I have not seen this type of request here before, however as anyone in the telecommunications world will know, squabbles over termination rates come with the territory; recently as a new entrant (boot strapped start up - Asterisk SS7 supporter) in the UK mobile space I have had to refer a mobile termination rate dispute between T-Mobile (UK) Ltd and Mapesbury Communications Ltd (MCom) to the UK regulator (Ofcom) http://www.ofcom.org.uk/consult/condocs/mapesbury_tmobile/ - kind of a David and Goliath fight.
For those that want to assist making sure the UK continues to be supportive of new entrants market entry, input to Ofcom in support of the below by tomorrow night UK time would be of value. http://www.ofcom.org.uk/consult/condocs/mapesbury_tmobile/howtorespond/
Below I lay out an outline of why I think Ofcom should uphold MCom's proposed termination rate:
1.Others should be aware that if Ofcom upholds the concept of efficient cost based pricing for a new entrants, this will most likely kill non-spectrum (eg WiFi) holders as their likely efficient termination costs will be almost nothing, and this major issue will/could jeopardise the survival of innovative start-ups.
2. TMUK makes a hefty profit at MCom's proposed termination rate. We have evidence of this and will be submitting an example, TMUK is just trying yet another way of stifling new entrants into the UK mobile space. All other UK MNO's have agreed the MTR.
3. MCom believes fair would have been upholding our termination rate, In a recent UK Competition Appeal Tribunal Ofcom was instructed to investigate costs so as to form an idea of the relationship between cost and price, not to set a cost based price.
4. Ofcom's statutory duties include promoting competition and encouraging the efficient and use of spectrum. This is what led them to liberalise the spectrum MCom uses in the first place. This dispute is a opportunity for Ofcom to demonstrate support to new entrants.
5. By obliging MCom to set a termination rate at their assumed efficient rate we enter the market losing money on termination, which forms a significant part of our business. Where is the level playing field? Four of the MNO's have had years and years to build customer numbers as well as barriers to entry; and at the time the incumbents launched, mobile termination rates were set an order of magnitude higher than we propose.
6. Ofcom's reliance on unsafe data and unreasonable assumptions and their failure to give the new entrant the benefit of the doubt is unreasonable and unlawful.
7. The effect of this decision is to decrease UK competition and devalue any future spectrum release (including re-farmed 900Mhz) as any new entrant will have to be willing to accept a loss on termination from the outset, a risk we do not believe a new entrant would be willing to take.
Comments and questions welcome.
Thanks and regards.
Magnus Kelly
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