DOCSLIB.ORG

Mobile Call Termination Market Review 2015-18 Draft Decision

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Mobile Call Termination Market Review 2015-18 Draft Decision Mobile call termination market review 2015-18 Draft decision Draft Statement Date of notification to EC: 6 February 2015 MCT Review 2015-18 About this document This document sets out in draft the conclusion of our review of the wholesale ‘mobile call termination’ (MCT) markets for the period 1 April 2015 – 31 March 2018. MCT is a wholesale service provided by a mobile communications provider (MCP) to connect a call to a recipient on its network. When fixed or mobile communications providers enable their customers to call a UK mobile number, they pay the terminating MCP a wholesale charge, called a ‘mobile termination rate’ (MTR). MTRs are set on a per-minute basis and are currently subject to regulation. We published a consultation document on 4 June 2014 outlining our regulatory proposals for MCT markets. We have taken account of points raised by stakeholders and new information received since the consultation. In this document we set out our decisions, including the regulation that we conclude is appropriate for this market. The regulation we have decided to impose includes a charge control on the MTRs of all MCPs offering MCT and is designed to promote competition and further the interests of consumers. This draft statement is today being notified to the European Commission. Once this notification process is complete, we will publish a final statement to bring our decisions into effect. MCT Review 2015-18 Contents Section Page 1 Summary 1 2 Introduction and background 4 3 Product and geographic market definition 21 4 SMP assessment 52 5 Remedies 64 6 Cost standard for the MTR charge control 92 7 Calculating the efficient costs of MCT 141 8 Implementation of the charge control 150 MCT Review 2015-18 Section 1 1 Summary 1.1 This draft statement sets out the conclusions of our review of the wholesale ‘mobile call termination’ (MCT) markets for the period 1 April 2015 – 31 March 2018. 1.2 MCT is a wholesale service provided by a mobile communications provider (MCP) to connect a call to a recipient on its network. When fixed or mobile communications providers enable their customers to call a UK mobile number, they pay the terminating MCP a wholesale charge, called a ‘mobile termination rate’ (MTR). MTRs are set on a per-minute basis and are currently subject to regulation. Based on current volumes, we estimate the total revenues in 2014/15 from MCT in the UK to be around £504m which compares to total retail revenues in the UK mobile sector of £15.6bn in 2013.1 If we consider “net” termination, i.e. we exclude mobile to mobile (M2M) off-net calls, the estimated revenue is around £141m.2 1.3 The purpose of this review is to analyse the state of competition in the provision of MCT and consider the appropriate form of ex ante regulation, if any, that should be imposed. To this aim we identify and define relevant markets that are susceptible to ex ante regulation and assess whether any MCP has significant market power (SMP). 1.4 The last MCT market review concluded on 15 March 2011 (‘2011 MCT review’), found 32 MCPs had SMP in their relevant markets and introduced a significant change from previous MCT charge controls in the way we assessed the cost of MCT. In particular, in choosing the cost standard to calculate the charge control for the four largest MCPs, we moved from LRIC+ to LRIC, which resulted in a sharp reduction of MTRs – falling around 80% between March 2011 and April 2013.3 1.5 In June 2014 we published a consultation (‘June 2014 Consultation’) to seek stakeholders’ views on our regulatory proposals for MCT for the period 1 April 2015 – 31 March 2018. We received 14 responses to the June 2014 Consultation.4 Responses from stakeholders focused mostly on the following: the choice of cost standard and our reasoning to continue to use LRIC; our proposal to introduce a charge control for smaller MCPs for the first time; our proposal to impose a one-off adjustment to the new LRIC-based MTR and our proposal that over the top (OTT) 1 For retail revenues see Ofcom, Telecommunications market data tables Q4 2013, 24 April 2014, http://stakeholders.ofcom.org.uk/binaries/research/cmr/telecoms/Q4-2013.pdf. 2 Termination revenues are obtained by considering total and net termination volumes of 59.62 and 16.72 billion, respectively and the current MTR of 0.845ppm. Volumes refer to the four largest MCPs and include traffic carried on behalf of, or for, MVNOs or other third parties. 3 Long Run Incremental Cost (LRIC) measures the incremental cost to an operator of providing a service in the long-run. It includes the variable and fixed costs associated with the service increment in question, in this case MCT. LRIC+ includes a mark-up for joint and common costs, such as the cost of the spectrum used by the network. By definition, the LRIC standard, as currently used to set the charge control, does not include such a mark-up. 4 We also received one letter as part of the separate MTR enforcement programme which we regard as relevant to our policy decisions. Ofcom, Own initiative enforcement programme into wholesale mobile call termination rates, 11 November 2013, http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open- cases/cw_01115/ 1 MCT Review 2015-18 voice services didn’t sufficiently constrain market power in MCT markets. Stakeholders also made a number of observations relating to the cost model used to calculate the regulated MTRs. 1.6 To inform our policy decisions, we have also considered the significant developments that have occurred in the mobile market in the last three years, recognising that the UK mobile sector has changed in ways that are relevant to this market review. Between 2011 and 2013, the availability of spectrum to provide mobile services has increased significantly following Ofcom’s work on spectrum liberalisation and the 4G auction. The four largest MCPs5 have started deployment of their fourth generation (4G) networks based on Long Term Evolution (LTE) technology and have launched 4G services. 4G networks are currently employed for data only but are expected to be used for voice in the future when some of the UK MCPs are expected to launch Voice over LTE (VoLTE). 1.7 Consumers increasingly use mobile networks for data connectivity: mobile data use mobile data use has seen strong growth in recent years. This has been partly driven by the continued growth in both the numbers and use of smartphones. Smartphone ownership has risen from 27% in 2011 to above 60% in 2014. 6 As 4G take-up grows, we expect MCPs to deliver less traffic over 2G and 3G overall. In addition, the mix of voice and data delivered over existing technologies is also likely to change. Another trend concerns the design and deployment of more cost efficient mobile networks. This has been achieved, for example, by new network sharing arrangements. 1.8 Having considered these developments, the latest market data and stakeholders’ responses to the June 2014 Consultation, we set out in the rest of this document our decisions to: 1.8.1 Define 72 separate markets, each corresponding to an MCP able to set an MTR for calls to the UK mobile numbers allocated by Ofcom to that MCP (see Section 3). 1.8.2 Designate each undertaking holding UK mobile numbers as having SMP with respect to the (wholesale) market for terminating calls to such numbers (see Section 4). This recognises the commercial reality that control of the number range provides the mechanism by which pricing power is exercised in relation to calls to mobile numbers. Applying this approach will mean that 72 MCPs are designated with SMP. The list of affected MCPs is set out in Table 5 of Section 3. 1.8.3 Regulate the MTRs of all MCPs with SMP by imposing a single maximum cap on MTRs (see Section 5). This represents a change from the previous market review where the charge control only applied to the four largest MCPs and smaller MCPs were subject to an obligation to provide network access on fair and reasonable (F&R) terms and conditions, including charges. We consider that imposing a charge control on all MCPs with SMP will be more effective than the F&R approach in remedying the harm caused by MTRs set above the efficient cost benchmark. 1.8.4 Impose on all MCPs an obligation to provide network access on fair and reasonable terms and conditions and an obligation of price transparency 5 EE, H3G, Telefonica and Vodafone. 6 Ofcom, Infrastructure Report 2014, 8 December 2014. http://stakeholders.ofcom.org.uk/binaries/research/infrastructure/2014/infrastructure-14.pdf 2 MCT Review 2015-18 requiring all MCPs to publish their MTRs (with any proposed change to their MTRs to be made at least 28 days in advance of those changes coming into effect) - see Section 5. 1.8.5 Impose only on the four largest MCPs an additional obligation of no undue discrimination in relation to the provision of network access for MCT (see Section 5). 1.8.6 Continue to use LRIC to set the charge control (see Section 6). 1.8.7 Implement an adjustment towards the new LRIC rate in the first year of the control (i.e. 2015/16) with MTRs in the first year mid-way between the current nominal MTR (0.845ppm) and the new forecast nominal LRIC rate, and the MTR capped at the new LRIC rate from the start of the second year of the three year control (i.e.
Load more

Recommended publications
  • Mobile Call Termination Market Review 2018-2021
    Mobile Call Termination Market Review 2018-2021 Draft Statement – Annexes 1 - 15 Publication Date: 23 February 2018 Contents Annexes A1. Equality Impact Assessment 1 A2. Regulatory Framework 3 A3. General approach to Market Definition and SMP analysis 12 A4. SMP Conditions 22 A5. Smaller MCT Providers 34 A6. Regulation of termination for calls originated outside the EEA – economic effects 41 A7. Regulation of termination for calls originated outside the EEA – Other NRA experience and evidence on UK to non-EEA traffic, pricing and revenue flows 60 A8. Regulation of termination for calls originated outside the EEA - Stakeholder responses to the consultation 72 A9. MCT cost model approach and design 79 A10. Cost of capital 101 A11. Model output and sensitivities 113 A12. List of MCT providers with SMP 122 A13. How voice calls are delivered 126 A14. Sources of Evidence 130 A15. Glossary 139 Draft statement: Mobile Call Termination Market Review 2018-2021, Annexes 1-15 A1. Equality Impact Assessment Introduction A1.1 Ofcom is required by statute to assess the potential impact of all our functions, policies, projects and practices on equality.1 An equality impact assessment (EIA) also assists us in making sure that we are meeting our principal duty of furthering the interests of citizens and consumers regardless of their background or identity. Assessment A1.2 We have considered whether our remedies would have an adverse impact on promoting equality. We have looked at whether the remedies would have a different or adverse effect on UK consumers and citizens in the following equality groups: age, disability, sex, gender reassignment, pregnancy and maternity, race, religion or belief and sexual orientation, and, in Northern Ireland, political opinion and persons with dependents.
    [Show full text]
  • Code Compliance Panel Tribunal Decision
    Code Compliance Panel Tribunal Decision Tribunal meeting number 185 / Case 1 Case reference: 72402 Level 2 provider: VisionSMS Ltd (UK) Type of service: “Ursexybabes.com” glamour video subscription service Level 1 provider: Veoo Ltd (UK); IMImobile Europe Limited (UK); Fonix Mobile Ltd (UK) Network operator: All Mobile Network operators THIS CASE WAS BROUGHT AGAINST THE LEVEL 2 PROVIDER UNDER PARAGRAPH 4.4 OF THE CODE BACKGROUND The case concerned a glamour video subscription service, charged at £3 per week, under the brand name “Ursexybabes.com”, operating on dedicated shortcodes 69119, 85085 and 89880 (the “Service”). The Level 2 provider for the Service was VisionSMS Ltd (the “Level 2 provider”). The Level 2 provider had been registered with PhonepayPlus since 17 August 2011. The Level 1 provider for Service shortcode 69119 was IMImobile Europe Limited (“IMImobile”). The Level 1 provider for Service shortcode 85085 was Fonix Mobile Limited (“Fonix”). The Level 1 provider for Service shortcodes 89880 was Veoo Ltd (“Veoo”). The Service The Service was stated to be a glamour video subscription service charged at £3 per week. The Level 2 provider confirmed that the Service commenced operation in October 2011, and remained operational as at 11 May 2016. IMImobile stated the Service commenced operation on shortcode 69119 in June 2010. Fonix stated that the Service commenced operation on shortcode 85085 on 28 June 2014. Veoo stated that the Service commenced operation on shortcode 89880 on 24 October 2014. The table below sets out the shortcodes on which the Service(s) operated and the Level 1 providers for each shortcode: Service name Shortcode Level 1 provider Cost per week ‘ursexybabes.com’ 69119 IMImobile Europe £3 Limited 85085 Fonix Mobile Limited 89880 Veoo Ltd The Level 2 provider supplied the following summary of the promotion of the Service: Code Compliance Panel Tribunal Decision “We advertise our service online using banner adverts which link to our site containing videos.
    [Show full text]
  • Fonix Mobile Plc (Incorporated Under the Companies Act 2006 and Registered in England and Wales with Registered Number 05836806)
    THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or as to the action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended), who specialises in advising on the acquisition of shares and other securities if you are resident in the UK or, if not, from another appropriately authorised independent adviser. This document, which comprises an AIM admission document prepared in accordance with the AIM Rules for Companies, has been issued in connection with the application for admission of the entire issued ordinary share capital of the Company to trading on AIM. This document contains no offer of transferable securities to the public within the meaning of sections 85 and 102B of the FSMA, the Act or otherwise. Accordingly, this document does not constitute a prospectus within the meaning of section 85 of the FSMA and has not been drawn up in accordance with the Prospectus Regulation Rules or approved by, or filed with, the FCA or any other competent authority. Application has been made for the ordinary share capital of the Company to be admitted to trading on AIM. No application has been, or is currently intended to be, made for the Ordinary Shares to be admitted to listing or trading on any other stock exchange. It is expected that Admission will become effective and that dealings will commence in the Ordinary Shares on 12 October 2020.
    [Show full text]
  • Vas Shortcode Pricing
    SMS Codes Company Shortcode Shortcode reply number Pay Monthly Pay As you Go Reply cost End user contact details Esclation details Fonix Mobile Ltd 60016 700032653 £0.10 £0.12 £1.00 Isomob, 08000356780, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60019 £0.00 £0.00 £0.00 0208 1147001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60020 £0.00 £0.00 £0.00 0208 1147001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60039 700026651 £0.10 £0.12 £0.50 1st 4 PRS, 0161 956 3505, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60061 700046144 £0.10 £0.12 £4.50 Braniq Products B.V, 0203 734 9251, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60082 700010229 £0.10 £0.12 £0.10 Infomedia, 0800 1512392, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60088 £0.00 £0.00 £0.00 Messagebird, 0208 114 7001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60096 700046066 £0.10 £0.12 £4.50 Fonix, 0208 114 7001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60180 700010367 £0.10 £0.12 £0.12 Messagebird, 0800 0776990, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60201 700010386 £0.10 £0.12 £0.10 Fonix, 0208 114 7001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60345 700035632 £0.10 £0.12 £1.50 Cellcast, 0333 335 0298, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60445 700046123 £0.10
    [Show full text]
  • 20190201VAS Pricing.Xlsx
    SMS Codes Company Shortcode Shortcode reply number Pay Monthly Pay As you Go Reply cost End user contact details Esclation details Fonix Mobile Ltd 60016 700032653 £0.10 £0.12 £1.00 Isomob, 08000356780, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60019 £0.00 £0.00 £0.00 0208 1147001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60020 £0.00 £0.00 £0.00 0208 1147001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60039 700026651 £0.10 £0.12 £0.50 1st 4 PRS, 0161 956 3505, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60061 700046144 £0.10 £0.12 £4.50 Braniq Products B.V, 0203 734 9251, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60082 700010229 £0.10 £0.12 £0.10 Infomedia, 0800 1512392, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60088 £0.00 £0.00 £0.00 Messagebird, 0208 114 7001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60096 700046066 £0.10 £0.12 £4.50 Fonix, 0208 114 7001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60180 700010367 £0.12 £0.12 £0.12 Messagebird, 0800 0776990, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60201 700010386 £0.10 £0.12 £0.10 Fonix, 0208 114 7001, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60345 700035632 £0.10 £0.12 £1.50 Cellcast, 0333 335 0298, [email protected] Fonix, 0208 114 7001, [email protected] Fonix Mobile Ltd 60445 700046123 £0.10
    [Show full text]
  • In This Issue
    monetizing connected consumers ISSUE 57 | £4.99 IPRN weathers the storm Messaging mad Mobility 14 International Premium Rate Messaging is Using mobile to Services (IPRN) are on the starting to become travel – what up as new markets look for a monetisable could be more ways to pay for content and delivery channel. mobile. As the apps – despite coronavirus Take a look at how world opens up find hitting call centres it is developing out how it works IN THIS ISSUE 16 20 TELECOMS & NETWORK PROVIDERS IN THIS ISSUE Voice and IPRN 06 GAMING: LET US PLAY The world has gone content crazy traffic: how during lockdown and games lead the coronavirus has way. What are the opportunities? 08 AFFILIATES DRIVE RETAIL shifted telecoms More peopel than ever are shopping on line and on mobile – and this is proving to be aboon to affilaites 10 PAYMENTS BOOM Payments are top of the agenda across ecomemrce and mobile content - we take a look at who is winning 10 GAMBLING GOES GLOBAL With our white paper on DCB for The coronavirus pandemic and the CONTENT gambling going live, we assess how attendant lockdown around the world Content services – particularly games, gam- gambling has exploded in 2020 has had a profound impact on telemedia bling, eSports and chat services – have all markets: content services and the billing had a huge boost over the lockdown, with a 22 FRAUD IN A TIME OF CRISIS that goes with it have rocketed, while a study by Bango into what people in coun- We take an in depth look at how the voice traffic has gone up.
    [Show full text]