Termination
rate for a mobile operator
Cost Sharing of
Customer Sited Interconnect (CSI) Circuits
Determination
requests relating to the NTS Consultation
Level of the Payphone
Access Charge (PAC) on LRIC
ADSL Services in Kingston upon Hull
Managed Dial IP and ISPnet Dial
Access
Safestyle UK
Unsolicited faxes from Premium
Competition
Calls to Paging Services
Tele-Check
Unsolicited faxes from Addwell
Systems Ltd
Cross-Marketing by BT's
Account Managers
Supply of Interconnect Circuits
Alleged Failure to Supply Cable TV
BT Connect to Business
Telecom Billing Systems Ltd
Worldcom's Billing and
Metering Systems
Cable & Wireless Billing
Inclusion of calls
to mobile in BT Dual Discount scheme
BT Chargecard
Monitoring
CWC Customer Records for
Emergency Access
National leased
lines in the UK
Compliance Forum
The Telecommunications (Data Protection and
Privacy) (Direct Marketing) Regulations 1998
This twelfth issue of Oftel’s Competition Bulletin contains details of developments in the competition and other regulatory enforcement casework handled throughout Oftel from 1 January 1999 to 30 April 1999. Readers should note that previous issues of Competition Bulletin are also available.
As usual, comments are welcome on any of the cases or other issues, especially new cases, where extra industry input would be useful. Please contact the relevant casework officer on the extension number listed (0171 634 + extn number). Alternatively, comments can be e-mailed to the Competition and Fair Trading Directorate. Alternatively, comments can be sent to:
Compliance Directorate; 50 Ludgate Hill; London WC4M 7JJ;
or faxed on: 0171-634-8772 marked for the attention of the relevant case officer.
Suggestions on the general layout or content of the Competition Bulletin can be sent to Peter Silverman at the above address. In supplying comments or submitting complaints, you should indicate whether you are prepared to let us disclose the full details of the information supplied, including whether you are willing to be identified, in any subsequent correspondence Oftel has with the licensee under investigation or with other interested parties. Confidential material should be marked as such and not sent via the Internet address. It should be noted that Oftel's experience has shown that it can be difficult to pursue a case successfully if we are not able to provide all the necessary information to the subject of the complaint. For additional information on this point please see Dealing with anti-competitive behaviour in telecoms on Oftel's website or contact the Oftel library for a paper copy.
This issue was despatched at the end of January 1999. The next issue of Competition Bulletin will be despatched at the beginning of May 1999.
Every last Wednesday in the month a senior member of the Competition and Fair Trading Directorate will be available in person or on the Competition Hotline (0171 634 8833) for consultation on competition related issues. The surgeries aim to concentrate on new or potential complaints, rather than provide updates for complainants on existing cases. The surgeries also aim to give potential complainants guidance on the approach to be taken by the Directorate and the type of information needed by Oftel to pursue a particular issue.
Details of staff available are as follows:
DATE |
AVAILABLE IN PERSON |
AVAILABLE ON TELEPHONE |
26 May 1999 |
Lawrence Knight |
James Tickel |
30 June 1999 |
Keith Loader |
Philip Taylor |
28 July 1999 |
Don Wilson |
Alistair Bridge |
The Hotline is also available between 9:00am and 12:00am, and 2:00pm and 5:00pm Monday to Friday.
This section lists cases that Oftel has opened since the beginning of January 1999.
The Director General has a duty under the Telecommunications Act 1984 to investigate complaints of anti-competitive behaviour in relation to telecommunications (unless they are frivolous). The Act also allows the Director General to investigate issues on his own initiative.
The cases shown in this section represent the majority of the issues with which we deal formally. In addition, we conduct informal discussions or exchanges of correspondence where a potential complainant seeks clarification of our policy or of the possible application of licence conditions to a particular issue, but does not follow through with a formal complaint.
There are a variety of reasons why such exchanges may not lead to a formal complaint including:
Competition Bulletin records cases only where our initial view is that there is a case to consider. However, the opening of a case does not necessarily imply that Oftel has reached any more substantive view of the merits of the case.
Comments and questions regarding all cases outlined below are invited and should be addressed to the relevant case officer in the first instance. Case officers can be contacted direct on 0171 634 + extension number or by post, fax or e-mail.
Termination rate for a mobile operator
Complainant against: BT
Issue: Pricing
Relevant instruments: Regulation 6(6) The Telecommunications (Interconnect) Regulations 1997
Case opened: 23 April 1999
BT has asked Oftel to make a determination regarding the rate for terminating calls to a mobile operator. BT issued an Operator Charge Change Notification (OCCN) under the terms of its interconnection agreement. The mobile operator rejected the OCCN and the parties failed to reach an agreement within the contractual timescale. Thus the operator referred the dispute to the Director General for determination.
Oftel is considering the case and will need to seek more information from the parties involved.
Case officer: Ursula Harnischfeger (extn 8844)
Case reference: BX/663/195
Cost Sharing of Customer Sited Interconnect (CSI) Circuits
Target of the complaint: BT
Issue: Pricing
Relevant instruments: Condition 13 BT’s Licence
Case opened: 8 January 1999
An operator has asked Oftel to make a determination regarding the charging principles for Customer Sited Interconnect (CSI) connection charges, as the parties have been unable to reach an agreement under the ICAS Standard Interconnect Agreement review on this issue. The complainant takes the view that cost-sharing principles established for CSI Rental should be extended to CSI Connection fees.
Oftel has written to BT to seek their view of the dispute and to establish more information from the complainant.
Case officer: Ursula Harnischfeger (extn: 8844)
Case reference: BX/663/155
Determination requests relating to the NTS Consultation
Complaints against: BT
Issue: BT’s proposed increases to its NTS Discounts and Call Origination Charges
Relevant instrument: BT Licence
Cases opened: Jan/Feb 1999
Oftel is currently dealing with a number of determination requests received during January and February relating to disputes surrounding the current number translation service (‘NTS’) Consultation. These are summarised collectively below.
NTS Discounts
When the NTS formula was determined in early 1996, it contained a figure for BT's average discounts applied to its actual retail price to obtain the deemed retail price used in the calculation of BT’s retention and terminating outpayments. The average discount at that time was assessed at 7.5% and this figure has remained unchanged despite several changes to BT's discount offerings to its customers.
In December 1998 BT gave notice through OCCNs that it proposed to increase the average discount figure from 7.5% to 11.45% to take account of increased discount levels over almost 3 years. This was followed by a further OCCN in March 1999 proposing a further increase to 11.77% based on BT’s latest data.
BT has informed Oftel that a number of operators have formally rejected BT’s OCCNs and has referred the dispute to Oftel for determination. Oftel has requested BT’s supporting data and the Director General will give his decision based upon a detailed examination of the figures.
NTS Call Origination/Conveyance
As with NTS discounts, the original NTS formula contained a charge for BT’s origination of calls to its own and other operators’ services based upon a single tandem average. This was because BT was unable to supply data to support operator specific conveyance costs.
A proportion of calls to any operator will incur some double tandem switching by BT. The extent of these is dependent upon how efficiently operators interconnect with BT.
BT has taken samples of calls it has originated to each operator and calculated route factors from the proportion of double tandem calls, which increase the single tandem average charge by varying amounts for each operator. BT has offered these higher charges in connection with the settlement of payments following the 1996/97 Determination of Final Charges for BT’s Standard Services and for current NTS charges from February 1999.
For the 1996/97 payments operators maintain that it is unreasonable for BT to seek such higher charges retrospectively. Had they known BT would be seeking charges based on routing, many operators would have taken steps to increase the numbers of points of interconnection in order to reduce their costs.
In both cases, operators have also rejected BT’s proposals on the grounds that BT’s has not explained how the charge was calculated and they appear far too high. Operators also maintain they need time to adjust their networks to interconnect more efficiently with BT before the higher charges are imposed.
Here again BT has informed Oftel that a number of operators have formally rejected BT’s OCCN. These disputes have been referred to Oftel for determination. Oftel is working with BT to obtain accurate and transparent charges which reflect the optimum call routing for each operator. Once achieved the Director General will give his decision on both the level and the effective dates for the charges.
Case officer: Geoff Brighton (Extn:8925)
Case references: BX/663/146 BX/633/154 BX/663/158 BX/663/168
Level of the Payphone Access Charge (PAC) on LRIC
Complaint against: Oftel own initiative investigation
Issue: Pricing of Access to Calling Card Services from Payphones
Relevant instruments: Condition 13 BT’s Licence
Case opened: 28 January 1999
As Oftel has set out in its document "The level of the Payphone Access Charge" of August 1998, Oftel intends to determine the PAC for the period 1 October 1998 – 30 September 2001 based on Long Run Incremental Costs (LRIC). The PAC will be subject to an RPI-X control where the X is determined specifically in relation to payphone operations (using the model used for other network services).
The PAC is a charge levied by BT to indirect access operators for access via freephone numbers to those operators’ services from BT payphones. Oftel has requested information regarding the determination of the PAC based on a LRIC basis under Condition 52 of BT’s licence. After considering the information Oftel will make a draft determination for public consultation seeking comments from operators and other interested parties. The Director General will then make a final determination.
Case officer: Ursula Harnischfeger (extn 8844)
Case reference: BX/663/163
ADSL Services in Kingston upon Hull
Subject of investigation: Kingston Communications Plc. Pro-active investigation
Issue: Third party access rights to KC’s broadband platform
Relevant instrument: Conditions 16.2 and 21.1 of KC’s licence
Case opened: 22 February 1999
At the beginning of December 1998, Kingston Communications (KC) began a six month trial of broadband ADSL/ATM services to all its small business and residential customers in its licensed area. This trial at the present time only offers fast Internet access and home working (remote LAN access). The trial rollout of interactive television, video-on-demand and other entertainment based services on the ADSL platform of the newly formed ‘Kingston Vision’ business is to begin later this year. A limited trial of similar broadband services to approximately 200 customers in the Hessle area of Hull has been active for the last two years.
Oftel has some concerns about the nature of the trial launched in December 1998 and the ability of third party service providers to obtain access to KC’s ADSL/ATM platforms. In particular, restrictions on third party access during this current trial may not be consistent with KC’s licence obligations not to discriminate in favour of its own business and not to do anything intended to distort competition in the supply of telecommunications services.
Oftel requested information from KC on these matters and is currently assessing the response received from KC at the end of March 1999.
Case officer: John Russell (extn:8830)
Case reference: BX/663/167
Managed Dial IP and ISPnet Dial Access
Complaint against: BT
Issue: Alleged predatory pricing and unfair cross subsidy
Relevant instrument: Conditions 18A and 20B.15 of BT’s licence
Case opened: 25 February 1999
A number of companies now offer dial-up pay-as-you-go Internet access at local call rates without a subscription being paid to the Internet Service Provider (ISP). The most prominent of which is Dixon’s FreeServe service. Given Dixon’s success with FreeServe, a number of other companies – including newspapers and other High Street stores – have launched similar services. Since the beginning of the year BT has launched BT ClickFree and some existing ISPs – including VirginNet – have also scrapped subscription fees.
Companies offering dial-up Internet access to customers require the services of a telecoms operator to connect calls from the customer’s phone line to the Internet access service. However, the services required from the operator will differ according to the amount of infrastructure the company providing the Internet access service has.
Traditional ISPs have a large amount of infrastructure (modem banks, connection to the World Wide Web, etc). They may therefore only require the delivery of PSTN traffic charged to the customer at local rate (usually by local-rate number translation services) to their modem banks.
However, some of the companies new to the supply of internet services do not tend to have significant infrastructure. They have therefore become known as virtual ISPs (VISPs). Most VISP’s interest in Internet access appears to be tangential to its core business and is a way of attracting customers to the VISP’s primary products for example; retail services. Effectively therefore, VISPs have to outsource the provision of much of their Internet access services. In so doing, they require a much more extensive service from an operator or from a combination of an operator and a traditional ISP.
In February 1999, Energis complained to Oftel that BT’s outpayments for two of its ISP/VISP services – Managed Dial IP and ISPnet dial access – were such that both services were not covering their costs of provision. Energis argued that this would severely limit its ability to compete for ISPs’ business. As such, Energis claimed that BT’s prices constituted predatory pricing and unfair cross subsidy in breach of BT’s licence.
Oftel requested cost information from BT on these products in order to assess whether they are covering their costs. Oftel has also requested further information from Energis on the effect BT’s pricing is having on its ability to compete for ISP/VISP business.
Oftel has launched a full investigation and is assessing the following:
For predatory pricing: The relevant market defintion for the provision of these products; BT’s market power in the relevant market(s) or in closely related market(s); BT’s pricing and whether it is below cost; whether this will lead to competitors exiting the market; and whether BT will be able to recoup its losses later.
For unfair cross subsidy: Whether BT is incurring costs in a market in which it is not dominant and paying for those costs through a market in which it is dominant; and whether this is having a material effect on competition in the relevant market.
Oftel would welcome comments from other operators or from ISPs or VISPs on the issues raised by Energis’ complaint.
Case officer: Jane Finlayson-Brown (extn:8825)
Case reference: BX/663/170
This section lists cases resolved since January 1999. It summarises the outcome of each case and gives a general guidance to Oftel's approach, which we hope will be of use to the reader. It is not an exhaustive inventory of precedent.
If you wish to discuss the principles underlying decisions in more detail please contact the case officer listed. Case officers can be contacted direct on 0171 634 + extension
Complaint against: Safestyle UK
Issue: Making unsolicited telesales calls after requests to cease calling an individual
Relevant instrument: Condition 6.1 of the Self Provision Licence (SPL)
Case opened: 4 August 1998
Case closed: 10 February 1999
A member of the public complained that they received unsolicited sales calls from Safestyle UK, a double-glazing supplier, after asking the company to stop calling.
Oftel’s investigation of the complaint indicated that a breach of Condition 6.1 of the SPL had taken place. Condition 6.1 prohibits the licensee from sending messages for the purposes of advertising etc, once a person has requested the licensee to cease sending such messages to a telecommunications system run by that person. Safestyle UK’s billing records indicated that it made a call to the complainant’s number at a time and date which corresponded to the customer’s complaint, and after the date on which Safestyle was requested to cease making calls to the complainant. Since then Safestyle UK has informed Oftel that it has taken steps to ensure that further requests to cease calling are met effectively and promptly. Safestyle UK informed Oftel that in December 1998, it installed into its telephone system at its head office a digital call barring system. This system is to be rolled out to all the company’s sites early in 1999. Safestyle UK has also informed Oftel that it has implemented administrative procedures to work in tandem with the new system, including the placing of responsibility for processing such requests onto a specific individual and publicising the new procedure to the staff. Oftel has received no further complaints of unsolicited calls involving Safestyle UK since 18 September 1998.
In view of this the Director General is not satisfied that Safestyle is likely to make further unsolicited calls in breach of Condition 6.1 of the SPL. No enforcement action is therefore proposed and the case has been closed.
Case officer: Barbara Powell (extn 8708)
Case reference: BX/663/124.
Unsolicited faxes from Premium Competition
Subject of investigation: Premium Competitions and Premium Phone Services (‘Premium’)
Issue: Sending unsolicited faxes
Relevant instrument: Condition 6.1 of the Class Licence to run Branch Systems to Provide Telecommunications Services (TSL)
Case opened: 21 September 1998
Case closed: 2 March 1999
This case was mentioned in Issue 10 and is concerned with unsolicited faxing. The TSL forbids the licensee from issuing unsolicited faxes if a request to cease doing so has been made.
Oftel’s investigation has revealed that Premium employs a third party to send its faxes. The TSL prohibits the sending of faxes by the Licensee or through any member of the Licensee’s corporate group.
The information Oftel received demonstrated that the third party employed by Premium is not part of the same corporate group. It was therefore apparent to Oftel that Premium was not in breach of the TSL.
Oftel has therefore decided to close this investigation.
Case officer: Lawrence Knight (extn:
8747)
Case reference: BX/663/131
Complainant against: BT (Oftel own initiative investigation)
Issue: Excessive Pricing for Calls to Pagers
Relevant instruments: Condition 18A BT’s Licence
Case opened: 1 October 1998
Case closed: 22 April 1999
Following complaints from consumers about the high price of calling pagers Oftel requested information from BT regarding costs of the service provided.
Having considered the information, Oftel opened a formal investigation into the price of calling pagers in October 1998.
BT’s market share for calls from fixed-to pagers was 64% in terms of value and 75% pagers in terms of volume for the year ended 31March 1998. Taking into account BT’s high market share the Director General of Telecommunications considered that BT is in a dominant position in the market for telephone calls to pagers within the meaning of Condition 18A.
Oftel’s investigation found that BT’s retail prices for calls to pagers resulted in a retention for BT from those calls of between 161% and 315% of what in Oftel’s view would be a reasonable level. In arriving at what a reasonable retention should be, Oftel aggregated the relevant costs of this activity with a reasonable rate of return.
It appeared to the Director General that BT was abusing its dominant position in the market for telephone calls to pagers by charging excessive prices for fixed-to-pagers calls.
The Director General was prepared to issue a Provisional Order under Section 16 of the Telecommunications Act of 1984 to ensure that BT’s standard fixed-to-pagers retail prices were reduced no later than 1 June 1999 to reflect a BT retention rate deemed reasonable in the Director General’s view.
BT agreed to cut its prices for calls to pagers to meet the Director General’s requirements. Oftel therefore closed the case.
Case officer: Ursula Harnischfeger (extn: 8844)
Case reference: BX/661/134
Subject of investigation: First Report Limited (acting under the name Tele-Check)
Issue: Sending unsolicited faxes after requests to cease
Relevant instrument: Condition 6 Class Licence for the Running of Self Provided Telecommunications Systems (‘SPL’)
Case opened: 19 October 1998
Case closed: 2 March 1999
Oftel’s investigation revealed that First Report Limited, acting under the name Tele-Check, sent a fax to the complainant after receiving requests from the complainant to cease doing so..
This would appear to contravene Condition 6.1 of the SPL, under which First Report Limited operates its telecommunication system.
First Report Limited provided Oftel with details of the procedures employed to prevent it from faxing persons who have requested not to be contacted.
In these circumstances the Director General was not satisfied that First Report Limited was likely again to breach this Condition of its telecommunications licence. Oftel therefore decided to close the investigation.
Case officer: Lawrence Knight (extn: 8747)
Case reference: BX/663/138
Unsolicited faxes from Addwell Systems Ltd
Subject of investigation: Addwell Systems Ltd
Issue: Sending unsolicited faxes after requests to cease
Relevant instrument: Condition 6.1 of the Self Provision Licence
Case opened: 6 October 1998
Case closed: 2 March 1999
Oftel's investigation revealed that Addwell Systems Limited issued a fax to the complainant after requests had been received that it cease.
This would appear to contravene Condition 6.1 of the SPL under which Addwell Systems operates its telecommunication system. Addwell Systems Limited provided Oftel with details of the procedures employed that will prevent it from faxing persons who have requested not to be contacted.
In these circumstances the Director General was not satisfied that Addwell Systems Limited was likely again to breach this Condition of its telecommunications licence.
Oftel therefore decided to close the investigation.
Case officer: Lawrence Knight (extn 8747)
Case reference: BX/663/144
Cross-Marketing by BT’s Account Managers
Complaint against: BT
Issue: Alleged abuse of market power
Relevant instruments: Conditions 18A, 38 of BT’s Licence
Case opened: 23 November 1998
Case closed: 11 March 1999
Procom Europe ("Procom"), complained that BT acted anti-competitively by cross-marketing one of its ASB products, an SDX-Index, to a customer on whose behalf Procom had requested an ISDN exchange line. Procom alleged that BT offered to sell its customer an SDX-Index, despite the fact that BT knew that Procom had already secured an order from the customer to supply an SDX Index.
Following an investigation, the Director General has concluded, in light of the available information, that he is not satisfied that the conduct in question had a material actual or potential effect on competition under Condition 18A (Fair Trading) of BT’s licence.
Condition 38 requires BT to promulgate a Code of Practice for its employees engaged in the Systems Business and to take all reasonable steps to ensure those employees comply with the Code. The Code’s rules governing disclosure appear to have been followed.
As a result of the Director General’s findings, Oftel’s investigation into this matter has been closed.
Case officer: Karen Lee (extn 8922)
Case reference: BX/663/145
Supply of Interconnect Circuits
Complaint against: BT
Issue: Breach of contract / failure by BT to invest in UK infrastructure
Relevant instruments: Conditions 12A, 13 and 18A of BT’s licence
Complainant: Telinco
Case opened: 17 December 1998
Case closed: 20 April 1999
In December 1998, Telinco, an operator offering internet access services, complained to Oftel that BT had avoided supplying interconnect circuits (E1s) in accordance with its contractual timescales by refusing to accept orders.
Telinco also alleged that in imposing a ‘planning rule’ that a single DMSU can handle a maximum of 10 x E1s of NTS traffic per operator, BT was in breach of its interconnect agreement with Telinco and of a failure to invest in UK infrastructure.
Following an investigation, the Director General concluded that the delay in acceptance of orders by BT did not, in the circumstances, amount to a demonstrable breach of Conditions 13 (obligation to interconnect) or 18A (fair trading condition).
The delays in question arose from new requests from Telinco which exceeded both Telinco’s original forecasts and Telinco’s own capacity to handle the additional circuits and which resulted in substantial negotiations over what was and was not possible.
The Director General was sympathetic to the problems of Telinco in needing to obtain exceptionally large numbers of additional interconnect circuits at short notice which neither Telinco or BT could reasonably have foreseen. However, much of this demand arose out of the exceptional growth in demand for internet services flowing from subscription free internet services which was affecting all levels of the industry and other operators, as well as BT.
In relation to the 10 x E1s planning rule, the Director General did not consider that the rule related to BT’s investment infrastructure, rather to the more efficient management of traffic across their switches.
The Director General did not consider that condition 12A (obligation not to do anything which could detract from BT’s ability to comply with its licence obligations to provide telecommunications services) applied to the sort of situation which applied here. However, he did consider that such planning rules should be incorporated into BT’s interconnect agreements with other operators.
The Director General did not directly consider the question of whether BT had breached its contract as that is a matter for the courts. The Director General’s consideration was limited to BT’s behaviour in relation to its licence
Case officer: Vince Affleck (extn 8819)
Case reference: BX/663/147
Alleged Failure to Supply Cable TV
Complaint against: Cable & Wireless Communications (CWC)
Issue: Provision of cable tv service
Relevant instrument: Condition 1.1 of CWC’s licence
Case opened: 28 January 1999
Case closed: 9 March 1999
Oftel received a complaint that CWC had failed to comply with a request to be supplied with cable TV. Condition 1.1 of CWC’s licence provides that it must comply with such a request where the infrastructure necessary to be able to provide such a service has been installed.
Oftel’s enquiries revealed that the infrastructure necessary for the supply of a cable TV service was not yet in place in the area in which the complainant lives. There does not therefore appear to be a licence breach and Oftel has closed this inquiry.
Case officer: Rosemary Buck (extn:8822)
Case reference: BX/663/165
Complaint against: BT
Issue: Alleged unfair cross subsidy
Relevant instrument: Condition 20B.15 and 18A of BT=s Licence
Case opened: 24 August 1998
Case closed: 30 March 1999
Following the closure of the investigation into BT’s Campus Connect (Issue 9), Oftel received a complaint regarding BT Connect.
That complaint alleged that BT Connect was, like Campus Connect previously, being unfairly cross-subsidised within the meaning of Condition 20B.15 BT’s Licence, and that the subsidy could also constitute a breach of condition 18A BT’s Licence.
To constitute an unfair subsidy under Condition 20B.15, or an abuse of a dominant position, it would have to be shown inter alia that any cross-subsidy had or could have a material effect on competition.
Given that BT had raised its prices in this market considerably and that it has suffered a marked reduction in customer numbers, the Director General was not satisfied that any such effect existed. Consequently, the Director is satisfied that BT Connect is not in receipt of an unfair subsidy and that it is not in breach of Condition 18A of its Licence.
Case officer: Philip Taylor (extn 8829)
Case reference: BX/663/127
Complaint against: Telecom Billing Systems Ltd (‘TBS’)
Issue: Adult services provided on a geographic number
Relevant instrument: TSL
Case opened: March 1999
Case closed: April 1999
TBS provide adult and other telephone services accessible through a geographic (eg 0171–xxx) number. The TBS revenue collection system involved TBS phoning customers after they have used the service to obtain a billing name and address. This is in contrast to other such service providers who generally use premium rate numbers, the revenue being collected through the telephone bill and shared with the telecoms operator.
Oftel has received many complaints from consumers concerning the TBS operation. The first allegation claimed that TBS were calling individuals for a billing name and address even when those individuals had not called the TBS service. The second issue arose from the fact that TBS use a geographic number for a premium rate type service. This meant that users were not aware that they were being charged for the call at a rate higher than the standard telephone charges and could not use premium rate number call barring.
Following Oftel’s investigation, TBS informed Oftel that it has placed a message at the start of the service detailing the TBS charges and billing methods, and that TBS do not charge callers to listen to these details. Where unauthorised calls are made, phone owners are advised to contact TBS customer services which can block incoming calls from the relevant number and waive the charges.
In the light of these factors, Oftel has decided to close this case.
Case officer: Philip Taylor (extn 8829)
Case reference: BX/663/188
Worldcom’s Billing and Metering Systems
Complaint against: Worldcom
Issue: The accuracy of Worldcom’s billing and metering systems
Relevant instruments: Condition 12.5 and 12.6 of MFS Communications Ltd’s licence
Case opened: 22 September 1998
Case closed: 18 March 1999
In September 1998, the Rewind Media Centre Ltd complained to Oftel that Worldcom had submitted inaccurate monthly bills and failed to maintain in operation a metering system and/or billing system which would enable Worldcom to render accurate bills to its customers. Worldcom’s duties and obligations in respect of these matters are contained in Condition 12 (Metering and Billing Arrangements) in the licence granted on 24 September 1993 to MFS Communications Ltd (as amended) pursuant to which Worldcom provides telecommunications services.
Under Condition 12.7 of the licence, Worldcom is not considered to be in breach of its obligation not to overcharge its customers, except where the failure is in relation to the Billing Process (as defined in Condition 12.11(b)) and Worldcom has failed to take all reasonable steps to prevent a contravention of its obligation not to overcharge.
Following receipt of numerous documents from both parties and a thorough review of them, the Director General is not satisfied that there was a failure in Worldcom’s Billing Process in this case.
Even if there had been a failure of the Billing Process, the Director General would not have been satisfied that Worldcom had failed to take all reasonable steps to prevent a contravention of its obligation not to overcharge customers. The Director General, therefore, was not satisfied that a breach of Condition 12.5 has occurred.
Under Condition 12.6 of Worldcom’s licence, Worldcom is required to maintain in operation at all times such a billing process as facilitates compliance with and is calculated to prevent contravention of Condition 12.5.
It is the Director General’s view that Worldcom appears to have in operation (and to maintain in operation) a billing process that discharges its obligations under this Condition.
Although the Director General is not satisfied that Worldcom has failed to comply with the requirements of Condition 12.6 in this case, Oftel is addressing the generic issue of ensuring customers are not overcharged.
Its Statement on Metering and Billing will seek to extend the BABT scheme for metering and billing to all PTOs (including Worldcom). Worldcom has welcomed Oftel’s work on this issue and has told the Director General that it is prepared to seek approval for its metering and billing systems following publication of Oftel’s statement on this issue later this year.
Case officer: Karen Lee (extn 8922)
Case reference: BX/663/136
Complaint against: CWC
Issue: Alleged overcharging
Relevant instruments(s): Condition 26.5 of the licence granted to Mercury Communications Ltd, pursuant to which CWC provides telephony services.
Case opened: 22 July 1998
Case closed: 22 February 1999
In July, Oftel initiated an investigation into a complaint that Cable & Wireless Communications inadvertently charged former Videotron (now part of CWC) customers for cable-to-cable calls over the 1998 Easter Bank Holiday weekend which were previously advertised as being free.
Under the terms of their contracts some former Videotron customers were entitled to free cable-to-cable telephone calls on certain days and times (e.g. national holidays). CWC determined that 35,366 former Videotron customers were affected.
Under Condition 26.5 (Metering, Billing etc), CWC is broadly speaking obliged not to overcharge customers.
However, under Condition 26.6, CWC is not considered to be in breach of this obligation except where its Billing Process failed and CWC failed to take all reasonable steps to prevent a contravention of that obligation. Oftel believes in this case that there was a failure in CWC’s Billing Process and that CWC may have failed to take all reasonable steps to prevent a breach of its obligation. This is supported by CWC’s admission that its billing team failed to input the requisite data into the billing systems.
As a result of Oftel’s investigation, CWC has taken or agreed to take various steps to avoid recurrence, including:
To obtain approval under the scheme, CWC must be able to demonstrate the following:
A meeting with Oftel wll take place every two months to provide an update on CWC’s progress towards obtaining BABT approval and completing other compliance plans to redress weaknesses in its Billing Process.
The BABT approval process is a lengthy process. In some cases, it may take up to one and one half years to complete. Oftel expects CWC to make substantial progress towards completing the BABT approval process by the end of this year.
Given the above measures, the Director General is not satisfied that the overcharging of CWC customers is likely to recur and has not found it necessary to pursue the issue of whether a breach of Condition 26.5 did in fact occur.
No enforcement action will therefore be taken. However, Oftel will continue to monitor CWC’s progress towards obtaining BABT approval.
Case officer: Karen Lee (extn 8922)
Case reference: BX/663/121
Inclusion of calls to mobile in BT Dual Discount scheme
Complaint against: BT
Issue: Inclusion of calls to mobile expenditure in this scheme
Relevant instrument: Condition 18A of BT’s Licence
Case opened: December 1998
Case closed: March 1999
Following the MMC’s findings on calls to mobiles, Oftel considered carefully an operator’s claim that these calls should not be permitted to be included in BT’s Dual Discount scheme. For Oftel to be concerned about their inclusion it had to be satisfied that this would have a material effect on competition.
An important factor in reaching any conclusion is the extent to which other operators can and do offer discounted prices on calls to mobile across all of a customer’s sites. Another consideration is whether the spend on calls to mobiles represents a significant element of business customers’ overall call spend.
As part of the investigation Oftel sought information on these issues from a number of operators. The response was limited and this appeared to indicate a lack of widespread concern about this issue. From the responses Oftel did receive and other sources of information available, Oftel concluded that other operators can and do offer discounted prices on calls to mobile across all of a customer’s sites. Oftel is also satisfied that even if other operators wanted to offer similar schemes but exclude calls to mobile, the level of additional discount that they would have to offer on other call services to match the effect of calls to mobile within the BT Dual Discount scheme would be minimal.
Oftel has therefore concluded that on the information available, the inclusion of calls to mobile within the BT Dual Discount scheme does not have a material effect on competition and therefore does not breach Condition 18A (the Fair Trading Condition) in BT’s licence.
Case officer: Keith Loader (extn 8793)
Case reference: BP/599/010/3
This section lists directions, determinations and orders issued under the Telecommunications Act 1984 to licensed operators under their licences since January 1999 and also reports on the monitoring of licensed operators' compliance with previous orders, directions and findings on selected cases
Complainant against: BT
Issue: Monitoring of BT’s Chargecard
Relevant instruments: Condition 18A BT’s Licence
Case opened: July 1997
Under the Chargecard Provisional Order of July 1997 BT was required to adjust its prices for the provision of retail Chargecard services so that they fully recover all costs on a current year basis.
Following the Provisional Order and taking into account the report of the Advisory Body on Fair Trading, Oftel is keeping the position of BT’s Chargecard under review. In order to meet Oftel’s monitoring requirements BT has to provide key indicators about its Chargecard business on a quarterly basis and full information of its business on a yearly basis.
Oftel has considered the financial information BT provided in relation to 1997/8 and the performance forecasts for 1998/99 and 1999/2000. On the basis of the information provided, Oftel is satisfied that BT’s Chargecard business fully recovered its costs in the financial year 1997/98.
However, Oftel is concerned BT’s Chargecard business may make a loss in 1998/99 and 1999/2000 based on the latest forecasts by BT for these years. The losses which may arise result from the additional costs of millenium compliance for the Chargecard platform and other exceptional costs in 2000. Oftel does not consider that such costs are incurred with the intent of preventing restricting or distorting competition but will continue to monitor BT’s Chargecard performance.
Case officer: Ursula Harnischfeger
Case reference: BP/106/001
CWC Customer Records for Emergency Access
Subject of Enquiry: Cable and Wireless Communications (CWC)
Issue: Information supplied by CWC’s 999 operator service to the emergency authorities
Relevant instrument: Condition 5 CWC’s licence
Case opened: July 1998
Oftel received a complaint in late July 1998 stating that CWC’s 999 operators had given incorrect customer addresses to emergency authorities on a number of occasions. This problem occurred on ‘silent calls’ where the calling party is unable to give an address to the operator or emergency authority and therefore their location has to be traced using CWC’s computer database.
By 13 August 1998 a manual solution was in place which resolved the problem in the short term. Oftel also received details from CWC of its plans and timetable to provide a permanent solution through a complete overhaul of the database used by its 999 operators. The overhaul was accomplished by the processing and review of customer records to ensure that the information held on CWC’s 999 database was correct. This process was completed at the end of March 1999.
Following the completion of the overhaul CWC undertook a full audit of its system to ensure that the 999 service meets Oftel’s requirements. Oftel staff also visited one of CWC’s 999 operator centres at the end of March 1999 and examined in detail the steps it had taken to make sure correct information about addresses was given out to the emergency authorities. Full details of CWC’s procedures and systems have been made available to Oftel.
Oftel is now satisfied that CWC’s permanent measures will ensure that emergency authorities are given correct addresses for customers. However, Oftel will continue to monitor CWC’s 999 operation on a monthly basis and expects to receive immediate reports on any problems that occur in the future.
Case officer: John Russell (ext:8830)
Case reference: BX/663/189
National leased lines in the UK
The January 1999 issue of Competition Bulletin contained a brief summary of the findings of Oftel’s investigation into the pricing of national leased lines in the UK. A more extensive report on the investigation was published at the beginning of January. Since January, Oftel has received a number of written comments on the findings of the report from operators and users and is continuing to keep this issue under review.
Response from operators
Other licensed operators (OLOs) have welcomed the report’s proposals that BT should explore extending its so-called partial private circuits offering to bandwidths other than 2Mbit/s and should ensure that the discount structure that applies to end-user retail private circuits also applies to partial circuits. This would help to reduce the cost of providing ‘final mile’ circuits connecting customer’s premises with the OLO’s network and would therefore enable OLOs to offer a more competitive product. However, BT has questioned whether there is sufficient demand for an extension of partial private circuits to other bandwidths. Discussions with BT and OLOs are ongoing on this issue.
Response from users
The Service Provider Interest Group (SPIG) made a presentation to Oftel in March. A discussion on the report’s findings followed this presentation. A number of written responses have also been received.
Users have argued that the findings of the investigation do not address their concerns. In particular, users have re-stressed the belief that UK prices for leased lines are not competitive with those available in the US. In support of this, the presentation made to Oftel again highlighted the difference in the price paid for a 300km 2Mbit/s circuit in the UK with the price paid for a similar circuit in the US. Furthermore, users argued that competition in the supply of leased lines in the UK was extremely limited outside London and that Oftel is wrong to assume that competition is placing pressure on BT’s prices. Many users stated that BT was the only supplier available to them and that therefore there was no choice but to pay BT’s prices.
Oftel’s next steps: International comparisons
The original report had set out Oftel’s analysis of international benchmarking studies. It highlighted a report by the independent consultancy firm, Ovum, which had showed that UK prices were comparable with those in the US. Furthermore, Oftel’s report had highlighted the fact that price comparisons were less favourable for longer distance circuits than for short distance circuits. This was an issue BT was addressing through focussing price cuts on the longer distance circuits.
However, Oftel acknowledged the importance of unpublished discounts which were available in the US to the largest users, but which BT was not allowed to offer UK customers. The price comparisons quoted by users at the SPIG presentation related to prices paid by a large company. Oftel will continue to monitor international comparisons as these can give an indication of whether competition in the UK results in the best deal for customers. Particular attention will be paid to comparisons with the US. Oftel would welcome input from users on the level of unpublished discounts available in the US or elsewhere in Europe.
Level of competition outside London
The initial investigation had found that competition in the supply of leased lines of 2Mbit/s and above was increasing. This had led to reductions in BT’s prices for circuits above 64kbit/s despite the fact that the price cap on these circuits had been removed in 1997. Oftel’s report acknowledged that competition was most vigorous in central London, but stated that competition in and between other major cities was also increasing. However, it appeared that some customers in certain areas faced no competition.
Nevertheless, BT has a fixed local end rental and per km charge for leased lines with at least one end outside the central London zone. Therefore, if competition places pressure on BT in one area, this should lead to price reductions for all customers. Also, for lower bandwidth digital circuits and analogue circuits, Oftel has acknowledged that competition is limited. For these circuits, the price cap remains in place. This price cap is due to be reviewed. However, given users’ concerns, Oftel is re-contacting OLOs to assess their ability to offer leased line services outside London.
Oftel would also welcome further information from users on the level of competition in the supply of leased lines. In particular, we would like detailed information on users’ requests or tenders for leased lines in the last six months. In providing this information we require details of the bandwidth of the circuit, the location of both ends of the circuit, which operators were able to offer a competing product and how did their prices differ. Oftel is also interested in circumstances where users require a number of circuits between different locations. In these circumstances, are users able to use more than one operator to meet their requirements or is BT the only option?
This information would help in assessing whether competition in the UK is effective or whether Oftel needs to take further steps to achieve effective competition.
Contact: James Tickel (ext 8826; e-mail: jtickel@oftel.gov.uk)
In the January issue of the Competition Bulletin, Oftel announced that it would be facilitating a Compliance Forum for telecoms operators. The aim of the Forum was to discuss the role of compliance in the telecoms industry in the light of the new Competition Act and to provide a forum to share best practice.
On 27 April Oftel hosted the first Telecommunications Industry Compliance Forum. The Forum was held at Cable & Wireless' offices in London and it was attended by 35 delegates.
Jane Whittles, Oftel's Director of Compliance, gave the opening address highlighting the importance of compliance for the telecommunications industry with the advent of the Competition Act 1998. The Office of Fair Trading's video on the new Competition Act was shown to give an introduction to the Act and in particular, to the investigative powers which regulators will be able to exercise in the future.
There were also three other speakers from industry. Anthony Rawlins, Compliance Director of Sedgwick Noble Lowndes (UK) Ltd, who spoke about the experience of compliance in the Financial Services industry; Alex Nairn, BT UK Compliance Controller, who spoke about BT's compliance programme; and Alex Blowers, Regulatory Affairs Manager, NTL Inc, who spoke about the compliance issues facing telecommunications companies. Overall the Forum attracted considerable interest from the industry and was favourably received by the delegates. Oftel is planning a further Forum in the Autumn.
For further information contact: Tim Cross (extn:8798)
The Telecommunications (Data Protection and Privacy) (Direct Marketing) Regulations 1998
These Regulations came into force on the 1 May 1999 and affect the sending of unsolicited communication of material for direct marketing purposes. These Regulations distinguish between unsolicited direct marketing faxes and telephone calls. In the case of such telephone calls, individual subscribers may opt-out of receiving such sales calls. In the case of fax transmissions, individuals should not be sent direct marketing faxes unless they have expressly requested them. In the case of corporate subscribers (which includes partnerships in Scotland), companies can opt-out of receiving faxes. There is no provision for companies to opt-out of receiving unsolicited direct marketing telephone calls in these Regulations. To opt-out, individual or corporate subscribers should register either with the Fax Preference Scheme or the Telephone Preference Scheme, then calls or faxes to those subscribers are prohibited. Subscribers can register with the Schemes by calling 0845 070 0702 or 0845 070 0707 respectively.
For further information contact: Philip Taylor (extn 8829)
Copies of past Competition Bulletins and Oftel statements referred to in this issue are available on Oftel’s web site
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