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30|06|05

Funding and provision of telephone services

People depend on access to telecommunications services. Much of what Ofcom does focuses on extending choice, encouraging greater competition and supporting innovation as new technologies enter the market. However, it is also an important duty of the regulator to ensure that basic telecommunications services remain within everyone’s reach, regardless of circumstance.

Recognising this, Parliament requires Ofcom, under Section 66 and 67 of the Communications Act 2003, to ensure that consumers are able to benefit from basic telecommunications at an affordable price, defined as Universal Service Obligations.

Ofcom has today published a statement and further consultation on its approach to ensuring that BT and Kingston Communications provide a range of universal services upon request. Ofcom’s approach is to focus its intervention so that customers get the services they need.

Key points of Ofcom’s proposals include:

1. Low-cost schemes

BT and Kingston are obliged to offer low-cost schemes to consumers on low incomes. Ofcom proposes to strengthen this important benefit by targeting a new low-user scheme at people who receive Income Support or Pension Credit and Housing Benefit.

2. Pre-pay schemes as an alternative to disconnection for non-payment

Customers who face difficulties in paying their telephone bills risk being cut off. However, BT can also offer those customers the alternative of a pre-pay scheme which can help to manage household costs as they arise.

Under Ofcom’s proposals, in 2006 BT must meet a target of at least 180,000 customers who have been offered a pre-pay account instead of being disconnected for non-payment. If BT does not meet this target, Ofcom will take further action to limit disconnections and protect vulnerable consumers.

3. Phone boxes

Many people depend on phone boxes - either because they do not have a landline at home or because phone boxes are an important lifeline.

However, some phone boxes can be both expensive to run and very rarely used. So from time to time, BT and Kingston apply to remove a phone box from a particular location.

At present BT and Kingston have to consult on plans to remove the last remaining phone box from a particular local area for 42 days. During this period, local public bodies can veto a proposed removal.

Ofcom believes that a proposal to remove what may in some cases be important local services should be carefully scrutinised by the local community with an interest in that proposal.

Ofcom has therefore decided that:

• the local veto should remain at unitary, county council or equivalent level;
• other local bodies must be consulted by them on proposals to remove a phone box;
• the consultation period should be extended from 42 to 90 days;
• the local veto currently applies to the last phone box available within a 100 metre area. Given the growth of mobile telecoms and other demographic changes, Ofcom believes it is reasonable to revise this definition to cover a 400 metre area; and
• BT should have greater freedom to use cashless phone boxes where boxes are subject to repeated vandalism or are needed primarily for emergency use.

4. Special services for people with disabilities

People with disabilities often have difficulty using telecommunications services to their fullest extent without specialist equipment or facilities.

The Universal Service Obligations require BT and Kingston to offer a number of services for people with disabilities, including text relay for people who are deaf and hard-of-hearing which translates voice calls into text.

Many people depend on these vital tools to communicate. Ofcom is therefore taking steps to underpin the service by establishing a Stakeholder Advisory Panel to monitor delivery and performance.

BT and Kingston are also required to offer phone bills in special formats for people who are blind or who are partially sighted. Ofcom is proposing to extend this requirement to meet the needs of people with any disability which may inhibit their ability to read bills or contracts produced in conventional print format.

5. Phone lines for all upon request

The actual cost of installing a new phone line varies greatly from location to location. However, to avoid penalising people who live in more remote areas, BT and Kingston are obliged to install a new line at a standard price of £74.99, regardless of location.

If the actual cost to the company is more than £3,400, then the customer must pay the difference above this figure. Ofcom has concluded that this threshold is still appropriate.

Funding Universal Service Obligations

The cost of meeting these responsibilities falls to BT and Kingston. Ofcom does not propose to change this arrangement at this time. However, as technology changes, as competition grows and as society’s needs and expectations develop over time, Ofcom expects to reassess the way in which these vital services are paid for over the long-term.

Ofcom Chief Executive Stephen Carter said: "Even in a market as dynamic and innovative as telecommunications, there is also a more basic issue - that everyone should have equal access to affordable and accessible phone services.”

Ofcom’s proposals are subject to public consultation. The closing date for responses is 28 September 2005.

The full document is available online at: www.ofcom.org.uk

Further printed copies, including a Plain English summary and Welsh translation, will be available from mid July. These documents will also be available in alternative accessible formats on request.

Ends.

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