Dispute between Cable & Wireless and BT - BT's Product Management, Policy and Planning ('PPP') charge

Complainant: Cable & Wireless ("C&W")
Complaint against: BT
Case opened: 19 November 2003
Relevant instrument: The Director intends to resolve the dispute under Chapter 3 of Part 2 of the Communications Act 2003 as from 25 July 2003. In resolving this dispute, to the extent the Director decides to consider the matter retrospectively and in relation to any period before 25 July 2003, he intends to do so under regulation 6 of the Telecommunications (Interconnection) Regulations 1997, by virtue of paragraph 22 of Schedule 18 of the Communications Act 2003. This dispute was referred to the Director on 30 September 2003.

Issue
C&W has referred a dispute relating to the level of, and recovery method for, BT's Product Management, Policy and Planning ('PPP') charge.

Background
PPP charges are levied by BT to cover the administrative costs of providing interconnection.

Scope
C&W considers that BT's PPP charge places it in breach of its regulatory obligations. C&W has requested that the Director:

(i) examine BT's regulatory accounts to strip out any cost elements that have been attributed to PPP but ought not to have been placed within this category;

(ii) depending on the results of this examination, lower the PPP charge to prevent incorrect or excessive cost recovery by BT;

(iii) ensure cost recovery on a pence per minute basis only for those elements within PPP which are truly volume driven;

(iv) ensure recovery according to cost drivers for elements which are not volume driven - for example, as a per operator charge where appropriate;

(v) secure recovery on a fair, reasonable and non-discriminatory basis from both BT Retail and competing operators, to ensure effective and efficient competition in downstream wholesale and retail markets; and

(vi) re-set the PPP charge accordingly, dating from the point at which the charge ceased to be reasonable, cost oriented and non-discriminatory.

Procedural matters
The Director is currently investigating BT's PPP charge as part of a policy project that is linked to the review of the fixed narrowband wholesale exchange line, call origination, conveyance and transit markets. The Director's decision to investigate the PPP charge separately was made clear in the Explanatory Statement and Notification of 26 August 2003 relating to that market review (http://www.oftel.gov.uk/publications/eu_directives/2003/fix_narrow_retail0803.pdf), see paragraphs 9.80 and 9.81.

After an initial consideration, the Director considered that the investigation of the PPP charge would involve an extensive cost investigation. Thus, the Director has already scoped and planned such a cost investigation for the purposes of the above-mentioned policy project. On the information presently before the Director, it would appear to the Director that it would need to consider the same (or similar) costing issues in order to determine the dispute now referred by C&W.

Therefore, in the interests of efficient resource allocation and the time needed to complete the investigation into costs, C&W's request for dispute resolution will be considered as part of the policy project. As a result, the dispute will not be handled in accordance with the Director's standard dispute resolution procedures, which are currently set out in the Oftel and Radiocommunications Agency document "Dispute resolution under the new EU Directives" (http://www.oftel.gov.uk/publications/eu_directives/2003/eud0203.htm).

At present, the above-mentioned policy project is not expected to conclude within the next four months. The Director considers for reasons given above that this dispute has been referred in exceptional circumstances and the requirement to resolve a dispute in four months, as set out in section 188(5) of the Act, will therefore not apply in this case. However, the Director is aiming, at present, to complete his investigation and resolve this dispute by 30 April 2004.

Update - 19 November 2003

All representations on the scope of the dispute should be submitted to Oftel by 27 November 2003.

Stakeholders interested in the outcome of this dispute should notify Oftel by 27 November 2003 describing the relevance of the outcome of the dispute to their business.

Stakeholders with relevant information and evidence in respect of this dispute should submit this to Oftel by 10 December 2003.

Case Leader: (Selina Chadha 020 7634 5307 e-mail:selina.chadha@oftel.gov.uk)
Case Reference: CW/00700/09/03