c


  
   

c Y
    Y
’

 
      
   
 
  Y

June 1999 Y

Ô Y
 
 Y

Ô
 - Why this consultation?YY

Ô
 - The MVNOs and what they might offerYY

Ô
 - Regulatory issuesYY

Ô
 - Issues on which Oftel welcomes views and commentsYY

Ô  
  Y

  - How the technology worksYY

 ! - Mobile Network Code allocationYY

 Ô - Foreign developmentsYY

 " - GlossaryYY

 
Y
This consultation document seeks views from service providers, mobile and other network
operators, consumer interests and other interested parties on the development of what are
known as Mobile Virtual Network Operators (MVNOs).Y

MVNOs would not have a licence to use radio spectrum, but would have access to the radio
networks of one or more of the current mobile operators and would be able to offer services
to customers using that spectrum. It is envisaged that the MVNO would be able to offer both
subscription and call services to customers. One of the key purposes of this consultation is for
Oftel to understand more clearly the types of services which MVNOs may be able to offer
and any benefits that they might offer to consumers through increasing competition.Y

There are already a number of competitors in the mobile market. As well as the network
operators, Independent Service Providers sell subscriptions and calls to customers and have
some flexibility to offer their own service packages to customers. Oftel is currently
consulting on whether Indirect Access (IA) should be mandatory on mobile networks. If IA is
introduced, there will be another layer of competition in the market, whereby customers can
choose to make certain calls (typically national or international calls) through an IA operator
and be billed by this operator for these calls. In this case, the customer still pays their existing
operator or service provider for subscription and other calls. MVNOs will be a yet further
type of competitor. Y

In order for MVNOs to offer services to customers, they will need to conclude commercial
agreements with at least one mobile operator to gain access to that network. If commercial
agreement cannot be reached, Oftel may be asked to intervene, potentially to decide whether
access should be allowed, on which networks and at what price. Oftel¶s clear preference is
that the industry should reach commercial agreements.Y

If commercial agreements cannot be reached, whether Oftel would intervene would be

critically dependent upon an assessment of a number of economic and legal considerations.
From an economic perspective, Oftel would take into account the competitiveness of the
mobile market and the impact of MVNOs on promoting competition in the market. If
regulatory intervention is justified, Oftel¶s presumption is that the price of access should be
based on µretail-minus¶.Y

The document also considers the legal framework that might apply to MVNOs. This is not
yet clear, in particular given the uncertainty around the precise definition of an MVNO.
However, the document sets out Oftel¶s preliminary views on the legal framework under EC
Directives that might apply to MVNO requests for accessrY

In addition, there are a number of technical and implementation issues on which comments
are sought. There are a number of ways in which MVNOs may be implemented, and they
may require different levels of use of the mobile network operator¶s infrastructure. Some of
the technical issues are detailed in an annex to this document, and Oftel would welcome
industry comments on the technical and cost implications of MVNO access.Y

In summary therefore, Oftel is seeking views on: Y

`Y The types of services an MVNO might offer and the number of potential MVNOs that
might seek to enter the market;YY
`Y The possible benefits to competition and consumers of MVNOs; YY
`Y If commercial negotiations to enable MVNOs fail, whether there is a case for
regulatory intervention;YY
`Y If regulatory action is justified, on what basis;YY
`Y The types of technical implementation which might be feasible for MVNOs.YY

Responses to this document are sought by 30 July 1999; written comments will be made
publicly available in Oftel¶s Research and Intelligence Unit (except where respondents ask to
keep details confidential), and comments on the responses are invited by 20 August 1999.
Full details of where to send responses are shown at the end of the document under the
heading µConsultation¶. Y

Once Oftel has analysed these responses, we will issue a further document by the end of
September 1999. Y

Ô
Y
#  
 $Y

%    Y

1.1 In the course of recent consultations on the mobile market, approaches by operators to
DTI and discussions with other regulatory authorities, Oftel has become aware of potential
demand from some commercial organisations to establish Mobile Virtual Network Operators
(MVNOs) on GSM networks.This consultation aims to bring out for discussion the consumer,
economic and regulatory factors that need to be taken into account if any proposals to run
these services cannot reach commercial agreement and Oftel is asked to resolve a dispute on
the issue. Y

1.2 MVNOs potentially offer the customer additional choices. Depending on the technical
approach chosen and commercial agreements made between the MVNO and the existing
mobile networks, the MVNO may be able to offer different packages of services and tariffs
from those available today by network operators and service providers and from those that
might come from the prospective Indirect Access operators on whose potential Oftel is
currently consulting. Y

1.3 cwould make up the 



 & & on mobile
networks in which each successive level has greater freedom from the network¶s control and
can therefore offer the consumer further degrees of flexibility and innovation in the way they
package and tariff services, and has progressively greater scope to develop new value added
services accessed by mobile customers. The
  of this hierarchy is provided by 

     
 . By definition, these sales organisations sell
the network¶s own services in the packages and at the prices set by their organisationr The
call services are end-to-end calls from the calling subscriber right through to the called
customerrY

1.4 The   contains the '&( &)'() who sell only branded
subscriptions and calls (airtime) of their parent network. These services are the same as the
network sells via its direct sales force. The TSP buys them at wholesale rates and has some
freedom to vary packaging and tariffing. The customer¶s contract is not with the network but
the TSP who is responsible for customer services and billing. Y
1.5 The %&( &)%() form the  
* 
.
They buy the same wholesale subscriptions and airtime services to resell to their contracted
customers. ISPs compete with the TSPs by offering differentiated customer servicing and
billing - and to a limited extent alternative packaging and tariffing. Their major advantage is
to offer choices between networks: BT Cellnet and Vodafone are obliged to provide services.
However, ISPs rely heavily on the branding of the services and some networks only supply
branded servicesr Many ISPs add a range of further value added services to the basic
subscription and calls services, aiming to offer a µone stop¶ shopr Y

1.6 Oftel is consulting on the  

*
 ± the %)%+

 . IA operators¶ contract with customers for 
& only. For   
& the customers would still contract with the networks or the TSPs/ISPs. The IA
operators¶ key advantage: they would not buy complete (end-to-end) calls but only the use of
the mobile network to originate calls. The customers would exercise their choice on a call-by-
call basis, by dialling four digit codes which would route the calls out of the mobile networks
and into the entire control of the IA operators. For each of these calls, the IA operators would
own the customer. Their aim would be to find more efficient ways of handling the calls
beyond the mobile network, sharing the benefits with the customers. Much less dependent on
the network than the TSP/ISPs, they would compete with them on costs, packaging and
tariffing. Like ISPs they will be eager to add in value added services. Oftel sees IA for
mobiles as adding significantly to the range of choices open to end consumers. Y

1.7 Thecwould complete 

.Theywould have the same control of 

& as the IA operators - but there would be no need for the customer to dial any access
code. Unlike the IA operators, however, they would also have full control of their customers¶

 &,Subscribers¶ contracts with the MVNOs would cover all services;
there would be no contract with the mobile operator (hence the term µvirtual¶ mobile
operator). The MVNOs would pay the network operators both for use of the mobile network
to originate calls and for the access (subscription) to the networks. With such wider control,
the MVNO could develop a fully independent range of call services and tariff packages.
Would-be MVNOs however see plain calls as simply the starting blocks of new services to
offer customers: they expect to innovate extensively in the design and packaging of
combinations of new value added services and mobile callsr Y

1.8 Oftel believes that there can be more than one type of MVNO, depending on how far an
MVNO wishes to rely on facilities of the host mobile network. All MVNOs would have the
common and essential feature that they would be entirely dependent on the mobile network
for the use of the radio spectrum to link their subscribers to the mobile operator¶s base
stations. At one end of the range of possibilities, the MVNOs would use only the minimum
elements of the mobile operators¶ facilities ± the element using the radio spectrum ± and
supply all the other elements itself, maximising the opportunity to provide different services
and add value. At the other end of the range, the MVNOs might make maximum use of the
mobile operators¶ facilities. In this case, the MVNOs¶ services would scarcely differ from
those available directly from the network operators or their service providers ± except for the
packaging and pricing of the service and the fact that the entire control of the customers rests
with the MVNOs. Y

1.9 The key factor on which the MVNO concept depends for its implementation is the
acceptance by the mobile networks of mobile calls transmitted by (or to) customers who are
µowned¶ by another operator. Technically and operationally, this would be arranged by the
MVNOs¶ issuing their own µsmart cards¶ in place of those issued by the mobile network
operators. These smart cards - SIM (Subscriber Identity Module) cards - contain the key
functions identifying the customer to the network. They act as a passport for the customer and
their handset: provided they are recognised by a mobile network operatorr Y

1.10 In assessing whether regulatory action might be justified, Oftel will consider both the
benefits to consumers of mobile services that might result from MVNOs and the effect on
existing operators and their customers. Oftel will follow the same process as it has adopted in
its consideration of other mobile issues. It will define the market; review the competitiveness
of the market; assess how far and in what ways MVNOs could be expected to add to
competition at either the network or the service level, or both; how they might reduce any
barriers to effective competition; and what competition there might be between MVNOs. If
Oftel were to decide that regulatory action is justified, then, consistent with its approach to
indirect access for mobile networks, Oftel would expect the appropriate cost basis to be
retail-minus (that is: the MVNO charge would be the retail price after deducting the costs of
elements of the service that are now to be supplied by the MVNO and no longer by the
network operator). Y

(     
  Y

1.11 Oftel¶s purpose in publishing this document is to gain consumer and industry views on a
number of questions arising from the potential introduction of MVNOs into the UK market.
These questions cover: Y

`Y The types of services an MVNO might offer and the number of potential MVNOs that
might seek to enter the market;YY

`Y Possible benefits to competition and consumers of MVNOs; Y

`Y If commercial negotiations to enable MVNOs fail, on what basis would a case for
regulatory intervention be founded, and, if justified, would it apply to all or only some
of the mobile operators?; Y

`Y If regulatory action is justified, the basis for charging for services which MVNOs may
require from the existing mobile operators;YY

`Y Identification of any technical issues that might impose practical or timetable

restrictions and how far these might vary according to the variations in the types of
MVNO services (identified above) or restrict their implementation. Y

1.12 Oftel is seeking the views of consumers and the industry as a necessary step in forming
its own conclusions. The views received will be used by Oftel to prepare more defined
proposals on what (if any) regulatory measures may be necessary on MVNOs, in the interests
of consumers and industry and the stimulation of effective competition in mobile markets.
The first phase of this consultation will last until -. ///, after which there will be the
usual two week period for comments on the responses during the first phase, ending -
 * ///. Oftel will review the results of the consultation and publish a further document

 
. Y
 Y

Ô
Y
'c

* Y

2.1 This Chapter sets out Oftel¶s current understanding of what sorts of services MVNOs
would offer to the customers; what sorts of organisations might wish to act as MVNOs; and
what sorts of facilities they would require from the mobile networks. Oftel is very aware that
MVNOs are a comparatively new concept and that ideas and approaches are evolving
constantly. What follows is a snapshot of the key features as Oftel understands them at this
point in time. Oftel is keen to have views on the issues set out in this Chapter and in Chapter
3. The areas on which views are specifically sought are listed in Chapter 4.Y

What benefits might MVNOs bring to consumers? Y

2.2 One of the purposes of this consultation is to understand the benefits to consumers that
MVNOs would bring. The MVNOs may be able to offer : Y

(a) Expanded choices ± with MVNOs, the customer would have a wider range of
organisations offering them a complete mobile service;Y

(b) Potentially wider range of services: use of the IN (Intelligent Network) functionality in
the MVNOs¶ networks may enable them to provide a wider range of services than those
available from the mobile networks themselves;Y

(c) Possibly lower retail prices ± exactly how much lower would depend on the one hand on
the terms and conditions for the payments by MVNOs to the mobile networks for the
connection to their systems and the use of the systems for calls; and on the other hand on how
much more efficient MVNOs are in procuring those elements of the service where they
substitute their facilities for those of the network operators. Y

º     

   

    
 
 
  

  
     rY

What organisations will seek MVNO status? Y

2.3 If the principle of serving MVNOs were established, then no doubt a range of service
providers and established networks, both fixed and mobile, would wish to consider
developing MVNO operations. At one end of the range (see paragraph 8) would be the sorts
of organisations that have already been formed in Scandinavia. They would make substantial
investments in facilities which would parallel many of the functions of the mobile networks
and would have their own IN (Intelligent Network) facilities to develop value added services.
They would have extensive interconnection with fixed and mobile networks as well as some
(at least) network facilities. These organisations would wish to depend on the mobile
networks only for the minimum services ± those that they cannot supply themselves because
they do not have licences to use spectrum. At the other end of the range (see paragraph 8 also)
would be MVNOs with minimal investment, possibly confined to facilities for retailing,
customer service and billing. They would look to the mobile networks to supply virtually all
elements of the services they supply to their customers. In this sense, they would be little
more than resellers and their services would be nearly indistinguishable from the service
providers who currently buy airtime on wholesale terms from the networks. The one
difference would be that the MVNOs would have the potential to move away piecemeal from
total dependence on the networks¶ facilities; whereas the ISPs/TSPs have to take or leave the
complete packages from the networks.Y

º                
 

          

   
 . Y

What will the MVNOs require of the mobile network? Y

2.4 As explained in paragraph 8 (and more extensively in Annex A), there is a range of ways
in which MVNOs can implement their services: from the minimum use of the mobile
networks¶ facilities to almost total dependence on them. This would be mirrored by the
gradual increase in the number of elements of the mobile networks¶ facilities that MVNOs
might wish to have supplied by the mobile networks rather than supply themselves.
Ultimately, this could extend to some MVNOs¶ being totally dependent on the facilities
provided by mobile networks ± at which point, from a consumer¶s point of view, these
MVNOs would scarcely be distinguishable from service providers or the network operators
themselves.Y

2.5 At minimum, all MVNOs will require is the use of the radio elements of the mobile
networks and such fixed parts of the mobile operators¶ networks as are necessary to route
calls between the radio elements and the first convenient points at which calls can leave (or
join) the mobile networks en route to (or from) the facilities of the MVNOs. (This minimum
amounts to no more than, firstly, the radio transmission link, its control functions and the
mobility management functions that keep track of exactly where mobile handsets are located
so that calls can be delivered to them; and secondly, some transmission and switching
facilities needed to link the radio facilities to the points of interconnection either with the
MVNOs¶ systems direct, or with transit carriers). Y

2.6 At the other extreme ± maximum use of the mobile operators¶ facilities and minimum
investment by the MVNO ± calls from MVNOs¶ customers will be handled virtually entirely
by the mobile networks as if in fact they were calls from subscribers to the mobile networks.
In particular all the verification operations would be carried out by the mobile operators ±
whose databases would have to be geared to receive, process and supply data concerning the
MVNOs¶ customers as well as their own. (In the same way, the routings used for the
transport and delivery of the calls after leaving the mobile networks to reach the terminating
operators would be exactly those chosen for the calls originated by the mobile networks¶ own
customers. Virtually all that would be different is that the billing and service performance
information would have to be transferred from the mobile operators to the MVNOs).Y

2.7 Between these extremes there is a range of varying degrees of use by MVNOs of the
mobile networks¶ facilities and corresponding use of, and investment in, their own facilities.
One such permutation could be that some MVNOs set up their own verification facilities to
check that calls are acceptable for onward transmission, but the onward transmission would
be the same as for calls made by the networks¶ own customers. This is the arrangement for
the present system of international roaming for subscribers of other countries¶ networks (see
Annex A): here the databases of the visited networks and the networks that own the visiting
subscribers already exchange this information, but the calls are handled by the visited
networks in their usual manner. A completely opposite alternative approach would be for the
verification to be carried out by the mobile operators¶ facilities but for the calls to be routed
to MVNOs for onward conveyance and termination. Clearly if MVNOs are accepted, each
will want to specify and agree the range of services to be provided by the mobile networks
and reflect this in the contracts, along with an appropriate set of charges. Y

º   
 

     
       
   
  r Y

ey requirement for MVNOs¶ operations: their own issue of SIM cards with their own
Mobile Network Codes (MNCs) Y

2.8 An integral part of any GSM system is the SIM card which contains the information that
identifies the user to the network. By exchanging this information with the mobile system
when the handset is switched on, the handset is readied to make or receive calls by generating
and receiving radio signals. These radio signals are used to make contact with a base station
as required. Without a SIM card, a handset can usually make only emergency calls. This is
detailed in Annex A. The key information required for this identification is contained in the
IMSI (International Mobile Station Identity) code which allows the mobile network to check
that the handset/ SIM card is used by a customer who has a contract with the network. This
IMSI number is entirely separate from the public telephone number through which the
customer is contacted for incoming calls and billed for outgoing calls. Y

2.9 The IMSI code is also more fully explained in Annex A. In summary, it consists of fifteen
digits. The first three identify the country to which the SIM card (and as at present the issuing
network) belong - they make up the Mobile Country Code (MCC). The next two are the most
important for the purposes of this consultation document and identify the network issuing the
SIM card - they are called the Mobile Network Code (MNC). The last ten digits identify the
specific customer. The allocation of MCCs is governed by the International
Telecommunications Union (ITU). In the UK, MNCs are allocated by the DTI. As with most
numbering schemes, these numbers are a finite resource.Y

2.10 In order to issue its own SIM cards, any MVNO would need to have its own MNC. DTI
are developing guidance for the industry and other interested parties on how the MNC
allocation process in the UK might work. DTI¶s letter of guidance to mobile network
operators on GSM code allocation is contained in Annex B. It sets out the conditions that
would have to be met to secure an MNC allocation ± in particular the condition that intending
MVNOs would need to demonstrate that they have effective agreements with mobile network
operators so that their customers could use a mobile networkr Attention has been focused on
the role of MNCs, and the potential demand for them by organisations other than mobile
network operators, particularly by the bids made in Scandinavia by the Sense organisation for
the right to have its own SIM cards recognised by mobile networks (see Annex C). In the UK,
some organisations are also making enquiries about MVNO services and have approached
DTI about the allocation of MNC codes. Y
º   º     
          r Y

Y
Ô
Y
0* 
  Y

3.1 If the MVNO concept is to be translated into services, there has to be an agreement
between MVNOs and mobile networks. As ever, Oftel¶s strong preference is that any such
agreements should be the result of commercial negotiation. The experience of the Sense
organisation¶s negotiations in Scandinavia has demonstrated some of the regulatory issues
that arise if commercial negotiations fail (see Annex C). This Chapter explores some of these
issues and seeks to identify questions on which Oftel would like responses. The key question
is whether, 

  

*1 there needs to be regulatory
intervention so that would-be MVNOs can have access to existing mobile networksr If there
were seen to be such a need, then on what terms and conditions should the services be
supplied? The rest of this Chapter considers such parallels as exist for this sort of service. It
briefly reviews some of the economic and competition issues that must be addressed, and
considers what powers Oftel has which bear on these issues. Y

When are other operators¶ SIM cards recognised by mobile networks? Y

3.2 There are two areas where mobile networks recognise or may recognise SIM cards which
are not their own. The first is roaming by the subscribers of foreign mobile networks on UK
mobile networks. Such agreements are routinely arranged for the joint benefit of customers of
both operators and both networks. The arrangements are purely commercial and depend on
negotiations between operators. They are not mandatory. There is in fact every incentive for
networks to reach this sort of commercial agreement as this valuable traffic is purely
additional. Y

3.3 The second potential category of roaming , not yet in operation, arises from the launch of
the Third Generation (3G) of mobile services and systems. The UK Government have said
that if any new entrant mobile network operator is successful in the bidding for the use of 3G
spectrum, then it will have the right to require roaming from one of the established Second
Generation (2G) licensees, under certain limiting conditions. This is to provide a level
playing field for such a new entrant by allowing it to offer its customers access to nationwide
2G services in the same areas as the 2G networks. These limiting conditions are designed to
ensure the roll-out of the new entrant¶s 3G network and will have a finite term (expiring in
the year 2009). In its consultation document ’

  !      
  "     , Oftel has indicated that it expects operators to
come to commercial agreement on charges for this sort of roaming service. However, if such
agreement is not reached and Oftel is required to set a rate, then the principle would be retail-
minus. That is: the charges would be set by deducting from the retail prices of the calls the
costs of the elements of the calls that would no longer be supplied by the mobile network
operators but by the MVNOsrY
Àevelopments abroad Y

3.4 The MVNO concept and hence this question of recognition of other operators¶ SIM cards,
has been developed particularly by the Sense organisation in the Scandinavian countries.
Oftel¶s understanding of the way the concept is currently emerging there is set out in Annex
C. Y

What basis for regulation in U?Y

3.5 The answers to the key questions of the principle of an obligation on mobile networks to Y

supply MVNO and the basis for charges may in part depend on how the service is defined;
that is, which of the range of forms MVNO services can cover is the subject of any dispute.
Some elements of the service are clearly akin to interconnection: particularly the conveyance
of the call (once accepted) over the fixed (non- mobile radio) parts of the mobile operators¶
networks. But the status of others is not clear and it is part of the purpose of this consultation
to bring out the issues of definition of what an MVNO service is, and the elements necessary
to implement it, in order to develop understanding of what parts of the regulatory regime may
be relevant.Y

3.6 To simplify discussion of a complex issue, it seems best to start with the minimum form
of MVNO: that is the form with minimum use of the mobile operators¶ facilities, and the
maximum use of the MVNOs¶ own facilities. This has the merit of focusing the question on
the common factor to all forms of MVNO services. This is the access to the air segment and
the facilities necessary firstly to register that the MVNO SIM cards are backed by agreements
on their recognition; and secondly to handle the calls according to the agreement ± which in
the simplest case would require the calls to be routed out of the mobile networks at the
earliest economic point. Y

3.7 This common element - the access to the radio and other facilities necessary for handling
MVNO calls - has some similarities with access to the local loop fixed networks. This is a
current source of discussion by National Regulatory Authorities (NRAs) and with DGXIII.
Oftel, too, will be considering what, if any, of the principles discussed in the fixed context
may be relevant in the mobile context. Y

åconomic assessmentY

3.8 The key initial question for Oftel to address in preparing an economic assessment on
which to base conclusions on whether MVNO access should be mandatory, is to define the
market and its competitiveness. If the market for mobile services is effectively competitive
then we might presume that intervention to require access to be provided to MVNOs is not
necessary or appropriate; Oftel would expect players in the market to be able to come to
commercial agreements on terms of access. If access is not provided there would be a
presumption, in a competitive market, that entry would not be efficient.Y

3.9 Oftel has concluded that the mobile market is a separate market which is not yet
effectively competitive. The basis for these conclusions was outlined in the consultation
document          (February 1999). Consequently there could be
benefits from increased competition if Oftel were to intervene to mandate access for MVNOs. Y
3.10 A requirement to allow access by MVNOs will not increase the number of competitors
in the provision of underlying airtime because the MVNOs will not have their own spectrum.
There may be benefits, however, from the entry of MVNOs in the form of increased
competition between the existing network operators. This could occur if MVNOs are able to
reduce barriers to effective competition between the existing four network operators.Y

3.11 The barriers to competition include the existence of switching costs which make it
difficult for customers to change operators. An MVNO may undertake the switching between
the underlying networks rather than the retail customer, who would continue to obtain service
via the MVNO. Competing MVNOs could have lower network costs of switching from one
network to another than a retail customer. For example, they may have lower costs of
gathering information and would be able to spread these over a large number of customers. Y

3.12 This may induce more intense competition between the networks (to supply to the
MVNOs). However, its impact on retail customers would clearly depend on the intensity of
competition between MVNOs, although if barriers to entry as an MVNO are low then
competition may be relatively strong. Y

What are the legal considerations? Y

3.13 Oftel is considering the legal framework that might apply to MVNOs. This is uncertain
given the lack of precise definition about the form of MVNOs. However the following
paragraphs outline some of the possibilities. Y

3.14 If MVNO services were defined as interconnection services which are governed by
Article 4(1) of the Interconnection Directive (ICD), the ICD would provide Oftel with
regulatory powers. For example, there would then be an obligation on the networks to
negotiate on the provision of services. In the event of a dispute over this negotiation, the issue
would be referred to the Director General for resolution using the criteria set out in Article
9(5) of the Directive. Y

3.15 However, in the light of the consideration given to this issue over the last three months,
Oftel is increasingly of the view that the key feature of MVNO operations, recognition of a
SIM card, is not a service which falls under the category of interconnection (in the terms of
the services to be provided as a result of the working of Article 4(1) of the ICD). We
understand this is also the view of other NRAs who have had to look closely at this issue and
see MVNO services as the equivalent of roaming services. DGXIII has indicated to UK
representatives that in its view roaming is not interconnection as defined in the ICD. Y

3.16 Requests by MVNOs for access to operators¶ networks may also fall under Article 4(2)
of the ICD. This applies only to networks which are designated as having significant market
power (SMP). The implications of the application of Article 4(2) are currently being
considered by some NRAs and also by DGXIII. Y

3.17 A third basis for asserting that Oftel has the power to mandate MVNO services may
derive from Oftel¶s statutory duties and powers under Section 3 of the Telecommunications
Act 1984. Representations have been made to DTI that they should consider acting on this
issue under this Section. Y
What should be the basis of charges if MVNOs are required?Y

3.18 The discussion in this Chapter is in deliberately µopen¶ terms: Oftel is seeking views and
has not yet formed a clear opinion itself, from either economic or legal analysis, on whether
(if commercial agreement cannot be reached) there are any ground for mandating access to
mobile networks for MVNOs. An obligation may however be one of the outcomes of this
review. It seems wise therefore to include in this stage of consultation a review of the basis of
charges if, in the event, there is to be an obligation. This does not prejudge the principle of
the obligation to supply MVNO services.Y

3.19 Whilst Oftel is seeking views on this issue of the charging basis for MVNO services,
Oftel believes it is right for it to state that its initial view is that the logical principle for
charging would be retail-minus. This would be consistent with the charging basis set out in
the parallel context of any 3G new entrant roaming on an existing 2G network; and with the
principle proposed in the consultation on IA for mobile networks. Oftel would not expect to
adopt the same cost-plus basis (that is: recovery of relevant costs including an appropriate
return on capital employed) that is applied to BT¶s services to other operators. The relative
merits of both approaches when applied to indirect access were discussed at some length in
the consultation document   
  
   
 

   
s (February 1999). Oftel favours retail-minus charging on the grounds that
intervention to reduce retail prices to close to the level of costs is unnecessary in a market
which is becoming increasingly competitive and, moreover, could damage incentives to
invest in infrastructure, particularly for the two newer 2G operators and operators investing in
3G systems. Y

3.20 The implementation of a retail-minus principle for MVNOs would however be different
from its implementation for 2G/3G roaming and for IA for mobile networks, because (in the
case of 2G/3G roaming) the avoided costs would be different and (in the case of IA) the retail
tariff from which avoidable costs are to be deducted would be different from the IA retail
tariff starting point. Y

3.21 On the difference between retail-minus for MVNO services and retail-minus for
roaming between 2G and 3G networks, MVNO services, in the form on which we have
focused in this document (minimum use of the mobile operator¶s facilities), would require
much less from the mobile network than the end-to-end call connection required to provide a
roaming service to visiting subscribers of other countries¶ mobile networks. The foreign
visitors¶ calls would be routed end-to-end just like any other calls on the mobile networks
from mobile operators¶ own customers, who have service contracts directly with them or with
their service providers. By contrast, the MVNOs¶ calls would be routed off the mobile
network at the earliest economic point to reach the MVNOs¶ facilities for further conveyance
and delivery. In this, the MVNO calls would be much more akin to indirect access calls from
mobile networks, using access codes to select IA operators¶ facilities. Y

3.22 Conversely, on the difference between retail-minus for MVNO services and retail-minus
for IA services on mobile networks, the retail tariff starting point for MVNO calls would
need to parallel the retail tariff starting point for roaming calls: that is - covering the cost of
access to the network as well as the cost of handling the calls.Retail-minus forMVNO calls
has thus also to include elements of the retail price for the network subscription, covering the
cost of the radio facilities linking the handset to the base station, the equivalent of the local
loop, in the same way as such costs have to be included in the price base for retail-minus
when applied to 2G/3G roaming. Y

º   
     
    

   
r Y

Ô
Y
2 %   &
  Y

Àefinition of MVNOs Y

4.1 Behind the concept of MVNO, there is a range of ways in which it can be put into effect
depending on the extent of the use of the mobile operators¶ facilities: Oftel welcomes views
on what these variations might be and which would be most attractive to operators or
customers.Y

4.2 As part of this definition of what the MVNOs may request from networks, Oftel would
welcome views on which elements constitute parts of the µaccess¶ service and which are akin
to interconnection services; and especially on the classification of the important


& (such as interrogation of data bases for essential verification, location and routing
information and for the entering and storing of information on such data bases). Y

’ssessing demand for MNCsY

4.3 Oftel recognises that its own decisions on whether there should or should not be an
obligation on mobile network operators to supply services to MVNOs ± and on what terms
and conditions - will influence the level of interest in MVNOs and hence the demand for
MNCs. Nevertheless Oftel (and DTI) will be glad of views that will help gauge the likely
scale of demand for MNCs. Y

In the absence of commercial agreement, is there a basis for requiring mobile network
operators to supply MVNO services?Y

4.4 Oftel¶s preference is for the parties to come to commercial agreements. However, this
may not prove possible. Oftel would be glad of views on the consumer, economic, or
competition factors commentators believe should be taken into consideration. Y

If there were an obligation, which of the mobile operators should be liable? Under what
criteria? Y

4.5 Oftel prefers minimum regulation, confined as far as possible to those with market power.
Oftel welcomes views on whether any obligation to supply MVNO services should extend to
one, two or all of the mobile networks. Y
If there is to be an obligation, what are the terms ± especially for charging?Y

4.6 Oftel sets out in this consultation document its preliminary conclusion that, consistent
with its proposals in parallel cases, the appropriate basis is retail-minus. Nevertheless, this is
consultation and Oftel would welcome views Y

What technical considerations may need to be kept in mind? Y

4.7 The technical descriptions in Annex A have been deliberately simplified in the cause of
explaining a concept which, on a first encounter is not easily assimilated. Oftel wishes to be
sure that there are no serious technical considerations which it needs to take account of either
for the general principle of MVNO services or for the implementation of particular versions
of MVNO. Oftel would therefore like to have views from interested parties identifying any
potential points of technical or operational difficulty and their possible effect on timetables. Y

Ô  
  Y
Oftel seeks the views of consumers and industry on the proposals contained in this
consultation document by-. ///, There will then be a 2-week further period during
which comments on the representations made during the first period of this consultation are
invited; this will end on - * ///, Y

Comments should be made in writing and sent to:Y

Steven Pater
Regulatory Policy Directorate
Oftel
50 Ludgate Hill
London, EC4M 7JJ Y

Tel: 0171 634 8863

Fax: 0171 634 8924
E-mailY

Written comments will be made publicly available in Oftel¶s Research and Intelligence Unit
except where respondents indicate that their responses, or parts of it, are confidential.
Respondents are therefore asked to separate out any confidential material into a confidential
annex which is clearly identified as containing confidential material. In the interests of
transparency, respondents are requested to avoid confidentiality markings wherever possible.
Appointments to view written comments in Oftel¶s Research and Intelligence Unit, which
must be made in advance, can be arranged by ringing: 0171 634 8761 (fax: 0171 634 8946). Y
Oftel would like to set up a link between this Consultative Document and any responses
placed on respondents own Internet pages. Please contact Lauren Ryner at Oftel on 0171 634
8753 or by e-mail to arrange this. Confidential responses should not be sent via the Internet.Y

Oftel has a free e-mail based mailing list to help people stay informed about the work that
Oftel is doing. Each time an Oftel document is published and placed on Oftel¶s web site
subscribers to the list receive an e-mail informing them about the document. If you would
like to join please click here.Y


&3 
 Y

Copies of the full Consultative Document are available on disk.Y

The Summary is available in large print, Braille, and tape formats.Y

Please contact the Oftel Research and Intelligence Unit on 0171 634 8761, or by e-mail, or
call textphone 0171 634 8769 for more information. Y

 Y
4   *  Y

%    Y

1 In order to help understand the implications of some of the changes being consulted upon in
this document this Annex has been included to give an overview of digital mobile networks,
and how some implementations of MVNOs may work in relation to them. This is not
intended to be an exhaustive or detailed description, but one that gives the general reader the
opportunity to understand how the standard components work in relation to each other and a
brief description of them.Y

2 Central to the concept of an MVNO is the ability of its subscribers to roam onto other
mobile networks. That is having the MVNO¶s customers able to make and receive calls using
the infrastructure of a GSM network with radio frequencies. The MVNO would not have any
radio spectrum itself, so could not implement a full mobile network. Y

3 Figure One gives an overview of how a Global System for Mobile Communications (GSM)
network operates, and the terminology employed: Y

Ô  &* Y

Y
×
 Y

îhe Mobile Station (MS) Y

4 This is the mobile that a user will have. The mobile station consists of a subscriber identity
module (SIM), that is needed to allow the phone to make normal calls, and the mobile phone.
It is worth noting that it is possible within the GSM standard to make emergency calls
without a SIM, however this is sometimes barred by network operators. The SIM is placed
inside the phone (normally at purchase) and is a small smart card type device that has details
of the user. It has the users public telephone number and the numbers required by the network
to recognise and authenticate the subscriber (authentication key). The SIM is transferable
between different mobile phones and also contains pre-programmed personal numbers. There
are two sizes of SIM possible, normal and mini. Most modern phones use mini SIMs. Y

5 This SIM roaming (moving your SIM from one phone to another) is sometimes not possible
between phones of different GSM networks, due to SIM roaming being barred by the
network operator.Y

ÿase Station System (ÿSS)Y

6 The BSS consists of the Base Transceiver Station (BTS) and the Base Station Controller
(BSC). The BTS can be a large metal mast, comprising the transmitting and receiving
antenna, or a smaller structure mounted on an existing building. Y

7 The BSC is not usually located with the mast as the BSC can control a number of BTSs.
The BSCs main function is to control the radio interface management, ie allocation and
release of a radio channel, and handover from one BTS to another for mobility management.
This mobility management is central to how a mobile network operates. Users are mobile and
want to be able to walk or drive whilst making calls. This means that during the length of a
mobile call a user may actually be making their call through a number of BTSs in succession.
The ability to do this without suffering a loss of service or quality is controlled by the BSC.Y

8 When a call is made to or from a mobile phone, radio signals are transmitted and received
by the mobile phone and the network operator¶s base station. The radio part of a mobile
network is also known as the air interface.Y

Mobile Services Switching Centre (MSC) Y

9 The main purpose of the MSC is to co-ordinate the setting up of calls to and from mobile
phones in the GSM operator's network. It routes the call to and from the Public Switching
Telephone Network (PSTN), which is the series of networks that a call is required to pass
through from the person making the call the person called. For instance a call from a GSM
mobile phone to a BT customer will go via BT¶s network. To a subscriber outside the UK this
will need to go via international networks. The first point of contact between the PSTN and
the GSM network is called the Gateway MSC. The choice of which MSCs act as gateway
MSCs is up to the operator (ie all MSCs or some designated MSCs). This gateway MSC
contains the interworking functions that are required to connect the GSM network with the
PSTN. The gateway also enables calls from the PSTN to be routed to the correct MSC by
interrogating the Home Location Register (HLR). The HLR is a database that contains the
subscriber information required to provide customer services without knowing the exact
location of the mobile within the network. The HLR contains information such as: Y

`Y Location information (VLR number);YY

`Y Basic telecommunication services subscription information;YY

`Y Service restrictions (eg roaming limitation);YY

`Y Supplementary services; the tables contain the parameters attached to these services.YY

10 The Visitor Location Register (VLR) is responsible for keeping more accurate information
as to where the mobile phone is within the GSM network. There are a number of VLRs in a
GSM network, and they are logically associated with an MSC. Whenever a mobile registers
with a VLR the VLR informs the HLR that the mobile has registered. In this way any call for
a particular mobile can be routed to the correct area of the network (group of BTSs) so they
can page the mobile to alert it to an incoming call. The VLR contains information such as: Y

`Y The GSM number of the mobile;YY

`Y The subscriber directory number;YY

`Y The temporary GSM number of the mobile, if applicable; YY

`Y The location area where the MS has been registered. This will be used to call the
station; YY

`Y Supplementary service parameters.YY

11 Associated with the HLR is the Authentication Centre (AUC), this contains the
information required to verify that the SIM card in the mobile is the one that is announcing
itself to the network. Y

12 There is also an Equipment Identity Register (EIR) associated with each GSM network.
This checks that the mobile equipment (ME : ie handset) as opposed to the SIM is valid. Each
ME has a number associated with it called the International Mobile Station Equipment
Identity number (IMEI). For instance the handset could be stolen or known to be faulty or not
fully approved for the network. It can also be useful to monitor how particular makes of
handsets perform within the network. The network can ask the mobile for its IMEI number on
each call or on specific occasions such as location area up dates (see below), or a selection of
call updates. The choice is the operator¶s.Y

13 The network is controlled and monitored by the operator at the Operations and
Maintenance Centre (OMC). Here the operator can monitor how traffic is passing through the
network and detect any alarms indicating faults within the network. Y

14 The last part of network shown in the diagram is the Service Control Point (SCP). This is
associated with the Intelligent Network (IN) part of a GSM network. The appearance of SCPs
in GSM networks has evolved from their use in fixed networks. Their main advantage is that
they allow operators to implement new and innovative services in their networks more
rapidly and at lower cost. Y

4 


Y

15 GSM networks are divided into a number of Location Areas (LA) which have a number of
BTSs within them. Each BTS supports a number of cells (normally one to three cells). LAs
help to define where a mobile is within a network when a mobile needs to be contacted. If the
LAs are too small then the network would constantly be updating which LA the mobile was
in. If the LA were too large then the network would have to send more signalling than
required to contact a mobile.Y

Œegistering on a GSM networkY

16 For a mobile to register on a new GSM network, a Location Update is performed (after the
mobile has detected the broadcast channel of that network). This is performed automatically.
If the mobile was not previously registered with the network the IMSI (International Mobile
Subscriber Identity) number is sent by the mobile to the MSC/VLR. The IMSI number is the
GSM number associated with each mobile, although it is not the same as the directory
number used to dial someone from the PSTN. Sometimes a temporary IMSI (TIMSI) is used
which is allocated by the VLR - this improves security by keeping the number of times the
IMSI is transmitted over the air interface to a minimum.Y

17 In the case of a mobile registering on its home network a location update request is sent is
on the random access channel of the air interface. This is a signalling channel used by
mobiles to signal the network that they wish to communicate. In this case to register. The
mobile will then await a reply on the paging channel. If no reply is forthcoming the message
is resent. On receiving this message the BSS will contact the MSC/VLR. The MSC/VLR will
check with the HLR to ensure the user is entitled to register, and also to update the HLR as to
which VLR to contact regarding incoming calls for that mobile. The HLR will also be able to
inform the VLR of any subsequent changes to the status of the mobile¶s subscription status.
Before the location update is completed a process of authentication may be carried out to
ensure that the mobile is whom it purports to be. Y

18 The authentication involves the use of the authentication key which is stored in the AUC
and the SIM. A calculation performed on this key using a random number which will result in
a value (SRES). The random number is sent to the mobile which performs its own calculation
of SRES, which it sends back to the network. The network compares the two values. If they
are the same then the mobile is authenticated. The process of contacting the HLR also means
that the HLR knows where the subscriber is and which VLR to contact if an inbound call for
the subscriber arrives at the gateway. Y

19 The network then sends the successful location update message to the subscriber and is
then successfully registered. The EIR may also be interrogated to check if the mobile (as
opposed to the SIM subscription) is valid.Y

20 The mobile is now registered in the location area and able to make and receive calls. The
size of location areas will vary depending on network characteristics.Y
21 In the case of a roaming customer (ie a mobile visiting another GSM network) the IMSI is
used to identify the home country and network. This allows the visited network to send a
signalling message to the HLR of the subscriber¶s home network (assuming there is a
roaming agreement with the two networks). The home HLR will be able to check the
roamer¶s subscription status to see if roaming is allowed. This information is communicated
back to the HLR of the visited network. Y

Inbound callY

22 If an inbound call is made this will be routed using the PSTN number to the gateway MSC
of the home network. The GMSC then interrogates the HLR. The HLR has a translation table
to convert the PSTN number to the International Mobile Station Identity (IMSI) number used
by the GSM networks. The HLR will have a record of the last VLR to update the position of
the subscriber (or if the subscriber is attached to the network). The HLR interrogates the VLR,
which responds with the Mobile Station Roaming Number (MSRN) for routing. That is the
information needed by the gateway MSC to route the call. The HLR then passes the MSRN
to the GMSC which routes the call to the visited MSC. If the call is to a mobile that has
roamed onto another GSM network the GMSC will use the MSRN to route the call through
the PSTN. Y

23 The visited MSC then sends a paging message to the BSS which will initiate the paging
request over the air interface to establish a call with the mobile subscriber. The mobile on
detecting the paging message for it will send a message on the random access channel to
respond. On receipt of this the BTS will allocate a dedicated traffic channel and notify the
mobile of this using the paging channel. This is the initial channel assignment. This traffic
channel will be maintained unless a handover occurs. This can be because the mobile has
moved out of the coverage of a particular cell, or if the radio signal is better on another cell or
channel, or if the traffic load is too high on a cell and another with less loading is available.Y

Outbound call Y

24 For an outbound call from the mobile (assuming it is registered), the mobile requests
access to make a call using the random access radio channel, the BSS will then assign a
channel and the call will be routed to the MSC. If the call is external to the mobile network it
will be routed through the GMSC using the ISDN to the correct country, then network or
region (depending on that particular countries assignment of subscriber numbers). The final
switch or exchange will then route the call to the correct subscriber. Y

25 For a roamed customer there may be a requirement to check with the home network if
they are authorised to make the call, but this would not normally happen on a call by call
basis, and will be dependent on the terms of the roaming agreement reached.Y

c
  Ô )cÔ+ Y

26 The common feature of all forms of MVNO operations - and the major distinction from
Indirect Access (IA) operations ± is that the %c
 (the µsmart card¶ that provides the key
function of identifying the customer to the network) 
 &
 

c
 
 
  .This is the key control that would allow the
MVNO to own the customer. Of course, the SIM card would have to be recognised by the
network.Y

27 Within GSM the number given to a particular subscriber is the International Mobile
Station Identity (IMSI). The construction of the IMSI is shown below. The IMSI is stored on
the SIM card. Part of the IMSI is the Mobile Network Code (MNC). Y

28 To issue a SIM card there is a requirement for an MVNO to have an MNC. The MNC
identifies the subscribers host network, which normally would contain the subscribers HLR,
where information on how any call is handled when the subscriber roams onto another
network resides. Therefore consideration needs to be given as to how MNCs might be
allocated to MVNOs.Y

29 The IMSI number is not the same as the user¶s telephone number which is dialled by
others to contact the subscriber, but the number GSM networks use to identify subscribers. Y

30 The IMSI is partitioned into three parts: the country code, the network code and the
mobile subscriber identity number (MSIN). The mobile country code (MCC) consists of three
digits, the Mobile Network Code (MNC) consists of two digits, and the MSIN has ten digits. Y

31 The MSIN is the number by which the GSM network recognises its customers. As the
MSIN is ten digits long, it has the potential to accommodate 10,000,000,000 subscriber
numbers. Y

32 One of the questions that arises in the issuing of SIM cards is the requirement for the
issuing of MNC numbers. Some of these are already allocated to existing mobile operators. It
may be possible for more than one MVNO to share a single MNC. As the number space
contained within a single MNC is so large, this sharing may help conserve the valuable
number resource. Comments are sought on the viability of this and the technical implications.Y

ë
  º    ë  º  #ºëº  Y

Y Y MSINY

MCCY MNCY 10 digitsY

3 digitsY 2 digitsY

MCC : Mobile Country Code Y

MNC: Mobile Network CodeY

MSIN: Mobile Subscriber Identification Number Y

4 *
c  $ Y
33 A roaming agreement requires a commercial contract between two operators to allow
customers to use their respective networks. An MVNO will require such an agreement to be
able to operate. An MVNO would not be able to reciprocate roaming as it has no spectrum.Y

34 It is possible for the mobile of one network to roam onto another network (as described in
µMaking a Call¶). This form of roaming is known as mobile station roaming and has very
little extra functionality required other than the signalling required between the two networks
and an agreement as to how often the billing information is sent between the two. However
the first time the roamer logs onto the visited network can be a lengthy process (of the order
of 30 seconds) as the two networks pass data to each other.Y

35 For an MVNO to work in the simplest technical form would require it to have the same
functionality as an existing GSM network has to allow its customers to roam onto another
GSM network. This functionality is explained in µHow a call is made¶ above. Y

36 It requires a gateway MSC function to allow the MVNO network to interact with the
PSTN, an HLR, MSC, AUC, EIR, and billing functions, along with a maintenance centre.
Calls to the mobile subscriber would be made in the same way as calls to a normal GSM
mobile. That is the MVNO would have a network code (or a number space within a network
code) which would route the call to the MVNO GMSC. From there the MVNO would check
its own HLR to find the last location of the subscriber and contact the VLR it has recorded
against that subscriber. This would be the VLR of the visited network. The VLR of the
visited GSM network would pass the MSRN to the HLR, which would pass it to the MVNOs
GMSC. Using the MSRN the MVNO would be able to complete the call using whatever
route it desired.Y

37 Calls made by a mobile subscriber of an MVNO registered on a µfull¶ network would

function in the same manner as described above for any GSM roamer. That is via the visited
networks gateway MSC and then on using the visited networks preferred routing option.Y

38 This represents the µsimplest¶ form of MVNO in terms of how it fits into the existing
GSM framework, that is the easiest to implement technically. Y

39 In the above scenario the routing of the call made by the mobile is in the hands of the
visited network, which will have agreements with various fixed providers to carry the GSM
traffic (via BT, C&W, NTL, etc). There is the possibility that the call can be ported to the
MVNO¶s gateway directly, leaving the MVNO to decide how to carry the call. This is shown
in Figure Two. While this adds an extra leg to the calls journey, it gives the MVNO the
opportunity to have a commercial agreement with their own fixed network providers which
may leave the MVNO with a larger profit per call than using the visited GSM operator¶s
network routing (beyond the GMSC). There may also be the possibility to decide on a call by
call basis.Y

40 The MVNO would make their profit on the difference between the cost charged to the
subscriber and the amount paid to the visited GSM network and the costs involved in
terminating the call beyond the visited GSM network. The same would be possible for
inbound calls to the mobile. In this case because the MVNO has a unique MNC (or subspace
within one) the call would be routed directly to the MVNO¶s GMSC. It would then be up to
the MVNO on which route to use to get the call to the visited GSM networks gateway MSC.Y
41 There is also another option whereby the MVNO does not have any switching or HLR
capability, but enters the customers data directly onto the µfull¶ network¶s databases (HLR
etc). In this case all that is required is a database that can communicate with any GSM
network (which has radio spectrum), and this is not required to be µreal time¶, ie during call
set up. The visited GSM network will have all the details required to handle the call from or
to the mobile, and will produce the billing information for the MVNO who will process it. In
this situation the MVNO might not require their own MNC, but issues SIMs with the MNC
of an existing operator. Technically this is very similar to what happens with existing GSM
service providers.Y

Y

Ô  &*  Y

 !Y
Transcript of DTI letter of 13 April 1999 sent to mobile operators regarding Mobile Network
Code allocation (plus Radiocommunications Agency attachment on TETRA code allocation). Y

š 
  c
  Ô  Y

1 As you will know, in accordance with ITU Guidelines COM 2-R 35-E Paragraph 7.2.2 the
DTI is the national administration in the UK which has the task of issuing Mobile Network
Codes (MNCs) to GSM operators. These guidelines call for MNCs to be allocated in an
efficient manner.Y

2 Interest has been expressed by potential Mobile Virtual Network Operators (MNVOs) who
are seeking access to GSM networks and are endeavouring to establish suitable agreements
with network operators either in the UK or overseas. A consultation document relating to the
MNVO concept will be released by Oftel in the near future. It will raise the issue of
allocation of unique MNCs available for GSM in the UK, if allocated in accordance with the
ETSI specifications, is 200 of which at present some 8 have been allocated to GSM operators
(including operators in the Channel Islands and the Isle of Man) and one has been allocated to
Dolphin.Y

3 In principle the DTI considers that there are no reasonable grounds to refuse to allocate
MNCs to legitimate MNVO applications in the UK. However, since there is a finite number
of MNCs available, the DTI will only allocate MNCs to operators who can show that they
have plans for an adequate network infrastructure, and can also demonstrate that they have
negotiated an agreement with a mobile network operator allowing access to a GSM radio
network. Typically this would be by means of a suitable roaming agreement. In addition to
this the applicant would also be expected to submit information similar to that requested
when applying for a licence: ie background on the company, a description of the services to
be offered, details of the system to be run, interconnection agreements, typical chain of
conveyance of messages, technical expertise, summary business case etc.Y

4 The DTI obviously wishes to maintain a consistent approach to the issue of MNC allocation.
With regard to future TETRA operators, it is clear that the DTI and the RA (who are
responsible for the allocation of TETRA MNCs) will need to provide the necessary MNC
allocations in the UK. A draft policy document on the procedures for TETRA allocations is
therefore being developed and the latest version of the document is attached. In the light if
the need to maintain consistency in our approach, you may find this paper of interest as it
may affect our future consideration of applications from MNVOs for MNCs.Y

5 I would be grateful for any comments which you may wish to make on the contents of this
letter. I would also be grateful if you could set out how you are using all of the MNCs which
have been allocated to your company."Y

Attachment to DTI letter of 13 April 1999 to mobile operators.Y

š%  

 
  '5'0c
  Ô Y

%    Y

6 Following the outcome of the ETO Workshop on TETRA Numbering and Addressing,
which acknowledged the need for a separately administered Numbering space, RA CTEC
identified the requirement for a process for Number Allocation. At the ETO Workshop, it was
agreed that the numbering aspects contained in the relevant standards required amendment
for clarification. Such clarification was on the basis of TETRA and GSM having distinct and
separate Numbering and Address space.Y

   Y

7 At the time that this policy was written (Q2/1999), the TETRA standards had not been
amended to reflect the outcome of the ETO Workshop. Therefore in advance of such
amendments the following assumptions have been made. Y

`Y A Tetra Country Code has been assigned by the appropriate Administration Body.YY

`Y The RA has been identified as the Administrating Body of the TETRA Mobile
Network Codes, that exist behind the TETRA Country Code. Y
`Y The administration of Subscriber Numbers that exist behind the TMNC remain
outside the scope of this interim policy.YY

%  Y

8 The following issues need to be addressed by the appropriate ETSI group: Y

`Y Emergency call handlingYY

`Y Dual working with other mobile technologies e.g. zone identity from a GSM
environmentYY
 `Y Roaming using the ISIYY

`Y CLI (Calling Line Identity) YY

`Y Èone IDYY

`Y Number PortabilityYY

`Y Do implementations of TETRA require a licence? Is so, then, this should be a

prerequisite for any allocation. Should allocation of spectrum be a prerequisite?YY

`Y Only one TMNC for allocation per logical allocation?YY

`Y Role of CII?YY

`Y Virtual Country Codes?YY

`Y Leading zero suppression?YY

`Y Registration Authorities YY

 Y

9 This interim policy specifies the requirements for, and the method of, assignment for the
allocation of numbering resource for both civil and public safety implementations of TETRA.
The allocation of GSM Numbering resource is not covered by this policy.Y

( Y

10 Service Providers who require an allocation of TETRA MNC shall apply in writing, Y

giving the information required by the RA. The RA shall have up to 28 days to seek further
information from the applicant. At the end of the 28 days, a written answer shall be given.Y

º   Y

Y An appeals process shall be required.YY


Y The responsibilities of the various departments within the RA exist, and
perhaps should be reflected in the process.YY

11 Once an MNC has been allocated, then: Y

`Y The assignment is for 12 months;YY

`Y At the end if 12 months the RA shall ensure that the resource has been brought into
service;YY

`Y If after 12 months the resource is not used then: an extension of a further 12 months
shall be negotiated or it shall be reclaimed;YY
 `Y If after the granting of an extension, the resource is not in use and no progress can be
shown towards bringing it in to use, it shall be reclaimed;YY

`Y A Service Provider shall not be excluded from applying for a further code if they have
had a code reclaimed under this procedure;YY

`Y The Service Provider shall provide annual returns on the use of the Numbering
resource behind the TETRA MNC. These records on which Service Providers base
their returns shall be liable to audit by the RA; YY

`Y The returns shall be used in judging the viability or not of any subsequent application
for TETRA MNC. YY

îetra MNCs (îMNCs)Y

12 The TMNCs allocated shall be four digits.Y

10 bits Y 14 bits Y 24 bits Y

3 digitsY 4 digitsY 8 digitsY

TETRA Mobile Country TETRA Mobile Network Network Specific Short

CodeY CodeY Subscriber IdentitiesY


 
 
  'cÔ Y

13 When applying for subsequent TMNC¶s, Service Providers (SPs) shall need to justify the
request either through high utilisation, conformance to ETSI standard, or supporting a multi-
vendor environment. Y

0  & & Y

14 Service Providers shall ensure that accurate records are kept of numbers allocated, and
that appropriate management processes are employed. Audits may be carried out, and
resources that are being misused, or that fail to meet the minimum required level of utilisation
may be withdrawn.Y

15 Any change in the rationale used to obtain the number should be notified to RA. Where
this contravenes the TETRA Numbering Resource Conventions, the bi-lateral discussions
between the SP and the RA will be undertaken to resolve the issues. Y

0  
 
*'5'0 
*
Y

16 An organisation requiring allocation of TETRA Numbering Space shall specify when the
Numbering space will be required, the scope of any application, the potential number of users
(in confidence)."Y

Y
 Y

 ÔY
3 *& Y

1 An important part of Oftel¶s review of the MVNO concept has been to obtain an up to-date
assessment of the state of policy development on this issue in other European countries. In
conducting its research, Oftel has found that, with a few exceptions, it is early days for
European regulators - issues surrounding the MVNO concept have not been discussed in any
great detail, and hence most regulators are not yet in a position to provide categoric
statements of policy. The exceptions are the Norwegian, Danish and Swedish regulators - all
three have formally ruled on disputes relevant to the MVNO concept in response to requests
they have received from an organisation called Sense Communications (a Norwegian based
service provider). The Finnish regulator has also reviewed some of the issues surrounding
MVNO, although it has not formally ruled on a dispute. Some background detail on these
foreign developments now follows:Y

Norway: the Sense dispute with îelenor Mobile Y

2 In September 1998, after six months of discussion and mediation, the Norwegian NRA
ruled on a dispute between Sense and Telenor. The NRA ruled in favour of Sense, because
under Norwegian legislation, Telenor is an operator with SMP and is thus obliged to meet all
reasonable requests for access. Consequently, Telenor Mobile was ordered to begin
interconnection negotiations with Sense. However, all three operators with a licence to
operate a GSM 900 or DCS 1800 network in Norway appealed against this ruling, and the
Ministry of Communications decided to examine the matter. In March 1999, a government
telecomms authority made a Statement that would have the effect of reversing the NRA
ruling, although the Ministry has not yet endorsed this. A report on the fundamental questions
raised by the MVNO concept is due to be presented to the Norwegian Parliament in Autumn. Y

Àenmark: the Sense dispute with Sonofon Y

3 In early 1998, Sense requested access to interconnect with the mobile network of Sonofon.
Sonofon refused access on the grounds that recognition of another organisation¶s SIM card is
roaming, and that roaming is not interconnection (this is a DGXIII ruling). In June 1998, the
Danish NRA was asked to resolve the dispute, and in February 1999 it outlined its decision,
effectively ruling in favour of Sonofon. Y

4 In its ruling, the NRA decided that Sonofon had significant market power and had an Y

obligation to meet Sense¶s reasonable requests for interconnection as specified under the ICD.
The NRA also endorsed Sense to use SIM cards which contain Sonofon MNCs and Sense¶s
own subscriber numbers. However, it decided that Sonofon should not be required to route
calls received from mobile terminals with SIM cards containing Sense¶s own MNC code,
because the service desired by Sense constitutes the same functionality as roaming between
mobile networks. In other words the NRA did not regard roaming as an extension of
interconnection, which agrees with the argument as presented by Sonofon above. Sense had,
nevertheless, been issued with an MNC by the Danish NRA. Y

Sweden: the Sense dispute with îelia Y

5 The Swedish NRA has considered the MVNO concept in some detail, and just like the Y

Danish NRA, it has decided that an established GSM network, Telia, is not obliged to
accommodate Sense¶s request for access, on the basis that the form of connection requested
by Sense, ie recognition of Sense¶s SIM card, is roaming and does not constitute
interconnection. However this is regarded as a legal argument, not an economic one. The
NRA believes it would be beneficial to the competitiveness of the Swedish mobile market,
and particularly in the encouragement of downstream competition at the service provider
level, if a business concept such as Sense¶s was realised. It has therefore proposed
amendments to the Swedish Telecommunications Act which would oblige networks to
provide MVNO services; the main argument being that GSM operators should have to
accommodate all reasonable requests for network capacity on market-based conditions. In the
long term, NRA envisages lower tariffs due to the increased service provider competition.Y

inland Y

6 The Finnish NRA has been reviewing the issues surrounding the MVNO concept since
March 1998 ± triggered in particular by complaints from operators on the difficulties they are
having reaching commercial agreement for MVNO facilities with the national SMP mobile
supplier. Up until now, no request to resolve a dispute has been registered with the NRA, but
the NRA has encouraged potential MVNOs to continue to negotiate their preferred terms
with the incumbent. The key question is whether the recognition of the MVNO¶s SIM card is
interconnect or roaming, and whether it is more similar to access to the MVNO¶s switch (like
local loop in the fixed network) than to interconnect (particularly given the replacement of
the mobile network operator¶s facilities by those of the MVNO operator, with the exception
of the base station, the base controller and the VLR). This raises the interesting question of
whether the MVNO concept can properly be described as a µvirtual¶ operation.Y

 "Y
× 
Y

6Ô7Authentication Centre*Y

!Ô7Base Station Controller*Y

!7Base Station System*Y

!'± Base Transceiver Station*Y

Ô 8(  ± a charge which covers the costs incurred by the network operator in providing
services for other operators, including a reasonable return on capital employed.Y

5%07Equipment Identity Register*Y

×c7Global System for Mobile CommunicationsY

4207Home Location Register*Y

%c%7International Mobile Station Identity*Y

% ± a situation where a customer contracts to buy a telecommunication service

from an operator to which the customer is not directly connected, and where the second
operator pays the first operator for the use of that connection.Y

%   ± the physical and logical connection of two operators¶ networks thereby
allowing customers of one system to connect with customers of the other, or to access
services provided from the other system. Y

%  "&)%Ô"+±the European Union Directive which came into effect
from 31 December 1997, setting rules for, amongst other things, who has rights and
obligations for interconnection and the terms on which it should take place. Y

c
 ( 9c
 %  ± the ability to raise prices above the competitive level
for a non-transitory period without losing sales to such a degree as to make this unprofitable.Y

cÔÔ ± Mobile Country Code* Y

cÔ ± Mobile Network Code*Y

cÔ ± Mobile Services Switching Centre*Y

   
 ±the operator of a telecommunication network with a PTO licence which
provides, amongst other things, network services.Y

cÔ7Operations and Maintenance Centre*Y

*
* 
  ± operator on whose network the call originates, i.e. the operator with
the line to the customer. Y

0
8c 7a charge based on the retail price to the end user minus the costs of all
elements of the call which are no longer supplied by the mobile network operator (since they
will now be supplied by the MVNO ). Y

0
* ± the provision of connection services by means of the Applicable Systems to
authorised mobile operators in respect of teleservices and bearer services pursuant to a
national roaming agreement between the licensee and a relevant mobile operator.Y
& & ± provider of telecommunication services, or services with a
telecommunication service component, to third parties whether over its own network or
otherwise.Y

*
c
 ( )c(+ ± the SMP test is set out in various European Directives,
notably the Interconnection Directive. It is used by the National Regulatory Authority (in UK:
Oftel), to identify those operators who must meet additional obligations under the relevant
Directive. It is not an economic test; rather it requires a consideration of the factors set out in
the test within a specified market ± much is left to the NRA¶s discretion.Y

%c± Subscriber Identification Module* Y

'
* 
  ± the operator on whose network a call terminates.Y

'×
 )×+
 ± A European 3G mobile communications system
will provide an enhanced range of multimedia services (such as high speed Internet access).
3G networks are expected to enter service in 2002/3 using radio spectrum in the 2GHz bands.Y

20 ± Visitor Location Register*Y

* For further details, please refer to Annex A.Y

%
*Y

Figure 1Y
Y

Note: The photograph in Figure One has been reproduced with permission from "Mike P¶s
UK GSM & UMTS Pages" at http://www.prattfamily.demon.co.uk/mikep/gsmnet.html Y

Figure 2Y
Y

Y
Y