Number portability enables subscribers, if they wish, to retain their telephone number when they switch between communications providers. The telephone number is “ported” from one communications provider to another. When the subscriber subsequently receives an incoming call, it is first routed to the network that originally held the number being called. The call is then identified as a call to a ported number and “onward routed” to the network to which the number has been ported.
The donor conveyance charge (“DCC”) is a wholesale charge that is levied between mobile communications providers (“MCPs”) for the onward routing of a call to a ported mobile number. General Condition 18 sets out the principles that communications providers must comply with in setting porting charges (including when setting a DCC).
On 14 October 2013, we commenced this review into whether we should set a maximum DCC on an ex ante, mobile industry-wide basis and if so at what level. We are using this review as an alternative means of resolving disputes brought by Hutchinson 3G UK Limited (“H3G”) against each of EE Limited (“EE”) and Telefonica UK Limited (“Telefonica”) about the level of the DCC charged between them. We considered it would be preferable for us to consider the appropriate level of DCCs on a mobile industry-wide basis, rather than in determinations of disputes which would necessarily only apply to the parties to the particular disputes.
It has been six years since Ofcom last determined a rate for the DCC in 2007. We believe it is likely that the costs of donor conveyance have fallen in this time as technology has improved, network equipment has become cheaper and call volumes have grown. However, we are aware that a number of MCPs are still applying DCCs in accordance with the rate set in 2007. We have refrained from intervening to date and allowed commercial negotiations between the MCPs with respect to revised rate(s) to take their course. However, bilateral negotiations to re-set DCCs have proven unsuccessful in some instances.
Therefore, we consider it unlikely that DCCs will remain at a suitable rate across the mobile industry going forward, without Ofcom’s involvement. We also have a duty under Article 30(2) of the Universal Service Directive to ensure that charges between operators relating to the provision of number portability are cost-oriented. In light of these considerations, we consider that it would be appropriate and consistent with our duties for us to set a maximum DCC across the mobile industry on a forward-looking basis.
In setting a DCC, we propose to use the same cost standard as we used in 2007, namely total service LRIC plus a mark-up for network common costs. We also consider it appropriate to use the same model that we used in 2007, but have updated this in line with the latest version of Ofcom’s 2011 mobile call termination model in order to reflect the most up-to-date understanding of the costs of mobile service provision. We are also proposing to make some other adjustments to the model that we consider to be appropriate.