Comments to. BEREC Guidelines on the application of Article 3 of the Roaming Regulation - Wholesale Roaming Access

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1 Tele2 is a challenger that has become one of Europe s leading alternative operator; a company that strives to always provide the best value deal. We have 35 million customers in 11 countries. Tele2 offers mobile services, fixed broadband and telephony, data network services, cable TV and content services. Ever since Jan Stenbeck founded the company in 1993, it has been a tough challenger to the former government monopolies and other established providers. Tele2 has been listed on the NASDAQ OMX Stockholm since In 2011, we had net sales of SEK 41 billion and reported an operating profit (EBITDA) of SEK 10.9 billion. Comments to BEREC Guidelines on the application of Article 3 of the Roaming Regulation - Wholesale Roaming Access & Choice Of Decoupling Method A consultation to assist BEREC in preparing advice to the Commission on its forthcoming Implementing Act Tele2 Group Response August 10, 2012 Tele2 AB ( Tele2 ) welcomes the opportunity to comment on BEREC s Consultations concerning the application of Article 3 of the Roaming Regulation and the Choice of decoupling as outlined in Article 4 and 5 of the Roaming Regulation. 1 This reply covers both the Guidelines of application of Article 3 and the consultation concerning the choice of LBO and Decoupling methods. 1 BEREC Guidelines on the application of Article 3 of the Roaming Regulation - Wholesale Roaming Access - A Consultation, BoR (12) 67, Roaming regulation - choice of decoupling method, A consultation to assist BEREC in preparing advice to the commission on its forthcoming implementing act, BoR (12) 68, P.O Box 2094, SE STOCKHOLM, SWEDEN Tel , Fax Org nr , 1

2 In this response Tele2 would firstly like to outline some general comments regarding the consultations and the practical implications of the new Roaming Regulation 2, secondly reply to some of the questions outlined in BERECs draft Guidelines concerning Article 3 before finally commenting on specific questions which are of high relevance for Tele2 concerning the choices of LBO and decoupling method. Tele2 welcomes that BEREC s starting point for the Guideline obligations concerning Article 3 of the Regulation commences with the classical wholesale roaming agreements negotiated as of today. However Tele2 is worried about how resale access requests that clearly fall outside the scope of today s negotiated agreements shall be met without becoming too burdensome for Mobile network operators ( MNOs ), something which otherwise risk becoming disproportionate in regards to the objective of the Regulation. An example is when a MNO does not provide wholesale roaming providers the possibility to resell roaming to pre-paid customers would this be considered to be an obligation. Another example is the situation when Tele2 does not have a roaming agreement with a specific MNO in a visited country but that MNO provides an LBO service that the end user would like to use would Tele2 need to set up a roaming agreement with that MNO in order to meet the end user request? In this regard and in order to achieve full harmonization in the application of the Roaming regulation the guidelines must clearly provide guidance regarding above scenarios and also clearly state what shall be seen as a reasonable request from a technical feasibility and network integrity aspect. What Tele2 believes is necessary will be outlined in more detail below. Concerning the scope of the application of Article 3 of the Regulation, we mean that this is rather straightforward. The obligation concern mobile operators within the union (and EEA), and covers only explicitly stated roaming services. Therefore the guidelines shall not introduce any further requirements which could affect the domestic or international markets, or provide guidance concerning any type of service not regulated in the Regulation. Regarding price obligations in the guidelines (Guidelines 2,12 and 18), Tele2 would like to emphasize that these requirements, as they are currently worded would mean that a MNO - a private business is forced by regulation to lose money each time they receive a reasonable request for wholesale roaming access. We mean that this could never be seen as a proportionate measure under the EU doctrine concerning proportionality and would contradict ECJ case law. The principle of proportionality is meant to ensure that any adopted measures from a regulator are based on a fair assessment that properly balances the relevant interests. The fact that one private business provider shall bear the cost for another private business provider (one that they are also competing with) must be found to be disproportionate. Stating this Tele2 however believes that BEREC efforts to divide the wholesale services into different categories i.e. services which MNOs are required or would voluntary offer - is very useful method and would be the preferred way forward for setting prices for wholesale roaming access. Although the current method for dividing the different services into distinctive categories needs to be altered. A final general comment concerning the Article 3 guidelines relates to the introduction of Service level agreements ( SLA ) in the general reference offer of wholesale roaming access. SLAs is something which is not included in classical roaming agreements today because measuring SLAs is very difficult due to the large number of intermediaries, for example Voice and signaling carriers which themselves do not grant 2 Regulation (EU) No 531/2012 of the European Parliament and of the Council of 13 June 2012 on roaming on public mobile communications networks within the Union, hereafter referred to as the Regulating.

3 any SLA towards the MNO. Therefore it should be seen as disproportionate to impose a requirement for whole roaming access, since the full level of service is outside the control of the MNO. Tele2 appreciates the thorough analysis that BEREC has conducted in regards to the forthcoming method for implementing the LBO and decoupling obligations as outlined in Article 4 and 5 in the Regulation. Tele2 means that BEREC has captured many of the deficits and ambiguities existing in regards to these obligations, however Tele2 is concerned that not all elements have been fully considered, which will be examined below. Specific remarks on BEREC s Guidelines for the application of Article 3 Q1. Do you agree with BEREC s interpretation of the Regulation concerning timing of provision of service? Tele2 sees the general rule of the Regulation to be that it came into force on 1 st of July 2012, however certain provisions are exempted from this rule. Concerning Article 3, it is stated that parts of the Article are exempted and they do not enter into force until 1 st of January Since the whole of the Article is dependent on clarification of different prerequisites, which the BEREC Guidelines will provide, and the Guidelines will not be published until the end of September, the ambiguity of the Article makes a harmonized application of the requirement currently very difficult. Stating this Tele2 presently has routines for how to handle and accept what we define as reasonable request for wholesale roaming access. Tele2s interpretation may however not be fully in line with the final definitions when clarified in BEREC guidelines, why we urge BEREC and National regulatory authorities (NRA) to acknowledge this current level of uncertainty. Q2. Do stakeholders agree with BEREC s approach to mandatory and optional resale access services and to its approach to pricing? Tele2 agrees with the approach to divide the different aspects of wholesale roaming access into different categories required, closely related to, and functions commonly required. However the current division of what falls into the minimum resale services required to allow a retail provide (Guideline 2 (a)), where the prices may not exceed the Price caps stated in Article 7, 9 and 12 of the Regulation is too wide. Our interpretation of the Regulation is that the wholesale caps should only cover the costs for those wholesale services which are strictly required in order to deliver voice, data and sms roaming services. Other services related to wholesale nature should be, like BEREC suggest, be charged by MNO at a price level which is fair and reasonable. Hence the problem with the current method and division proposed by BEREC is that what falls into the Guideline 2(a) includes aspects of wholesale roaming services that would lead to additional costs for the MNO, which they would not be allowed to charge for, i.e. lead to a financial loss. The costs related to providing even the minimum wholesale and resale services which Tele2 believes shall be priced at a fair and reasonable level are; setting up a VPN connection or direct access for wholesale roaming traffic, signaling and needed testes for carrying out the roaming wholesale arrangement, network resources such as HLR, VLR and GPRS, VAS services and FCH/DCH services.

4 Tele2 means that for BEREC to meet the requirement of proportionality, guidelines 2, 12 and 18 needs to be rephrased so that they take into account what is outlined above. If BEREC does not carry out these alterations the measures are to be seen as disproportionate, since they cannot be seen as necessary to achieve the relevant aim and since there are less intrusive measures, where MNO would not bear excessive costs driven by another private party. Also Guideline 12 states that services which have been typically offered must be offered in wholesale roaming access agreements. Tele2 would like to emphasize that this differ greatly from one MNO to another. Some MNO currently offer all types of wholesale roaming access services while others have implemented solutions which only provide wholesale access to MVNO s. This means that the wording of Guideline 12 needs clarification especially since it provides guideline for what also falls into the scope of reasonable requests. Tele2 wonder if this shall be interpreted from what operators generally have offered or shall the prerequisite be interpreted in accordance with what one specific MNO has offered previous? Tele2 means that Guideline 12 shall be interpreted in accordance with what a single MNO has been offering up until now and that this will define the scope for what services can be provided under a reasonable request. Even though solutions including for example pre-paid roaming is technical feasible to offer for MNO who currently do not provide this the technical implementation of this would lead to disproportionate costs for MNOs, especially if it is not clearly stated in the guidelines that such costs must be at least partly covered by the requesting wholesale roaming provider. Q4. Do you agree with BEREC s general approach to refusal of requests? Do you have any specific suggestions on how the guidance in this area could be strengthened so as to deter refusals on spurious grounds while not constraining the right of MNOs to refuse to provide on the basis of careful objective justification? Tele2 means that the application of Article 3 by NRAs shall be consistent across EEA. In order to achieve this, more details are needed for when a MNO may refuse a request. The regulation states that a request can be refused for an objective reason such as technical feasibility, security or network integrity. In Guideline 3 BEREC provides some further criteria for what shall be regarded as reasonable request; BEREC outlines that any deployment which can be carried out without undue level or resources and where it can be foreseen that the implementation costs will be recovered within a reasonable period of time shall be seen as reasonable request. If a request is denied the MNO according to Guideline 5, shall describe why in writing such a decision has been made. Tele2 consequently concludes that MNO bear the burden of proof for any denial. In order to avoid a large number of dispute settlements, which may have very different outcomes across the EEA, Tele2 favour more detailed and clearer guideline for when a request can be denied. A way forward in this regard could be the usage of a black-list; a list stating what technical standards can always be required (such list may not be exhausting but would provide some needed direction for both the NRA and MNOs). If these technical standards are met, the implementation costs which include all costs for resources needed are covered (something which require an alteration to guideline 2 as stated above), and the required resources are reasonable cumulative prerequisites the request shall be considered as reasonable. One of the requirements on the black list should be that the party is registered as a provider of telecommunication services with the NRA, in member states where this is applicable. 3 3 In accordance with Article 3.2 of the Authorisation Directive; notification to the relevant NRA

5 Furthermore, Tele2 means that a request shall not be seen as reasonable if the requesting party does not meet the rules for payment guarantees and basic obligation for preventing fraud (such as those stated in guideline 30). Therefore Guideline 5 needs to be altered. Firstly, it needs to include the possibility for MNO to seek basic information about level of traffic expected, this in order to ensure that the right level of bank guarantees have been granted. Such information request may however not in any way be so detailed that it contradicts competition law requirements. Secondly guideline 5, 9 and 10 are interconnected however the wording is not clearly linked. Guidelines 3 and 8 also correlate to when a MNO must accept a request or are able to refuse a request. Tele2 believes that the level of details in all these Guidelines and the consistency among them needs to be ensured in order to prevent inconsistency. Also in regards to the wording of Guideline 5 in order to ensure that the needed capacity exists in the networks the wholesale provider needs to, in accordance with what is stated above, provide estimated volume information also for technical reasons. A refusal to provide such information must be considered as a reason to refuse access since this otherwise may interfere with network security. Finally Tele2 does not understand the final section of Guideline 5 why we recommend it to be either altered or deleted. Q5. Do stakeholders consider that further Guidelines should be developed to deal with the issue of requests for wholesale resale roaming access from market players whose retail services are otherwise hosted on other networks? If so, please provide examples of commercially credible retail services which could be operated in this manner. Tele2 means that a situation where a MVNO use one operator for national wholesale while use another operator (based in the same member state) for roaming services would be too complicated from a technical stand point that it would fall outside what shall be considered as technical feasible. This since the solution would require the access provider to be able to provide dual IMSI services and dual authentication. Tele2 therefore recommend Guideline 6 to be deleted. Q6. Do you agree with BEREC s views on resale access to unregulated services? Tele2 does in principle agree with BEREC s views on resale access to unregulated services. However since the Regulation only cover intra EEA roaming services Guideline 13 need to be clarified so that it is apparent that these services are not covered by the mandatory obligation of Article 3 in the Regulation and Guideline 13 shall be linked to Guideline 16. Guideline 16 shall needs to be altered slightly. Firstly it needs to clearly refer to Article 3 section 7 and furthermore state that the obligation of the Guideline is not mandatory. Q7. Do you agree with BEREC s general approach to fair and reasonable prices? Do you consider that other general principles should be articulated? Tele2 agrees with BEREC s general approach to fair and reasonable prices. However we believe as pointed out under Question2 above that the type of access services that shall be priced according to what is fair and reasonable is wider than what is currently stated in the Guidelines.

6 Q8. Do you agree with BEREC s proposed basis of charging for resale of incoming roaming voice calls? Q9. Do you agree with BEREC s proposed basis for resale charges for termination of outgoing SMS Tele2 means that all costs must be covered and that the method for ensuring this must build on a simple and straightforward costing methodology. The costs that shall be covered must be clearly stated and shall at least include payments to the visited network and transit providers, as well as the internal costs (including overhead costs directly related to roaming) of the MNO. Tele2 does not believe that new complex cost methodologies which are burdensome to use both for NRA and MNO shall be introduced in order to establish what is fair and reasonable prices. Guideline 20 needs to be altered since the price for SMS goes outside the scope of the Regulation. Tele2 rather recommend to use the principle of fair and reasonable price. Q10. Do you have any comments on BEREC s approach to service level agreements and guarantees or on the regular monitoring of service levels? Tele2 means that the current obligation stated in Guideline 23 is disproportionate since much of the level of service outlined in the guideline fall outside the control of the MNO. Service level agreement is not part of the classical wholesale roaming agreements negotiated today. The agreements today are rather based on best-effort. The reason for this is the large number of intermediaries involved in providing roaming services. Furthermore the monitoring of SLA in regards to roaming both for direct roaming and especially resale roaming access, is complex, why enforcing of SLA would place a dispensable high burden on MNO, something which cannot be seen as necessary in order to meet the relevant aims of the wholesale roaming access. Q11. Please set out your views on what the accepted standards and methods are. Is there any action which BEREC could usefully take to promote further useful standardization? Tele2 believes that the current technical 3GPP standards shall be seen as accepted standards. We therefore mean that new standards shall build on these but shall also be applicable to wholesale roaming providers (re-sale and MVNO). Furthermore Tele2 believes that current roaming business standards, including specifications and processes shall be the ground for new extended standards. These new standards shall be applicable to all roaming providers including re-sale providers and other roaming wholesale providers. As a minimum these standards need to set out method and processes for how to carry out signaling, how to carry out tests during the setup phase, and specifications about billing interfaces and methods (in situations when this applies). We believe that the current specifications and processes shall be further standardized and shall be part of the guidelines which BEREC provides. Q12. Do you consider that the Guidelines should include specific provisions on fraud prevention in addition to the generic statements in the draft? Tele2 is worried that the new roaming Regulation may increase the risk of fraud. GSMA currently have standard documents concerning fraud however Tele2 believes that these need to be codified (i.e. be part of BEREC guidelines). Such guidelines shall as a minimum include the following; obligations to use specific protocols (as outlined in current GSMA documents), specify what is an accepted reply period for a fraud notification, and they shall outline how to define which party bears the burden in a specific case of fraud.

7 Q14. Do you consider that any current practical permanent roaming applications should be considered as an unfair use of roaming wholesale access agreements? If so, please explain why and also how you would propose to distinguish between fair and unfair uses of permanent roaming. Would a distinction based on the phone number of the roaming MSISDN be relevant and applicable? The aim of the Roaming regulation is to ensure better terms for end users when they are temporary roaming. The Regulation shall not go beyond this scope and shall not impact any domestic market. Tele2 therefore means that permanent roaming shall be prevented. Tele2 would like to suggest that the prevention for permanent roaming builds on "percentage of roaming traffic" by a specific roaming provider in a specific member state e.g. traffic which exceeds the level of what is considered as temporary traffic shall be defined as permanent roaming and would therefore be prevented. The prevention shall be carried out by NRA in cooperation with national MNO. Q15. Do you consider that the Guidelines need further detail concerning anti-competitive provisions which must not be included in the Reference Offer or supply contract? No Tele2 means that this is sufficiently covered by general EU competition legislation. Other comments on the draft Guidelines Comment to guideline 12 & 13 Tele2 believes that the requirements for what services must be offered in accordance with Guideline 12 and 13 to wholesale roaming services provider is vague. It shall be clarified that in cases where the MNO does not have a roaming agreement with a network provider in another member states, there are no requirement for the MNO to set up such agreement only because there is a request about such roaming exchange from the wholesale roaming access provider. Comment to guidelines 10 & 33 An MNO shall, as stated by BEREC in Guideline 33 be able to assure payment for services provided and safeguard requested from the MNO must be proportionate in regards to the wholesale roaming access being requested (based on the volume of traffic foreseen and other business criteria). The information needed for establishing that the safeguard (being for example a bank guarantee) is proportionate must be handled in such a manner that it obeys to general competition legislation. Therefore the wording of Guideline 10 needs to be altered. Furthermore the guarantees shall be of a necessary level. In cases where traffic over a specified period of time exceed or go below the forecasted traffic volume the safeguard shall be altered and if this is not carried out this shall be seen as a reason for termination of the wholesale roaming agreement- Comment on Guideline 26 and 27? In regards to Direct access Camel phase I may be included in Guideline 26. CAMEL is of course important also in resale access however since far from all operators have implemented CAMEL it shall not be introduced for resale access. Such an obligation would be timely and resource restraining function to implement.

8 Specific remarks on BEREC s consultation concerning Choice of decoupling method. Q1 Do stakeholders agree that the basic version of LBO should be introduced in July 2014? What are the elements that may hinder or facilitate the diffusion? BEREC considers that the most basic version of Local break out, is the preferred solution to be introduced in July Tele2 sees the most basic version of LBO as the only feasible alternative since further developments of a LBO obligation would significantly increase the complexity and cost while not necessarily provide associated gains. It would furthermore likely lead to delayed implementation for many MNOs. Tele2 is fully aware that the LBO obligation is part of the Regulation and will come into force as of 1 st of July However we believe that the fact that not all end users will be able to benefit from the obligation, such as specific Blackberry users and users utilizing VPN solutions, has been somewhat omitted. The fact that not all end users will be able to use LBO is something Tele2 believes may lead to confusion among end user. For example how and by whom shall the fact that Blackberry enterprise services cannot work with the LBO solution be conveyed to end-users? Tele2 also would like to underline that BEREC seems to simplify how easy some of the aspects of LBO are. Since the obligation in the Regulation outlines the possibility for end users to easy chose a data provider through a LBO, while voice and SMS shall be conveyed as today, by the visiting MNO (VMNO) with whom the Home MNO (HMNO) has a roaming agreement cannot be directly compared with services such as WiFI since it implies other more complex technical alterations. The currently used standards 3GPP define that a mobile subscription, including services such as voice, SMS, Data, camel, VT, USSD etc can only be used on one access at a time with one single operator. Hence the fact that BEREC states in the Decoupling consultation that a subscriber should be able to use data services with one local break out provider (one specific VMNO) while at the same time using another VMNO for his/her voice and SMS services is per definition technically impossible without altering the current 3GPP standards. For MMS BEREC states that this traffic shall be steered to the normal VMNO. In this regard Tele2, based on what is stated above, would like to emphasize that it is not feasible to simultaneously use two different VMNO for providing data and voice/sms, MMS cannot be technically divided from other data services. Therefore MMS traffic must also be steered to the LBO and the VMNO providing data. MMS will automatically be sent via the dedicated operator for data (if this is a LBO provider or a VMNO) Q2. Should co-operative efforts be made to develop a more user-friendly version of LBO for subsequent evolution? What kind of efforts would be most productive? Could you provide any cost estimations for the development of user-friendly interfaces? Can BEREC assist with this process? Tele2 supports further cooperative effort in regards to develop user-friendly versions for choosing LBO provider. However Tele2 would like to emphasize that the selection mechanism, like the once existing on many smart phones today for choosing Wi-Fi provider, are and must be developed in cooperation with handset and tablet manufactures. Concerning the LBO interface between HMNO and the different LBO providers (on different VMNO nets) in a visiting country needs to be standardized in all EEA countries and the preferred standards is 3GPP (see further comments above on page 6 question 11 in regards to how the 3GPP standards, these comments also apply to the area of LBO). There is a crucial need for standardized processes and specifications both in regards to the element of accessing LBO (the technical interface between MNO s)

9 and in regards to billing (in situations where any type of billing would be carried out in cooperation with the HMNO). Q4. Do you agree that Dual IMSI should not be implemented in July 2014? Tele2 agrees with BERECs conclusion that Dual IMSI is not the best solution for de-coupling and would be technically extremely difficult to implement by July Tele2 furthermore believe that the cost and resources the Dual IMSI would imply shall be regarded as disproportionate. Q5. Can you provide clear evidence on the feasibility and the costs which would be involved in making access to traffic steering possible (within the normal limits of steering technology) via Single IMSI + by 1 July (Any information you provide will be treated by BEREC as commercially sensitive, if you prefer). Q6. What is your view of the difference in incremental competition benefits achievable, as between implementation of Single IMSI and Single IMSI +? Please provide as much justification as possible for your view. Tele2 recognizes that there may be some potential benefits with Single IMSI + as well as with Dual IMSI. However there is little evidence that the Single IMSI+ solution is feasible by July 2014 due to its complexity. Steering technology shall be considered as sensitive, why an alteration in traffic steering technology leads to an increased risk for fault, which would directly affect end users. Tele2 does not consider there to be any evidence that potential gains for the single IMSI + would outweigh the additional risks and costs related to the introduction of Single IMSI + compared to Single IMSI. Since the aim of Article 5 would due to its complexity likely not be met by Single IMSI +, and since it cannot be seen as a necessary solution due to other simpler alternatives and since it is not the most effective mechanism to achieve the aim of Article 5 - the obligation of IMSI Single + would not meet the requirement test of proportionality under the EU doctrine. Q7 Do you agree that a version of the Single IMSI family should be implemented in July 2014? Which elements are key to a successful implementation? As of now, Single IMSI is the only solution which can be considered to be introduced by July However since the Single IMSI solution also is complex it will be very challenging to fulfill the set out obligation. Q8. If steering is not implemented, do you consider that it would nevertheless be practical to implement systems which would allow decoupling providers to have an option to settle wholesale roaming charges directly with the visited network, on the basis of their own wholesale roaming agreements, as opposed to reliance on a roaming resale agreement with the end user s home network? If practical, please estimate the cost (if applicable) to your company of implementing such systems changes. Please also assess the competition benefits which you would foresee. Tele2 does not support direct settling of roaming charges since this cannot be carried out today without new interfaces and processes. However if direct wholesale charging will become a requirement, MNO

10 must be able to cover all costs related to setting up the systems and interfaces needed for carrying out the obligation. Q11. Are there any additional necessary obligations or are there obligations that should not be included? Tele2 believes that detailed guidelines and standards need to be provided in order to clarify how to handle fraud. Potentially these can build on draft Guideline 30 (as referred to above). Q13. Do you have any other comments? Tele2 proposes a highly standardized solution for both LBO in Article 4 and Single IMSI as the solution for Article 5. This since it will facilitate the process of implementing the new LBO and De-coupling obligations outlined in the Regulation, not only for MNOs but also for LBO and other new roaming providers. Detailed technical standardized solutions would decrease costs and would lead to effective and likely more efficient solutions since the same standards, mechanisms and processes could be used across Europe. Tele2 means that this would lead to indirect gains for end users. Finally Tele2 would like to emphasise the importance of clear division of legal obligations in regards to parallel legal EU acts such as MNOs obligations for data retention and legal intercept. The technical solutions for LBO and de-coupling will affect what data can be retained about customers and what can be legally intercepted. In order to ensure that the division of responsibility for this and potentially other legal obligation under EU regulation, Tele2 believes that clarification in this area is essential.