The issue
4.1 Oftel continues to be concerned about the high levels of disconnection from the network of customers who have difficulties paying their bill. BT serves approximately 20 million residential lines and, during 1995/6, over 800 000 of these were disconnected for debt and net residential disconnections exceeded 340 000 ( Net disconnections exclude those customers who are subsequently reconnected following payment of their outstanding bill). Oftel considers that these figures are far too high and that a simple means needs to be found of keeping people on the network for emergency and incoming calls while the debt is recovered.
Possible ways forward
4.2 The December 1995 consultative document proposed that residential customers should have access to an outgoing calls barred service (OCB) as an alternative to disconnection for existing debt where this was accompanied by an agreed repayment plan. Oftel believes that such a service would be to the benefit of both customers and operators. Customers in temporary payment difficulties would retain a service which allowed them to make emergency calls and receive incoming calls, be able to pay back outstanding debt over a reasonable time frame and then revert to the service level of their choice. Operators would avoid the costs of disconnection, continue to receive incoming call revenue, and recover outstanding debt. Potentially profitable customers would not be lost from the network.
4.3 While responses to the Consultative Document supported Oftel s objective of promoting OCB as an alternative to disconnection, there was a lack of consensus on the best approach. Consumer groups felt that any new arrangements should be codified in licence conditions because formal obligations offered customers absolute protection in the form of enforceable rights. Operators, on the other hand, felt that licence conditions would be inflexible, bureaucratic and not the best medium to address different individual circumstances. A working group consisting of operator and consumer representatives has given helpful advice on the issues involved and possible ways forward, including a draft model disconnection policy statement.
Oftel's proposals
4.4 Following consultation, Oftel now considers that a Cross Industry Code of Practice could give rise to difficulties, not least because different operators have different procedures and do not use the same technology and software in their day to day operations. Oftel also believes that formal regulation in this area may not be needed, given the willingness of the industry to work constructively on voluntary proposals.
4.5 Oftel s preference is to work with the industry to develop improved procedures for outgoing calls barred service with agreed repayment plans as an alternative to disconnection for debt. Such an approach has proved effective in achieving a variety of consumer protection measures in a competitive multioperator environment, and Oftel expects it to work well for disconnections. BT has already demonstrated its commitment through trialing a manual outgoing calls barred service, doing more market research on customer needs and looking at flexible repayment methods. For example, BT now offers customers the ability to pay an outstanding bill through monthly budget payments by direct debit. Oftel expects the rest of the industry to respond positively and is encouraged by developments so far. It should be noted that published information on disconnection rates are to be included in the next tranche of Comparable Performance Indicators which apply to fixed link operators. Data should be published on this in 1998. This improvement in transparency is welcomed and will provide further incentives to encourage good practice across the industry.
Disconnection policy statements
4.6 Oftel has encouraged BT as the dominant operator to review current practices and publish a revised policy statement on its approach to the disconnection of residential customers. A draft BT statement is reproduced at Annex 2 and Oftel would welcome comments on the draft. BT intends its new policy to come into force across the UK in November 1997, although parts of it are already in operation. The statement sets out the options open to BT customers facing bill payment difficulties; the circumstances in which disconnection might take place; and outlines the customer s and BT s responsibilities. Any customer who advises BT that they are having payment difficulties will be offered a variety of measures to assist them including a repayment plan with outgoing calls barred enabling the outstanding bill to be cleared over an agreed period; the option to pay their outstanding bill and future bills by monthly budget account; Call Levels to assist future budget management; CallMyBill to keep track on a regular basis of their call spend; and international or premium rate call barring free of charge where requested by the customer. Oftel considers BT s new policy represents a significant step forward and expects the level of disconnections for debt in the UK to fall substantially as a result.
4.7 Kingston Communications in Hull is producing a similar policy statement and other operators have also agreed in principle to prepare them as part of their Consumer Codes of Practice. Oftel expects these statements to be prepared and agreed during 1997. The Consumer Codes are publicly available statements of company policy covering a range of issues.
Outgoing calls barred/Lifeline service
4.8 The outgoing calls barred service as an alternative to disconnection for debt is distinct from the Lifeline service which Oftel propose as a new package to be offered by BT in the residential market. The Lifeline service is a service which new and existing customers without existing debt can choose to take, whereas the outgoing calls barred service is one which customers with debt may be temporarily restricted to while their debt is paid back. Consequently, the outgoing calls barred service will be accompanied by a repayment plan, while the Lifeline service will not. Although BT is currently reviewing the appropriate rental charge to apply to OCB service, in the short term because of systems difficulties BT s customers are likely to be charged full line rental. Oftel believes a lower fixed charge is appropriate and expects BT to address this as a matter of some priority. When a customer on outgoing calls barred has repaid the debt, s/hewill have the option to take standard service again or take one of the restricted use service packages described in Chapter 3.
Implementation and monitoring
4.9 This new approach is expected to result in drastically reduced disconnection levels and Oftel would expect the number of disconnections for debt to be reduced by at least 50% per annum over the next two years. Oftel would expect to see a fall in the number of complaints to operators and to Oftel about disconnection. Oftel intends to actively monitor all of these indicators. If these targets are not met, then Oftel will reconsider the need for formal regulatory action in order to provide adequate consumer protection in this area.
Questions:
4 Do respondents agree with Oftel s approach to reducing the level of disconnections for debt in the UK?
5 What comments do respondents have on BT s draft Policy Statement
(see Annex 2)?