Interconnection and Facilities Leasing Discussion

1. Interconnection and Facilities Leasing Discussion • Introduction and Objectives • Chapter 10 Market Review Process - Overview • Relevant markets, essential facilities and Ch 10 • Consolidated approach to Ch 7 (IC), Ch 8 (FL) and Ch 10 • Remaining conceptual IC and FL issues • Pricing Principles • Framework for Tech & Fin feasibility • Manner of unbundling • Summary • Way forward

2. CH 10 Market Assessment Process Conceptual Framework 67(4)(b) 67(6) (b) Approach DS, SS, SSNIP 67(4)(a) 67(6)(a) Approach 67(4)(d) 67(5) Potential PCC 67(4)(c) 67(7) S 67(4) Enabling Regulations Market Review Process Market Definition Competition assessment SMP Remedies • Dominance • Control of Essential Facilities • Vertical relationship Review Process 67(4)(e) Monitoring 67(4)(f) Periodic Reviews Anti-comp Behaviour

3. Essential Facilities, Relevant Markets and Ch 10 ECA Qualifying criteria Exclusively/ predominantly provided by single/limited number of licencees AND Cannot be feasibly substituted/ duplicated (environmentally, economically or technically) Approach DS, SS, SSNIP 67(4)(a) 67(6)(a) List Essential Facilities Conceptual Framework 67(4)(b) 67(6) (b) Approach 67(4)(d) 67(5) Market Definition Competition assessment SMP 67(6)(a) & EU criteria • Dominance • Control of Essential Facilities • Vertical relationship High non-transitory barriers to entry (structural, legal, or regulatory) AND Dynamic functioning and character of markets / markets whose structure does not tend towards effective competition within the relevant time horizon AND The application of competition law alone would not adequately address the market failure(s) concerned List Ex-ante Markets Remedies “Indicative” lists Potential PCC 67(4)(c) 67(7)

4. Consolidated approach to IC, FL and Ch 10           KEY: What is on the table (Draft Regulations) Proposed approach

5. Essential Facilities and Ch 10     KEY: What is on the table (Draft Regulations) Proposed approach

6. Interconnect & Facil. Leasing Regulations (s38 & s44) Regulations to facilitate the conclusion of agreements (principles & procedures): Reference Offers with model T&C Time frames and procedures for negotiation, conclusion and implementation of agreements Quality & service levels IC Pricing principles and FL rates Information requirements Dispute resolution procedures Billing and settlement procedures Associated support services Access and security arrangements Framework for technical and financial feasibility and efficient utilisation of EC networks/services Manner of unbundling services Subject to Chapter 10 To be assessed case-by-case Part of market definition Detailed input in many of these areas is covered in the various individual submissions, but we address conceptual approaches to the bold underlined areas in the next slides

7. Pricing Principles Specific pricing principles or approaches are considered to constitute remedies and should be subject to Chapter 10 market review process. Any specific pricing approaches should not form part of the IC and FL regulations. Different underlying IC and FL services may warrant materially different pricing approaches, whether offered on commercial terms or subject to a finding of SMP and ineffective competition.

8. Framework for assessing “reasonableness of requests” Interconnection and Facilities Leasing Regulations may include: “a framework for determining technical and financial feasibility and promotion of efficient use of electronic communications networks and provision of services” IC and FL both potentially represent a wide variety of different underlying services. Therefore it would be difficult to set out a framework that is both instructive and sufficiently flexible to facilitate meaningful evaluation of financial and technical feasibility and economic efficiency A framework would undoubtedly be helpful but it is probably more practical to evaluate the reasonableness of requests on a case-by-case basis

9. Unbundling of services and facilities Interconnection and Facilities Leasing Regulations may include: “the manner in which interconnection services are to be unbundled and made separately available by licensees” “the manner in which unbundled electronic communications facilities are to be made available” Unbundling would more pragmatically form part of the market definition exercise e.g. Origination, transit, termination Voice, messaging, data Fixed, wireless, mobile\ Cable landing station, co-location, MDF, backhaul Such unbundling and access requirements should thus not be part of the IC and FL regulations, but are a logical outcome of the Chapter 10 market definition and competition assessment process.

10. Summary • Network operators, have reached a simple and clear consensus which would make the draft IC, FL and EF package acceptable to them (once drafting / nuts and bolts issues resolved): • Price remedies should always be subjected to a full Chapter 10 process • Facilities leasing obligations should always be subject to SMP finding • The implication / proposed implementation of these two principles are: • Remedies removed from IC, FL and EF Regulations and be subject to full Chapter 10. • Generic exemption from the obligation to lease facilities for non-SMP operators (as per current draft regulations) • Essential Facilities Regulations be reduced to a list of assets which meet the qualifying criteria of the ECA definition

11. Thank You

12. ECNS/ECS and Interconnection ? ECS ECS IC ECS ECS IC Application Routing (L3) Switching (L2) NS NS NS NS Transmission (L1) ECNS ECNS IC ECNS