Virgin Media 2006 Annual Report Download - page 27

The General Conditions of Entitlement and SMP conditions
Full details of the General Conditions of Entitlement are available on Ofcom’s website (www.ofcom.org.uk). Some of the
requirements under the General Conditions of Entitlement include:
• a requirement to negotiate interconnection arrangements with other network providers
• a requirement to ensure that any end−user can access the emergency services
• a requirement to offer outbound number portability to customers wishing to switch to another network provider and to support
inbound number portability where we acquire a customer from another network provider
• a requirement to ensure that any end−user can access a directory enquiry service
• a requirement to publish up−to−date price and tariff information
• a requirement to provide itemized billing on request from each customer.
In addition to the General Conditions of Entitlement, Ofcom imposes further conditions on providers of electronic
communications networks or services who have significant market power (SMP) in identified markets. In regulatory terms, SMP
equates to the competition law concept of dominance. The new EU regulatory framework, adopted in 2002, required Ofcom to carry
out a number of initial market reviews to establish which providers held SMP in these markets, and should therefore be subject to
further conditions, and to keep these markets and any other relevant markets identified by Ofcom under regular review. This has
resulted in British Telecommunications plc (BT) being found to have SMP in a substantial number of markets. As a result, BT has
been made subject to further regulatory requirements in both wholesale and retail markets.
During 2007, Ofcom will be carrying out further reviews in a number of these markets to re−assess the competitive conditions
applying in these markets and whether their earlier assessments of companies having SMP remain valid.
Under one of the earlier reviews, all fixed operators, including ourselves, have been found to possess SMP in relation to the
termination of calls on their own networks. This has resulted in the imposition of a requirement on all fixed operators to provide
access to their networks on fair and reasonable terms for terminating calls, with additional requirements being imposed on BT and
Kingston Communications. We have not been found to possess SMP in any of the other voice, data or internet markets in which we
operate.
All U.K. mobile network operators (MNOs) have been found to possess SMP in relation to the termination of calls on their own
networks. Accordingly in June 2004 Ofcom imposed Specific Conditions on each of the MNOs in respect of their 2G networks
requiring, among other things, a reduction in the average charges for termination of voice calls on their networks levied on fixed line
operators or other MNOs. These price controls are currently in place until the end of March 2007. Ofcom currently proposes that
further average price reductions should be achieved by all MNOs in respect of voice call termination on their 2G and 3G networks
over the period from the end of March 2007 to the end of March 2011. Ofcom intends to publish its final statement in respect of such
proposals in early 2007. As Virgin Mobile is not an MNO such proposals do not apply directly to us. However, under the terms of the
network supply agreement we have with our network provider, T−Mobile, they will continue to operate to decrease the inbound
interconnect revenue we receive from T−Mobile in respect of calls made to our customers. Ofcom is currently reviewing the
wholesale SMS termination market. This follows the European Commission’s proposed amendment to its Recommendation to include
SMS in the voice call termination market. Ofcom believes the review will take 12 to 18 months and will involve at least one
consultation.
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Source: VIRGIN MEDIA INVESTM, 10−K, March 01, 2007