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General

1. What is Universal Service?

People depend on access to telecommunications services. It is an important duty of the regulator to ensure that basic telecommunications services remain within everyone’s reach, regardless of circumstance.

Sections 66 and 67 of the Communications Act 2003 require Ofcom to ensure that consumers are able to benefit from basic narrowband telecommunications at an affordable price, defined as Universal Service Obligations (USO). Ofcom therefore requires BT and KCOM (in the Hull area) to offer a range of universal services.

Under the EC Universal Service Directive, the DTI's Universal Service Order sets which universal services must be provided in the UK. Ofcom has responsibility for implementing the Order.

2. What about extending USO requirements to other services like broadband or mobile?

The EC Universal Service Directive and the DTI's Universal Order are concerned with fixed narrowband services.

Ultimately any changes to the scope of the USO would be decided at government and European level. The European Commission has not proposed any significant changes on the scope of USO. Last year Ofcom’s Strategic Review of Telecoms considered the future of USO requirements and identified that these may change over time.

Phone boxes

3. Why are phone boxes important?

Phone boxes provide an essential service for those who do not have a landline at home or where using a mobile phone is not possible.

4. How many phone boxes are there currently in the UK?

There are approximately 67,000 Phone boxes in the UK, of which around 64,500 are provided by BT.

5. How much do they cost to run - Is this area of BT's business profitable?

According to BT, average annual running costs per phone box are £1,673 and around 42 per cent of its phone boxes are profitable.

BT Payphones is a cash positive and profitable business. BT’s regulatory Financial Statements 2004 show that BT Payphones’ turnover was £176 million per annum and achieved a return of £60 million. These figures have been revised by Ofcom to £152 million and £29 million respectively for 2005, based on data provided by BT.

Nevertheless, BT’s revenues from payphones have been falling – by around 47 per cent between 2000 and 2006. BT argues that this trend is mainly due to increased mobile phone penetration.

Some phone boxes are expensive to run and very rarely used. BT and KCOM may seek to remove the last phone box from a particular location, but they must publish their plans for public consultation. During this consultation period local bodies can veto the proposal.

6. How many phone boxes has BT removed?

BT has removed about 28,500 phone boxes since March 2002..

7. What are the rules to prevent further phone boxes being removed?

Ofcom believes that local communities must have the final say in decisions about keeping or removing the last phone box in a particular area.

Ofcom intends to publish a guide for local authorities on the revised rules.

• BT and KCOM must publish plans to remove the last phone box from a particular location for full public consultation. During this consultation period local bodies can veto the proposal.
• The local veto will apply to the last phone box within a 400 metre area. This means that around 90% of the 67,000 phone boxes in UK can not be removed without local bodies having the final say. A majority of responses to Ofcom's consultation supported changing the previous 100 metre definition.
• The local veto will be available to unitary, metropolitan, district and equivalent councils. Other local bodies must still be consulted.
• The consultation period for proposals to remove a phone box will be extended from 42 days to 90 days.

8. How will the Ofcom guide help local authorities?

In exercising the 'local veto' public bodies must provide reasons for their decision in writing and comply with the consultation and notification requirements in the Communications Act 2003. The guide will assist public bodies with this process and promote consistency across different parts of the country.

9. Why has Ofcom given BT and KCOM greater freedom to use cashless phone boxes?

BT says it has experienced a high incidence of ‘cash attacks’ on low revenue phone boxes in rural and semi-rural locations and that the annual cost of crime to BT Payphones is substantial.

BT and KCOM will have greater flexibility to remove cash payment facilities, in particular at sites which are subject to frequent vandalism and where the local public body has objected to a proposed removal on the grounds of the importance of the PCB for emergency use.

Low cost schemes

10. What schemes are BT and KCOM offering?

BT currently provides the Light User Scheme and InContact. BT is introducing a new low-user scheme which will target people who receive Income Support, income-based Job Seekers Allowance and Pension Credit. These criteria have been broadened to reflect responses to Ofcom’s consultation.

KCOM has two low cost schemes, Basic Contact, an incoming calls only scheme (with the exception of emergency calls and fault repairs) and Basic Call which allows for outgoing calls by purchasing a prepaid card. Take up of both schemes has been small to date (112 and three respectively).

KCOM has recently launched a new product Social Access Package available to customers in receipt of certain state benefits. This has a reduced line rental charge combined with a restriction on the number of non-local calls customers can make monthly.

11. What is BT doing to reduce the level of disconnections for non-payment of bills?

In June 2005 Ofcom set out that BT’s disconnection levels could be significantly reduced if it promoted its special schemes, in particular its pre-pay products, more effectively.

BT has worked to improve the marketing of Pay & Call and set itself a target to have 180 000 customers on Pay & Call during 2006. Ofcom will be monitoring take up of this scheme and the level of disconnections.

Since November 2005 BT has launched several initiatives to improve the responsiveness of their credit management procedures. These include measures to help customers understand and activate their Pay & Call accounts and to increase contact with customers in debt at earlier stage.

Telephone line provision

12. How often does BT charge customers more than the standard £99.99 to install a telephone line?

Between April 2003 and March 2004, BT provided connections, under USO, involving excess charges to 24 residential and 4 business customers. Many of these customers were in rural areas but there were some who were in urban areas.

13. What do KCOM charge to install a line?

KCOM ’s standard connection charge is £51 for residential customers and £66 for business customers (figures exclude VAT)

14. How was the £3,400 threshold for extra charges calculated?

This was previously based on an assessment by BT of how many man-hours would be required to complete the work.

If it was less than 100 man-hours, a standard charge applied. If over 100 man-hours , the customer was required to pay a charge based on the additional work involved. This was known as the '100 man-hours rule'.

In 2001, BT changed its approach as the contractors it employed no longer charged on the basis of man-hours. BT instead fixed a figure of £3400, based on a notional rate of £34 per hour, and this is now referred to as the '£3400 rule'.

Services for customers with disabilities

15. What about services for people with disabilities?

BT and KCOM are required to offer a number of services for people with disabilities, including text relay for people who are deaf and hard-of-hearing. Text relay translates voice calls into text.

To improve transparency and accountability in this area, a Stakeholder Advisory Panel will be established to monitor delivery and performance of these services.

Other changes in relation to services for customers with disabilities will be subject to a separate public consultation later this year.

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