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26|09|07

NTS Focus Group - 9th August 2007 - 2.00 pm Ofcom

Agenda item (1) - Introductions

Attendance:

Andrew Wileman	Virgin Media (Chair)
Preya Chawhan	Band-X
Rob Day	BT
Kath Embleton	BT
Sean Hartley	BT
Justin Hornby	Cable & Wireless
Laurent Pariat	Cable & Wireless
Andrew Monk	Carphone Warehouse
Toby Higho	Easynet/Sky
Will Goodall	Flextel
Kevin Archer	Flextel
Andy Martin	IV Response
Lesa Green	Kingston
Geoff Brighton	Ofcom
Clive Hillier	Ofcom
Michael Barford	Tiscali

Agenda Item (2): Review of minutes of previous meeting

No comments/concerns were raised.

Agenda (3): Update/progress report on the current 'live' NTS related consultations/investigations: (Ofcom/All)

Review of Regulation of Premium Rate Services

Clive Hillier advised that the research phase was progressing well. Preparation of the Consultation document is underway, with the intention of publishing in the Autumn.

NCCN 500 investigation/ NTS call termination market review

Clive Hillier said that a draft Determination had been issued to the parties to the dispute. Clive added that the deadline for comments had been extended at the request of one of the parties.

Andrew Wileman asked about the implications for the NTS call termination market review. Clive said that the commencement of the market review was contingent upon the publication of the final version of the Determination.

ICSTIS progress re. Governance of 0871

Geoff Brighton said that Ofcom and UKCTA had met on 8 th August to discuss industry concerns with the proposed changes to the regulations applying to 0871. Geoff added that Ofcom and ICSTIS had subsequently met on 9 th August. The ICSTIS Statement is due to be published in September and Ofcom will have sight of this in advance of publication.

Geoff said that ICSTIS had indicated its intention to apply a version of the 11 th PRS code to the 0871 range, but ICSTIS anticipated that its approach to enforcement will be ‘light touch’ at least during the initial period of applicability. Several attendees said that they believed the application of the full ICSTIS PRS code to be disproportionate and requested comfort/guarantees that the mooted light touch approach would prevail.

Andy Martin asked if ICSTIS would be publishing the responses that it had received to the condoc. Lesa Green said that she expected the sheer number of responses would make this unfeasible. There had been in excess of 700 replies, many of which used a standard consumer response template created by the ‘say no to 0870’ group. Will Goodall asked who regulates ICSTIS. Geoff Brighton said that the ICSTIS code has to be approved by Ofcom, but ultimately ICSTIS is a stand alone regulatory body in its own right. Will asked if Ofcom had the power of veto over ICSTIS. Geoff said that Ofcom’s approach to the ICSTIS statement would depend on its contents but that ultimately ICSTIS’s Code of Practice is subject to approval by Ofcom.

Will added that the due diligence requirements contained within ICSTIS’ proposals were too onerous –particularly if they were required to apply retrospectively. The FCS numbering group had raised serious concerns - in particular around the fact that those providers running 0871 services only were not geared up to comply with full PRS regulations. Will said that he believed the regulations would destroy the 0871 market.

Andrew Wileman asked if all avenues for lobbying ICSTIS had been explored. Most attendees confirmed that they had submitted individual responses to the ICSTIS consultation, together with additional representations via a number of industry groups.

It was suggested that ICSTIS be invited to attend the next NTS Focus Group .

New Action Aug07_01: ICSTIS to be invited to attend the next NTS Focus

Andrew Monk suggested that there was a risk that the forthcoming consumer protection test could lead to the introduction of due diligence requirements even if they were removed from the ICSTIS 0871 Code. Andrew suggested that a layered approach, variable by service or provider type could be more appropriate. Geoff Brighton said that Ofcom would raise the concerns of NTSFG members with ICSTIS.

Will Goodall expressed concern that the proposed 0871 regulation would eventually extend to 0844 services.

General Condition 14 Enforcement Programme

Clive Hillier said that Ofcom was in the process of reviewing the compliance of the Code of Practice with the General Conditions. This will be followed by a review of whether CPs are compliant with the Code of Practice. Thereafter, Ofcom will decide if any action needs to be taken.

Clive added that Ofcom was disappointed at the number of CPs that were still referring to 0845 & 0870 services as local and national rate.

Turning to action point Apr07_07, Will Goodall said that the information held on the BT Retail website had improved, but still required some additional amendments. Will agreed to email Kath Embleton with his remaining concerns.

New Action Aug07_02: Will Goodall to confirm remaining concerns with the pricing information held on the BT Retail website to Kath Embleton.

Andy Martin said that he believed equal prominence for all numbers was still not in place and that more stringent enforcement action needed to be taken – particularly where certain Mobile operators were concerned.

Will Goodall added that if Ofcom’s ongoing considerations around retail pricing resulted in BT retail pricing obligations being relaxed, clear pricing information must be a pre-requisite.

Own-Initiative Investigation into the Possible Mis-use of 087 Numbers

Clive Hillier advised that Ofcom had issued an update Competition Bulletin, concluding the investigation and as such the case had been closed. The specific company involved in the mis-use had ceased to operate in the UK.

Agenda (4): Implementation of the 03 Range

Andrew Wileman asked if any pricing disputes had materialised. Clive Hillier confirmed that none had been submitted to Ofcom.

Laurant Pariat said that there had been little progress on the arrangements for porting 03 numbers to/from BT. Laurant sought clarity around what process should be followed and whom at BT CPs should engage with. Attendees requested the issue of 03 porting to be included as a specific agenda item at the next focus group meeting.

New Action Au07_03: Porting arrangements for 03 number ranges to be added to the agenda for the Sept 07 NTS FG meeting.

Lesa Green highlighted the fact that the BT DMA forms applying to the 03 number range provided for international access, whereas such access was still not available for 0844/0871 ranges. Will Goodall said that his interpretation of the regulations was that GC20 required NTS numbers to be accessible across the EU. Clive Hillier said that GC20 applies to all non-geographic numbers and requires TCPs to ensure that their numbers are available in EU countries to the extent technically and economically feasible, unless the user of the number requests otherwise. It does not apply to international carriers or overseas originators.

Will and Lesa confirmed that they had both submitted requests to BT to provision international access to 0844 and 0871 ranges. Lesa said that BT’s response had been that it did not believe that such access was appropriate at the present time, but BT was willing to engage in commercial dialogue. Both Lesa and Will felt, however, that progress had stalled and that there was a lack of visibility on how the issue was being taken forward by BT. BT agreed to provide some additional thinking on a way forward at the next NTS FG.

New Action Au07_04: BT to update on its position in respect of international access to 0844/71 ranges, including what needs to be done to open such access, at the next NTS FG meeting.

Kath Embleton said that there were a number of reasons why BT had not opened access to the ranges in question. Chief among these was the issue of overseas AIT .

Attendees agreed that this was a generic issue involving international access & gateway providers, not simply something that was centred on BT. As such, it was suggested that a sub group be convened to discuss international access to NTS ranges in general, with a view to addressing the current shortcomings.

New Action Au07_05: Sub group to be convened to discuss the general issue of international access to UK NTS ranges.

Agenda Item (5) – Update on Implementation of 0870 Reforms

Attendees were informed that BT was referring the dispute to Ofcom in respect of the interconnect charges that would apply to 0870 calls post 1 st February 2008 in two batches. [Note: Ofcom did not receive two referrals but BT needed more time to confirm that further TCPs had rejected its offer. No referral has been made by a TCP]. Clive Hillier said that Ofcom’s enquiry phase was scheduled to conclude on 18 th August (subsequently extended to 31 August).

Will Goodall said that he believed that Flextel was still negotiating with BT. Will believed that Flextel’s specific cost base was a critical factor in these negotiations – as such he did not believe that it was appropriate for Flextel to be referred to Ofcom as part of a generic dispute. Will added that he was surprised that Ofcom could combine all such disputes when CPs had differing cost bases.

Andy Martin expressed concern at BT’s representation of the events leading to the dispute in the referral letter submitted to Ofcom. Andy said that he believed BT appeared to be apportioning blame for the inability to reach agreement on rates to the NTS FG – despite the concerted efforts that had been made/dedicated workshops that had been held.

Justin Hornby asked if there was any risk that Ofcom would reject the dispute referral on the grounds that all avenues of negotiation had not been pursued. Justin added that time pressures would become increasingly critical as the implementation date of the reforms approached.

Discussion turned to action point Jun07_04 (Ofcom to highlight the wording that requires BT Retail’s 0870 pricing to be uniform post 1st Feb 2008). Clive Hillier / Geoff Brighton clarified the points made at the previous focus group meeting about the regulations applying to 0870 post 1 st Feb 2008 , including the removal of the call origination condition, and the revised designation for 0870 calls in the Numbering Plan. OCPs would set the retail rate for 0870 calls – with an obligation to charge either geographic rates (or less) or provide a free to caller pre-announcement. However, OCPs would not be required to charge all 0870 calls at the same rate. Termination charges for 0870 calls are a matter for commercial negotiation in the first instance and there are no restrictions on TCPs proposing their own interconnect termination rates. Geoff added that if Ofcom accepts the 0870 termination charges dispute, these issues may feature in the dispute.

Will Goodall said that this underlined his belief that Flextel’s dispute with BT was separate and should not be included in a generic dispute referral. Will said that Ofcom had promised during the setting of the new 0870 policy that revenue certainty for TCPs would be preserved – and he believed that this would now not be the case. Will read out a statement highlighting Flextel’s concerns and confirming its position. This statement is appended below:

“FleXtel statement at the NTS Focus Group of the 9 August 2007

(to be included in the meeting notes)

FleXtel generally supports Ofcom’s broad policy objective to protect consumers from

rapacious pricing. To ensure proper competition, price transparency is paramount

and so retail prices must be accurately labelled, this also protects consumers from

pricing scams. In normal markets, the retailer sets its retail tariff, taking into account

a negotiated wholesale tariff.

Ofcom’s intervention removes 0870 from the NTS Call Origination Condition, which

controls the wholesale price, based on BT’s retail price. It follows that TCPs should

now be able to set their own wholesale rates and have, as Ofcom promised,

“revenue certainty restored”. Therefore it is surely unreasonable for Ofcom to

impose a common termination rate based, once again, on BT’s retail price. The

question is therefore, should BT continue to control wholesale rates, if Ofcom have

promised “BT would purchase call termination from TCPs”?

It is now recognised that, if Ofcom finds in favour of BT’s offered rate, of about one

third of penny per minute, then TCPs will be forced to charge the called party up to

five pence per minute to receive 0870 calls. We can find no evidence that Ofcom

have taken this cost into account in its impact assessment. Furthermore, when

consulting on this intervention, Ofcom failed to highlight this extra cost burden to

stakeholders. Indeed, the consultation was silent on the issue in the “press release”,

the “high level summary” and in the “plain-English summary”. Only on page 67 of the

215-page detailed document was there a hint that such costs were “possible”.

As a result of the current state of affairs, a number of organisations have called on

Ofcom to delay implementation. These include the Cabinet Office, the FCS and the

CMA . Indeed, of all the NTS Focus Group members, it seems that only a minority

(including BT and Ofcom) wish to proceed .

When appraising the recent request from BT for a dispute, Ofcom may wish to

consider the Competition Act issues surrounding price fixing and cartels. The EU

Commission may be interested to discover why Ofcom is being asked by BT to force

wholesale prices below its suppliers costs, particularly as BT and Ofcom both

appear to favour proposals contrary to the opinion and expertise of many other

stakeholders.

Finally, if Ofcom continues with its proposals, without underpinning them with proper

impact assessment and consultation, with respect to the costs to receive 0870 calls,

then Ofcom’s actions could be construed as negligent. Some stakeholders may feel

justified in seeking compensation, if this were the case.”

End of Flextel statement.

Agenda item (6) – Review of remaining outstanding actions

Action Aug06_09 : Porting differential issue to be added to the agenda of the first NTS FG meeting of 2007. Ongoing – Andrew Wileman said that the issue had not been added to the May agenda due to the breadth of topics already included and the potential linkage with the NCCN 500 investigation (which was still ongoing). The issue would remain on the outstanding actions list and would be included as an agenda item at a future date.

Action Feb07_05: Ofcom to review the concerns around 03 implementation and consider potential remedies to the situation. Discharged – Attendees agreed that any ongoing concerns would be dealt with on a business as usual basis, or via dispute, should one arise.

Action Apr07_06: Ofcom to monitor the situation re. 03 with the Cabinet Office Contact Council and report back to the NTS FG as appropriate. Discharged – Attendees were informed that the Cabinet Office Contact Council had made no further representations to Ofcom.

Action Apr07_07: BT to review the information on its website in light of the recent GC14 compliance investigation. Discharged – See new action point Aug07_02.

Action Apr07_08: Ofcom to confirm its thinking re. the GC20 obligations on access to UK 0844/71 codes from EU Member States. Discharged – See new action point Aug07_05.

Action May07_02: Attendees to forward ideas for increasing awareness/clarity of the 03 range to the chair for collation and distribution to Ofcom. Discharged – Andrew Wileman confirmed that no submissions had been received. It was therefore agreed that this action could be closed.

Action May07_03: Andrew Wileman to hold discussions with the chair of the Mobile Broadband Group with a view to gaining input to NTS debates from the mobile community (to include the prospect of MNO attendance at the NSTFG, or NTS FG member attendance at the Mobile Broadband Group). Ongoing.

Action Jun07_01: BT to write to CPs detailing the application of the Ofcom Determination and quoting the rates that would prevail. Discharged – BT had issued an industry briefing on 11 th July.

Action Jun07_02: Ofcom to issue a clarification note, confirming the status of the Determination and outlining its expectations for implementation of the resulting amended rates. Discharged – Ofcom had issued a clarification note to the NTS FG on 4 th July 2007 .

Action Jun07_03: BT to clarify the charging arrangements for the termination of 03 calls (and, post 1 st Feb 2008 , 0870 calls) on the BT network. Ongoing – Attendees requested that BT address the apparent ambiguity in the Carrier Price List that showed BT terminating calls as attracting a two-tier charge (ST and DLE).

Action Jun07_04: Ofcom to highlight the wording that requires BT Retail’s 0870 pricing to be uniform post 1st Feb 2008. Discharged – See notes under agenda item 5 above.

Action Jun07_05: Kath Embleton to confirm if the 1 st August BT Retail price changes will result in changes to the POLO rate. Discharged – Kath confirmed that the retail changes would not result in amendments to the POLO rate. This was because BT believed that any changes resulting from the increased retail fixed fee had been offset by reductions in the per minute charge. Laurant Pariat said that several CPs had requested additional justification of this offset. Laurant added that he believed that the NTS FG was the most appropriate forum in which to pursue this and asked that BT prepare a presentation on the reasoning behind the offset. Rob Day said that the Interconnect Briefing issued by BT outlines the rationale behind the offsetting, and asked what additional information C&W wanted to see. Laurant said that he wanted to gain reassurance in BT’s suggestions that the changes did directly offset each other. Rob said that to provide such comfort would entail the provision of commercially sensitive information – which BT would not be prepared to release. Ultimately, the only body that could provide absolute verification of the offset would be Ofcom.

Andrew Wileman suggested that there might be a compromise position. This could take the form of a ‘middle ground’ in which BT would provide a conceptual overview, without divulging commercially sensitive detail.

Laurant agreed to provide further detail to BT on the type of information that would afford C&W and other CPs the reassurance being sought. Rob said that BT would provide additional detail at the next NTS FG based on the compromise approach.

New Action Au07_06: Laurant Pariat to confirm to BT the type of information that would provide additional reassurance on the NTS POLO offsetting assertions.

New Action Au07_07: BT to provide additional detail on the NTS POLO offsetting at the next NTS FG.

Agenda item (7) – Any Other Business

Chairmanship of NTS FG

Andrew Wileman confirmed that he had received one nomination/volunteer for the chairmanship of the NTS FG – that being Justin Hornby of Cable & Wireless. No objections to Justin’s appointment to the role were expressed, however it was agreed that non-attending stakeholders should be given the opportunity to express an opinion. An email would therefore be distributed to NTS FG members requesting that any objections to Justin’s appointment be made by midday on 24 th August. Assuming none were received, the new appointment would duly be made thereafter.

(Post meeting note: No objections were received. Justin Hornby has therefore been confirmed as the new chair.)

Date of Next Meeting:

The meeting next meeting will take place on Thursday 13 th September 2007 , commencing at 2:00pm , at Riverside House, London .

Summary of New and Outstanding Actions:

Aug06_09	Porting differential issue to be added to the agenda of the first NTS FG meeting of 2007
May07_03	Andrew Wileman to hold discussions with the chair of the Mobile Broadband Group with a view to gaining input to NTS debates from the mobile community (to include the prospect of MNO attendance at the NSTFG, or NTS FG member attendance at the Mobile Broadband Group.)
Jun07_03	BT to clarify the charging arrangements for the termination of 03 calls (and, post 1 st Feb 2008 , 0870 calls) on the BT network
Aug07_01	ICSTIS to be invited to attend the next NTS Focus Group
Aug07_02	Will Goodall to confirm remaining concerns with the pricing information held on the BT Retail website to Kath Embleton
Aug07_03	Porting arrangements for 03 number ranges to be added to the agenda for the Sept 07 NTS FG meeting
Aug07_04	BT to update on its position in respect of international access to 0844/71 ranges, including what needs to be done to open such access, at the next NTS FG meeting
Aug07_05	Sub group to be convened to discuss the general issue of international access to UK NTS ranges
Aug07_06	Laurant Pariat to confirm to BT the type of information that would provide additional reassurance on the NTS POLO offsetting assertions
Aug07_07	BT to provide additional detail on the NTS POLO offsetting at the next NTS FG