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UK International. Telecoms Policy. Mike Conradi Legal Secondee from Baker & McKenzie World Bank, 9 March 1999. michael.conradi@bakernet.com. Market Information. 370. International. Local, National and International Call volumes. 400. 350. 300. 250. 1986/7=100. 200. 150. 100. 50.
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UK International Telecoms Policy Mike Conradi Legal Secondee from Baker & McKenzie World Bank, 9 March 1999 michael.conradi@bakernet.com
370 International Local, National and International Call volumes 400 350 300 250 1986/7=100 200 150 100 50 0 1986/87 1987/88 1988/89 1991/92 1993/94 1996/97 1997/98 1989/90 1990/91 1992/93 1994/95 1995/96 Local National
UK Traffic by Region of the World (Jan-March 1998) 900 800 700 600 500 400 Millions of minutes 300 200 100 0 EU Africa Far East Bloc South Asia Former Central and Middle East US and Canada Eastern Australia/NZ Other Europe S America Western Outbound Inbound UK Traffic by Region
Local 60% National 28% Other 6% International Calls to 4% mobile 2% All Operators Retail Call Volumes Q3 97/98
Local National International Calls to mobile 19% Payphone Private Circuits Other DQ BT’s Retail Profits Profits1997/8 36% 0% 0% 33% 10% 0% 2%
1992/93 Market Shares - 1992 to 1997 100% 80% Others 60% Cable 40% Share of revenues CWC BT 20% 0% 1992/93 Residential Users Business Users
1997/98 1997/98 Market Shares - 1992 to 1997 100% 80% Others 60% Cable 40% Share of revenues CWC BT 20% 0% Residential Users Business Users
Handover point Switch Switch Call Origination Call Termination International Conveyance Settlement Rate Accounting Rate The Accounting Rate System NB: Major profits come from incoming calls
France Germany Greece Spain Italy USA Canada Netherlands Weighted Average Accounting Rate Trends EU, USA and Canada 0.5 0.4 0.3 Value (SDR) 0.2 0.1 0 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98
Weighted Average Accounting Rate Trends Rest of the World 1.8 1.6 Pakistan 1.4 India South Africa 1.2 Russia 1 Israel Value (SDR) 0.8 Turkey 0.6 Poland 0.4 0.2 0 Dec-96 Jun-97 Dec-97 Jun-98 Dec-98
International Simple Resale • Allowed in UK since 1994 • Competition but constrained by cost of leased circuit. • Complaints re: BT’s IPLC prices • No network competition. • No return traffic - unlike Accounting Rates. • Many countries - illegal (deprives incumbent of revenues). OFTEL/DTI “liberalised” list. • Packaged IPLCs - on SDH rings
Competitive Origination Competitive Transport Competitive Termination REGULATION Cross Border Interconnection Model NB: Profits can arise from either outgoing or incoming calls
1,000,000 minutes Dodgy Dodgy 1,500,000 minutes 1,000,000 Minutes Tel Tel UK One-Way Bypass
Policy Issues • One-Way Bypass • Whipsawing • Asymmetric pricing imposed by monopolist; or • Other manipulation - depending on balance of traffic • IFL Licence conditions aim to prevent these: • Proportionate Return • Information to DG - no longer “parallel accounting” • Specifications & Consents
Policy Issues • Review of BT’s wholesale IDD pricing: • Gross pricing replaced by net pricing • New Guidelines out (very) soon • BT Retail price control review expected this year • Monitoring the market: • Publication of Accounting Rates (Statement on the Collection and Publication of International Call Information - July 1998) • Detection of breaches • CWC WEO review - results published February 1999
Tromboning Mobile Interconnect rate: 20p Int’n mobile term rate: 5p Settlement rate: 3p BT’s loss per mobile call: 2p/min • Solutions: • Call “gapping” & • Negotiation of separate rates for calls to mobiles - coming soon!
Efforts to Reform Accounting Rates • Study Group 3 - Focus Group. • Target rates according to teledensity • Moves to compensate those who suffer significant revenue losses. • Outcome of last meeting • Settlements rate “deficit” - 1996, > $5.5bn • Benchmarking proposal - implementation dates, and target rates, staggered by income. • Upper Income benchmarks - 1 Jan 1999.
Efforts to Reform Accounting Rates • Investigation begun December 1997 • 7 operators’ charges merit further investigation. • Also, looking at availability of cross border interconnection. - Implementation of ICD • WTO Basic Telecommunications Agreement • Signatories made “offers” detailing stages of liberalisation. • Offers are binding.
Submarine Cables • Cases concerning capacity on consortia cables - 1997/87 • Now, three changes: • 1. Economics • 2. Private Cables - capacity for sale • Atlantic Crossing, Flag, Flute (dark fibre) • 3. Self-owned networks • Farland (BT), Hermes, Worldcom, Viatel, Esprit CWC, Colt, Unisource & others
Max Capacity end 2000 Capacity (current) Pan-European Networks 700 600 500 400 Total Capacity - Gb/s 300 200 100 0
UK Cable Landing Stations January 1999 Atlantic Crossing BT operated CWC operated Redcar CANTAT-3 Scarborough UK-Denmark 4 UK-Germany 6 (3/99) Winterton UK-Germany 5 UK-Netherlands 14 Holyhead BT-TE 1 Bude TAT-14 (2000) Aldeburgh UK-Netherlands 12 Farland (1999) Oxwich Bay TAT-11 Gemini SOLAS (early 99) Widemouth TAT-8 Broadstairs UK-Belgium 5 Land’s End (Porthcurno) CELTIC RIOJA TAT12/13 FLAG Gemini Brean PTAT St Margaret’s Bay UK Belgium 6 UK-France 4 Farland (1999) Brighton UK -France 3 Folkestone UK -France 5 Goonhilly TAT-9 UK-Spain 4 SEA-ME-WE 3 (mid 99) NB: Excludes self-owned cables
Submarine Cables • Backhaul & Cable Station Access • Conveyance: Switch & Cable Landing Station (CLS) • CLSs owned, usually by BT or CWC only • So obligations - re: access to CLSs, publication of backhaul prices & non-discrimination • CWC obligations lifted - February 1999 • Could be significant bottleneck • Breakout below STM-1 (155 mb/s)
UK International Telecoms Policy Mike Conradi Legal Secondee from Baker & McKenzie World Bank, 9 March 1999 michael.conradi@bakernet.com