The NGNuk Executive recognised that there were specific commercial issues which were advantageous to resolve in advance other priorities. The NGNuk Executive agreed that these issues should be addressed by a specific commercial work group.
The key driver for these high priority commercial issues was the uncertainty created for both investment and network planning. The issues identified by the Executive can be grouped as follows:
NGNuk provided an initial paper to BT Wholesale in March 2007 reflecting the views of NGNuk members with respect to the potential number of Voice Interconnects required within the UK for interconnection with BTW. This suggested 31 interconnects, a small increase from the 20 interconnect nodes proposed by BTW. In addition 2 substitute core nodes were suggested. The NGNuk view was predicated upon receiving additional information requested from BTW. BTW felt unable to provide this data for reasons of commercial confidentality.NGNuk was therefore unable to refine its views beyond the original submission.
BT Wholesale subsequently consulted industry on a wider basis regarding its views of the NGNuk initial paper. This consultation was undertaken via Consult 21.
The Commercial Work Group within NGNuk, as part of its work on an overall Commercial Framework, considered the question of which Charging Principle ( or Principles) would underpin its work.
The attached NGNuk paper explores whether the current wholesale charging principles ( such as Calling Party's Network Pays, Receiving Party's Network Pays etc.) should apply in the NGN world or whether an alternative principle would be more appropriate. In particular, it examines which wholesale charging principle is more likely to offer incentives to operators to seek either productive efficiency or dynamic efficiency gains delivering lower prices and/or new services to consumers. The paper is focussed mainly on the UK and draws on UK examples, though the argument may be relevant in other countries in particular within the European Union.
Efficient and timely investment in NGN will happen if firms making the investments expect to generate a return on their investment either by being more efficient than their competitors or by being able to deliver new and innovative services which consumer are willing to pay for. This requires that CPs are able to recover costs from the party to the call or message transfer which gains most value from, and so has a greater willingness to pay for, the call or message.
The economic fundamentals of who benefits from the exchange of a voice call or message seem to us to be unaffected by the introduction of NGNs:
The NGNuk view therefore is that the current mixture of CPNP and RPNP should remain in place for today’s services on NGNs. The charging principles applied to any new service should be decided upon taking into account which party is likely to derive most benefit from a call and may include CPNP, RPNP and B&K.
Subsequent to considering which charging principles were most relevant for NGNs, NGNuk went on to consider which charging structure best supports the chosen charging principle. A mechanism like the existing one, i.e. "Usage-Based Charging", was compared with two alternatives; "Port Charging" and "Capacity Charging" . The comparison was based on a structured questionnaire to NGNuk members that allowed quantitative and qualitative analysis.
Members indicated their preferred charging structure, including suggested variants, taking an analysis paper prepared by the Secretariat as input. The paper set out five goals for any new structure:
Respondents also rated the importance of each goal to their company and how far each structure allowed that goal to be reached, together with a brief explanation of their reasoning.
Of those operators responding, eight favoured Usage Charging as their preferred option and three favoured Capacity Charging.
Generally respondents scored usage charging higher than capacity charging overall against the five high-level goals, except for "Consistency with NGNs" and opinion was evenly divided in relation to "Economic efficiency".
Usage Charging scored higher than Capacity Charging on the smoothness of the transition to the new system and the flexibility and clarity of the structure and was rated as more likely to protect and enhance users’ experience.
In discussing the results within the NGNuk Commercial work group the consensus view was that the results indicated that a move to capacity charging at this time was seen as risky as the outcome and costs were not understood. Generally, the group accepted that the results indicated that capacity charging was most likely to be the more efficient basis for a long term cost orientated charging model for NGNs supporting a range of interconnected services.
The recommendation of the Commercial group to the Executive was to develop an “interim” charge framework for voice based on usage with a target availability for the end of the BT Network Charge Control in October 2009. This usage scheme should, however, seek to reflect NGN economics and architecture better than would be the case should today’s PSTN tariff structure be adopted.
The following papers are a summary of NGNuk Member views on potential charging mechanisms for PSTN emulation over NGNs plus a more detailed paper including member data:
The following discussion document on Capacity Charging was commissioned by NGNuk from consultants Ellare and Oxera to assist the commercial work group in the review of the potential charging mechamisms:
The commercial group recommended that any usage scheme for voice emulation over NGNs should seek to better reflect NGN economics and architecture than would exist via an extension of today’s PSTN charge structure.
This NGNuk paper identifies a number of factors that might be used within a usage based charging scheme ,the level of consensus amongst members regarding the types of usage model that might be adopted and an understanding of the support across the membership for and against specific charge factors.