TELECOMMUNICATIONS ACT 1984
PROVISIONAL ORDER UNDER SECTION 16
October 1999
WHEREAS:
1) On 22nd June 1984, the Secretary of State granted a licence ("the Licence") to British Telecommunications under section 7 of the Telecommunications Act 1984 ("the Act") for the running of the telecommunications systems specified in Annex A to the Licence ("the Applicable Systems");
2) By virtue of section 109 of, and paragraph 20 of Schedule 5 to, the Act, the Licence has effect as if granted to British Telecommunications plc ("BT");
3) Condition 40 of the Licence places on the Licensee an obligation to provide certain classes of telecommunication services. The condition states (inter alia):
40.1 The Licensee shall provide at the reasonable request of any person, telephony services to that person ……… by means of the Applicable Systems, and the Licensee shall ensure that the Applicable Systems are installed, kept installed and run for those purposes"
4) Condition 57 of the Licence prohibits the exercise of undue discrimination and/or the showing of undue preference on the part of the Licensee. In particular, Condition 57.1 of the Licence states (inter alia):
57.1 the Licensee shall not (whether in respect of the charges or other terms or conditions applied or otherwise) show undue preference to, or exercise undue discrimination against, particular persons or persons of any class or description (in any market) as respects:
i) the provision by means of the Applicable Systems of any telecommunications service provided by the Licensee(including offers of terms on which such services are to be provided):
(A) which the Licensee is obliged to provide for the purposes of [Condition 40.1]
5) Further, paragraph 57.1(b) of the Licence states:
57.1(b) the Licensee may be deemed to have shown such undue preference or to have exercised such undue discrimination if it unfairly favours to a material extent a business carried on by it in relation to the provision of any telecommunication service referred to in paragraph (a) above so as to place at a significant competitive disadvantage persons competing with that business.
6) For the purposes of the Licence "persons" means either natural or legal persons.
7) Condition 12.1 of the Licence states that (subject to specific exceptions which do not apply in the circumstances of this case):
12.1 The Licensee shall not render any bill in respect of any description of telecommunication Service provided by means of the Applicable Systems unless every amount …… stated in the bill is no higher than an amount which represents the true extent of any such Service actually provided by the Licensee to the customer in question."
Background information relating to the Calls & Access Service
The Service
8) Since 19 October 1998 the Licensee has offered to supply a Service known as "Calls & Access" ("the Service") to service providerSPs ("SPs"). The Service purports to be designed to allow a SP to contract directly with the end user for the provision of the end user’s telephone line and of the ability to make calls over those lines. When a line is rented by the Licensee to a SP the pre-existing contractual relationship between the end user and the Licensee is terminated. The Licensee provides the line to the SP who then provides it to the end user. The Licensee is contractually responsible to the SP for the repair and maintenance of the line and for the quality of the call service as all calls are made utilising the Licensee’s infrastructure. The SP provides the point of direct contact for the end user who receives a telephone bill from the SP. In addition to simple re-selling of the Licensee’s services, SPs are able to "bolt on" additional value-added services. Such services include monthly billing, automatic routing of national and international calls via alternative operators to secure lower call costs and the provision of internet services offering low cost or free access call charges.
The Gateway
9) The Licensee’s preferred method of receiving requests to transfer service from SPs is by means of a computer system, owned and operated by the Licensee, which allows limited two-way transmission of data between the Licensee and the SP ("the Gateway"). Use of the Gateway is not specific to the Service. BT use it to effect other transfers of lines and has proposed to use it for the provisioning of lines in major projects in the future such as the introduction of ADSL technology.
10) The Gateway operates by allowing the SP to enter the details of a request for transfer into the Licensee’s own system. Once received, the Licensee’s system scans the data for immediately obvious errors (such as a customer name not matching the subscriber records for a particular number) and either accepts or rejects the application. Once accepted, the Licensee carries out the relevant work to arrange the transfer assigning certain codes to the application at various stages in the process. The SP is able to view the progress of the transfers it has put forward by accessing the system and checking those codes.
Time allowed for provisioning of transfers
11) It has previously been agreed by the Licensee that, once a request for transfer has been accepted, the Licensee shall provision that transfer within eight days. In the absence of any communication to the contrary, a SP can properly assume that it can start billing an end user directly once that eight day period has expired. The eight day period not only allows the actual transfer to take place but also allows a short "cooling-off" period during which the end user can, if necessary, change his mind and the Licensee can attempt legitimate win-back activity.
Billing
12) Once an end user has transferred from the Licensee to the SP, the SP should receive sufficient data from the Licensee to allow it to bill its end users. The SP must bill the end user in such a way as accords with its own contractual obligations and those laid down in the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 ("the Regulations"). The Licensee purports to supply such information by means of a monthly consolidated invoice known as the "Onebill". The Onebill provides a collated invoice for up to 17,000 individual lines with the information being provided either by paper and by means of a CD-ROM.
13) In addition to the Onebill the Licensee also provides SPs with call data records ("CDR") which provide an ongoing record of call usage. CDRs covers a day’s call usage and are provided after a lapse of 72 hours. Although they provide an ongoing record of service usage, CDRs are not, however, suitable for the purpose of billing end users as, according to the Licensee, they are neither accurate or reliableonly provide a limited data set within specified parameters. The Licensee has now advised SPs that they should not use CDRs for billing and should only rely upon the information contained in the Onebill.
End users wishing to transfer service back to the Licensee
14) Where an end-user wishes to return to the Licensee from a SP, it is necessary for him to enter into a new contract with the Licensee for rental of his telephone line. Before the Licensee can enter into such a contract, the contract with the SP must be terminated. As the end user is not a party to the contract relating to rental of the line from the Licensee, he has no locus to terminate or otherwise alter the contract between the SP and the Licensee. Before the end user can return to the Licensee, it is, therefore, necessary either for the SP to give its consent to the termination of the contract relating to that particular line, or for the end user to terminate his contract with the SP in accordance with the terms of his contract with the SP and the for the Licensee to give written notice of its intention to end the contact for that line in accordance with Clause 15.1 of its standard contract for supply of the Service.
The relevant acts and omissions on the part of the Licensee
15) Since the introduction of the Service the Director has received numerous complaints from two SPs, NextCall Telecom plc ("NextCall") and Localtel Limited ("Localtel") regarding the Licensee’s provision of the Service to them. In addition, there have been numerous complaints made by members of the public.
16) The complaints included, inter alia, allegations that the Service supplied by the Licensee was inadequate for the purposes of the SPs whose needs it was intended to satisfy, as:
a) the Gateway was inadequate for the purpose for which it was being put, in that:
i) the Gateway was not sufficiently robust to deal with the number of requests for transfer put to it by the SPs;
ii) the Gateway, as operated by the Licensee did not provide sufficient information to the SPs to allow them to review properly the progress of their applications;
iii) entry of data into the Gateway by the Licensee was inaccurate, which meant that certain applications could not be viewed by the SP at all. Certain lines were identified in the Licensee’s records by the wrong SP name which resulted in the SP not having the necessary permission to view the records for that line;
iv) the Gateway does not give certain crucial information to the SP
b) the Licensee’s operation of the Gateway and its associated procedures were and remain inadequate in that:
i) SPs have not been provided with the codes necessary to interpret the data available from the Gateway;
ii) despite requests, a manual for operation of the Gateway was not made available to SPs until Oftel directly intervened;
iii) the Licensee has failed to provide SPs timeously with sufficient digital certificates to enable orders to be processed through the Gateway and continues to fail to do so despite repeated requests.
c) The Licensee’s billing system and practice was inappropriate for the product and insufficient for the reasonable needs of the SP customer in that:
i) the format of the Onebill is entirely unsuited for the reasonable requirements of a SP who needs to send an individual, itemised bill to its customers;
ii) the Onebill generally lacks accuracy as a number of entries on the bill refer to charges which are not the responsibility of the SP. Examples of such erroneous entries include:
A) charges for the rental of equipment by the end user from the Licensee which do not form part of the contract for the Service;
B) charges for the Licensee’s "Call Commitment" scheme were being added notwithstanding that the SPs had explicitly declined this scheme. The application of this scheme to accounts where it was not requested means that where an end user uses less than £10 worth of telephone services provided by the Licensee the SP will be billed a set fee of £13 by the Licensee.
C) SPs are being charged for services such as soft credit bars which are not meant to be charged for separately.
iii) the Licensee continued to send CDRs to SPs which related to customers who had returned to the Licensee.
17) Further, there were complaints that, when providing the service or dealing with end users who were users or potential users of the service, the Licensee acted in a manner which unduly preferred its own business or otherwise placed it in breach of one or more of the conditions of its Licence in that:
a) procedures imposed by the Licensee on SP resulted in end users receiving poorer levels of service than its own end user customers, as:
i) the Licensee has provided insufficient points of contact to deal with operational issues raised by a SP and has failed to provide a specific escalation procedure for problems and queries;
ii) the Licensee has failed to appoint points of contact with sufficient knowledge or authority to deal with the issues raised by SPs;
iii) assistance for SPs is provided via a Service Management Centres (SMC) based in Chester and Three Bridges. The SMC is only operational during routine office hours with no assistance available outside the hours 9am to 5pm, Monday to Friday.
iv) the Licensee refuses to act upon complaints of malicious calls in the same manner as it would treat such complaints from its own end users; complaints from SP customers can only be actioned through the SMC during its operational hours whereas initial action upon complaints from the Licensee’s own customers can be actioned immediately;
v) the Licensee refuses to take reports of faults from SPs through the same channels as it would complaints from its own end users. By making the SP report all faults via one designated contact who then enters the complaint into the Licensee’s system, the Licensee has extended the repair time for faults experienced by SP end users. Further, where the Licensee has introduced a new system for the reporting of faults via the internet it had failed to advise SPs of that service.
b) the Licensee’s Customer Options Team ("COTS") deals directly with requests from customers of SPs with whom it has no existing contractual relationship;
c) the Licence is terminating its contract with the SP without agreement from the SP or giving appropriate notice;
Contraventions of the relevant licence conditions
18) Having considered the information presently available to him, including the Licensee’s proposed enhancements to the Service which are intended to address, inter alia, the complaints listed in paragraphs 16 and 17 above, the Director is satisfied that the Licensee has contravened Condition 12 of its Licence in that bills provided to SPs are inaccurate and contain demands for payment for services above and beyond those services which have actually been provided.
19) On the information presently available to him, the Director is satisfied that the Service provided by the Licensee is so defective in its structure and in its delivery to the SP that its supply does not, in fact, constitute a supply of a service of the type reasonably demanded requested by SPs. On this basis, the Director is satisfied at this time that the Licensee has breached Condition 40 of its Licence by its failure to supply the service reasonably requested.
20) On the information presently available to him, the Director is satisfied that the Licensee has breached Condition 57 of its Licence in that it has showed undue preference to its own business in that:
i) the Licensee has acted upon requests by end users to transfer back to the Licensee in a manner which deprives the SP of the opportunity to properly manage or control its customer base;
ii) the Licensee’s procedures and systems, including the Gateway, billing systems and the provision of CDRs, are so deficient that a SP is unable to provision new customer requests and administer its customer base in an efficient and economically viable manner including the early detection of fraud;
iii) the Service is, in its design and the manner of its supply, so unsuitable for its intended purpose that the reputation of such a service and the SPs who offer it to the general public has and continues to suffer. On the information presently available to him, the Director is satisfied that the adverse effect of such a loss of reputation has a disproportionate effect upon SPs as:
A) existing customers of SPs who experience difficulties with their service are likely to leave the SP and return to the Licensee, thus depriving the SP of income from that customer
B) potential customers are likely to be dissuaded from moving to a SP by reason of the adverse effect which the deficiencies in the Service have on the reputation of the Service
iv) The quality of the Service and its application are such as would deter:
A) potential SPs from purchasing the Service in order to compete for sales of telecommunications services to end users; and
B) existing SPs from seeking to increase their business by actively seeking to increase its customer base
v) the effect of the procedures put in place by the Licensee for, inter alia, the reporting and repair of faults and the initial actioning of complaints of malicious calls, necessarily means that the level of service which the Licensee is able to offer its end users is higher than that which a competent SP can offer its end users.
21) On the information presently available to him, the Director is satisfied that the undue preference shown by the Licensee to its own business places persons competing with that business at a significant competitive disadvantage.
22) On the information presently available to him, the Director is satisfied that the Licensee has contravened and, in the absence of this proposed order, will continue to contravene or is likely to contravene again Condition 40, Condition 12 and Condition 57 of its Licence.
23) Having regard to all the relevant matters arising from his examination of the complaints referred to above and, in particular, to the fact that service providers and end users are likely to sustain loss or damage in consequence of anything which, in contravention of Condition 40, Condition 12 or Condition 57 of the Licence, is done or is likely to be done, or omitted to be done, before a Final Order is made, it appears to the Director to be requisite that a Provisional Order be made on the following terms.
THEREFORE THE DIRECTOR IN EXERCISE OF THE POWERS CONFERRED ON HIM BY SECTION 16(2) AND 16(6) OF THE ACT MAKES THE FOLLOWING PROVISIONAL ORDER:-
i) prevent its personnel working in COTS or in any other part of the Licensee’s business from acting upon any requests relating to the Service made by persons other than the SP, which would necessarily result in:
A) the termination of the Service; or
B) an alteration in the nature of the Service; or
C) the accumulation of any financial or other liability relating to the Service;
without the agreement of the SP or any other lawful authority;
ii) prepare suitably worded briefings relating to the correct treatment of requests and enquiries made by SP customers to the Licensee for use by COTS and any other of the Licensee’s personnel who may reasonably be expected to deal with such requests or enquiries.
iii) supply a copy of any briefing material created for the purposes described in Paragraph 1(ii) above to the Director upon request;
iv) provide a manual for the operation of the Gateway to all SPs using the Service which contains a full list of current order status codes used in the operation of the Gateway and to advise SPs, in writing, of any changes to the manual or the order status codes at least 24 hours before they come into operation;
v) ensure that, to the extent that the Licensee has not already done so, reports of malicious calls made by SPs are dealt with in an equivalent way to similar calls made by the Licensee’s own end users.
2) The Licensee shall, no later than 1st December 1999 ensure that the Service, as supplied, satisfies the reasonable requests of SPs. Notwithstanding the generality of the above, the Licensee shall, no later than 1st December 1999:
i) audit all current data records for lines supplied to SPs under the Service to ensure that:
a) all lines are correctly attributed to the correct SP with a uniform and unique designation being given to each SP so as to allow each SP to utilise the Gateway in respect of each and every one of its accounts;
b) all lines have the correct billing provisioning information recorded against them, such information should, where appropriate:
A) identify the tariff options, Select Services and any call commitment options applicable to a particular line; and
B) identify the dates upon which the Service any associated services or products were ordered, provisioned altered or terminated;
c) CDRs are only sent for those lines which relate to current SP customers.
ii) put in place such systems, manual or otherwise, so as to ensure that the following information is readily available to the SP no more than 24 hours after a request for transfer has been put to the Gateway:
a) if an order has been rejected, the reason for such a rejection;
b) if an order is accepted, confirmation of the provisioning date and time and confirmation of the services to be provisioned for that customer;
iii) ensure that sufficient, appropriate points of contact are in place within the Licensee’s business as can deal timeously with reasonable requests for advice and assistance from SPs.
iv) ensure that procedures are implemented for the supply of Call Data Records to SPs no later than equivalent records are supplied to the Licensee’s own business.
v) have in use a Gateway or such alternative system which is sufficiently robust to cope efficiently with the reasonable demands requests of SPsservice for the serviceService.
vi) notwithstanding the generality of paragraph 2(v) above, ensure that any system introduced by the Licensee for the purpose of provisioning orders allows service providerSPs to properly monitor the progress of their requests for provisioning.
vii) develop, test and implement such systems as will allow timeous and accurate billing of service providerSPs in such a form as will allow service providerSPs to efficiently and accurately bill their end users;
viii) notwithstanding the generality of paragraph 2(vii) above, ensure that any system introduced by the Licensee for the purpose of providing information to SPs suitable for their billing of end users enables the SPend user to provide regular, accurate and properly itemised bills to their end user customers.
3) The Licensee shall provide to the Director, no later than noon on 1st November 1999 and subsequently by noon on each Monday thereafter until further notice, a report covering the operation of the Service, the results of its ongoing monitoring of the issues referred to in Paragraph 1 of this Order and outlining its progress in fulfilling the requirements of paragraph 2 of this Order.
This Provisional Order shall take effect on 26th October 1999. If not previously confirmed by the Director under Section 16(4) of the Act or revoked, it shall cease to have effect on 25th December 1999.
In this Provisional Order words or expressions used have, except where the context otherwise requires, the same meaning as in the Act or the Licence.
DAVID ALBERT EDMONDS
DIRECTOR GENERAL OF TELECOMMUNICATIONS
26th October 1999