Pricing Interconnection ETNS 1

Pricing & Interconnection • • • ETNS 1 Interconnect tariff models Market introduction of European Numbers Serving to Service Network relationship Possible Service Network scenarios Serving to Service Network tariff issues ETNS network development Len Tunney Chairperson, ETNS Interconnect Working Group +352 091 752246 len. tunney@tele 2. com

ETNS Interconnect Tariff Models • • • ETNS 2 Revenue neutral local Revenue neutral national Revenue share local Revenue share national Incoming from non-ETNS country Note : Retail and interconnection tariff models are still under discussion within the ETNS Steering Committee and the ETNS Interconnect Working Group. Constructive input welcome

ETNS Revenue Neutral Local • Calling party pays local tariff • ETNS customer not charged an additional per call fee • May be popular where majority of calls terminate close to calling party & are not switched beyond originating operator’s network • Possible services : – Franchised taxi service • same +3883 number for many European cities – Fast food home delivery • Large penetration in many European countries, Eg. Pizza Hut ETNS 3 • Service provider may not charge per call fee to network operator’s - receive income from service provided, Eg. taxi service as Service Provider

ETNS Revenue Neutral National • Calling party pays national tariff • ETNS customer not charged an additional per call fee • May be popular where majority of calls terminate within the same country as the calling party & are not switched beyond originating operator’s network • Possible services : – Travel industry • Hotel chain front desks, airlines, franchised travel agents operating many offices in several countries – Banking industry • Operations in several countries but offices in each country ETNS 4 – Roadside assistance • Alliances between different organisations in many European countries

ETNS Revenue Share Local ETNS 5 • Calling party pays local tariff • ETNS customer pays per call fee to Service Provider • May be popular where majority of calls cross international boundaries • Service Provider pays Serving Network or reverse depending on which operator carries call the greatest distance • Possible services : – Companies offering services in several countries but without offices in each country. – Could be used for marketing purposes where ETNS customer wishes calling party to pay small amount for call & ETNS customer pays higher percentage of total call cost

ETNS Revenue Share National • Calling party pays national tariff • ETNS customer pays per call fee to Service Provider • May be popular where majority of calls cross international boundaries • Service Provider pays Serving Network or reverse depending on which operator carries call the greatest distance • Possible services : – Companies offering services in several countries but without offices in each country – Could be used for customer service purposes where ETNS customer wishes calling party to pay larger share of call cost ETNS 6

ETNS Revenue Share National Service Provider Non-call Related Bill Call Related Service Producer Revenue Share National Service Producer Assisted Network Bill ETNS National Bill Serving Network Revenue Share National Bill ETNS customer Revenue Share National Service Network Serving Network Bill Serving to Service Network Revenue Share National ETNS 7 Service Network Revenue Share National Bill Terminating Network Termination Tariff Bill

Incoming from Non-ETNS Country • Calling party charged an international rate similar to the rate charged within originating country for a call to a geographic number in an average European country. • One rate applied to calling party regardless of retail tariff arrangements within ETNS area. • Operators within the ETNS zone are free to offer international call termination rates to ETNS numbers. • ETNS customers able to decide whether they will accept calls originated from outside ETNS area. ETNS 8

ETNS Revenue Share National Service Provider Service Producer Revenue Share National Non-call Related Bill Call Related Service Producer Assisted Network Bill Calling Party tariff: UK - 33. 3 €c/ for 3 minutes AUT - 48 €c for 3 minutes Bill Call origination fee: UK - 2. 73 €c/ for 3 minutes AUT - 7. 8 €c for 3 minutes Bill Service Network Revenue Share National ETNS Customer Revenue share National Service Network Serving Network Bill Serving to Service Network Revenue Share National ETNS 9 Bill Remainder: UK - 21. 57 €c for 3 minutes - 64. 7% of calling party tariff AUT - 31. 2 €c for 3 minutes - 65% of calling party tariff Remainder = (Calling Party tariff - call origination fee - call termination fee) Bill Call termination fee: UK - 9 €c/ for 3 minutes AUT - 9 €c for 3 minutes Terminating Network Call termination fee based on international termination tariff of 3 €c per minute.

Market Introduction of European Numbers • Publicise European numbers – By telecommunications industry • First, to internal participants • Next, to general public – By ETNS customers • Use European numbers for everyday services • Develop trust in European numbers – Simple tariffs, easy to understand – European number an expensive call ETNS 10 • Allow the market to determine future

Changes in Perception • For operators, 00 international – ETNS calls not routed as international calls – 003883 passed between operators at national interconnect level • For customers, 003883 international – 003883 tariffs are not international tariffs ETNS 11

Serving to Service Network Relationship Serving Network Responsibility: Route ETNS calls to the Service Network that currently switches a particular ETNS customer’s traffic to its destination. Serving Network to Service Network Relationship: Passing calls between Serving Networks & Service Networks is likely to produce the most friction between ETNS players because: • The choice of Serving Network is under the control of the originating operator. • The choice of the Service Network is under the control of the Service Provider. ETNS 12 • Serving Networks are forced to develop relationships with all Service Networks.

Serving to Service Network Relationship - 2 • Service Network POP could be: • In same city as calling party • In another part of the same country as calling party • In a different country to the calling party • Payments between Serving and Service Network for call carriage between the networks should reflect the distance the call is carried. • Serving Network operators have no control over Service Network POP locations, but have a responsibility to deliver calls to these locations. ETNS 13 • Some Service Networks could have significantly more POPs than some Serving Networks, ie. a Service Network POP may be available in same city as calling party but Serving Network POP is located in another part of country. • Interconnect tariff arrangements between Serving & Service Networks must attempt to balance these issues.

Possible Service Network Scenarios • One POP in one country offering services in many countries - Many calls between Serving & Service Networks will be across international boundaries • One POP in each country in which services are offered - The distance between Serving & Service Networks will be long for many calls • Distributed network of POPs in some countries in which services are offered - In some countries, the distance between Serving & Service Networks will be long for many calls - In other countries, there will be a short distance between Serving & Service Networks • Distributed network of POPs in each country in which services are offered ETNS 14 - The distance between Serving & Service Networks could be short for most calls

Serving to Service Network Tariff Issues Serving & Service Network operators will wish to minimise for call handling costs as much as possible. For some tariff models, all call revenue will be received by the Assisting/Serving Network from the calling party. • Money will need to be passed forward along the chain of players involved. For other models, some revenue will be received from the calling party by the Assisting/Serving Network while other revenue will be received by the Service Provider from the ETNS customer. • Money may flow in either direction depending on factors such as: – The relative amounts paid by the calling party and the ETNS customer. ETNS 15 – The distance the call is carried between the Serving & Service Networks.

Serving to Service Network Tariff Issues - 2 • For some tariff options, Serving Network will pay Service Network. The amount paid to the Service Network should decrease as the distance between the Serving & Service Networks increases. • For some tariff options, Service Network will pay Serving Network. The amount paid to the Serving Network should increase as the distance between the Serving & Service Networks increases. • For some tariff options, the Serving Network will pay the Service Network where the distance between the two operators is small while the Service Network will pay the Serving Network where the distance is large. ETNS 16

ETNS Network Development 1 Sg. N 1 As. N 1 SN 1 As. N 2 Sg. N 2 Assisting Network Cost Drivers - Analyse +3883[ESI] - Switch call to Serving Network POP (could be short or long distance) ETNS 17 TN 1 Assisting Network Options to Control Costs - Become a Serving Network - Change Serving Network provider - Select Serving Network with POPs close to Assisting Network POPs Serving Network Cost Drivers - Maintain Sg. N database - Analyse +3883[ESI][SN] to find RN - Switch call to Service Network POP (could be short or long distance or international) Serving Network Options to Control Costs - Pass call as close to Service Network as possible

ETNS Network Development 2 Sg. N 1 As. N 1 SN 1 TN 1 As. N 2 Country A Sg. N 2 Country B As. N 3 TN 2 Sg. N 3 ETNS 18 - Some Service Networks will offer services & POPs in multiple countries - Others will offer services in multiple countries, but POPs in only one country

ETNS Network Development 3 SN 1 As. N 1 Sg. N 1 SN 2 SN 3 TN SN 4 As. N 2 Sg. N 2 Country A SN 5 Country B SN 6 As. N 3 SN 7 Sg. N 3 TN SN 8 SN 9 ETNS 19 - A growing number of Service Networks will emerge with increasingly complex interconnection arrangements between Serving & Service Networks. - All interconnection arrangements must be seen as acceptable and commercial arrangements should be fair to both parties.