Consultation on the proposed markets, market power determinations and remedies for wholesale call termination, wholesale call origination and wholesale narrowband access markets.
The Narrowband Market Review 2017 covers five wholesale markets that underpin the delivery of retail fixed voice telephone services in the UK. The outcomes from this review are designed to promote competition and further the interests of residential and business customers.
We are reviewing three access markets: wholesale fixed analogue exchange lines (the standard fixed lines used by residential and business customers) and two markets that enable the delivery of digital telephone services to businesses to support applications such as call centre operations. The two digital exchange line markets are ISDN30 and ISDN2. In addition, we are reviewing wholesale call origination – a complementary service to the provision of analogue and digital exchange lines, which enables end customers to make calls over those lines.
This review also includes wholesale call termination, a connection service provided by a fixed telecoms provider when their customer receives a call. If customers call a UK geographic number (a number starting 01 or 02), their provider pays the terminating provider a wholesale charge, called a fixed termination rate.
This consultation considers the level of competition in each of these five wholesale markets. Where competition is not working effectively, we propose regulation that should apply for the period 1 October 2017 to 30 September 2020.
We will take all responses to this consultation into account before reaching our final conclusions, which we plan to publish in a statement in September 2017.
Ofcom will shortly publish a consultation on our review of the market for standalone landline telephone services.
We recognise that stakeholders may wish to consider the interactions between our wholesale and retail proposals – particularly in relation to wholesale fixed analogue exchange lines (WFAEL) and wholesale call origination (WCO) – before they finalise their responses to our December wholesale Narrowband Market Review consultation. We are therefore extending the final deadline for submissions to 29 March 2017.
Where possible, we ask stakeholders to provide their responses to our proposals by the original closing date of 28 February 2017, particularly where they relate to the wholesale call termination, ISDN30 and ISDN2 markets.
This document sets out clarifications to the consultation document on the Narrowband Market Review published on 1 December 2016 (the “Consultation”), which can be found at: https://www.ofcom.org.uk/__data/assets/pdf_file/0016/95011/Narrowband-Market-Review.pdf
This note supplements the Consultation, and the Consultation should be read accordingly.
Following publication of the Consultation, BT raised concerns with us about the value we had calculated for its current average wholesale call termination (WCT) charge. The charge published in the Consultation was 0.029ppm and was used in our estimation of the financial impact of our proposals, our arguments around the use of a glide path, and the relevant draft condition (draft Condition 5C). BT stated that, by its own calculations, this should instead be 0.035ppm.
We have investigated this issue further with BT and have determined that the discrepancy is caused by differences in the volume mix (the relative volumes of day, evening and weekend calls) assumed in the calculations. Using the most recent available data regarding the volume mix, we agree with BT that its average charge during the lacuna period is 0.035ppm in 2015/16 prices.  The Consultation should therefore be read with this value replacing the published value of 0.029ppm.
This issue affects three distinct parts of the Consultation:
This is based on the average charge in the 2015/16 charge control year (in accordance with BT’s voluntary pricing commitment, see https://www.ofcom.org.uk/phones-telecoms-and-internet/information-for-industry/telecoms-competition-regulation/narrowband-broadband-fixed) and volumes in the 2015/16 financial year.
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