The issue
5.1 Oftel s December 1995 Consultative Document included reasonable access to public call boxes (PCBs) as part of universal service. This was widely supported by respondents. During the summer, Oftel has been in discussion with BT and consumer representatives over the practical meaning of reasonable access to PCBs and how Condition 11 of BT s licence might be streamlined and amended in order to secure such access. The Consumer Panel has also been focusing on PCB provision as part of its work on universal service.
5.2 While PCB provision is generally good, Oftel believes that there are three main areas where the existing arrangements are deficient. Firstly, the existing rules on removal and resiting PCBs are cumbersome and bureaucratic. Secondly, there is a particular problem with PCBs located on private land, where the PCB must be removed by BT if requested by the landowner, but there is no requirement for the box to be replaced. Thirdly, there is a concern that new PCB provision, driven by purely commercial considerations, will not necessarily meet specific areas of consumer need such as for new social housing. Consequently, Oftel has drafted a new licence condition and guidelines to simplify the existing provisions on removal and resiting, to guarantee continued widespread provision of PCBs and to introduce new criteria for their installation. Oftel is also keeping payphone charges under review.
Current Provision
5.3 The number of PCBs has almost doubled since privatisation from about 70,000 in 1984 to around 132,000 today. BT includes within this figure those on private sites such as railway stations, airports and shopping malls (known as managed payphones ) as well as those sited on the street. BT now ensures that at least 95% are in good working order at any time - compared with only 80% at the end of 1988. In a survey of customers without a telephone at home, 93% reported a PCB within half a mile of where they lived (See research study carried out by MORI for Oftel, Telecommunications - the consumer viewpoint, May 1995). There are, in addition, over half a million private payphones in the UK, which also offer a useful service to the public. The private payphone market is fully liberalised.
5.4 As part of the Government s policy to open up the market for PCB provision, Oftel has revised and updated the rules affecting licensees who wish to offer such services. The new rules no longer require the Director General to make a determination each time an operator wishes to install a PCB and, with respect to removal, simply require the operator to give 42 days notice of withdrawal of service. This means that nondominant telecoms companies can provide PCB services at their commercial discretion. These new rules do not affect BT who retains restrictions in its licence on PCB removal and resiting.
5.5 The move towards open market provision of PCBs should help improve availability and accessibility. Recently IPM Communications Ltd, trading as InterPhone, has taken over a number of Mercury s former PCB sites. InterPhone currently operate 1,600 PCBs and have rollout plans for up to 6,000 over the next four years. New World Payphones, who already operate some 5,000 private payphones, have also recently been granted a licence which will enable them to operate PCBs. To date they have 100 street sites with rollout plans for 3,000 over the next three years.
BT s licence obligations
5.6 Provision of PCBs is currently governed by Condition 11 of BT s licence. BT is broadly required to maintain the public call box services that existed at 1984 and any that have been installed since then. However, the licence condition sets out limited circumstances in which BT may remove PCBs. The most important of these are :
5.7 The licence condition is supplemented by Guidelines issued by BT in consultation with Oftel regarding the installation of new PCBs. These state that BT will normally expect a new call box to cover its costs and will take into account the number of PCBs already in the area and their usage, the penetration of residential telephony and availability of private call boxes; the cost of providing a suitable PCB at the site, including the likelihood of vandalism; and the availability of a suitable site. Under these guidelines, BT only installs new PCBs where they pass a revenue test .
5.8 As far as the resiting of existing PCBs is concerned, BT is currently restricted by an agreement with Oftel to resiting a PCB within 100 metres of the original location and preferably within line of sight .
5.9 Oftel s view, based on the findings of its MORI research, discussions with consumer bodies and an analysis of representations it has received, is that reasonable access to PCBs is largely being met in the UK. There are three areas however, where a revised approach appears to be needed. Firstly, the rules on resiting and removal are very complicated and bureaucratic and an alternative which protects existing provision while allowing for greater local involvement would be attractive. Secondly, where single PCBs serving communities happen to be sited on private land, their removal has caused a small number of complaints. Typically, BT is requested to remove a PCB at the request of a landowner who owns the site. For example, a village PCB located outside a Post Office might be removed at the request of new residential owners if the Post Office closes since the PCB is now outside their house. BT must remove the PCB in these circumstances and under the current terms of its licence is not obliged to resite the PCB elsewhere in the village. Oftel s view is that by not doing so it is acting contrary to the spirit of universal service, and is not meeting the needs for reasonable access to PCBs.
5.10 Thirdly, Oftel is concerned about new provision for new housing developments. At present, BT works to guidelines for provision of new PCBs which include a test of commercial viability. While this may be appropriate in most situations, Oftel considers the condition may deter provision in areas of need such as new social housing estates. There have been a few examples brought to Oftel s attention where new PCBs were not being provided to serve new estates because of a rigid application of the current guidelines.
Oftel's proposals
Proposed new licence obligations
5.11 In order to ensure that BT does provide reasonable access to PCBs across the country, and in order to streamline existing procedures for resiting, a revised licence condition for BT and new public call box guidelines have been drawn up, in consultation with BT (attached in Annex 3).
5.12 The proposed arrangements mean that BT would not remove single PCBs except with the express permission of the local community by means of consultation with the smallest unit of local authority. For those PCBs which BT is obliged to remove (eg on private land at the request of the landowner), BT would consult both the local Parish Council (where appropriate) and the local planning authority (LPA) about the identification of an alternative nearby site. BT would resite the call box unless it was agreed with the local authorities that no suitable alternative site was available or the needs of the local community could be met by other means eg resiting of other nearby call boxes. In the event of a dispute, the local authorities would have recourse to Oftel. Oftel considers that this approach represents a considerable improvement over present arrangements.
5.13 Under the new PCB guidelines, BT will proactively monitor the availability of PCBs for new housing developments and in residential areas generally, working closely with local authorities. Local authorities will be able to request the provision of new PCBs which will be assessed against criteria which reflect social need as well as commercial considerations and which will be agreed with Oftel, or request relocation of existing PCBs. Oftel believes that the installation of a relatively small number of new boxes along with some redistribution of existing boxes will be sufficient to meet reasonable access needs.
5.14 Oftel will allow BT freedom to resite or remove call boxes providing it is done in consultation and with the agreement of the smallest unit of Local Authority for the area where the public call box is located and the LPA.
PCB tariffs
5.15 Oftel accepts that the concept of reasonable access to PCBs must also include affordable charges. Neither public nor private payphones are subject to direct price control, and this will not be altered by the recent price control review. Oftel considered bringing PCBs into price control as part of its recent review, but rejected this on the grounds that BT s profits on this business have generally been small and that competition in PCBs is increasing. BT is required to maintain a geographically averaged tariff for its public and managed payphones so the benefits of competition in certain areas are spread to all customers. Given that PCB prices have not been controlled in the past, Oftel considered that it would be inappropriate to bring them into price control now when competitors are just starting up, having based their business plans on what they considered would be free pricing arrangements.
5.16 The cost of an average call from a PCB has fallen since 1984. For example, Oftel estimates that for regional calls (up to 35 miles) an average call costs about 57p in November 1984 if made at peak times, whereas the same call made now costs about 51p. For national rate calls (over 35 miles), an average call cost about £1.08 (at peak time), 82p (at standard time), or 37p (at cheap time) in November 1984 whereas the same calls now cost about 58p, 58p and 35p respectively (the peak rate has now been abolished).
5.17 PCB users pay more for their calls but do not incur the fixed rental charges paid by other customers. A comparison of the current call charges from PCBs with the call charges paid on an ordinary residential tariff shows that an average local call is between 2.3 and 4.1 times more expensive when made from a PCB than from a residential telephone depending on when the call is made, while regional and national calls are 2.3 to 2.7 times more expensive. For international calls, PCBs are approximately 2.3 to 3.3 times more expensive depending on which country is being called.
5.18 There has been some concern about the charges for use of PCBs from consumer groups, given the low income of certain users. However, BT s market research shows that PCB serviceability, ease of use, cleanliness, availability of phones, privacy of kiosks, and choice of ways to pay are all rated as of greater importance to customers than charges. The majority of users also believe that PCBs offer value for money.
5.19 Oftel is not proposing to introduce price control on PCB charges as part of the new universal service arrangements because:
5.20 However, should PCB charges increase significantly or should the tariff structure change to give undue impact o any individual customer group then Oftel would have no choice but to review the position.
Questions:
6 Do respondents support Oftel s proposed amendment of BT s licence and revised guidelines to secure reasonable access to PCBs?
7 Do respondents agree with Oftel that emerging competition and
geographic averaging will be sufficient to keep PCB prices at
acceptable levels?