CHAPTER 8: PROTECTING CONSUMER INTERESTS

INTRODUCTION

This chapter sets out the work Oftel undertakes to protect consumer interests.

While competition will deliver sustained benefits to customers in areas and customer segments where real choice exists, Oftel has a responsibility to protect the interests of other customers who have yet to benefit from effective competition. Oftel achieves this objective through a range of mechanisms including responding to consumer complaints; ensuring effective consumer codes of practice are drawn up and followed by operators; and through the control of BT's prices.

The primary objective for the current review of the BT price control arrangements is the protection of consumer interests through the mimicking of competition in those areas of the market where competition is not yet fully efficient and to promote the efficiency of the UK telecommunications industry. The price control arrangements will be a major determinant of the level and structure not just of BT's prices but of prices across the whole of the industry. The industry is concerned that if retail price controls are set too tightly, operators' investment in competing infrastructure will be deterred. Consumer representatives, on the other hand, are concerned that competition is not yet constraining prices and continuing retail controls are needed. Oftel has appointed a Consumer Panel to advise how the interests of residential customers can best be addressed in this review. A panel of economics, business and financial experts is also providing advice to Oftel on the review.

Oftel also encourages telecommunications companies and consumer organisations to provide better information to assist customers in drawing meaningful comparisons of the quality of service and prices of various telecommunications companies and so make informed choices.

PRIORITY PROJECTS

1. Price control review - Project manager: Ann Taylor
- Project leader: John Bean

Project objective: To decide on and have in place new arrangements to replace the current controls when they expire at the end of July 1997. To determine new arrangements for interconnection charges from August 1997.

Fit with Oftel's objectives: The second consultative document published on 20 March 1996 confirmed Oftel's view that the central objectives for the price control should be consumer protection and the promotion of efficiency in the UK telecommunications industry.

Follow up second Consultative Document

- Public Hearings April/May 96

- Further modelling work April/May 96

- Analysing responses to the document Late April/mid May 96

- Consultation with Consumer Panel and Economics and Financial Expert Advisers

Ongoing

Final consultation document and draft licence modifications

- decide structure of retail and network caps

- determine X's

- finalise interconnection charging arrangements (LRIC, floors and ceilings)

- clarify interaction with service provider proposals

- finalise draft licence modifications

- publish final document

- publish statement on Incremental Cost methodology, indicative floors and ceilings, interconnection guidelines June 96

Formal proposals to BT

- assimilate responses to consultation beginning to mid July 96

- amend draft licence modifications, if necessary

- final proposals to BT late July 96

Response from BT Board early August 96

If no - then there will be a MMC reference

- contingency planning for possible reference July 96

- preparation of MMC reference By mid-August 96

- preparation of MMC submission From early October 96

- continuing work on reference April/May 97

- further document and licence modifications May/June 97

Control in place 1 August 97

New interconnection arrangements

- working out in detail how the interconnection charging arrangement will operate and transition from the existing ones Autumn 96 on

(Timing contingent on BT response)

Impact on customers

- set up systems to monitor impact on different customer groups end 96

2. Promoting better customer information on service quality and price
- Project manager: Christine Farnish
- Project leader: Geoffrey Delamere

Project objective: To monitor and review quality of service delivered by competing operators, and ensure useful comparative information is published so consumers can make informed choices. To facilitate price comparisons by consumer groups between telecommunications companies for the benefit of customers.

Fit with Oftel's objectives: This project helps ensure consumers can make informed choices - it therefore supports the achievement of effective competition. It also provides objective information on the extent to which customers are getting a good deal in terms of service quality.

Comparable Performance Indicators

Publication of Oct- Dec 1995 quarter of Comparable Performance Indicators for fixed link operators April 96

Publication of Jan-Mar and April-June 1996 quarters for both quantitative and qualitative measures October 96

Publication of Jul -Sep 1996 and Oct-Dec 1996 quarters for both quantitative and qualitative measures April 97

Progress Federation of Communication Services (FCS) led initiative with mobile operators and consumer groups to develop quality of service indicators and to address customer concerns

Ongoing

Price comparisons

Encourage use of relevant calling pattern data from BT by consumer bodies to make price comparisons of residential bills for different telecommunications companies

by June 96

Quality of service and complaints data

Review full range of quality of service and complaints data to identify trends and take action

Ongoing

3. Removal of RPI + 2% implementation - Project manager: Christine Farnish
- Project leader: Bernie Palmer

Project objective: To encourage a smooth implementation of new service/tariff packages by BT, in line with fair trading requirements, in response to the removal of the RPI + 2% constraint on line rentals.

Fit with Oftel's objectives: To protect the interests of consumers and ensure that service/tariff package charges best meet consumers' needs.

Close monitoring of proposals against fair trading guidelines and licence obligations

April 96 on

Close liaison with BT on education information campaign April 96 on

Close monitoring of implementation to ensure consumers get a good deal and systems are in place to respond to consumer requests, queries and concerns. as required

4. Consumer representation - Project manager: Christine Farnish
- Project leader: Chris Martin

Project objectives: To identify the need for consumer representation, review the options and develop a strategy to secure the most efficient and effective mechanisms for consumer representation regarding telecommunications regulatory issues.

Fit with Oftel's objectives: Consumer interests must be effectively represented to Oftel in order to ensure that the objectives of fair shares of benefits and consumer protection are achieved.

Informal consultation to clarify the objectives for consumer representation and elaborate the options by May 96

Publish consultation document July 96

Publication of Oftel's evaluation of the results of consultation and its plans for any formal regulatory change end November 96

Implementation of changes needed end January 97

SERVICES AND FUNCTIONS

Consumer complaints and enquiries

Oftel has a statutory duty to consider any complaints received which relate to telecommunications services provided or telecommunications apparatus supplied in the UK. In the region of 30-40,000 complaints and enquiries are handled a year. Apart from seeking to ensure that individual customers are fairly treated and their problems resolved, one of Oftel's main objectives is to reduce the number of disputes by analysis of their underlying causes. Where an operator's policy or practice gives rise to widespread public concern, Oftel will consider whether some change is needed and, where appropriate, seek to introduce this by negotiation, or by the exercise of regulatory powers available to the Director General.

Advisory Committees

Oftel provides staff and financial resources to support the work of the six Advisory Committees on Telecommunications (ACTs) for England, Scotland, Wales, Northern Ireland, disabled and elderly people, and small and medium sized businesses. The ACTs themselves are independent statutory bodies and their activities fall outside this Plan. They may, however, provide advice to the Director General, at his request or at their own initiative, on any aspect of Oftel's work and may thus contribute to the delivery of the Plan.

BT price control compliance

Oftel is responsible for ensuring that BT complies with the terms of the price controls covering its retail prices and to this end BT's proposed price changes are scrutinised for accuracy and compliance.

PTO meter approval

Oftel has responsibility for the PTO Meter Approval Scheme whereby PTOs' metering and billing systems are approved by BABT.

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