New Reference Interconnection Offer - UKE

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New Reference Interconnection Offer

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2006-07-05

On 4 July 2006, the President of the Office of Electronic Communications approved a new Reference Interconnection Offer of Telekomunikacja Polska S.A. The document is a draft Reference Interconnection Offer presented by TP on 20 December 2005 and amended ex officio by the President of UKE.

The President of UKE found that the draft RIO of TP did not comply with the law and did not correspond to market needs and thus required an amendment. In its assessment of the draft RIO from the perspective of market needs, the President of UKE took account of comments made by the telecommunications chambers: the Polish Chamber of Commerce for Electronics and Telecommunications (KIGEiT), the Polish Chamber of Information Technology and Telecommunications (PIIT) and the Polish Chamber of Electronic Communication (PIKE). TP was being summoned to explain the wording of certain provisions and in response it was frequently admitting that certain provisions of the draft RIO were redundant or should be modified.

The major modifications introduced by the President of UKE to the new RIO concern, inter alia:

  • the reduction in the rates and charges within interconnected networks by almost 35% (the analysis carried out by the President of UKE shows that the rates have significantly fallen in the EU Member States over the last few years. In the absence of TP rates calculated on the basis of a cost model approved by the chartered accountant, the President of UKE defined the rates on the basis of Best Current Practice),
  • introducing a model for interconnection traffic settlements based on flat interconnection rates (this solution should enable the operators to compete effectively with TP flat retail offers),
  • the provisions on the terms and conditions for the implementation of number portability,
  • for collocation, introducing the possibility to connect necessary equipment of a beneficiary (with respect to regulated services, i.e. leased lines, local loop for full and shared access),
  • facilitating procedures for the conclusion of agreements and for the establishment of interconnection points,
  • a number of other substantive amendments and editorial modifications consisting, inter alia, in eliminating redundant repetitions and making the terminology uniform.

Interconnection

The objective of the President of UKE was to create as universal definitions of interconnection services as possible, enabling telecommunications undertakings access to TP’s network and the possibility to provide different telephone services. Thus, the President of UKE introduced a provision indicating that TP, based on interconnection services regulated under the RIO, has the obligation to enable telecommunications undertakings to provide all telephone services that may be provided in TP’s network.

The terms and conditions for call origination, termination and transit as defined by the RIO should allow alternative operators connected to TP’s network to construct their retail offers as they wish. The RIO enables them to provide domestic and international calls, calls to mobile networks, calls to intelligent network services (Premium Rate and 0-80x) and to 0-20x numbers (dial-up), to 0-39x numbers (VoIP), to special subscriber services numbers and other switched services that will emerge on the telecommunications market in the future.

Rates

In the absence of reliable regulatory accounting reports of TP and cost calculation results for possible application for regulatory purposes (an opinion and a report of the chartered accountant) the President of UKE analysed the rates applied in comparable competitive markets when making its decision concerning the rates for telecommunications services.

The President of UKE found benchmarking according to Best Current Practice in fixed networks for 2004-2005 an appropriate method for the calculation of interconnection rates. The analysis of interconnection rates presented in the Commission 11th Implementation Report shows that these rates had been systematically falling in the EU-15.

The method adopted by the President of UKE is based on data concerning the countries that had been the EU Members before 1 May 2004 (i.e. the date of Poland’s accession) as the best model currently available that constitutes a realistic indirect objective for the Polish market. To determine the settlements under the new RIO the President of UKE assumed the euro exchange rate to be an arithmetic mean value for 12 months (1 February 2005 – 31 January 2006) at the level of 1 EUR = 4,004 PLN.

Table. The comparison of rates applied in the EU Member States before 1 May 2004 (the RIO of 4 July 2006) with the rates applied in the RIO 2004 (PLN/min)

Type of call

 

RIO 2004

 

EU-15 / RIO 2006

 

Change in %

 

Termination /origination within a numbering area

 

0.0412

 

0.0248

 

-39.81%

 

Termination/origination within the transit area

 

0.0565

 

0.0360

 

-36.28%

 

Termination outside the transit area

 

0.0738

 

0.0525

 

-28.86%

 

Mean arithmetic value determined on the basis of a percentage change

 

 

 

 

 

34.98%

 

It should be stressed that the above difference (average reduction in the rates by almost 35%) between the rates included in the RIO 2004 and the rates proposed in the new RIO complies with the trend for those Member States which joined the EU after 1 May 2004. The amount of charges has significantly fallen in the EU in recent years while in Poland operators have paid the same high interconnection rates for a few years.

According to the 11th Implementation Report the rates for local termination have fallen by 56% in Slovakia, the rates for single transit call termination have fallen by 52% in Latvia, by 50% in Malta, by 49% in Slovakia and the most significant reduction in the rates for double transit call termination was observed in Latvia – by 79%. As the European Commission has stressed significant reduction in interconnection rates is a common phenomenon for new Member States.

Separate WLR Offer

The President of UKE did not accede to the request from KIGEiT and PIIT that the RIO should include provisions concerning the Wholesale Line Rental service to be provided by TP. Not rejecting the arguments raised by both chambers regarding the legitimacy of WLR implementation in the Polish market, the President of UKE concluded that the WLR should be regulated by a separate reference offer.

At present, the President of UKE is carrying out proceedings in order to determine whether the national market for call origination in the fixed public telephone network is effectively competitive (Market 8). According to the President of UKE, the designation of TP as a telecommunications undertaking with significant market power and the imposition of regulatory obligations in the form of a WLR reference offer to be applied is the best way to implement this service in Poland.

Number portability

Currently the interest in fixed number portability is relatively low and thus the implementation of other solutions would be time consuming and would lead to significant costs not adequate to the objectives that could be achieved. The President of UKE indicated in the RIO that Onward Routing is a sufficient method to provide number portability in fixed networks. This method has already been implemented and applied by operators.

Single billing

The President of UKE decided that TP should place the payments due to TP as well as the payments due to another telecommunications undertaking in one invoice. If the applicable law provides for this possibility, TP should ensure it and provide the subscriber with a list of charges for all services in one invoice.

The decision of the President of UKE introducing the new RIO is immediately enforceable and thus it has been in force since 4 July 2006.

 

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    INTRODUCTION
    The President of the Office of Electronic Communications (President of UKE) is the national regulatory authority for the market of telecommunications and postal services. The President of UKE is also the specialised authority in the area of equipment conformity assessment, including telecommunications terminal equipment and radio equipment.

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    Here you can find information about the most import ant international events, significant for the development of telecommunications and postal markets In Poland and for the statutory activity of the Office of Electronic Communications.
    International activity of the President of UKE consists of, inter alia, cooperation with the European Commission, other EU institutions and Regulatory Authorities of EU Member State. It includes also the cooperation within organizations of which UKE is a member, i.e. the International Telecommunications Union (ITU), the Body for European Regulators of Electronic Communications (BEREC) and the European Committee for Postal Regulation (CERP).


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