Contents

Direction on Phase two issues

Summary and Decision table
Chapter 1 - Oftel's objectives and approach
Chapter 2 - Structure of PPC prices
Chapter 3 - Cost related issues
Chapter 4 - Migration charges
Chapter 5 - Forecasting
Chapter 6 - Service level agreement
Chapter 7 - Infrastructure sharing and mixing issues
Chapter 8 - Equipment re-use
Chapter 9 - Wholesale equivalents of retail services
Chapter 10 - Other phase 2 issues
Chapter 11 - PPC/PSTN mixing

Annex A - List of issues referred to Oftel
Annex B - Description of phase one issues
Annex C - Capacity based charges
Annex D - Model to derive forecasting penalties
Annex E - Migration model
Annex F - Glossary of terms and acronyms

Direction on Phase two issues

DIRECTION UNDER REGULATION 6(6) OF THE TELECOMMUNICATIONS INTERCONNECTION REGULATIONS 1997 ("THE REGULATIONS") RELATING TO A DISPUTE BETWEEN BRITISH TELECOMMUNICATIONS PLC AND GTS, FIBERNET, GLOBAL CROSSING, NEOSCORP, THUS, WORLDCOM, ENERGIS AND COLT CONCERNING THE PROVISION OF PARTIAL PRIVATE CIRCUITS

Whereas:

(A) The Secretary of State granted to British Telecommunications on 22 June 1984 a Licence ("the BT Licence") under section 7 of the Telecommunications Act 1984 ("the Act") for the running of telecommunications systems specified in the BT Licence;

(B) By virtue of section 109 of, and paragraph 20 to, Schedule 5 of the Act the BT Licence has effect as if granted to British Telecommunications plc ("BT");

(C) The Secretary of State has granted to each of GTS, Fibernet, Global Crossing, NeosCorp, Thus, Worldcom, Energis and Colt (the "Operators") a Licence under section 7 of the Act for the running of telecommunications systems specified in the Licences;

(D) The Operators have signed an agreement with BT concerning the provision of Partial Private Circuits;

(E) In August 2001 the Director General of Telecommunications ("the Director") received several requests from the Operators to determine a dispute outlined in the explanatory memorandum ("the Memorandum") accompanying and attached to this Direction;

(F) It is clear to the Director, and self-evident from the fact that he has received requests for a determination, that despite the signing of an agreement and the negotiations which took place in the context of a direction published on 29 March 2001, the Operators remain in dispute with BT over a number of issues;

(G) Regulation 6(6) of the Regulations provides that where there is a dispute concerning interconnection between organisations, the Director shall, at the request of either party, take steps to resolve the dispute. The Direction which the Director makes to resolve the dispute shall represent a fair balance between the legitimate interests of the parties, and shall be notified to the parties in accordance with Regulation 8(3). The parties are entitled to a full statement of the reasons on which the Direction is based;

(H) The Director has published a Direction on 14 June 2002 (otherwise known as the phase 1 Direction) resolving some of the issues in dispute. The phase 1 Direction was amended by a Direction published on 18 October 2002;

(I) The Director has considered, inter alia, the information provided by the parties and the matters set out in Regulation 6(8) of the Regulations. The principal points are summarised in the Memorandum accompanying and attached to this Direction;

(J) The Regulations place upon the Director the general responsibility to encourage and secure adequate interconnection in the interests of all users;

(K) On 10 September 2002 the Director issued a draft of this Direction and accompanying Memorandum concerning issues raised by the dispute left unresolved by the Directions published on 14 June 2002 and 18 October 2002, which contained the Director’s reasons, and to which responses were invited by 8 October 2002;

THEREFORE:

Pursuant to Regulation 6(6) of the Regulations, and having considered, inter alia, the views of the parties and those matters set out in Regulation 6(8) of the Regulations, the Director makes the following Direction to resolve the dispute between BT and the Operators:

Definitions

1. Except as otherwise defined in this Direction, words or expressions used shall have the same meaning as in the Act and in BT’s Licence.

2. For the purpose of this Direction the following terms shall have the meaning as set out in BT’s Standard PPC Handover Agreement, as at the date of publication of this Direction, but with the necessary changes in order to ensure compliance with this Direction and the Direction published on 14 June 2002 (the "Directions"):

Advance Capacity Order
Advance Order Commitment
BT Retail Private Circuit
Capacity Order
Capacity Profile
Customer Sited Handover ("CSH")
Forecast Profile

In-Span Handover ("ISH") Re-Designation
Qualifying BT Retail Private Circuit

3. The following definitions shall also apply for the purpose of this Direction:

Partial Private Circuit charges

4. BT shall charge to an Operator no more than the amounts set out in Annex 1 of this Direction, for each of the products set out in Annex 1 of this Direction and in accordance with Annex 1 and paragraphs 4 to 7 inclusive of this Direction. These charges shall be effective from 1 August 2001 until 31 July 2002.

5. From 1 August 2002 BT shall charge Operators no more than 94.93% of each of the amounts set out in Annex 1 of this Direction, for each of the products set out in Annex 1 of this Direction and in accordance with Annex 1 of this Direction and paragraphs 4 to 7 inclusive of this Direction and paragraph 12 of this Direction.

6. For Partial Private Circuits provided by BT to an Operator which do not pass through two or more BT tier 1 nodes, the main link per kilometre charges set out in Table 4 of Annex 1 of this Direction shall be applied to the straight line distance between the local serving exchange which serves the relevant third party customer premises, and the local serving exchange which serves the relevant Point of Connection.

7. Subject to paragraph 12 of this Direction, for Partial Private Circuits provided by BT to an Operator which pass through two or more BT tier 1 nodes, BT shall charge no more than the main link per kilometre charges set out in Table 4 of Annex 1 of this Direction for the first 15 kilometres for each Partial Private Circuit. The main link per kilometre charges set out in Table 4 of Annex 1 of this Direction shall be applied to the straight line distance between the local serving exchange which serves the relevant third party customer premises, and the local serving exchange which serves the relevant Point of Connection. The main link per kilometre charges set out in Table 4 of Annex 1 to this Direction do not apply to the extent that the main link of a Partial Private Circuit to which this paragraph applies is longer than 15 km.

8. BT shall implement the pricing changes set out in paragraphs 4 to 7 inclusive of this Direction within 80 working days of the date of publication of this Direction.

9. BT shall, as soon as reasonably practicable, inform an Operator of the charges calculated pursuant to paragraphs 4 to 7 inclusive of this Direction which will be applicable to Partial Private Circuits it is already providing to the Operator.

10. Any money payable by BT as a result of the pricing of Partial Private Circuits, retrospectively or otherwise, under this Direction, shall be refunded to an Operator as soon as reasonably practicable. Furthermore, BT shall, on or before the date of an Operator’s first quarterly bill due after 30 working days after the publication of this Direction, provide an interim refund. Such interim refund shall be a reasonable estimate by BT of any refunds payable to the Operator pursuant to this Direction and may be offset by BT against money owed to it by the Operator. BT shall refund to the Operator any remaining money due as soon as reasonably practicable after such interim refund and BT may offset such money against money owed to it by the Operator.

11. BT shall, within 30 working days of the date of publication of this Direction, provide the Director with a report which shall demonstrate to his satisfaction that BT’s plan for implementing paragraphs 9 and 10 of this Direction is reasonable.

12. Unless otherwise agreed by the Director, by 1 January 2004, for each Partial Private Circuit provided by BT to an Operator which passes through two or more BT tier 1 nodes, BT shall charge no more than the main link per kilometre charges set out in Table 4 of Annex 1 of this Direction for a proportion of the straight line distance between the local serving exchange which serves the relevant third party customer premises, and the local serving exchange which serves the relevant Point of Connection. Such proportion shall reasonably reflect the sum of the actual proportions of the Partial Private Circuit which run from the local serving exchange which serves the relevant third party customer premises and the nearest BT tier 1 node, and from the relevant Point of Connection to the nearest serving BT tier 1 node. The main link per kilometre charges set out in Table 4 of Annex 1 of this Direction shall not apply to the portion of the Partial Private Circuit which represents conveyance between two or more BT tier 1 nodes.

For the purposes of this paragraph all distances shall be calculated on the straight line distance between, as the case may be:

- the local serving exchange which serves the relevant third party customer premises and the nearest BT tier 1 node;

- the relevant Point of Connection and the nearest serving BT tier 1 node; and

- two BT tier 1 nodes.

13. The charges for Partial Private Circuits set out in Annex 1 and paragraphs 4 to 7 inclusive and paragraph 12 of this Direction shall apply from the date that a Partial Private Circuit is migrated by BT pursuant to the Directions and the PPC Contract or, if a new Partial Private Circuit (that is a Partial Private Circuit which has not previously been a BT Retail Private Circuit), from the date the Partial Private Circuit is first provided.

14. Where BT has taken, or will take, longer than five working days from receiving a request from an Operator to migrate a Qualifying BT Retail Private Circuit to a Partial Private Circuit, it shall give to the Operator a refund as set out in paragraphs 15 and 16 of this Direction.

15. Where paragraph 14 of this Direction applies, BT shall refund to the Operator a sum of money equal to the difference between:

- the charge levied by BT for the BT Retail Private Circuit to which the request for migration relates; and

- the charge levied by BT for the Partial Private Circuit to which the request for migration relates.

16. The refund set out in paragraph 15 of this Direction shall cover the period from the date BT received, or receives, the request to migrate until the date BT completed, or completes, the migration.

17. After 30 working days following the date of publication of this Direction BT shall, upon an Operator’s written request, provide to the Operator a map of BT’s network within the United Kingdom which clearly illustrates and labels the geographic location of each BT tier 1, tier 1.5, tier 2, and tier 3 node.

Charges for capacity on third party customer infrastructure in situ before August 2001

18. Where an Operator already has a Partial Private Circuit connected to third party customer infrastructure which was in situ before 1 August 2001, and has a Subsequent Partial Private Circuit connected to the same third party customer infrastructure BT shall charge no more than the amount set out in the table below for such a connection. This paragraph shall be effective from 1 August 2001.

Charge for change of speed or interface

19. BT shall charge no more than £94 for changing the speed or interface of a 1 Mbit Partial Private Circuit. This charge shall be effective from 1 August 2001.

Migration

Migration of BT Retail Private Circuits in situ at the date of publication of this Direction

20. A BT Retail Private Circuit, which was in situ and being provided to a Schedule 2 Public Operator on the date of publication of this Direction shall be a Qualifying BT Retail Private Circuit. A BT Retail Private Circuit for which an order had been placed by a Schedule 2 Public Operator on or before the date of publication of this Direction shall be a Qualifying BT Retail Private Circuit.

21. A BT Retail Private Circuit which has been provided to a non-Schedule 2 Public Operator which is running a telecommunications system under a Licence, on or before the date of publication of this Direction, but which is subsequently provided to a Schedule 2 Public Operator, shall be a Qualifying BT Retail Private Circuit. This paragraph, and paragraph 25, shall apply whether or not the non-Schedule 2 Public Operator which is running a telecommunications system under a Licence, and the Schedule 2 Public Operator, are the same Operator.

22. BT shall allow an Operator the option of Re-Designation of a multiplexor for Partial Private Circuit purposes if such a multiplexor either:

- existed before the date of publication of this Direction but is carrying no BT Retail Private Circuits, and nor is any capacity reserved for such; or

- is in the course of being processed for delivery on or before the date of publication of this Direction and no capacity has been reserved for BT Retail Private Circuits.

23. An Operator shall have the right to opt for the Re-Designation of such a multiplexor up until 140 working days after the date of publication of this Direction.

Penalty free migration of Qualifying BT Retail Private Circuits

24. BT shall allow an Operator to migrate a Qualifying BT Retail Private Circuit, to which paragraph 20 of this Direction applies, to a Partial Private Circuit for up until 140 working days following the date of publication of this Direction without the Operator incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits.

25. BT shall allow an Operator to migrate a Qualifying BT Retail Private Circuit, to which paragraph 21 of this Direction applies, to Partial Private Circuits for up until 60 working days following the date that it is first provided to a Schedule 2 Public Operator without the Operator incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits, where such provision takes place after the expiration of 80 working days following the date of publication of this Direction. Where such provision takes place before the expiration of 80 working days following the date of publication of this Direction, BT shall allow an Operator to migrate a Qualifying BT Retail Private Circuit, to which paragraph 21 of this Direction applies, to Partial Private Circuits for up until 140 working days following the date of publication of the Direction without the Operator incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits.

26. Where, at the date of publication of this Direction, BT offers a BT Retail Private Circuit product and does not offer an equivalent Partial Private Circuit product, but subsequently offers to provide an equivalent Partial Private Circuit product, it shall allow an Operator to migrate to the equivalent Partial Private Circuit product without it incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits, for a period of 60 working days following the date on which the equivalent Partial Private Circuit product is first offered by BT, where such an offer takes place after the expiration of 80 working days following the date of publication of this Direction. Where such an offer takes place before the expiration of 80 working days following the date of publication of this Direction, BT shall allow an Operator to migrate to the equivalent Partial Private Circuit product without it incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits, for a period of 140 working days following the date of publication of this Direction.

Charges for reclassification of BT Retail Private Circuits

27. Where a BT Retail Private Circuit is migrated to a Partial Private Circuit in accordance with the PPC Contract, as amended by the Directions, it shall charge the Operator no more than £37 per migrated circuit as a reclassification charge. This charge shall take effect from 1 August 2001.

Charges for failed migration orders

28. Where BT informs an Operator that a request for migration of a BT Retail Private Circuit to a Partial Private Circuit is invalid in accordance with the PPC Contract, as amended by the Directions, it shall charge the Operator no more than £36 per request rejected. This charge shall be effective from 1 August 2001.

Infrastructure tariff conversion charges

29. BT’s infrastructure tariff conversion charges to the Operators shall be no more than the amounts set out in Annex 2 of this Direction and calculated in accordance with Annex 2 of this Direction. These charges shall be effective from 1 August 2001.

30. BT may also levy an infrastructure tariff conversion charge, in accordance with Annex 2 of this Direction, on a BT Retail Private Circuit which was in situ on the date of publication of this Direction and being provided to a non-Schedule 2 Public Operator which is running a telecommunications system under a Licence, but which is subsequently provided to a Schedule 2 Public Operator after the date of publication of this Direction. This paragraph shall apply whether or not the non-Schedule 2 Public Operator which is running a telecommunications system under a Licence, and the Schedule 2 Public Operator, are the same Operator.

Forecast penalties

31. BT shall not levy any forecasting penalties pursuant to the PPC Contract or this Direction in respect of an Advance Capacity Order or Advance Order Commitment submitted before 140 working days following the date of publication of this Direction.

32. BT shall allow an Operator to set its Advance Capacity Order and Advance Order Commitment without any penalty by up to, 10% (by volume) below, or 20% (by volume) above, the amount stated in the Operator’s previous Capacity Profile or Forecast Profile for the period covered by the Advance Capacity Order or Advance Order Commitment.

33. BT shall allow an Operator to revise periods covered by its previously stated Capacity Profile and Forecast Profile without any penalty by up to, 30% (by volume) below, or 30% (by volume) above, the amount stated in the Operator’s previous Capacity Profile or Forecast Profile, provided that paragraph 32 of this Direction does not apply.

34. In calculating any increase to an Advance Capacity Order, Advance Order Commitment, Capacity Profile or Forecast Profile pursuant to paragraphs 32 and 33 of this Direction, the outcome of the revision shall, if not an integer, be rounded up to the nearest integer.

35. In calculating any decrease to an Advance Capacity Order, Advance Order Commitment, Capacity Profile or Forecast Profile pursuant to paragraphs 32 and 33 of this Direction, the outcome of the revision shall, if not an integer, be rounded down to the nearest integer.

36. Where an Operator places a Capacity Order at a Point of Connection for the period corresponding to that of the Advance Capacity Order, which total less than its Advance Capacity Order for the Point of Connection, BT may levy a charge no more than a sum equal to:

[(80% of B) – C] x £2,490

Where B is the total capacity provision by number of VC4-equivalent units specified in the relevant Advance Capacity Order in respect of each Point of Connection; and

Where C is the number of VC4-equivalents ordered during the period to which the relevant Advance Capacity Order relates in respect of each Point of Connection, but does not include cancellations of Capacity Orders made during or after the relevant Advanced Capacity Order period, but does include any Capacity Order cancelled as a result of the inability of BT to secure consents for CSH links.

37. Where an Operator places orders for Partial Private Circuits below 1 Mbit for the period corresponding to that of the Advanced Order Commitment, which total less than its Advance Order Commitment for the Partial Private Circuits below 1 Mbit, BT may levy a charge no more than a sum equal to:

[(80% of B) – C] x £52

Where B is the total Advance Order Commitment for Private Partial Circuits below 1 Mbit; and

Where C is the number of Partial Private Circuits below 1 Mbit ordered during the period to which the Advance Order Commitment relates, but does not include cancellations of orders for Partial Private Circuits made during or after the relevant Advanced Order Commitment period, but does include any order for a Partial Private Circuit cancelled as a result of the inability of BT to secure consents for Partial Private Circuits.

38. Where an Operator places orders for Partial Private Circuits from 1 Mbit to 45 Mbit/s for the period corresponding to that of the Advanced Order Commitment, which total less than its Advance Order Commitment for Partial Private Circuits from 1 Mbit to 45 Mbit/s, BT may levy a charge no more than a sum equal to:

[(80% of B) – C] x £143

Where B is the total Advance Order Commitment for Private Partial Circuits from 1 Mbit to 45 Mbit/s; and

Where C is the number of Partial Private Circuits from 1 Mbit to 45 Mbit/s ordered during the period to which the Advance Order Commitment relates, but does not include cancellations of orders for Partial Private Circuits made during or after the relevant Advanced Order Commitment period, but does include any order for a Partial Private Circuit cancelled as a result of the inability of BT to secure consents for Partial Private Circuits.

39. Where an Operator places orders for Partial Private Circuits above 45 Mbit/s for the period corresponding to that of the Advanced Order Commitment, which total less than its Advance Order Commitment for Partial Private Circuits above 45 Mbit/s, BT may levy a charge no more than a sum equal to:

[(80% of B) – C] x £3,788

Where B is the total Advance Order Commitment for Private Partial Circuits above 45 Mbit/s; and

Where C is the number of Partial Private Circuits above 45 Mbit/s ordered during the period to which the Advance Order Commitment relates, but does not include cancellations of orders for Partial Private Circuits made during or after the relevant Advanced Order Commitment period, but does include any order for a Partial Private Circuit cancelled as a result of the inability of BT to secure consents for Partial Private Circuits.

40. In calculating (80% of B) in paragraphs 36 to 39 inclusive of this Direction the outcome shall, if not an integer, be rounded down to the nearest integer.

Service level agreements

General

41. Subject to paragraphs 89, 108 and 109 of this Direction, paragraphs 43 to 55 inclusive, and paragraphs 57 to 85 inclusive of this Direction shall apply to Partial Private Circuits and Network Infrastructure ordered on or after 30 working days following the date of publication of this Direction.

42. Subject to paragraphs 41, 89 and 109 of this Direction, paragraphs 45 to 47 inclusive, 53 (as regards records concerning repair), 55, 69 and 78 to 85 inclusive of this Direction shall apply to all Partial Private Circuits and Network Infrastructure regardless of when, or if, they were migrated from a BT Retail Private Circuit, and regardless of when the Partial Private Circuit or Network Infrastructure was ordered.

43. BT shall set a Committed Delivery Date for each Partial Private Circuit or Network Infrastructure ordered from it by an Operator.

44. For each Partial Private Circuit or Network Infrastructure ordered from BT by an Operator, BT shall provide to an Operator Firm Order Confirmation in the manner set out in paragraph 3 of this Direction.

45. The time scales and levels of fixed individual compensation payments to be payable under the service level agreement shall be those set out in the Directions, unless otherwise agreed between BT and an Operator, or except to the extent that the Director otherwise consents.

46. Unless otherwise agreed between BT and an Operator, any fixed individual compensation payment, or reimbursement pursuant to paragraph 50 of this Direction, payable by BT to an Operator pursuant to the Directions shall be offset by BT against the money owed to it by the Operator, on a quarterly basis, with an initial one-off adjustment in order to co-ordinate payments with the next billing cycle following, at the latest, 50 working days after the date of publication of the Direction. BT shall keep complete and accurate records of the amounts it has offset in accordance with this paragraph. Such records shall be made available by BT following a request by an Operator.

47. BT shall not be liable to pay fixed individual compensation payments pursuant to the Directions for periods of delay which arise due to circumstances beyond its reasonable control. BT shall notify an Operator as soon as reasonably practicable when such circumstances arise. All contractors or sub-contractors of whatever level, and their respective employees, servants and agents, shall for the purpose of this paragraph be treated as employees of BT. Major construction works shall not be considered circumstances beyond BT’s reasonable control.

48. Any time limits set out in this Direction shall not apply to an Operator to the extent that periods of delay arise due to circumstances beyond its reasonable control. The Operator shall notify BT as soon as reasonably practicable when such circumstances arise. All contractors or sub-contractors of whatever level, and their respective employees, servants and agents, shall for the purpose of this paragraph be treated as employees of the relevant Operator.

49. BT shall, at the reasonable request of an Operator, postpone the Committed Delivery Date of a Partial Private Circuit or Network Infrastructure if such postponement is technically and organisationally reasonable. In agreeing to such a postponement BT shall only charge for reasonable additional expenses it has directly incurred as a result of the postponement.

50. BT shall only postpone the Committed Delivery Date of a Partial Private Circuit or Network Infrastructure with the written agreement of the Operator. BT shall inform the Operator as soon as reasonably possible of any proposed postponement of the Committed Delivery Date. Where such a postponement takes place BT shall reimburse the Operator for any reasonable additional cost incurred by the Operator as a direct result of the postponement.

51. The FOC Receipt Interval shall be a maximum of:

- five working days for Partial Private Circuits of less than 2 Mbit/s; and

- eight working days for Partial Private Circuits of 2 Mbit/s and above and Network Infrastructure;

regardless of how many Partial Private Circuits are, or the amount of Network Infrastructure is, ordered at a particular site.

52. The FOC Acceptance Interval shall be a maximum of one working day for Partial Private Circuits of 2 Mbit/s or below and two working days for Partial Private Circuits above 2 Mbit/s and Network Infrastructure. Where an Operator has not informed BT of its Acceptance of Terms or rejection of the order within five working days of the FOC Date, BT may cancel the Operator’s order.

53. BT shall keep complete and accurate records of the ordering, provision and repair of Partial Private Circuits and Network Infrastructure it provides to an Operator.

54. Where any Partial Private Circuit or Network Infrastructure which is ordered by an Operator is in excess of 110% (by volume), rounded up to the nearest integer where necessary, of its Advance Order Commitment or Advance Capacity Order, the applicable Requisite Period set out in the tables in paragraphs 61 and 71 of this Direction shall be extended by 50% and rounded up to the nearest working day, where necessary, for the purposes of calculating fixed individual compensation payments.

Unliquidated damages

55. Nothing in the PPC Contract, as amended by the Directions, shall prevent an Operator from bringing a claim against BT for unliquidated damages over and above the fixed individual compensation payments set out in the Directions.

Partial Private Circuits

Quick quote and high bandwidth quote on line

56. BT shall provide to an Operator, upon written request, the necessary wholesale network and pricing information to enable the Operator to obtain the same information for Partial Private Circuits that is available to BT Retail, for its "Quick Quote" and "High Bandwidth Quote On Line" quote facilities. Such services shall be provided by BT on a cost orientated basis.

Concurrency of Partial Private Circuit and ISH link and CSH link delivery times

57. Where an Operator has ordered a Partial Private Circuit, and the operation of the circuit requires the provision of an ISH link or CSH link, BT shall ensure that the delivery dates of the Partial Private Circuit and the CSH link or ISH link are the same.

Expedited orders

58. Upon an Operator’s written request, BT shall make reasonable endeavours to set a Committed Delivery Date for Partial Private Circuits within 50% of the relevant Requisite Period set out in the table in paragraph 61 of this Direction, rounded up to the nearest working day where necessary, for at least 15% (by volume) of an Operator’s previous month’s order. The Operator shall inform BT which particular Partial Private Circuits BT shall endeavour to be expedited pursuant to this paragraph. This paragraph shall only apply to the delivery of Partial Private Circuits of 2 Mbit/s or less. This paragraph shall not apply to Partial Private Circuits which exceed 110% (by volume), rounded up to the nearest integer where necessary, of an Operator’s Advance Order Commitment.

59. Paragraph 68 of this Direction does not apply to orders of Partial Private Circuits made pursuant to paragraph 58 of this Direction.

Time scales for fixed individual compensation

60. Where the Committed Delivery Date for Partial Private Circuits is set by BT later than the relevant Requisite Period (as set out in the table in paragraph 61 of this Direction) without the agreement of an Operator, BT shall be liable to pay the Operator a fixed individual compensation payment equal to 5% of the monthly rental for the Private Partial Circuit delayed, per working day or part of a working day in respect of the period commencing immediately on the expiry of the relevant Requisite Period and expiring on the Installation Date.

61. Where the Committed Delivery Date for Partial Private Circuits is set by BT either, later than the relevant Requisite Period (as set out in the table below) but with the agreement of an Operator, or within the Requisite Period, BT shall be liable to pay the Operator a fixed individual compensation payment equal to 5% of the monthly rental for the Private Partial Circuit delayed, per working day or part of a working day in respect of the period commencing immediately on the working day following the Committed Delivery Date and expiring on the Installation Date.

Bandwidth of Partial Private Circuit Requisite Period

64 kbit/s 10 working days

128 kbit/s to 256 kbit/s delivered over copper 10 working days

128 kbit/s to 256 kbit/s delivered over fibre 30 working days

320 kbit/s to 960 kbit/s 30 working days

1 Mbit 30 working days

2 Mbit/s 30 working days

Subsequent Partial Private Circuit of 2 Mbit/s 10 working days

34 Mbit/s to 155 Mbit/s 57 working days

Above 155 Mbit/s 72 working days

Operator’s ability to cancel order

62. Where the Provisioning Interval exceeds the relevant Requisite Period set out in the tables in paragraph 61 of this Direction, an Operator shall be allowed to cancel its order for a Partial Private Circuit after the Cancellation Threshold (as set out in the table below) has expired. The Cancellation Threshold shall commence upon the expiry of the relevant Requisite Period set out in the tables in paragraph 61 of this Direction. The Requisite Periods in the table in paragraph 61 shall apply, for the purposes of this paragraph, regardless of whether there is a delay in delivery of a Partial Private Circuit which is due to circumstances beyond BT’s reasonable control.

63. Where an Operator cancels a Partial Private Circuit pursuant to paragraph 62 of this Direction, BT shall not charge the Operator for the circuit and shall not charge for cancelling the circuit. BT shall also be liable to pay the Operator any fixed individual compensation payments accumulated pursuant to the PPC Contract as amended by the Directions.

Reduced Requisite Periods for Partial Private Circuits

64. BT shall ensure that for at least 70% (by volume) of Partial Private Circuits of a particular bandwidth delivered by BT to an Operator within a three month period (such period not to be calculated on a rolling basis) the Committed Delivery Date is set within the relevant Reduced Requisite Period (as set out in the table below).

Bandwidth of Partial Private Circuit Reduced Requisite Period

128 kbit/s to 256 kbit/s delivered over fibre 20 working days

320 kbit/s to 960 kbit/s 20 working days

1 Mbit 20 working days

2 Mbit/s 20 working days

34 Mbit/s to 155 Mbit/s 45 working days

Above 155 Mbit/s 50 working days

65. In calculating the 70% (by volume) of Partial Private Circuits to which paragraph 64 of this Direction applies the following shall not be included:

- Partial Private Circuits of 64 kbit/s;

- Partial Private Circuits of 128 kbit/s to 256 kbit/s delivered over copper;

- Subsequent Private Partial Circuits of 2Mbit/s;

- Partial Private Circuit orders to which paragraph 58 of this Direction applies; and

- Partial Private Circuits which exceed 110% (by volume), rounded up to the nearest integer where necessary, of an Operator’s Advance Order Commitment.

66. The Reduced Requisite Periods set out in the table in paragraph 64 of this Direction apply only if, in the previous three month billing period (such period not to be calculated on a rolling basis), an Operator has ordered from BT:

- at least ten Partial Private Circuits of the same bandwidth where such Partial Private Circuits are 2 Mbit/s or less; or

- at least two Partial Private Circuits of the same bandwidth where such Partial Private Circuits are more than 2 Mbit/s.

For the purposes of this paragraph the first billing period of three months shall be the first three month billing period falling after 30 working days following the date of publication of this Direction.

67. For the purposes of this Direction, in determining whether 110% (by volume), rounded up to the nearest integer where necessary, of an Operator’s Advance Order Commitment has been exceeded, the calculation shall be at a national level for each individual Partial Private Circuit bandwidth category and applied in the order in which the Partial Private Circuits were ordered by the Operator.

Multiple orders

68. Where BT receives an order for more than 10 Partial Private Circuits at one site from an Operator, the relevant Requisite Period applicable to determine whether BT shall pay fixed individual compensation as set out in paragraphs 60 and 61 of this Direction, shall be the relevant Requisite Period set out in the table in paragraph 61 of this Direction increased by a maximum of 50%. BT shall inform the Operator of the revised time scales as soon as reasonably practicable.

Availability of service

69. When total loss of service (i.e. total loss of service for one minute or longer) occurs three or more times, within a 12 month period, to a Partial Private Circuit, the Operator shall not be liable to BT for the monthly rental in any subsequent month where total loss of failure occurs to the Partial Private Circuit, until such time as 12 months have passed and the Partial Private Circuit has not suffered total loss of service. Occurrences of total loss of service which result in BT being liable to pay fixed individual compensation pursuant to paragraphs 80, 81 and 83 of this Direction, shall not be considered as an occurrence of a total loss of service for the purposes of this paragraph.

Network Infrastructure

Time scales for fixed individual compensation

70. Where the Committed Delivery Date for Network Infrastructure is set by BT later than the relevant Requisite Period (as set out in the table in paragraph 71 of this Direction) without the agreement of an Operator, BT shall be liable to pay the Operator a fixed individual compensation payment equal to 0.3% of the connection fee for the Network Infrastructure, per working day, or part of a working day, in respect of the period commencing immediately on the expiry of the relevant Requisite Period and expiring on the Installation Date,

71. Where the Committed Delivery Date for Network Infrastructure is set by BT either, later than the relevant Requisite Period (as set out in the table below) but with the agreement of an Operator, or within the Requisite Period, BT shall be liable to pay the Operator a fixed individual compensation payment equal to 0.3% of the connection fee for the Network Infrastructure, in respect of the period commencing immediately on the working day following the Committed Delivery Date and expiring on the Installation Date.

Network Infrastructure Requisite Period Requisite Period

Operator’s ability to cancel order

72. Where the Provisioning Interval exceeds the relevant Requisite Period set out in the table in paragraph 71 of this Direction, an Operator shall be allowed to cancel its order for Network Infrastructure after the Cancellation Threshold (as set out in the table below) has expired. The Cancellation Threshold shall commence upon the expiry of the relevant Requisite Period set out in the table in paragraph 71 of this Direction. The Requisite periods in the table in paragraph 71 shall apply, for the purposes of this paragraph, regardless of whether there is a delay in delivery of Network Infrastructure which is due to circumstances beyond BT’s reasonable control.

73. Where an Operator cancels Network Infrastructure pursuant to paragraph 72 of this Direction, BT shall not charge the Operator for the Network Infrastructure and shall not charge for cancelling the Network Infrastructure. BT shall also be liable to pay the Operator any fixed compensation payments accumulated pursuant to the PPC Contract as amended by the Directions.

Reduced Requisite periods for Network Infrastructure

74. BT shall ensure that for at least 70% (by volume) of the total VC4-equivalents of Network Infrastructure delivered by it to an Operator during a three month period (such period not to be calculated on a rolling basis) the Committed Delivery Date is set within the relevant Reduced Requisite Period (as set out in the table below).

75. In calculating the 70% (by volume) of the total VC4-equivalents of Network Infrastructure to which paragraph 74 of this Direction applies the following shall not be included:

- Network Infrastructure which exceeds 110% (by volume), rounded up to the nearest integer where necessary, of an Operator’s Advance Capacity Order.

76. The Reduced Requisite Periods set out in the table in paragraph 74 of this Direction only apply if, in the previous three month billing period (such period not to be calculated on a rolling basis) an Operator has ordered from BT at least 2 VC4-equivalents of Network Infrastructure. For the purposes of this paragraph the first billing period of three months shall be the first such billing period falling after 30 working days following the date of publication of this Direction.

77. For the purposes of this Direction, in determining whether 110% (by volume), rounded up to the nearest integer where necessary, of an Operator’s Advance Capacity Order has been exceeded, the calculation shall be made using VC4-equivalents at each Point of Connection applied in the order in which the Network Infrastructure was ordered by the Operator.

Repair of Partial Private Circuits and Network Infrastructure

78. Where BT offers to an Operator Regular Care and Enhanced Care for Partial Private Circuits and Network Infrastructure it shall do so at a cost orientated price and as set out in the table below:

79. Receipt by BT from an Operator of a report of a fault concerning a Partial Private Circuit or Network Infrastructure, shall be acknowledged by BT to the Operator within one hour.

80. Where BT fails to repair a Partial Private Circuit within the time limits set out in the table in paragraph 78 of this Direction it shall pay to the Operator a fixed individual compensation payment as set out in paragraphs 81 to 85 inclusive of this Direction in respect of the period commencing on the expiry of the applicable repair time set out in the table in paragraph 78 and expiring at the time the Partial Private Circuit or Network Infrastructure is repaired.

81. Where the Operator has ordered BT’s Regular Care for Partial Private Circuits, BT shall pay the Operator an amount equal to 100% of the monthly rental payable for the type of Partial Private Circuit being repaired per working day, or part of a working day, of delay is repair.

82. Where the Operator has ordered BT’s Regular Care for Network Infrastructure, BT shall pay the Operator an amount equal to 1% of the connection fee for the type of Network Infrastructure being repaired per working day, or part of a working day, of delay in repair.

83. Where the Operator has ordered BT’s Enhanced Care for Partial Private Circuits, BT shall pay the Operator an amount equal to 15% of the monthly rental payable for the type of Partial Private Circuit being repaired per hour, or part of an hour, of delay in repair.

84. Where the Operator has ordered BT’s Enhanced Care for Network Infrastructure, BT shall pay the Operator an amount equal to 0.15% of the connection fee for the type of Network Infrastructure being repaired per hour, or part of an hour, of delay in repair.

85. BT shall not be liable to pay fixed individual compensation pursuant to paragraphs 82 and 84 of this Direction where it is also liable for fixed individual compensation pursuant to paragraphs 81 and 83 of this Direction where the Partial Private Circuit is being provided using the Network Infrastructure which is being repaired.

Reporting

86. BT shall provide to the Director:

- individual quarterly reports to each of the Operators and to the Director; and

- aggregated quarterly reports with respect to all Schedule 2 Public Operators,

setting out its on its performance with respect to Committed Delivery Dates, Requisite Periods, Reduced Requisite Periods, FOC Receipt Intervals, repair and availability of service and a list of incidences of circumstances beyond the reasonable control of BT, split by reason. The aggregated reports shall include BT's performance with respect to its retail arm.

87. BT shall provide to the Director on a quarterly basis the following information:

- the percentage of a Schedule 2 Public Operator’s previous month's orders having Committed Delivery Dates quoted within 50% of the Requisite Periods set out in the table in paragraph 61 of this Direction;

- the number and percentage of instances where each Schedule 2 Public Operator exceeds the applicable FOC Acceptance Interval, set out by bandwidth, for Partial Private Circuits;

- the number and percentage of instances where each Schedule 2 Public Operator exceeds the applicable FOC Acceptance Interval for Network Infrastructure;

- the average amount by which each Schedule 2 Public Operator exceeds the applicable FOC Acceptance Interval, set out by bandwidth, for Partial Private Circuits;

- the average amount by which each Schedule 2 Public Operator exceeds the applicable FOC Acceptance Interval for Network Infrastructure;

- the number and percentage of orders for Partial Private Circuits rejected by BT;

- the number and percentage of orders for Network Infrastructure rejected by BT;

- the mean response time to fault reports relating to Partial Private Circuits and Network Infrastructure set to BT by Schedule 2 Public Operators; and

- new installation fault report rate relating to Partial Private Circuits.

88. The information set out in paragraph 87 of this Direction shall be provided by BT on the following basis:

- for each Schedule 2 Public Operator;

- aggregated for all Schedule 2 Public Operators;

- aggregated for all of BT Retail’s customers; and

- aggregated for all of the top 100 customers (by value) of BT Retail.

89. The information set out in paragraphs 86 to 88 inclusive of this Direction shall first be due on 1 July 2003 and apply as appropriate to:

- Partial Private Circuits and Network Infrastructure ordered on or after the relevant implementation dates set out in this Direction; and

- all Partial Private Circuits and Network Infrastructure regardless of when, or if, they were migrated from a BT Retail Private Circuit, and regardless of when the Partial Private Circuit or Network Infrastructure was ordered.

90. BT shall ensure that it is able to provide within a reasonable period, to be determined by the Director, following a request from the Director, the following information:

- list of reasons for order rejection;

- list of reasons for faults;

- list of reasons for any Committed Delivery Dates begining 10 working days later than the relevant Requisite Period;

- the number of overdue Partial Private Circuits;

- the number of overdue Partial Private Circuits due to the Operator not being ready to accept installation;

- the average ageing of overdue Partial Private Circuits split into 10 working day categories;

- service credits due to each Schedule 2 Public Operator; and

- quality improvement actions undertaken or proposed.

91. BT shall attend, and invite Operators to, regular meetings to review the level of service provide by BT in relation to Partial Private Circuits and related Network Infrastructure.

Change of speed or interface

92. Within 30 working days of the date of publication of this Direction BT shall offer to provide, at cost orientated prices, within a reasonable period of an Operator’s written request, the ability to alter the speed or interface of a Partial Private Circuit.

93. BT shall ensure that it provides to an Operator a Partial Private Circuit variant for the services to which paragraph 92 of this Direction applies, which are equivalent to the services it currently provides on a retail basis for retail leased lines.

STM-1, ISH and CSH handover

94. BT shall within 30 working days of the date of publication of this Direction, offer to provide within a reasonable period of an Operator’s written request for a Synchronous Transfer Mode–1 ("STM-1"), an interface using an ISH link or CSH link on a non-discriminatory and cost orientated basis; and handover pursuant to paragraph 2 of the phase 1 Direction published on 14 June 2002. Such link or handover shall be provided by way of Network Connecting Apparatus capable of providing no more than the STM-1 capacity ordered by the Operator.

Equipment re-use

95. Paragraphs 95 to 102 inclusive of this Direction shall only apply to the re-use of Plesiochronous Digital Hierarchy ("PDH") and Synchronous Digital Hierarchy ("SDH") equipment situated at a third party site ("Equipment"). BT shall offer Equipment re-use pursuant to paragraphs 95 to 102 inclusive of this Direction within 30 working days of the date of publication of this Direction.

96. Where an Operator requests BT to provide Equipment at a specific site, and the Operator has already used the Equipment at the site, BT shall allow the Operator to re-use the Equipment at that site, subject to paragraph 98 of this Direction, without charge, subject to paragraph 100 of this Direction, or at any other third party site without charge, subject to paragraphs 99 and 100 of this Direction, for as long as the Equipment remains available for use.

97. Where an Operator requests BT to provide Equipment at a specific site, and the Operator has not used the Equipment at the site, BT shall allow the Operator to re-use the Equipment at the site, subject to paragraph 98 of this Direction and shall charge the Operator a discounted charge equivalent to its remaining value. Such discounted charge shall be cost orientated and shall be passed on to the Operator which had previously used the Equipment at that site, less any reasonable costs incurred by BT in administrating a system necessary to implement paragraphs 95 to 102 inclusive of this Direction.

98. BT may reject a request by an Operator for re-use of PDH Equipment if such re-use would be incompatible with its network. Any such rejection by BT shall be made within 10 working days of a request by an Operator and fully justified in writing to the requesting Operator at the same time as the request is rejected.

99. BT shall only charge an Operator for testing SDH Equipment before such equipment is re-used, where such infrastructure is to be re-located. Such charge shall be cost orientated. In addition BT may levy a cost orientated charge for re-locating SDH Equipment.

100. BT may levy a cost orientated charge for testing PDH Partial Private Circuit Equipment before such infrastructure is re-used. In addition BT may levy a cost orientated charge for re-locating PDH Equipment.

101. The charge contained in paragraph 97 of this Direction shall:

- reflect all the incremental costs necessarily and efficiently incurred;

- reflect the value of the Equipment being re-used; and

- be non-discriminatory.

102. All charges set out in paragraphs 99 and 100 of this Direction shall reflect all the incremental costs necessarily and efficiently incurred and be non-discriminatory.

Migration of Partial Private Circuits terminating on 4X2 multiplexors

103. BT shall allow an Operator to migrate a BT Retail Private Circuit, which is terminated on a 4x2 multiplexor to a Partial Private Circuit, for up until 140 working days following the date of publication of this Direction without the Operator incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits.

Migration of Partial Private Circuits terminating on multi-tenancy equipment

104. BT shall allow an Operator to migrate a BT Retail Private Circuit, which terminates on multi-tenancy equipment, to a Partial Private Circuit up until 140 working days following the date of publication of this Direction without the Operator incurring any penalty (including any default or early termination charge) under its agreement with BT for the provision of BT Retail Private Circuits.

Partial Private Circuit with no single point of failure

105. Within 40 working days of the date of publication of this Direction BT shall complete a feasibility study on the product and processes necessary for it to offer an Operator a Partial Private Circuit with no single point of failure ("the Product"). When conducting this feasibility study BT shall have the utmost regard to the Operator’s requirements and the NICC Study 59 Report. The outputs of this feasibility study shall, in particular, include:

- an assessment of the most efficient and cost effective approach available to BT to provide the Product;

- identification of development costs of the Product relative to the estimated level of demand;

- indicative costs to BT of the Product;

- indicative prices of the Product;

- an assessment of the suitability of each of the three network architecture candidates outlined in the NICC Study 59 Report;

- time scales for implementation of the Product;

- time scales for delivery of the Product; and

- specification of the Product.

106. Unless the Director otherwise agrees, BT shall, before 1 July 2003, offer to provide the Product, within a reasonable period of an Operator’s request.

Modification of the PPC Contract and implementation of this Direction

107. This Direction shall form part of the interconnection agreement between BT and the Operators, and BT and the Operators shall modify their PPC Contract, and if necessary any other interconnect agreement, to give effect to, and implement, this Direction within 30 working days of the date of publication of this Direction, unless otherwise stated in this Direction.

108. BT shall have 50 working days following the date of publication of this Direction to implement paragraphs 44, 51 and 52 of this Direction and such paragraphs shall apply to Partial Private Circuits and Network Infrastructure ordered on or after 50 working days of the date of publication of this Direction. BT shall have 50 working days to implement the provisions of this Direction concerning fixed individual compensation payments as set out in paragraphs 60, 61, 70 and 71 of this Direction, and such paragraphs shall apply to Partial Private Circuits and Network Infrastructure ordered on or after 50 working days of the date of publication of this Direction.

109. BT shall have 60 working days following the date of publication of this Direction to implement paragraphs 46 (with regard to fixed individual compensation payments concerning repair) and paragraphs 80 to 85 inclusive of this Direction, and such paragraphs shall apply to Partial Private Circuits and Network Infrastructure ordered on or after 60 working days of the date of publication of this Direction.

110. BT shall have 60 working days following the date of publication of this Direction to implement paragraph 90 of this Direction.

111. The Annexes to this Direction form part of the Direction.

Date of entry into force

112. Unless otherwise stated, this Direction shall take effect on the day it is published.

David Albert Edmonds

Director General of Telecommunications

20 December 2002

Annex 1 - Charges for Partial Private Circuits

Table 1 – Point of Connection equipment charges

Table 2: Connection of a new Partial Private Circuit

Table 3: Third party equipment charges

Table 4: Rental and maintenance charges

Table 5: 622 Mbit/s pricing

Annex 2 – Infrastructure tariff conversion charges

Charges for BT Retail Private Circuits below 1 Mbit circuits which were installed up to and including 31 December 2001

Charges for 1 Mbit BT Retail Private Circuits which were installed up to and including 31 December 2001

Charges for 2 Mbit/s for BT Retail Private Circuits which were installed up to and including 31 December 2001

Charges for 34 Mbit/s and 45 Mbit/s BT Retail Private Circuits which where installed up to and including 31 December 2001

Charges for 140 Mbit/s and 155 Mbit/s for BT Retail Private Circuits installed up to and including 31 December 2001

Charges for BT Retail Private Circuits below 1 Mbit installed after 31 December 2001

Charges for 1 Mbit for BT Retail Private Circuits installed after 31 December 2001

Charges for 2 Mbit/s for BT Retail Private Circuits installed after 31 December 2001

Charges for 34 Mbit/s and 45 Mbit/s for BT Retail Private Circuits installed after 31 December 2001

Charges for 140 Mbit/s and 155 Mbit/s for BT Retail Private Circuits installed after 31 December 2001

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