NTS focus group meeting notes and actions

Meeting Notes & Actions

Agenda item (1) - Introductions

Attendance:
Colin Scott	THUS (Chair)
Caroline Wallace	Ofcom
Geoff Brighton	Ofcom
Adam Kilgour	Ofcom
Clive Hillier	Ofcom
Tanya Rofani	Ofcom
Rickard Granberg	Your Communications
Debbie Mulloy	NTL
Dave Simpson	Easynet
Toby Higho	Centrica
Richard Anderson	MCI
Alex Jennings	Tiscali
Karen Wray	C&W
Tim Stephens	C&W
Andrew Wileman	Telewest
Karen Hardy	Energis
Sid Crane	Rateflame
Gerard Lever	Rateflame
Mike Ankin	BT
Colin Annette	BT
Kath Embleton	BT
Clive Goodwin	COLT

Agenda item (2): Ofcom Presentation - NTS Framework Re-examination

Clive Hillier provided a presentation on Ofcom's NTS Framework re-examination. A copy of the presentation has been provided along with these minutes.

Ofcom intend to split the Framework re-examination work into a series of workstreams (information gathering, stakeholder input etc) culminating in a full consultation document towards the end of 2004.

Operators asked Ofcom a series of questions relating to the Framework Re-examination:

Q	Dave Simpson asked Ofcom if the issue of where NTS ‘Profits' are distributed (TNO Vs. ONO) was within the scope of the review?
A	Ofcom said that the work of the NTS Futures Group had already looked into the idea of distributing NTS profits differently, therefore it was expected that the framework re-examination would also include this with in its scope.
Q	Colin Annette asked if the INCA/CLI work would continue, or would it be suspended until Ofcom had completed the Systems Consultancy workstream within the framework re-examination?
A	Ofcom said that there has already been a considerable amount of effort put into the INCA/CLI billing development project to date and that this work would progress independently of the Framework Re-examination, since some method of charging (or at least costing) conveyance for NTS calls would be likely to be important regardless of the outcome of the Framework Re-examination.
Q	Dave Simpson said that he believed that other improvements could be rolled into the INCA / CLI project.
A	Ofcom said that a balance had to be struck between delivering some benefits in the short term and the cost of delaying until it was capable of meeting all requirements. Further system enhancements would be considered on their merits.
Q	When will the NTS Retail Uplift Consultation be issued and will the Framework re-examination have any impact on it?
A	The Retail Uplift Consultation will be issued in May / June 2004, and given the work already undertaken Ofcom intend to press ahead with the consultation. Ofcom did not consider that the outcome of the retail uplift consultation would pre-empt consideration of a full range of alternative NTS policy frameworks in the framework re-examination.
Q	What level of approval has this project received within Ofcom and what resource has been allocated to it?
A	The project now has board level approval within Ofcom and an internal Project Team has been assembled (within the Competition & Markets Division). No new staff have been recruited and the project will have to compete with other Ofcom projects for resources. There is a huge amount of NTS case work which also has to be dealt with (alongside the more strategic NTS policy work).
Q	Karen Hardy asked how this will affect outstanding NTS Disputes (e.g. Discounts etc)?
A	Ofcom noted statutory requirements on Ofcom relating to dispute resolution. NTS disputes would be dealt with based on the current Framework and not delayed as a result of the framework review.
Q	Karen Hardy said that there is a real risk that if the current NTS arrangements continue, a number of ISPs may go out of business prior to the output from the framework re-examination being implemented.
A	Caroline Wallace said that Ofcom didn't have the power to immediately direct an outcome that diverged from existing policy without having done the work to support and justify a change in policy. Ofcom had to work within the legal framework set out.
Q	Debbie Mulloy requested that Ofcom provide the Focus Group with a list of project milestones?
A	Ofcom said that when the project had been firmed up Ofcom would inform the Focus Group of key project milestones.

Caroline Wallace suggested that an industry/consumer workshop might be a good idea to enable operators to discuss a range of issues with consumer reps. While consumer reps are interested in NTS issues, the detail and complexity of the NTS market often presents a barrier to their understanding. Caroline agreed to raise this idea again once the NTS Framework Re-examination project was more established.

Agenda item (3): Operator Specific Charging

As one of the main advocates for Operator Specific Call Origination charges Andrew Wileman outlined Telewest's case for introducing Operator Specific Origination charges in the UK NTS regime.

Andy argued that:

More and more value was being stripped out of NTS
Another operator's costs should not be imposed as a surrogate for an operator's own costs
Originating operators require recognition for the work that they undertake
Any NTS Framework re-examination requires the full length of the value chain to be re-exaimined, not just issues which affect terminating operators
Oftel's Freephone Direction in August 2002 doesn't take the issue forward as the NTS arrangement in the BT Carrier Price List effectively hardwires rates in the market place and prevent originators from commercially negotiating.
Although Originators have flexibility at the retail end of the call, Telewest would prefer flexibility at the termination end.
Originating operators can't close access to NTS ranges as consumers are now so used to making calls to these, closing access isn't an option.
While Telewest believe their costs to be different from that of BT, they don't believe them to be hugely different.

Various counter arguments were put forward:

Non-dominant originators are free to adjust their retail pricing to recover their own costs.
How would billing systems incorporate operator specific origination charging?
Operators who are less efficient than BT shouldn't be rewarded for their inefficiency.
Other Originating operators also enjoy BT's discount allowance, without necessarily giving this allowance away to their own retail customers, therefore they are currently over recovering.
Originators can distribute their traffic to terminating operators directly, by-passing BT and splitting the twix charge.
If an originating operator has a more expensive network, it is the customers of that network who should pay for its higher costs (rather than TNO customers).
BT's origination costs are subject to regulatory scrutiny and the attribution methodology is relatively transparent. How are terminating operators and consumers going to be protected from gold plated call origination charges which aren't properly cost orientated.
Originating operators are free to close access to number ranges they don't want to carry traffic to.

The FG was unable to reach a conclusion on this issue. Ofcom said that they have to take a holistic approach to NTS, balancing the interests of Originators, Terminators, Transit operators and Consumers. This issue will be raised with the NTS Framework re-examination workstream.

Agenda item (4): NCCN 500

Colin Annette said that BT had issued NCCN 500, which increased termination payments for access to its 0845 and 0870 services from the 1st of May 2004. These rates are only applicable to non-BT originated minutes and BT Retail would continue to pay pre-May '04 rates (ie. rates which are governed by the NTS Formula and still controlled by the NTS Formula). Non-BT access to these number ranges isn't regulated and BT had the commercial freedom to make this change.

Dave Simpson asked how BT was going to distinguish between BT and non-BT traffic given the complexities of IDA/CPS and number portability. Colin Annette said that the traffic was split out as a journal entry within the BT management accounts.

Ofcom were asked about their view of this issue. Ofcom said that they had made some preliminary enquiries and had decided not to pursue an own initiative investigation. There wasn't enough evidence at this stage to open up a Competition Act chapter 2 case on abuse of dominance. Ofcom wouldn't actively seek information in this case, instead they would await a referral from another party.

Dave Simpson asked if the size of the price movement and the fact that operators can't replicate this change would be enough to trigger Ofcom's consideration of a referral. Ofcom said that is would depend on the referral.

BT were asked whether other operators were able to replicate this move, ie change section 1.12 in the BT CPL and charge a difference rate for non-BT originated minutes.

New Action #K1: Mike Ankin agreed to investigate if BT would permit other operators to charge a different rate for non-BT originated minutes in section 1.12 of the BT CPL.

An operator asked what the implications would be if they paid out based on the old contract rates (given they can't reject an NCCN). BT said that would be dealt with as a contractual dispute.

Agenda item (6): Review of Outstanding Actions

#I1	All to provide Clive Hillier with contact details of colleagues in other European Countries who would be willing to help with the International Benchmarking research.
	Closed - Clive said that two further responses had been received and that he would present his findings back to the Focus Group once the project had reached some conclusions
#J1	Ofcom to provide a full update on the NTS Framework Re-examination for the next NTS FG.
	Closed - Item included on the Agenda
#J2	Colin Scott to include the issue of Operator Specific origination within the agenda for the next Focus Group.
	Closed -Item included on the Agenda
#J3	All operators to provide feedback to Dave Simpson with their preferred option for dealing with the minimum call fee and suggested answers on questions 1 - 3 .
	Closed - The preferred option was ‘Squirreling' - i.e. hold the money over until such time as it became cost effective to sort out. New Action #K/2: Any operator who wishes to participate in helping to decide on answers to the questions 1 -3 below should contact Dave Simpson. What interest arrangements should cover the over-recovered amount prior to it being distributed to operators? What was an appropriate trigger level amount for the money to be distributed to operators? What date should this new arrangement commence from? This issue will be put on the agenda for the next meeting.

Agenda item (7) - Any Other Business

Ofcom said that the retail uplift consultation would now be published in May/June (a delay of 1 month). The consultation will last for 6 weeks (confirmed by email from David Brown).

The 0845 / 0870 Statement will be published w/c 26th April

The NCD replacement Statement will be published in May.

The ISP margin Squeeze investigation is still ongoing, however a decision is expected to be published by mid-May. Operators who wish to keep updated on this case should sign up to the Ofcom competition bulletin.

Ofcom have emailed a number of operators requesting their comments on the scope of the NTS discounts dispute.

Ofcom reiterated that they are still interested in the output of the NTS Futures group and would like to see the detail of the proposal (i.e. retail and POLO prices). Colin Annette said that a number of operators had Competition Act concerns that prevented them from discussing these issues as part of the sub-group, however BT were still intending to start bi-lateral discussions with a number of operators on this issue.

Date of Next Meeting Thursday 3rd June- 2pm Ofcom - Riverside House, London

Other meeting Dates for 2004:

Thursday 15th July
Thursday 26th August
Thursday 7th October
Thursday 18th November

Summary of New and Outstanding Actions:

#K1:	Mike Ankin agreed to investigate if BT would permit other operators to charge a different rate for non-BT originated minutes in section 1.12 of the BT CPL.
#K/2:	Any operator who wishes to participate in helping to decide on answers to the questions 1 -3 below should contact Dave Simpson. What interest arrangements should cover the over-recovered amount prior to it being distributed to operators? What was an appropriate trigger level amount for the money to be distributed to operators? What date should this new arrangement commence from?

#K1:

Mike Ankin agreed to investigate if BT would permit other operators to charge a different rate for non-BT originated minutes in section 1.12 of the BT CPL.

#K/2:

Any operator who wishes to participate in helping to decide on answers to the questions 1 -3 below should contact Dave Simpson.

What interest arrangements should cover the over-recovered amount prior to it being distributed to operators?
What was an appropriate trigger level amount for the money to be distributed to operators?
What date should this new arrangement commence from?