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Ofcom own initiative enforcement programme into wholesale mobile call termination rates

11 Tachwedd 2013

Complainant: Ofcom own-initiative enforcement programme
Investigation against: Mobile communications providers (“MCPs”) offering wholesale call termination services
Case opened: 11 November 2013
Issue: Compliance with the requirements under significant market power (“SMP”) conditions M1 and M4 relating to the rates charged by MCPs for wholesale mobile voice call termination.
Relevant instrument: SMP conditions M1 and M4 as set out in the Notification under sections 48(1) and 79(4) of the Communications Act 2003 dated 15 March 2011. (Contained in Annex 1 to Ofcom’s Statement entitled “wholesale mobile call termination”, published on 15 March 2011). This can be found here: http://stakeholders.ofcom.org.uk/consultations/mtr/statement

On 15 March 2011, Ofcom published the Statement “wholesale mobile call termination” (the “MCT Statement”). In this statement, Ofcom designated each of 32 MCPs as having SMP with respect to the termination of calls to UK mobile number ranges allocated to each of them respectively and imposed SMP conditions on these MCPs.

All 32 MCPs are required to provide network access on fair and reasonable terms (including charges) (SMP condition M1) and are required to publish their mobile termination rates (“MTRs”) in the manner specified (SMP condition M4).

Ofcom also imposed charge controls setting the maximum amount that the four large MCPs (Everything Everywhere Limited, Hutchison 3G UK Limited, Telefónica UK Limited (formerly O2 (UK) Limited) and Vodafone Limited) can charge for mobile call termination until 31 March 2015. We refer to this cap as the “benchmark MTR”. 

In April 2011, we published guidance describing how Ofcom would approach any future dispute between an originating communications provider and a smaller MCP as to whether MTRs charged by the smaller MCP are fair and reasonable.(-1-) This can be found here: http://stakeholders.ofcom.org.uk/binaries/consultations/mtr/statement/guidance.pdf

In this guidance, we said that whilst we will consider any dispute on its specific facts and evidence, we would take the benchmark MTR as the starting point for establishing a fair and reasonable MTR for smaller MCPs.(-2-) MTRs above this level are only likely to be considered fair and reasonable where the MCP can demonstrate that: (a) charging the benchmark MTR would not allow them to recover their efficiently incurred actual costs of MCT and; (b) charging a higher MTR would be offset by consumer benefits. 

Ofcom is now launching an enforcement programme to assess the 32 designated MCPs' compliance with SMP conditions M1 and M4, and to determine whether to take any further action, including enforcement action under the Communications Act 2003.

Case Leader: Costas Pittas (email: costas.pittas@ofcom.org.uk)
Case Reference: CW/ 01115/11/13

Footnotes:

 1.- The fairness and reasonableness of the charges of the four large MCPs is assessed on the basis of their compliance with the charge control.

 2.- The exception to this is where the MCP terminates 100% of their incoming traffic using over the top means (“OTT”), in which case we would take the benchmark fixed termination rate as our starting point.