PT0000. 00/00/03 “Upwardly Mobile” - ALTO Barney Lane, Director Regulatory Affairs Presented by MCI International Affairs Group May 19, 2003.

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Presentation transcript:

PT /00/03 “Upwardly Mobile” - ALTO Barney Lane, Director Regulatory Affairs Presented by MCI International Affairs Group May 19, 2003

01 The New MCI

11/15/ The New MCI: Update on Key Developments WorldCom is now doing business as MCI. – MCI name has a strong heritage in telecoms as the – MCI was the company that broke the Bell monopoly in the US. –"MCI" is also known for innovation and value in the US. – brand change is much more than just a name change.... MCI will be a model of corporate governance. –New CEO, new CFO, new Board of Directors, new auditors. –Internal Investigation of accounting issues and full co-operation with US authorities have led to early settlement with the SEC –All employees associated with wrongdoing have been removed.

11/15/ Continuation: Update on Key Developments Plan of Reorganisation was filed on 14 April MCI expects to emerge from Chapter 11 Reorganisation process by Q MCI management and creditors committee have confirmed the importance of MCI’s global operations, with particular commitment to European operations. All units are operating with an “outrageous sense of urgency”, commitment to service excellence and world class performances in all areas of the business.

Section Title Using 28pt. Arial Bold 02 NEW EUROPEAN FRAMEWORK AND MARKET ANALYSIS

11/15/ New European Framework for Electronic Communications and Market Analysis We applaud ComReg’s quick action on market analysis under the new EU Framework for electronic communications. Although the process is complex and resource intensive (especially for new entrants), it is vital for ensuring effective regulation. We share the EU Commission’s view that effective ex-ante regulation is required for the key markets identified in the relevant markets recommendation, especially local access leased lines (pricing and provisioning), fixed-to-mobile termination, and DSL bitstream. Continued effective regulation of access is critical for the future of competition in the Irish market. Identification of SMP operators and developing appropriate remedies is key. The incumbent fixed-line operator and mobile operators in Ireland will continue to require regulation for the foreseeable future. Appropriate remedies must include LRIC pricing of interconnection and access, non- discrimination and effective action against price-squeeze.

11/15/ New European Framework for Electronic Communications and Market Analysis, continued We understand that ALTO (of which MCI is a member) met with the Department to discuss draft legislation for transposition of the new EU framework on April 16. We share the views and concerns voiced by ALTO at that meeting. Implementation of the new framework will considerable resource from ComReg and the operators. MCI will be fully involved in the process of market analysis and developing appropriate remedies.

Section Title Using 28pt. Arial Bold 03 REGULATION OF MOBILE OPERATORS

11/15/ Fixed to Mobile Termination in Ireland FTM costs were reduced by 13% on a unilateral basis by the two SMP operators, Vodafone (formerly eircom’s mobile arm) and O2 (formerly BT’s mobile arm) in MCI Ireland welcomes these reductions but; 1. they are not sufficient and will leave Ireland in one of the worst positions if no further reductions are imposed; 2. they do not resolve the price squeeze problem that all fixed operators in Ireland still face. ALTO has planned a government/industry conference on Mobile issues in Ireland for May 19 to focus attention on this issue. ComReg has taken the novel approach of banning GSM gateways. Although we are acutely aware of the technical issues related to the use of GSM gateways we disagree in principle with this approach and do not believe it has a sound legal basis. Price squeeze (from both mobile VPNs and GSM gateways) remains a major concern in Ireland. This situation will persist so long as the mobile termination remains above cost.

11/15/ Fixed to Mobile Termination in Ireland, continued Although mobile termination rates in Ireland are about average for Europe, they remain substantially higher than cost, imposing a tremendous burden on Irish fixed operators and their customers. To date ComReg has not chosen to regulate F2M interconnect rates in Ireland. The EU’s relevant markets recommendation makes clear that mobile termination is a key area of regulatory concern. The market needs a clear signal from ComReg that mobile termination should be cost oriented.

11/15/ Fixed to Mobile (F2M) Termination Privileged and Confidential

11/15/ Fixed to Mobile (F2M) Price Squeeze: German Example Privileged and Confidential

11/15/ F2M - Forward Looking Rates

11/15/ F2M - Forward Looking Rates

Section Title Using 28pt. Arial Bold 04 MOBILE NUMBER PORTABILITY

11/15/ Mobile Number Portability ComReg is currently conducting a consultation for implementation of Mobile Number Portability in Ireland. A chief concern for MCI Ireland is the cost of implementation. ComReg prefers that the technical and pricing aspects of implementation be left to commercial negotiation between Mobile Network Operators and Fixed Network Operators. Mobile Operators in Ireland appear to be arguing for a gold plated solution involving direct routing of ported mobile numbers via queries of a central data base. This would substantially raise costs for fixed operators and their customers. A gold plated solution makes little sense at the introduction of MNP when very few numbers have been ported. Most European fixed and mobile operators use indirect routing, a more practical, low cost solution.

11/15/ Mobile Number Portability, continued We disagree with the current approach in Ireland. We believe that as a matter of policy, fixed network operators should be able to use indirect routing for ported mobile numbers until such time as a credible threshold of rerouted calls is reached, justifying the substantial investment in a direct routing solution. We have considerable experience with such solutions in other European countries and would be happy to discuss an appropriate threshold. If and when such a threshold is reached, the Regulator should, as a matter of policy, exercise strict oversight over the central data base solution to regulate its pricing, ensure it is independently administered, and to verify that costs are assessed and recovered in a transparent, objective, and fair manner.

05 REMEDIES REQUIRED

11/15/ Regulatory Measures Required Effective Mobile Regulation - movement towards cost orientation required Direct action against “price-squeeze” by mobile operators Mobile Carrier Pre-Selection Proportionate implementation of mobile number portability

PT /00/03 MCI International Affairs Barney Lane. Presented by MCI International Affairs Group