Summary
1.1 Wholesale mobile voice call termination (“MCT”) is the service purchased from mobile network providers by another communications provider so that they can connect their networks to enable their customers to contact the person they are calling. The recipient of the call will be answering using their mobile phone. If call termination was not available a communications provider could only terminate calls to other customers on its own network. This service is referred to as wholesale because it is sold and purchased by communications providers rather than retail customers.
1.2 In 2003, a new European regulatory framework for electronic communications networks and services entered into force, which was implemented in the UK via the Communications Act 2003 (‘the Act’).
1.3 In keeping with its requirements under the Act, Oftel and then Ofcom conducted a review of the extent of competition in the provision of wholesale mobile voice call termination. Following this market review, Ofcom, in June 2004, determined that there was a separate market for wholesale mobile voice call termination on the network of each of Vodafone, O2, T-Mobile, Orange and H3G (“the MNOs”) (plus Inquam, which has since ceased to trade). Those markets were considered to include voice call termination on both 2G and 3G networks, but they exclude termination of data and SMS. Ofcom also concluded that each MNO had Significant Market Power (‘SMP’) in its respective market.
1.4 On this basis, Ofcom imposed regulatory remedies on each of the operators for the period June 2004 to April 2006, with the 2G MNOs, Vodafone, O2, Orange and T-Mobile, being subject to charge controls and other requirements. H3G was required only to give advance notification of price changes and provide Ofcom with details of its call volumes. Inquam was subject to a requirement to give advance notification of its price changes.
1.5 H3G subsequently appealed Ofcom’s determination that it had SMP to the Competition Appeal Tribunal (‘the CAT’), on the grounds, amongst others, that Ofcom did not carry out a sufficient analysis to entitle it to come to a decision that H3G had SMP and, failed to take account or sufficient account, of the ability of BT to restrain pricing, in reaching its conclusions (-1-).
1.6 The CAT, in November 2005, found that Ofcom erred in its SMP determination since it did not conduct a full assessment of the extent to which BT had Countervailing Buyer Power (“CBP”). It made an Order requiring Ofcom to:
- Reconsider whether H3G has SMP in the market for mobile wholesale voice termination on H3G’s network taking into account the extent to which CBP exists in BT and any other matters as are relevant at the time of Ofcom’s reconsideration; and
- Take account of the CAT’s Judgment in its reconsideration.
1.7 On 13 September 2006 Ofcom published the consultation document Assessment of whether H3G holds a position of SMP in the market for wholesale mobile voice call termination on its network (the ‘H3G reassessment consultation’) (-2-), reassessing H3G’s position of SMP consistent with the Order made by the CAT.
1.8 In the H3G reassessment consultation, Ofcom proposed that H3G has SMP in the market for wholesale mobile voice call termination on its own network as:
- H3G has 100% market share of the relevant market;
- There are absolute barriers to entry; and
- Ofcom considered that BT did not and will not, over the period under consideration, have sufficient CBP to constrain H3G’s prices to a competitive level.
1.9 Additionally, Ofcom proposed to impose a transparency obligation on H3G for the period until 31 March 2007.
1.10 This statement (the H3G reassessment statement) sets out Ofcom’s decision in relation to the reassessment of H3G over this period.
1.11 Ofcom has today also published its final decision in relation to its review of Calls to Mobile (-3-) for the period from 1st April to 31 March 2011.