How the Communications Commission Regulates
The Commission believes it is in the interest of the Island’s consumers and businesses to follow best practice guidelines issued by major regulators such as the European Commission and other European national regulatory authorities, in order to learn from their past experience. Telecommunications regulation in the Isle of Man will therefore look similar to regulation elsewhere.
In 2012 the Commission undertook and published results of market reviews into the telecommunications markets. These market reviews identified markets where one or more operators have Significant Market Power (SMP) and imposed remedies in these markets so that they operate effectively.
Manx Telecom and Sure have SMP for call termination on their own mobile networks, resulting in the Commission regulating call termination rates annually, in May each year.
Manx Telecom has SMP in various fixed wholesale and retail markets resulting in a wide range of remedies which has opened up the market and had positive impacts.
Manx Telecom operates its wholesale products and services separately to its retail products and services (wholesale meaning sale to other licenced operators and retail meaning sale to end users). Where appropriate, Manx Telecom Retail takes a wholesale input to provide a retail service, the same wholesale input as any other retail licensed operator.
Manx Telecom cannot discriminate between its own retail arm and other licenced operators. This means it cannot prioritise Manx Telecom Retail end users above other licensed operators’ end users for wholesale engineering work, for example.
Manx Telecom Wholesale must allow other licensed operators access to appropriate wholesale products. This has led to new product development, including wholesale line rental and carrier pre-selection for example, which has allowed other operators to offer their own line rental and calls services.
Manx Telecom Wholesale must act transparently, meaning other licensed operators must have sufficient notice of new product development and price changes to allow them to compete effectively.
Manx Telecom Retail must not cause a margin squeeze, which is where the difference between the wholesale input cost and the retail price is so low that other competitors cannot compete. Whilst this can result in short term low prices, long term it is bad for competition as it blocks competition from that market.
Manx Telecom has spent several years developing bottom up cost models, which are incredibly detailed and allow the Commission to thoroughly analyse the costs incurred in various markets.
The Commission negotiated the weighted average cost of capital (WACC) for Manx Telecom.
We required Manx Telecom to produce separated accounts, which are specialised and granular detailed accounts, down to individual product level. This allows us to monitor returns generated in various markets, and allows us to ensure that MT is compliant with all of its obligations.
Finally, Manx Telecom is required to work towards setting cost oriented wholesale prices, which mean that prices must be derived from the costs that would be incurred by an operator working efficiently. This ensures that returns are not too high in regulated markets and that prices accurately reflect costs.