RD312 - Reflection Document on Bill & Keep for IP interconnection charging

These are ETNO comments on the ERG draft “Common Position on Next Generation Networks Future Charging Mechanisms / Long Term Termination Issues,” ERG(09) 34.

• The Association believes that regulatory intervention as regards future charging mechanisms for IP interconnection, such as the mandatory ‘Bill & Keep’ (BaK) regime proposed, is inappropriate and premature;
• The European Commission’s “Recommendation on the Regulatory Treatment of Fixed and Mobile Termination Rates” foresees the continuation of the calling party network pays (CPNP) charging mechanism through 2013 and beyond;
• An assessment of the impact of the development of cost-oriented, termination rates and the implementation of symmetry between larger and smaller operators under the existing CPNP regime should be considered in the first instance;
• A strict separation of transport and service layer under a BaK regime, would not allow the end-to-end QoS necessary to provide high quality, secure and time-critical services in an NGN environment;
• The proposed mandatory BaK regime would be plagued with arbitrage, adverse selection and free rider problems;
• A regulatory obligation for BaK charging does not have a legal basis within the EU Regulatory Framework and is counter to key principles for the implementation of the Framework.

ETNO welcomes the opportunity to comment on the ERG draft “Common Position on Next Generation Networks Future Charging Mechanisms / Long Term Termination Issues,” ERG(09) 34.

• The Association believes that regulatory intervention as regards future charging mechanisms for Internet Protocol (IP) interconnection, such as the mandatory ‘Bill & Keep’ (BaK) regime proposed in this draft ERG Common Position, is not warranted at this time and thus inappropriate;
• The timing of the Common Position appears premature based on many aspects, including, for example:
  o Slower than expected migration to multi-service (including voice) all-IP next generation networks (NGN) and convergence of services;
  o That the European Commission’s “Recommendation on the Regulatory Treatment of Fixed and Mobile Termination Rates” foresees the continuation of the calling party network pays (CPNP) charging mechanism through 2013 and beyond;
• An assessment of the impact of the development of cost-oriented, termination rates and the implementation of symmetry between larger and smaller operators under the existing CPNP regime should be considered in the first instance;
• A strict separation of transport and service layer, as envisaged under a BaK regime, would not allow the end-to-end quality of service (QoS) necessary to provide high quality, secure and time-critical services in an NGN environment;
• The proposed mandatory BaK regime would be plagued with arbitrage, adverse selection and free rider problems;
• Adoption of such a regime would also send the ‘wrong message’ to the market in a period where major private-sector investments in network infrastructure is critical; 
• The proposed BaK regime would also impose considerable negative effects on consumers (e.g., low-usage mobile subscribers) and the industry.  These effects are underestimated and insufficiently treated in this draft Common Position;
• Un-coordinated, country-by-country, implementation of new charging mechanisms would lead to market fragmentation; 
• ETNO calls upon the ERG to reconsider positive developments in the CPNP regime – in particular, capacity-based charging and QoS-aware IP interconnection;
• ETNO is responding to this consultation without prejudice to its position that a regulatory obligation for BaK charging does not have a legal basis within the EU Regulatory Framework and is counter to key principles for the implementation of the Framework.