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Interconnect Management Limited



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  • 1. ANNEX A PUBLIC WIRELESS NETWORKS -EXEMPTION OF USER STATIONS REPLY FORM Name: Simon Mounsey -For and on behalf of: See Annex B Organisation (if applicable): Interconnect Management Limited and Associated Parties: See Annex B Address: Level 29 One Canada Square Canary Wharf London E145DY Tel: 0207712 1738 Fax: 02077121501 Contact details (if different): As above Please tick the appropriate boxes Proposal 1: It is proposed that the definition of 'user station' be amended to cover any customer of the network, irrespective of its fixed or mobile status. Yes, I agree with the proposal to amend the definition of 'user station' to cover any customer of the network, irrespective of its fixed or mobile status.  No, I do not agree with this proposal  Please give your reasons: Introduction Broadly, the status quo represents an historically appropriate regime which, given the current multiple fixed stations, requires adjustment to permit diversification in the equipment and applications making use of radio frequency and potentially competition in the supply of equipment and services using r8:dio frequency being offered. Importantly none of this need cause any capacity or credit risk issues for those allocated with radio frequency, but rather it offers the opportunity to develop a sustainable, competitive orderly market. 1. USER STATION: By definition a 'user station' should be a device which can carry GSM traffic. The specifics of whether it is 'mobile' or 'fixed' is not relevant to its ability to be a 'user station' in the sense that it is capable of passing GSM traffic (SI 2000/1012, SI 2001/730, SI 2002/1590). Cont. Page 1 of 9 © SMM-MMG/JCM/S&S -RACD/GSMG
  • 2. Proposal 1: Please give your reasons - cont. 2. USER STATION : We submit that the original definition of a 'user station' being classified as 'mobile station' was due to the fact that at the time of the legislation being written all 'user stations' were indeed 'mobile' devices -it was thus inevitable that the mobile element came to be included in the definition statement. 3. EQUIPMENT: The GSM 'engines' which drive the GSM Gateways are the same 'engines' found in 'approved [by MNO (Mobile Network Operator) handset technical departments] handset lists' and facilitate GSM connectivity in the same way as the 'mobile handset' from which they are derived. It is submitted therefore that the intrinsic path of connectivity offers the same level of interoperability, security, clarity and quality of transmission that the derived handset could offer. 4. EQUIPMENT -APPROVED HANDSET/DEVICE: The MNOs approve FCTs (Fixed Cellular Terminals ) for use on their networks. In particular Vodafone and 02 promote such devices as a means to 'reduce fixed to mobile call costs' .Vodafone ~ and 02 have developed special tariffs, namely; Vodafone Company Caller and 02 Groupworker. These facilitate a lower rate for 'in-calling' 'closed user group' mobiles. The SIM (Subscriber Identity Module) used in the FCT is included in the 'closed user group'. Manufacturers ofFCTs approved with the MNOs include Nokia and Ericsson. a. Vodafone information on FCT (Premicell) http://www.vodafone.co.uk/cgi bin/COUK/portal/ep/browse.do?channelPath=/Vodafone%20Portal/Business %20Services/Technical%20Sales/Nokia%20PremiCell&BV_ SessionID=@@ @@0842743249.1045773319@@@@&BV_EngineID=cccgadchihfhjklcflgc egidgnfdffm.O b. Vodafone information on 'What benefits would it bring me?' http://www .vodafone.co.uk/cgi-bin/COUK/portal/ep/browse.do?BV SessionID=@@@@,08427 43249.1045 73319@@@@&BV_EngineeID=cccgadchihfhjklcflgcegjdgnfdffm.0&chann elPath=%2FVodafone+ Portal %2FBusiness + Services %2FTechnical + Sales %2FNokia+PremiCell%2FFAOs&faq=2 c. 02 information on FCT (Cellular Exchange Line) http://www.02.co.uk/business/productsservices/connectivity/cellularexchange /10..133.00.html d. Orange information on FCT (Orange Business Together -Wirefree Gateway) http://www.orange.co.uk/business/products/services/orange business together html 5. EQUIPMENT-DIVERSIFICATION & COMPETITION: The current regime operated by the MNOs, restricts the use of 'devices' to only those which have been individually evaluated, and either 'approved' or 'disapproved' for use on their own networks. Currently if a perfectly serviceable handset, not yet 'approved', is used on the network, the MNO's subscriber terms and conditions permits the MNO to disconnect the customer without recourse. This practice restricts not only the 'type' of device available for use but also the market price of the same. Moreover it stifles initiatives to develop new products and applications irrespective of whether the 'device' and respective service would be in the public interest. Cont. Page 2 of 9 © SMM-MMG/JCM/S&S -RACD/GSMG
  • 3. Proposal 1: Please give your reasons - cont. 6. NETWORK INTEGRITY: There is no difference to 'network integrity' between a group of 'mobile station' subscribers initiating traffic in the same geographic location (such as at football matches, rallies and other organised public events) to a GSM Gateway initiating traffic from one geographic location. 7. NETWORK INTEGRITY: In consideration of proposal 1, point 5, we submit that GSM Gateway traffic has the potential to be managed whereas a random group of 'mobile station' subscribers do not. MNO 'network planning' departments could liaise with relevant GSM Gateway operators when working on the rollout of GSM Gateways. 8. NETWORK INTEGRITY: GSM Gateway operators could supply 'spectrum analysis' ofBTSs (Base Transfer Station) they intend to terminate traffic into to assist 'network planning' departments with rollout. 9. NETWORK INTEGRITY: GSM Gateway devices can use external aerials which can be either: a. Omni directional b. Directional (60 degree arc) c. Parabolic -Line of sight A combination of these can afford greater flexibility to which BTS is used for termination to manage traffic capacity across BTSs with the most redundant capacity avoiding those where congestion is prevalent. 10. CREDIT MANAGEMENT: The decision to accept a customer rests with each MNO. Provided the 'network integrity' issues can be addressed -through working in conjunction with MNO 'network planning' departments -there are still credit risk issues. These can be addressed by developing GSM Gateway tariffs (with advance payments for bundled minutes), forward payments and/or security deposits. All of which are acceptable to the GSM Gateway operators who support this proposal. 11. NETWORK INTEGRITY / CREDIT MANAGEMENT: We submit that an SRO (Self Regulatory Organisation) could adequately manage the rollout of GSM Gateways if tasked to work in conjunction with GSM Gateway operators and MNOs in so far as implementation and/or credit management issues are concerned. 12. PROPOSAL 1: Passing proposall would facilitate GSM Gateways to be used for 'private connection' to a 'public network'. This may only facilitate the use ofGSM Gateways as an LCRoGSM (Least Cost Routing over GSM) model for parties with a level of call traffic that justifies the expense of installation. 13. ISSUES WITH PROPOSAL 1: Proposal 1 would restrict the market benefit to larger corporate companies only. The consumer would not enjoy the benefits of reduced charges as the only way a SOHO, SME or private consumer could access GSM Gateway technology would involve establishing a 'public connection' to a 'public network'. 14. ADJUNCT: Proposal 1 would empower the MNOs to establish GSM Gateways to arbitrage their own call traffic, terminate it onto their own network and price manage their own rates without passing the benefit on to the consumer. 15. ASIDE GSM GATEWA Y: Road traffic cameras (not GA TSO or SPECS), remote management alarm systems, courier location management systems, vending machines, A TMs, and other remote located data transfer systems would all benefit from acceptance to proposal 1. However, some may require proposal 2 in order to effect multiple 'private connections' to a 'public network' resulting in the provision of a 'telecommunication service' 'by way of business'. END – Proposal 1 Page 3 of 9
  • 4. Proposal 2: It is proposed that the restriction on the type of service that may be provided via network user stations shall be withdrawn. Yes, I agree with the proposal that the restriction on the type of service  that may be provided via network user stations shall be withdrawn. No, I do not agree with this proposal Please give your reasons: Introduction Withdrawing the restriction on the type of service that may be provided should enable more rapid price competition; bring the benefits of such competition to all users rather than just large users and enable the scarce radio spectrum to be used more efficiently. This can only happen, however, if the MNOs access and interconnection obligations, and without any insurmountable technical issues being raised, are rigorously enforced and preferably, ex ante regulations are adopted making clear the terms and conditions therefore that Oftel considers to be reasonable and non-discriminatory. 1. GENERAL: The purpose of GSM Gateway is to arbitrage the 'interconnect rate' with the 'mobile to mobile same network' MNO retail tariff in order to: a. Deliver a reduced 'cost of connect' to the consumer b. Introduce proper competition in the market c. Introduce a new tier of fixed to mobile distribution 2. FACT: In order for proposal 2, point 1 to be achieved a 'public connection to a public network' needs to be approved, as to which please refer to proposal 1, points 12, 13, 14 & 15. Reducing price of call termination 3. The Director General's statement on the Competition Commission's report on mobile termination charges, 22 January 2003, determined that the 'normal market discipline of consumers reacting to higher prices' 'does not happen because the consumer who pays the charge is not the customer of the MNO which sets the charge'. The Commission also found that the 'market definition' was such that 'each MNO has a monopoly for termination on its own network', and furthermore that none of the MNOs could convince the Competition Commission that the 'monopoly position would erode quickly'. We would submit that by withdrawing the restriction on type of service a degree of fair competition would be introduced more rapidly and therefore prices will come down for termination. Cont. Page 4 of 9 © SMM-MMG/JCM/S&S -RACD/GSMG
  • 5. Proposal 2: Please give your reasons – cont. 4. The Competition Commission's verdict was that 'the termination charges of the four mobile operators operate against the public interest' and 'current termination charges are 30-40% above a fair charge'. With GSM Gateway, termination prices to the end user are already at the fair charge level. In addition, provided an orderly working relationship between GSM Gateway Operators and the MNOs can be established, it is certain the prices will fall further once the number portability database (held on the HLR [Home Look-up Register] with each MNO) can be published to GSM Gateway operators. Number portability can double the blended rate (meaning average cost of passing each minute of traffic) in some cases which means if the MNOs gave access to the ported numbers the price to the end user would be extremely favourable. Our view is that if that could be delivered to GSM Gateway operators (perhaps through the SRO) the resultant reduction in call costs would cause a paradigm shift towards calling mobiles from fixed lines generally, in itself generating a significant increase in termination and communication generally. 5. It is conceivable that if GSM Gateways were exempted in accordance with proposals 1 & 2 and the MNOs are obliged to grant access to their networks, an enforced price cap on termination charging may become effectively redundant more rapidly as a result of the introduction of fair competition. 6. On the issue of convergence of wholesale and retail tariffs, 'the MNOs argued that the retail price would increase if [ wholesale] was capped' .Oftel and the Competition Commission were in agreement that this will not happen. 'The MNOs business plans already project a downward trend of retail prices and whilst retail prices might not fall as fast as predicted, the Competition Commission concludes they will not need to rise'. The indication here is that the GSM Gateway model is sustainable utilising the current tariff sets, yet it is likely the cost of originating a call from a SIM is if anything going to fall. The fallout from that would be that the end user rate would be reflected in the SIM tariff reductions also. Generally driving the termination costs down further as time goes on. 7. On the issue of termination charges supporting 3G rollout the Competition Commission agreed with Oftel in that 'the business case for 3G should stand on it's own merits' and '3G investment does not justify termination charges'. 8. Quite simply the current position on call termination in the UK is one of masked profits and monopoly operations by the MNOs. The whole business definition acts completely in the MNOs favour. We submit that any decision in favour of liberalisation in accordance with proposal 1 and proposal 2 will give a chance at reducing charges and potentially reducing more rapidly than would otherwise be the case. Cont. Page 5 of 9 © SMM-MMG/JCM/S&S -RACD/GSMG
  • 6. Proposal 2: Please give your reasons -cont. Public Connection Ramifications 9. INCREASED ELIGIBLE MARKET: Potential users fitting the following criteria would still be able to benefit from LCRoGSM: a. Users with traffic volumes lower than the minimum commercial threshold for GSM Gateway implementation: i. SOHO ii. SME iii. Household consumer b. Users who are precluded from implementing a GSM Gateway solution because of: i. Geographic considerations ii. Network integrity issues pertinent to their locality iii. Financial considerations, both infrastructure, expertise and/or SIM provisioning iv. Freeholders, leaseholders, general planning issues 10. USER ACCESS: This can be achieved by anyone or a combination of the following: a. Direct connection- 1Mb link (VoIP) / El (TDM) b. 1XXX access for ingress into switch c. 0800 access for ingress into switch Traffic volume, PDD (post Dial Delay) requirements and ingress costs dictate which option is most suitable for each end user/ business case. We submit that this demonstrates interoperability between current fixed to mobile termination and fixed to mobile via call translation and empowerment of the end user to derive cost benefits in a seamless, easy manor and caters for non discriminatory realisation of benefits. 11. CHARGES: Deliverable tariffs utilising LCRoGSM would afford immediate savings to the end user of between 30-40% over the current market rate -in line with the Competition Commission findings. These figures can be demonstrable if required. 12. EFFICIENT USE OF SPECTRUM: The most efficient way to operate a GSM Gateway ring is to 'load balance' traffic across an integrated network of GSM Gateways either by using VoIP (Voice over Internet Protocol) or TDM (Time Division Multiplexer) connectivity. This affords a higher ASR (Answer Seize Ratio ) and therefore an acceptable standard of call delivery. In order to achieve this, all GSM Gateways are co-located at different sites. In turn this provides for greater resilience in addition to supporting 'network integrity' by distributing the load over a greater geographical spread. Finally it is important to provide a PSTN (Public Switched Telephone Network) breakout point to further insure against peaks in traffic profile over-extending system capacity and to factor against system failure. The only means of supporting such network architecture is either to have one 'private connection' originator (very few individual companies would generate the required volume of traffic) or to combine originators (establishing a 'public connection'). Cont. Page 6 of 9 © SMM-MMG/JCM/S&S -RACD/GSMG
  • 7. Proposal 2: Please give your reasons -cont. Technical Considerations 13. NETWORK INTEGRITY: Refer to proposal 1 , points 6,7,8,9, 10 & 11. 14. CLI PRESENTATION: It is technically possible to present CLI of the originating caller to the terminating party whilst utilising GSM Gateways as part of the process of call termination. With appropriate action and support from OFTEL, DTI, RA and MNOs, GSM Gateway termination could pass originating CLI. The SRO discussed in proposal 1, point 10, could hold a register of SIM identities used in GSM Gateway activity, along with Operator details, IMEI (International Mobile Equipment Identity) and ISMI (International Security Mobile Identity) for the purposes of regulating use where SIM CLIs are replaced with originating caller CLIs. This would ensure that the practice of CLI translation is appropriately managed. 15. INTERNATIONAL ROAMED UK REGISTERED MOBILE ISSUES: There is a technical issue with Orange voicemail retrieval. If a UK mobile user, who is outside UK coverage, seeks to retrieve their voicemail, and other Orange services, and if the UK bound call is terminated through a GSM Gateway, the Orange system picks up the CLI from the SIM in the GSM Gateway (whether 'withheld' or not) rather than the roamed SIM. This is peculiar to Orange. The result is that roamed customers of Orange cannot retrieve voicemail and in some cases with P A YT (Pay-As- You- Talk) customers they can not 'top up' their accounts or inadvertently 'top up' GSM Gateway SIMs for the same reason. This could be corrected by identifying the number ranges that are affected and either: a. Divert calls to PSTN b. Divert calls to a dedicated GSM Gateway operator who configures a system to be interoperable with the Orange interface c. Deliver a message to the originating party indicating the service is either: i. Not available whilst roaming ii. Advising a different number needs to be called d. Transfer the call to a customer services operator with appropriate preamble message to qualify the additional delay incurred in connecting. Or Orange could avert the situation by: e. Issuing international voicemail retrieval numbers (as Vodafone does)* f. Issuing international PAYT 'top up' numbers* 16. DELIVERY OF VALUE: The likely result of proposal 2 being accepted would be that the inherent market pressure would force the wholesale interconnect rate down and converge much closer to the GSM Gateway pricing model (which in turn represents the own network mobile to mobile (ie On-net) price); providing consumer value much quicker than the Competition Commission would otherwise be able to enforce, a by-product of the new market dynamics. Cont. Proposal 2: Please give your reasons – cont. Moving Forwards Page 7 of 9 17. INTERCONNECT / ARBITRAGE & THE FUTURE: It is wholly unlikely that the -RACD/GSMG © SMM-MMG/JCM/S&S
  • 8. future of interconnection of fixed and mobile infrastructures rests with GSM Gateway. GSM Gateways are a lever to drive down the price of mobile traffic termination to a level which is reasonable and sustainable. The phasing of GSM Gateway into wholesale interconnect through fibre on direct connects with each MNO is inevitable. Longer term, the MNOs will need to manage a strategy of facilitating greater competition in wholesale interconnect through multiple companies and managing many more carrier relationships than just BT and C& W .GSM Gateway in the 'call re-file' market has a limited road map, maybe 2-3 years. 18. GSM GA TEW A Y & THE FUTURE: GSM Gateways will mature into the Corporate and SME OSI (On-site Installation) market place which will deliver special 'closed user group' calling rates and lower cost to other mobiles. This we free up choice and competition with mobile termination and empower more businesses to derive keener rates still by taking on the risk to manage their own traffic. GSM Gateways will also find special circumstances which lend themselves to its operation, such as: a. Providing back-up communication resilience to fixed networks b. Providing connectivity in remote areas without fixed infrastructure c. Providing lower international call charges** 19. MNO RESPONSIBILITY: To act appropriately to ensure that the benefits of 'public connection' are made available to consumers. In this context, the European Union policy, as set out in the Access Directive (2002/19/EC), is that the rights of the licence holders (MNOs) to exploit the network(s) for their own benefit should be balanced against the rights of other operators to access the network(s) to provide a telecommunication service as well. This is subject to those operators meeting criteria such as technical feasibility and maintaining network integrity. It is therefore, submitted that the legislation should be rigorously enforced by Oftel to ensure that access to the networks is provided and, when so provided, is provided on reasonable, non-discriminatory terms and conditions. Other Information Supplied for Completeness This information is pertinent to GSM Gateway being sustainable; however, it is not directly related to the singular question of 'restriction on the type of service'. Financial Considerations 20. MNO: The MNOs are unlikely to support proposal 2 when considering the ramifications: a. Loss of 50-80% of termination revenues (excluding cross network mobile revenues derived through SIM charges) b. Increased use of spectrum, albeit whilst generating more subscribers 21. SURETIES: If findings are in favour of proposal 2, it is conceivable that Oftel may need to intervene to specify 'acceptable credit management requirements' for the facilitation of GSM Gateway SIMs. Otherwise MNOs may choose to 'price' GSM Gateway out of the market by imposing unrealistic financial controls. We would submit that there is no basis for sureties to be anything other than a rolling advance payment of 1 calendar month at any time, calculated daily and paid either weekly, fortnightly or monthly at the MNOs request. Cont. Proposal 2: Please give your reasons - cont. 22. PRICE CHANGES: a. The primary reason the GSM Gateway market exists is due to the disparity in the pricing models. Therefore there are two controls which can either facilitate or disable the market -Interconnect rate and retail mobile tariff. Ultimately the target must be for the consumer to enjoy lower charges. We would propose a control to be set, monitored perhaps by of 9 SRO, of a suitable©SI:M tariff for -RACD/GSMG Page 8 the SMM-MMG/JCM/S&S
  • 9. GSM Gateway activity for each MNO. Otherwise it is conceivable the tariffs lending themselves to GSM Gateway activity could be removed and the higher interconnect rates would prevail. b. Secondly an estimated £220M is already invested in existing GSM Gateway infrastructure, equipment, services, management not withstanding other industries providing services to the GSM Gateway industry such as billing management solutions and computer networking companies, an immediate cessation of the business brought about by 'quick' tariff adjustments by the MNOs would have far reaching ramifications on many business verticals over and above GSM Gateway operators themselves. When taking into account the LRIC (Long Run Incremental Costs), EPMU (Equa1 Proportionate Mark Ups) the range of scenarios for the cost of mobile tern1ination is still between 3.8 and 4.8ppm at 2005/2006. On the basis that a GSM Gateway SIM does not enjoy the full benefit of 'network externality' (it only serves the purpose of establishing connections not receiving calls) it should not be valued above 1 ppm. Either way a price cap on GSM Gateway SIMs should be established at no more than halfway between the LRIC/EPMU figure and the figure available from the most cost effective mobile retail tariff (if it operates using bundled minutes) or the mobile retail tariff (if it operates using 'pay as you use' minutes) or the LRIC/EPMU figure itself, which ever is the lower. c. Finally, when considering the issue of pricing one should remember the MNOs currently monopolise both the interconnect rate to tern1inate onto their own network and the mobile retail tariff for calling 'on net' within their network, hence the submission that a control should be set as they retain complete control of the market pricing for their own network without competition. *0845 / 0870 numbers or a standard UK NNG number would be suitable **In some geographic locations it is possible to use a GSM Gateway to terminate internationally originated, nationally terminated, mobile minutes with the careful siting of GSM Gateways in the country of call origin using SIM cards from the national MNO and the use of high gain directional aerials in order to terminate 'cross border'. END – Proposal 2 Page 9 of 9 © SMM-MMG/JCM/S&S -RACD/GSMG