Epidemiología de la depresión y ansiedad.

6.85 EE and Vodafone argued that if the modelled estimate of LRIC is lower than the actual level of LRIC, operators will incur a loss on every minute of voice termination they supply, and this will have serious impacts on ongoing investment. In their view, however, if the MTR cap (based on the modelled LRIC) is above the true level of LRIC it will do little harm.

6.86 In our view, modelling errors are most unlikely to have a significant effect on the return on investment. First, revenues can be recovered from the retail-side of the market. Second, even if a waterbed effect in retail prices is incomplete, the impact of any potential modelling error (through reductions in MCP revenue from fixed and

240

See 2013 FNMR Statement. 241

This is based on approximately 32.4bn minutes of mobile-to-fixed UK calls in 2013 and a difference between the estimate of LRIC and LRIC+ for FTRs, of 0.194ppm. See Ofcom,

Telecommunications market data tables Q2 2014, published 20 November 2014 (‘Ofcom Data Tables Q2 2014’) and 2013 FNMR Statement, paragraph 8.28

242

Enders Analysis, UK 2G licence fee proposals: Higher and higher, 16 January 2014.

http://stakeholders.ofcom.org.uk/binaries/consultations/900-1800-mhz- fees/responses/Enders_Analysis.pdf

243

The February 2013 auction of the 800 MHz and 2.6 GHz spectrum bands raised £2.4 billion from the sale of licences for 250MHz of band width – see

http://stakeholders.ofcom.org.uk/binaries/spectrum/spectrum-awards/awards-in-progress/notices/4g- final-results.pdf

international calls) is likely to be modest in the context of a £15.6 billion industry.244 For example, from the scenarios considered in Annex 12 the “high” cost scenario produces an estimate of LRIC 0.16 ppm higher than our base case LRIC (in 2015/16 when the gap is largest). As a result, in the low probability scenario of the base case LRIC turning out to be below the out-turn LRIC by the full extent of this “high” cost scenario, the net revenue loss would be around £30m across all MCPs.

6.87 Moreover, most investment decisions at the network level are made over a longer timescale than that of an MTR review period. This means that the probability that, across the relevant asset life, MTRs will be below LRIC on average, is lower than the probability of this occurring in a single review period. Stakeholders noted that, in our 2007 MCT Statement, we considered there was an asymmetry in risks in relation to dynamic efficiency, and suggested that this supported a charge control level above the midpoint of the range of benchmarks to avoid the possibility of under-recovery. However, in recognition of the two-sided nature of call termination (i.e. the

opportunity to recover costs on the retail-side) and other arguments set out in this section (in particular the small difference between LRIC and LRIC+ on the net revenues of MCPs and the importance of MTRs for competition), we do not think there is an asymmetry of risks which requires us to aim above our central estimate of the costs of MCT. Moreover, in the appeal of our 2007 MCT Statement, the CC stated that dealing with asymmetry of risk by applying a higher charge cap shifts the burden onto FCPs and their customers and it considered that this is particularly relevant given that the benefits of the investments which such an upward adjustment would be seeking to encourage would accrue to the MCPs, not the FCPs.245

6.88 Vodafone referred to our statement in the June 2014 MCT Consultation in the context of discussing glide paths, where we said we would be concerned if MTRs were set below LRIC at any point during the charge control period and therefore, in the event that MTRs at the start of the period were below LRIC, we would make a one-off upwards adjustment to LRIC so that MCPs would be able to recover the LRIC of providing MCT.246 It is true that we would wish to avoid a situation where the MTR cap is below our best estimate of LRIC for the reasons set out in our June 2014 Consultation. However, we would also be concerned if MTRs were above our best estimate of LRIC. We acknowledge that our best estimate of LRIC may not turn out to be the true LRIC of an average efficient MCP, since it is not possible to entirely avoid forecast error given that there will be some level of uncertainty in the

assumptions that we make for modelling purposes. However, we have used our best estimates for an average efficient MCP and in order to make our model as robust as possible, we have calibrated it against actual asset counts and accounting costs for the 2G/3G/4G national MCPs back to 2010.

6.89 In the report by Towerhouse LLP (Towerhouse) submitted by Vodafone, Towerhouse argued that we previously rejected cost standards below LRIC in the consultation phase of the 2011 Review because they may disincentivise investment. However, the relevant discussion in the April 2010 MCT Consultation considered certain options

244

CMR 204, figure 5.40

245

See paragraph 2.9.166-169, Determination of the Competition Commission Reference under section 193 of the Communications Act 2003: Hutchison 3G UK Limited v Office of Communications, Case 1083/3/3/07 British Telecommunications plc v Office of Communications, Case 1085/3/3/07, Mobile phone ,wholesale voice termination charges, 16 January 2009,

http://www.catribunal.org.uk/files/CC_Determination_1083_H3G_1085_BT_220109.pdf

246

See paragraphs 8.77 to 8.79 of the June 2014 Consultation.

(mandated reciprocity of MTRs and FTRs and mandatory bill and keep) that were ultimately rejected primarily on the grounds that they would have been expected to involve setting a cap on MTRs below LRIC and therefore below the expected cost of providing MCT.247 When regulating on the basis of LRIC, the cap is set by reference to our best estimate of the projected average efficient LRIC of MCT – we would not be setting MTRs at a level that we know to be, or expect to be, below the LRIC of MCT (including the cost of capital on those investments).

6.90 We note that Frontier Economics, in a report for Vodafone, say that there is no significant asymmetry of risk to dynamic efficiency and Alix Partners, in a report for Telefonica, suggested dynamic efficiency more generally was a lesser consideration than allocative efficiency and competition.