chapter three

Options available to Oftel

3.1 In reaching his draft decision the Director has considered a number of options and their advantages and disadvantages. These are presented below.

3.2 There are broadly two choices open to Oftel. However, within each there are other options:

• The first is to uphold BT’s proposal to require the use of INCA for BT originated traffic whilst embarking on a programme of defined upgrades to improve its functionality for all call types.
• The second option is to allow operators to continue to invoice BT for NTS POLOs using NCD principles until agreement can be reached on how compatibility between INCA data and operator billing systems can be achieved.

Option 1 – Permit BT to require the use of INCA

3.3 If it is decided that BT should be able to require operators to use INCA in its present form, further issues that need to be addressed include:

• what improvements are needed to address INCA’s compatibility and transit deficiencies?
• what are reasonable timescales for any upgrades to be introduced?
• what are the likely costs and how should these be met?
• should the date of introduction be deferred from 3 January 2001?

3.4 The main benefits of this option are as follows:

• it would remove multiple billing options for BT originated traffic. Operators who have accepted INCA and are able to use INCA data are paying ‘real’ costs of conveyance whilst those who have rejected INCA are using NCDs which, in their present format, were not designed to reflect BT’s costs accurately;
• it will encourage the industry as a whole to work towards better interoperability between billing systems;
• it would mean that charges were set on a more rational basis than the manual expedient of NCD.

3.5 The disadvantages with this option are that:

• according to operators, INCA has only recently produced regular outputs. It seems unreasonable to direct that INCA billing should commence from 3 January 2001 when, at that time, INCA was not generating usable call records. It seems unlikely that operators would be able retrospectively to compile accurate invoices to BT;
• depending on the effectiveness of BT’s proposed short term upgrade, there may still be a need to retain NCDs for non-BT traffic for an extended period;
• it would impose an unwelcome and unworkable system on some operators whose billing systems still can not interface with INCA;
• it may reduce the incentive on BT to resolve the key problems with INCA as quickly as possible;
• operators have only recently started the process of optimising their networks following the NTS Links direction. INCA charges from January 2001 could only take account of actual network architectures and may excessively penalise some, especially smaller, operators.

3.6 Even if it were to be decided that BT should be allowed to require the use of INCA, the question would remain whether its introduction should be as proposed by BT, from 3 January 2001, or that it be introduced at a later date, to be determined by the Director, in order to allow operators an opportunity to complete the optimisation of their networks.

Option 2 – Allow charging by NCDs to continue until INCA problems are resolved

3.7 As with Option 1 a number of similar questions need to be addressed:

• how would the deficiencies with INCA be addressed?
• what are the likely costs of addressing the problems with INCA and how should these be met?
• how long will it take and what target date should be set for INCA re-introduction?
• should operators be able to choose to use INCA or NCD based charging principles or to move from NCDs to INCA before the target date?

3.8 The benefits of this option are that it:

• avoids the imposition of a system which some operators clearly believe has not been developed sufficiently;
• allows time for interoperability problems to be addressed and for standardisation of billing interfaces;
• allows time for operators’ networks to be optimised;
• increases the incentive on BT to resolve all the issues.

3.9 The disadvantages of this option are that:

• unless NCDs are revised there is a potential for a two tier system of charging, for operators who are or are not party to this dispute, with dissimilar charges for similar conveyance services from BT.

Accuracy of NCDs

3.10 In considering the continuation of a manual billing process Oftel is concerned that NCDs do not precisely represent BT’s conveyance costs. They were designed as a short term expedient until INCA could be introduced. They were also set at a level which prevented unreasonable increases in BT’s charges whilst operators took steps to optimise their interconnectivity with BT.

3.11 If NCDs are to continue to be used for any length of time, the graph which produced the sliding scale will need to be reset to, more accurately, align with corresponding INCA charges. This, however, was not the subject of the dispute referred to Oftel by BT and would have to be considered outside this direction.

Chapter four

The Director’s Draft Decision

4.1 The Director is concerned that any single decision he may make may have an unacceptable impact on some operators. The evidence available is not conclusive but it is clear that the present position with BT’s de-averaged NTS charges remains unsatisfactory.

4.2 Having considered all of these options and the matters set out in Regulation 6(8) of the Telecommunications (Interconnection) Regulations 1997 the Director proposes that the operators in dispute with BT should not be required to use BT’s INCA billing system for NTS, but should be able to choose to continue to use NCDs until INCA billing system compatibility issues have been addressed or the Director directs otherwise. However, the Director also considers that those Operators who do not wish to continue to use NCDs may, at any time as a matter commercial negotiation with BT, agree to use INCA data.

4.3 Accordingly, without fettering the Director’s discretion as to the final decision in this direction, Oftel intends to commence a review of the NCD sliding scale.

Chapter five

Arrangements for making and viewing representations

5.1 The Director General’s proposed draft decision is being made available to interested parties, together with the Director General’s reasons, so that they may have a reasonable opportunity to make representations. Having considered any such representations, the Director General will, if appropriate, make the direction and will notify BT and interested parties of that direction and his reasons for making it. The closing date for submitting representations on both the charging methodology and the charges proposed in this direction is 14 December 2001.

5.2 Where possible, comments should be made in writing and sent by e-mail to geoff.brighton@oftel.gov.uk.

However, copies may also be posted or faxed to the address below. If any stakeholders are unable to respond in one of these ways, they should discuss alternatives with the Oftel manager named below:

Geoff Brighton
Oftel
50 Ludgate Hill
London
EC4M 7JJ
Tel: 020 7634 8925
Fax: 020 7634 8943

Further copies of this document

5.3 Paper copies and more accessible formats of this document such as large print, Braille, disc and audio cassette can be made available on request. Please contact Oftel’s Research and Information Unit by phoning 020 7634 8761 or by sending an e-mail to infocent@oftel.gov.uk.

Publication of representations made by stakeholders

5.4 On this occasion, Oftel is not programming a formal period during which interested parties may comment on the representations made by others. However, in the interests of transparency, all representations will be published, except where respondents indicate that a response, or part of it, is confidential. Respondents are therefore asked to separate out any confidential material into a confidential annex which is clearly identified as containing confidential material. Oftel will take steps to protect the confidentiality of all such material from the moment that it is received at Oftel’s offices.

5.5 Non confidential representations can be viewed on Oftel’s website in the Publications section under classification Responses to Oftel consultations. They can also be viewed at Oftel’s Research and Information Unit. Appointments must be made in advance by phoning 020 7634 8761 or sending an e-mail to infocent@oftel.gov.uk.

References to earlier directions and determinations

Determination of Interim charges for BT’s Standard Services for the year ending 31 March 1996 – containing ‘the NTS Determination’ - made in January 1996. This is not published on Oftel’s website.

Direction concerning BT’s NTS Conveyance - made on 13 November 1999

Determination of a dispute between BT and a number of operators regarding a proposal to charge for NTS links from January 1 2001 - made on 28 June 2001

Determination relating to BT's proposal to increase NTS discounts - made on 3 September 2001

Schedule

 Annex A

Geoff Brighton
Office of Telecommunications
50 Ludgate Hill
LONDON
EC4M 7JJ

21 September 2001

Dear Geoff,

Dispute regarding NTS conveyance charging via INCA and CLI

1. You wrote to me on 5 September 2001 asking for information on the NTS billing issues associated with the use of INCA and potential solutions for, in particular, non-BT originated and ported calls. You subsequently asked whether or not INCA was charging on a least cost routeing basis. BT’s response is set out below.

Current issues

2. For calls which are non-BT originated, the settlement with the sender is independent of network use (this is assumed to be constant in the sender's network) while the settlement with the recipient consists of the usual POLO minus the transit network use (TWIX) to carry the call from entry to exit POC (NB – the full POLO is paid to the recipient and the TWIX element subsequently claimed back). This processing is currently carried out using the incoming (to BT) call record to evaluate the TWIX, which is subsequently charged to the recipient. Outgoing traffic currently assumes a constant BT network use regardless of the call origin.

3. With the advent of CLI’s presence in the outgoing record, this can be used to evaluate all required BT network use, both for BT-originated and for transit traffic (currently incoming call records are "merged" into the settlement with the recipient operator). However, all of the above suffers from the presence of CPS, IA and number portability at the origin of the call to the extent that the recipient cannot readily verify the BT bill. Such differences in the true call origin from that implied by the CLI range holder can make transit traffic appear as BT-originated and vice versa.

4. Annex A shows the way in which the true origin of an outgoing call can be masked by IA, CPA and Number Portability.

Options for resolution

Short Term

5. It would be possible to use both incoming and outgoing call records when settling with the recipient. This option will cause INCA to identify any incoming NTS traffic with CLI in a BT range, caused by origins subject to GNP export, IA and CPS. Such traffic with CLI in a BT range will appear to be BT-originated when leaving the BT network (since INCA operates on a number range holder basis rather than individual telephone numbers).

6. Incoming traffic with destination number not in a BT range (i.e. transit) will then have the EBC TWIX charged to the terminating operator associated with the destination number range.

7. Outgoing traffic will show an EBC charge band based on CLI and POC. This charge band will either indicate BT-originated or outgoing transit traffic. We know (above) from incoming traffic that a degree of outgoing transit will appear to be BT-originated since the CLI is in a BT range - this traffic will be "subtracted" from the BT-originated traffic shown in the outgoing call summaries, since it was actually transit traffic which has already been charged for with the incoming record.

Issues

i) the recipient OLO will not have access to the records of traffic incoming to BT used to cater for GNP/CPS/IA at the call origin in INCA outgoing record processing and will therefore have insufficient information accurately to verify the BT bill;

ii) there will not be an exact match when "deducting" outgoing transit traffic with CLI in BT range (identified with incoming record) from outgoing BT-originated traffic shown in the outgoing call summaries. The process will have to subtract from the outgoing summaries that traffic with the most expensive charge band first as, for a particular call, the incoming charge band will be transit but the outgoing BT originated, meaning that a direct match cannot take place (these charge bands are different); and

iii) As described above, this solution does not cater for NGNP at the call destination, though with further analysis it is expected that this would be possible. However, due to the low volume (relatively) of NGNP, it is not expected that a development in this interim approach will be financially viable.

8. INCA requires a development to carry out the checking to see if CLI for incoming traffic is in a BT range. This development will be in place by end December 2001. A further development, already planned, will be necessary in BAT (Billing Assistance Tool) to carry out the inter-summary table processing (though catering for NGNP is not currently planned). BAT will be decommissioned when the wholesale billing solution comes into place at the end of February 2002; this would not absorb this aspect of BAT functionality, however.

Medium Term

9. The network could add a prefix to the dialled digits for NTS traffic incoming to the BT network. Traffic in these number ranges, which cannot be those subject to either IP grooming or NGNP Phase 2 import, would trigger the IN to cause prefix addition. (the aforementioned restriction is caused by the fact that the prefix would prevent the required triggering to the IN for these products; this does not matter since, by definition, such traffic will not be transit.) Ideally, the prefix would identify sending OLO (based on route) though the practicality of this will need to be assessed in a feasibility study. The outgoing call record for such incoming transit traffic would contain the prefix (which may be passed on to the OLO for verification purposes - or not if the necessary build in the OLO network to cater for the prefix is unacceptable), allowing INCA correctly to differentiate outgoing transit traffic and outgoing BT-originated traffic. Subject to full analysis, it is anticipated that an INCA development will be required as well as the network changes. This would be necessary because, if the prefix were to be shown on the incoming call record (the full consequences of the change in the network is currently unknown), it would have to be skipped in order to derive the TWIX incurred to carry the call to the destination number range holder.

10. A networks feasibility, in conjunction with INCA charging analysis, will be required to fully specify this approach - the above simply gives a broad indication of its possible operation. Costs and timescales for this option will have to wait for a feasibility study, but are likely to be less than the indicative costs for the long term solution (see below).

Issues

i) it does not cater for NGNP at the destination;

ii) may impact OLOs if prefix is to be passed across the interconnect;

iii) if the prefix is to be passed across the interconnect to allow accurate OLO verification, a new set of prefixes will be required from Oftel; and

iv) until feasibility work has been carried out the viability of this approach, and costs/timescales, will not be fully known.

Long term

11. It could be possible to enrich all INCA call records with, at least, first and last BT switches in the BT network (and possibly originating/terminating operator deduced from the incoming/outgoing routes). This information could be passed to OLOs in the signalling.

12. This would require conceptual analysis to consider the use of the new information in view of the "shortest theoretical path" mechanism of charging, and it is likely that all INCA systems (NCDB, EBC, streamer and Company system) would be impacted. Further it is likely that an enhanced set of verification reference data would be required by OLOs (since additional new data in the call records will be being used for charging), meaning that industry agreement would be necessary.

13. Such a solution would be longer term because it would require changes within the network in terms of signalling messages passed between operators as well as the data that would be included in call records. We could include in the signalling a flag (perhaps the LOPID) to indicate the retail billing operator for the class of call under consideration (this is to avoid the BT DLE switch being used where a call has originated from a BT customer making an Indirect Access or Carrier Pre-Select call). We could also include a flag, again possibly the LOPID, to indicate the operator to which BT passes the call. There would need to be a tight definition of this in case the operator passed the call back to BT to compensate for any congestion within its own network. In addition we could include in the signalling the BT originating switch - unless there were any OLO switches through which the call passed, in which case we would have to use the first BT switch after the OLO switch. We would also have to include the switch where the call was passed across to another operator - which need not be the terminating operator. Operators already have LOPID information (maintained by Oftel) and they already have NNI information from various sources, including EBC. The major benefit would be that we would be able to identify costs of carrying calls in a fashion which was closer to the true costs and the operators would be able to identify the same information and verify our bills more easily. Another benefit would be that working out EBC charge bands would be vastly simplified, reducing the costs involved in charging for calls this way.

14. Initial indicative costs and timescales for this longer term solution are in the region of £2m and two years, but true figures for this option will only emerge from a feasibility study

Issues

15. The effect in terms of the point at which operators would pick up call records from BT would need to be considered. If we use the outgoing records then we would charge differently for each call from the same customer - depending on where the call record was generated. This would already affect calls from BT customers and it could also affect transit calls from other operators (there are a number of l