OPTAs Draft Decision Market Review Mobile Termination

1
OPTAs Draft Decision Market Review Mobile
Termination

• OPTA Oral Hearing
• The Hague
• April 7, 2005

2
Response of behalf of

• bbned
• BT
• COLT
• Enertel
• MCI
• Priority Telecom
• Tiscali
• Versatel

3
Timing, Relevant Market, Competition Problems

• Timing
• ACT glad to see action is finally taken
• However, (draft) decision could have been taken
  much earlier there is nothing included that we
  did not know one year ago already.
• Should we conclude that this is a deliberate
  delay to accommodate the timeframe of Dec-03
  deal between MNOs, OPTA and NMa.
• Through this delay MNOs abusively earn another
  150-300M/year that FNOs end users must pay
  for.

4
Relevant Market Market Dominance

• Indeed, every MNO is dominant for termination of
  traffic on its network, but that is something
  that we already know for years

5
Competition problems

• OPTA to address the issue that FNOs are squeezed
  through Mobile VPNs (where retail F2M is offered
  for a fraction of the wholesale mobile
  termination price).
• The adverse effects of excessive mobile
  termination rates for FNOs (again) should be
  taken into account. gt long term end user
  benefits through sustainable competition
• Mobile call origination excessive originating
  fees for 0800 numbers

6
Remedies

• Access obligation to meet reasonable requests
  for direct interconnection is without any meaning
  as long as OPTA does not add that the terms and
  conditions must be fair and reasonable. In
  addition OPTA must also specify what fair and
  reasonable means in practice. All access
  obligations of art 6a.6 Tw should be imposed.

7
Transparency

• ACT agrees that the terms and conditions and
  tariffs for direct interconnection and
  termination must be published by MNOs. But in
  addition we need an obligation for MNOs to
  publish a Reference Offer that needs OPTA
  approval. Another transparency requirement is
  that MNOs must publish tariffs and tariff
  changes taking into account an appropriate notice
  period.

8
Non discrimination

• OPTA must specify the precise meaning of the
  obligation that MNOs must provide MT under the
  same conditions to others as to themselves or
  their subsidiaries.
• ACT is shocked by OPTAs oral reply that the
  non-discrimination obligation looks nice on paper
  but is worthless in practice. An additional
  obligation of accounting separation is crucial to
  be able to monitor non-discriminatory pricing.
• Non-discrimination to be imposed in detail as set
  out in OPTA retail remedies retail document of 24
  March 2005
• MNOs should be prevented from favouring on-net
  calls

9
Cost orientation

• ACT agrees with OPTA that MT tariffs must be at
  the level where they would be in a competitive
  environment, but OPTAs approach means that the
  rates will continue to stay far above that level
  for many years to come.
• OPTAs arguments for a transitory regime and
  gliding scale are insufficient. OPTA should
  impose cost oriented tariffs ASAP. No need to
  wait until July 2006. In addition the first step
  of the reductions should be much steeper (as in
  UK).
• As long as the LRIC cost-model is not completed
  the European benchmark (best practice) as a
  temporary measure can be used to determine the
  reductions.
• Enertel supports OPTAs gliding scale for MTA
  tariffs
• COLT tariff reductions will only lead to
  improved competition if imposed in combination
  with PST and non-discrimination to avoid margin
  squeeze

10
Price Squeeze Test

• the imposition of non-discrimination and cost
  orientation obligations is not sufficient to
  prevent anti-competitive price squeeze behaviour.
  Without knowing the arguments OPTA neglects the
  concrete proposals for such a test.
• Price squeeze detection and prevention is of
  utmost importance for sustainable competition
• PST to be applied as precondition to approval of
  wholesale tariffs (no double dominance required)
• PST is to take into account the cost of an
  efficient new entrants costs (interconnect,
  switching, economies of scale)
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