Home >  > Competition and Consumer Bulletin > Open cases > All Open Cases > CW/00992/06/08

Disputes between: each of THUS plc (“THUS”), Cable & Wireless UK (“C&W”), Virgin Media Limited (“Virgin”), Global Crossing (UK) Telecommunications Limited (“Global Crossing”) and Verizon UK Limited (“Verizon”) (together “the Parties”) and British Telecommunications plc (“BT”)
Case opened: 25 July 2008
Issue: The Parties have asked Ofcom to use its powers under under Section 190 of the Communications Act 2003 (“the Act”) to resolve disputes between the Parties and BT concerning the level of BT’s charges for partial private circuits (“PPCs”).
Relevant instrument: Ofcom intends to resolve these disputes using its powers under Chapter 3 of Part 2 of the Communications Act 2003 (“the Act”).

Update note 27 April 2009

Ofcom has today issued draft determinations to the parties in these disputes. Please see the related item.

Ofcom will be consulting on its proposals until 5 pm on 29 May 2009. Please send responses to:

Martin Hill
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to martin.hill@ofcom.org.uk

End of update note

Update note: 27 August 2008

Ofcom’s consultation on the proposed scope of these disputes has now concluded. BT noted that the issues in the disputes would be superceded by the new charge control regime being developed under the Business Connectivity Market Review and associated Leased Lines Charge Control (which BT has agreed to implement as if it had been available from 1 October 2008[(-1-)] ). In the light of this we have decided to amend the scope of these disputes so that it covers the period from 24 June 2004 to 30 September 2008.

The finalised scope is therefore to determine whether, in the period from 24 June 2004 to 30 September 2008:

i. BT has or will have overcharged the Parties for PPCs (based on whether or not BT’s charges for the underlying trunk and terminating elements of those PPCs were, during that time, reasonably derived from the costs of provision based on a forward looking long run incremental cost approach and allowing an appropriate mark up for the recovery of common costs including an appropriate return on capital employed) and, if so;
ii. by how much the Parties will have been overcharged; and
iii. whether and by how much BT should reimburse the Parties.

As Ofcom progresses the resolution of these disputes, we will consider whether any of the matters arising in the disputes raise industry wide issues that it would be appropriate for us to deal with on our own-iniative.

End of update note

These disputes concern allegations by the Parties that BT’s charges for PPCs have been too high since 24 June 2004 as they were not “cost oriented”. The Parties claim that, as a result, they have significantly overpaid BT for these products and that BT should reimburse the amounts overcharged.

PPCs are interconnection products that are purchased by communications providers and combined with their own networks to provide leased lines to business customers.

Ofcom considers that on the face of the dispute submission, there appear to be disputes between each of the Parties and BT that commercial negotiations have failed to resolve.

Ofcom considers that the disputes meet the relevant statutory criteria and that it is appropriate for Ofcom to handle them according to section 186 of the Act and, accordingly, Ofcom has accepted the disputes for resolution.

In resolving disputes Ofcom must act in accordance with the six Community requirements that give effect to Article 8 of the Framework Directive.

In summary, those requirements are:

• to promote competition in communications markets;
• to secure that Ofcom contributes to development of the European internal market;
• to promote the interests of all European Union citizens;
• to act in a manner which, so far as practicable, is technology-neutral;
• to encourage, to the extent Ofcom considers it appropriate, the provision of network access and service interoperability; and
• to encourage such compliance with certain international standards as is necessary for facilitating service interoperability and securing freedom of choice for the customers of communications providers.

Scope of the dispute:

The scope of the dispute is to determine whether, in the period from 24 June 2004 to the date of the notifications which will be issued by Ofcom to resolve the disputes:

i. BT has or will have overcharged the Parties for PPCs (based on whether or not BT’s charges for the underlying trunk and terminating elements of those PPCs were, during that time, reasonably derived from the costs of provision based on a forward looking long run incremental cost approach and allowing an appropriate mark up for the recovery of common costs including an appropriate return on capital employed) and, if so;
ii. by how much the Parties will have been overcharged; and
iii. whether and by how much BT should reimburse the Parties.

Procedural matters:

Guidance on the resolution of disputes can be found in Ofcom's Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives.

All representations on the scope of the disputes should be submitted to Ofcom by 8 August 2008.

Stakeholders interested in the outcome of these disputes should notify Ofcom by 8 August 2008, describing the relevance of the outcome of the disputes to their business. Stakeholders with relevant information and evidence in respect of these disputes should submit this to Ofcom by 11 August 2008.

Stakeholders who wish Ofcom to join them as parties to the disputes must provide evidence, as set out in Ofcom's Guidelines, that they are in dispute.

Case Leader: Martin Hill (020 7783 4334 e-mail: martin.hill@ofcom.org.uk)
Case Reference: CW/00992/06/08

Footnotes:

1.-See: http://www.openreach.co.uk/orpg/news/generalbriefings/gen07008.do

Back to top