| 1.1. |
The Service Providers Interest Group, SPIG, represents the interests of independent service providers, who provide communications services in the fixed, Internet, content and mobile markets. Information on the Group and its members may be seen on the SPIG website, www.spig.org.uk. |
| 1.2. |
SPIG welcomes the Draft Management Plan for 2000/01 and for having the opportunity to respond. SPIG wishes to work with OFTEL to provide the views of service providers to the debate and within the project programme. We particularly welcome the commitment to timescales for completion of the work. |
| 1.3. |
It seems to SPIG that when OFTEL issues a consultation document it has usually made up its mind. We would therefore like to see OFTEL requesting inputs from service providers and consumers of all types much earlier, as neither generally has the resources to continually lobby and present a viewpoint. |
| 2.1. |
In general SPIG supports OFTEL's approach in encouraging competition. It has been shown again and again that the best way to provide consumers with the products they want, at the prices they can afford, and with the best possible level of service is to introduce full and fair competition to a market. Any policy that has as its stated aim to provide effective competition and elimination of anti-competitive behaviour is to be welcomed. |
| 2.2. |
However, careful scrutiny is needed on the judgements made by OFTEL as to whether these aims have been met. There is always the danger that those with vested interests will seek to maintain the status quo. For competition to deliver the expected benefits to the market, OFTEL must be careful to ensure that the arguments are correctly made and are not simply a smokescreen to prevent competition emerging. |
| 2.3. |
Consequently, SPIG particularly welcomes OFTEL's recent proactive stance. OFTEL is showing a new readiness to come up to speed on important issues before it is called in to make a determination. This should make decisions faster and fairer, important in the fast-moving markets we now live in, and encourage negotiations between service providers and
network operators to proceed along fairer lines from the outset. The work that OFTEL has done on Surf-time, for example, has provided a far more hospitable environment for
service provider competition that would otherwise have been the case. We hope that this situation continues, for everyone's benefit |
| 4.1. |
SPIG welcomes the assessment mechanism to determine whether competition is effective and the commitment to take appropriate action where it is not. |
| 4.2. |
We also welcome the commitment to provide resources, including external resources, to make the assessment. SPIG has said in the past that it thought that OFTEL had not had access to sufficient resources and therefore the availability of external resources to do some of the assessment work is most welcome. |
| 4.3. |
In our view the method of measuring consumer benefits should be objective and transparent. We think that the effects on the consumer of vertical integration by the operators are not well understood and suggest that this might be the subject of further detailed study by OFTEL or by outside consultants. |
| 4.4. |
The inhibitors to innovation, one of which is lack of access, should be specifically addressed as should encouraging new entrants at all levels. |
4.5. |
We note that the barriers to switching still remain to be dealt with, for example SIM locking and unlocking charges and the lack of freedom for pre-pay users to buy top ups from any service provider |
| 4.6. |
We are concerned that the technology chosen by operators will limit the scope and choice for independent service providers in future e.g. BT's choice of equipment for ADSL. |
| 4.7. |
SPIG welcomes market sector reviews. The market characteristics have and will continue to change such as:
- Mobile substitution for fixed voice telephony
- Fixed as a means of wide band access, via the local loop
- Increase in non-voice services particularly from mobile.
Access to information services from mobiles can be included in the latter category, which we think will be significant in the next two years. We have concerns that access to content will be restricted through exclusive agreements if this area is not addressed.
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| 4.8. |
SPIG agrees that there are lessons to be learnt from elsewhere in the world and there is value in international benchmarking. We believe that the UK could usefully learn about the right of access to networks for service providers and the mechanisms and methods for determining wholesale prices. |
| 4.9. |
The implications for regulatory policy of these issues are far reaching and we would urge the Director General not to be persuaded away from sector specific regulation where this is or becomes required. |
| 5.1. |
SPIG welcomes the high focus by OFTEL on the mobile communications sector. SPIG members have held useful meetings with OFTEL staff and we encourage OFTEL to continue these. |
| 5.2. |
It is our view that, within this project, the definition of the market subsectors is crucial and that OFTEL monitors competition within each subsector. We suggest that these include:
- Call origination
- Call termination
- Pre-pay
- Post pay
- Value added services
- Content
- Public access mobile radio
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| 5.3. |
In addition the review process should take account of the changing market. |
| 5.4. |
Pre-pay should not be disregarded as it has materially changed not only mobile usage by opening up the use of mobile to users who would not otherwise be part of the market, but also changed the way in which people pay for services. These services are not limited to voice telephony. Introduction of pre-pay, however, has also provided the potential for unfairness and discrimination. |
| 5.5. |
The way that consumers use their mobile phones is continuously changing. Mobile tariffing now permits economic substitution for a fixed line in voice telephony. However, this is countered by the explosion in non voice services like SMS, that are mobile specific, and the find me anywhere anytime feature of mobile. |
| 5.6. |
It is not too soon to think about the effects that third generation mobile might have on the market. |
| 5.7. |
The delay in OFTEL reaching a conclusion on its inquiry into unfair cross subsidy causes SPIG continuing concern. The inquiry was announced in July 1999 and by end March 2000, eight months later, there has been no announcement of a conclusion. In fact the reverse. On 30 March OFTEL advised that it was proposing to review the OFTEL formula. The delays have not been helped by the successive replacement of case officers. In the meantime more independent SP businesses have been subject to take-over by the operators. The inquiry is crucial to establishing a regime of fair competition within mobile communications. Without fair competition the consumer will pay more for less. |
| 6.1. |
While the LLU process seems to be well underway and, with the much greater amount of political and public scrutiny, being monitored carefully, there is probably little that can be done now to change things. BT will still have a significant first mover advantage, so the focus for regulatory action now must be on ensuring that the arrangements being proposed present the best possible environment for faircompetition. |
| 6.2. |
This will entail OFTEL carefully checking to ensure that timescales for LLU are met, cost prices are fairly and accurately calculated and guidelines are laid down and adhered to ensure fair and open access to loops. SPIG expects that OFTEL are already investigating these areas and will be closely monitoring the situation. |
| 6.3. |
However, one particular point of concern regards the type of equipment that can be co-located. The proposals seem to specifically exclude the siting of any equipment other than DSLAMs in co-locate space. As BT acknowledged in their original "flat rate" proposals, moving ISPs' modems to the edge of the telephony network has many significant benefits to the ISP (and thus to the consumer) reducing costs, making the network more efficient, removing congestion from much of the telephone network, and so on. |
| 6.4. |
If it is not possible for operators to site their modems near to their customers, many more inefficient narrowband telephony networks must be built- an unnecessary cost and handicap. This is of particular importance given that BT will be siting modems at, or near to, exchanges enabling them to carry traffic back much more efficiently and at lower cost. |
| 6.5. |
In order for completely fair competition to take place all operators planning to deploy modems to take Internet calls should be offered exactly the same commercial terms. It is not vital that modems can be sited at or near the exchanges, simply that commercial adjustments be made in order that all operators (including BT) are working on the same terms and are subject to the same conditions. |
| 7.1. |
SPIG welcomes Oftel's involvement in consideration of the issues arising from the management of this scarce resource. |
| 7.2. |
We would caution Oftel, however, to guard against seeking to maximise income to the Treasury through a policy that favours radio spectrum auctions wherever it can. The massive amounts being bid for the third generation spectrum in the March 2000 auction (totalling £10 billion at 31 March) may not be recovered from the market if low and competitive prices for end user services are the end objective. Further work on auction design may well be desirable. |
| 7.3. |
As there is obvious incentive to maximise spectrum usage by civilian users, we would welcome Oftel's support in encouraging more efficient use of spectrum by defence users as well. |
| 7.4. |
In moving into this new area of study, we recommend that Oftel takes time to research at first hand all of the industry sectors, particularly service provision, and user markets within the scope of study. |
| 9.1. |
There have been difficulties with mobile operators in the past. Operators have deeply embedded functionality within their networks and claimed that, for reasons of economics or network integrity, it is not practicable to extend access to the functionality to independent service providers. They have, we believe, extended access to functionality to their internal and tied service providers, giving first mover advantage, which they have not made freely available to others. There is nothing to prevent them from continuing this practice in the future. |
| 9.2. |
SPIG believes that there is need to define the SB/SSB split in mobile and has an ongoing work item on this subject. Similarly core network services and value added services require definition. |
| 9.3. |
There is no formal procedure agreed between the mobile operators, OFTEL and service providers for requesting access to networks, and we believe this area requires investigation. Many independent service provider requests fall at the first hurdle. There is belief that the operators cherry pick their partners for whom they make gaining access easy. This inhibits innovation in services. |
| 9.4. |
There are also the economic aspects of access. There seems to be no viable wholesale tariffing mechanism for utility services (SMS, circuit switched conveyance and packet). Tariffing is presently based on a retail price for a bundle of services the service provider may not want or need to buy. We recommend that this area be addressed. |
| 9.5. |
As traditional voice services are supplemented with new types of services there is potential for new problems. There should be some form of standardisation for electronic top-ups, IP transport and access to location and register information. Open access should be a requirement of the design for all new functionality. |
| 9.6. |
We propose that there should be an open forum for all new services involving operators and service providers. The availability of new interfaces should be announced and notice of new generic services given. Exclusive arrangements with content providers should be prohibited. |
| 10.1. |
This issue is becoming more and more important, and it is good to see it listed in OFTEL's Draft Management Plan. Currently many new broadband networks are being deployed or developed such as cable access, DSL, third generation mobile and local wireless. At present, however, there is no requirement on the operators of those networks to allow access to any Service Provider other than themselves. |
| 10.2. |
SPIG welcomes the ongoing investigation that OFTEL, in association with the Office of Fair Trading, is making into network access. However, it was noticeable during discussion on the topic at the recent Internet Forum that most Network Providers were interested in explaining the way in which they will present information to their users, not in the way in which they can present the best possible choice to their customers. |
| 10.3. |
SPIG believes that many lessons can be learned from the Internet market. There is full competition in the access market, with customers being offered a variety of innovative options (subject to access to the underlying infrastructure being available) and the network is completely open to all providers of services. Anyone can become a user or provider of information, e-commerce, etc. |
| 10.4. |
It is this openness that has made the Internet such a huge success. Imagine what would have happened if one company had tried to dominate and control the Internet. History has shown that companies will try and take control of as much as they possibly can, perhaps in the belief that this will provide them with extra revenue (though again, the Internet would seem to disprove this theory). It is vitally important that openness be maintained to encourage future growth, and that this is used as a model of what is achievable when barriers in the form of closed systems and specifications are removed and competition is allowed to flourish. |
| 11.1. |
SPIG will be responding to Oftel's consultation document with a separate submission. |
| 11.2. |
In this response we would like to note that Retail Price Control is still needed since BT continues to dominate many markets, which are not yet subject to effective competition. |
| 11.3. |
We welcome OFTEL's recognition of the practical limitations of a policy dominated by network competition and the value of competition in services. We reiterate the points made elsewhere in this document that service providers require cost based pricing, which is not currently available because of limitations on interconnection rights and access to wholesale rates. |
| 11.4. |
SPIG welcomes OFTEL’s suggestion in March Consultation Document that Annex II status be available to SPs who have not invested in own fixed network infrastructure. |
| 11.5. |
We caution that quality as well as price determines success of a competing product and OFTEL must ensure BT meets acceptable and transparent standards for any Calls & Access replacement. |
| 12.1. |
SPIG supports the proposals presented by the DMA for new arrangements for numbering administration. |
| 12.2. |
Numbers are another valuable national resource, which require a structured charging approach that has equal availability and can be accessible as next off the pile and with specific selection. The test of value of golden numbers can be addressed by the market through open auction. |
| 12.3. |
The principles of a new numbering administration should be based on individual number allocation, with equal and open access to number stock. It should not be operator controlled and should be managed on a business model. |
| 12.4. |
We recommend that the outline business model based on an Accredited Reservation Organisation including all parties, not only operators. The position of Value Added service providers however requires clarification. The benefits are facilitating open and equal access to numbers, support for the rights of number use and help to expand and develop the VASP market. |
