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| Final Statement by the Director General on Calls and Access Quality of Service Standards. | |
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June 2001 Chapter 1 The background to this statement Chapter 2 Quality of service negotiations Chapter 3 Outcome of the statutory Consultation on Clause 20.2 Chapter 4 Conclusions and withdrawal of Director General's notice of intent Annex A Glossary S.1 On 11 September 2000 the Director General issued a Statement on Calls and Access service standards following a public Consultation on Calls and Access quality of service standards in June of that year relating to quality of service standards in BT’s standard Calls and Access contracts with service providers. The main conclusions of the September statement were as follows: i BT and Calls and Access Service Providers should agree by 29 September 2000 on those service issues where resolution between the parties appeared possible. ii BT’s ‘save’ and ‘winback’ activities should not be prohibited in relation to Calls and Access service providers, so long as in exercising them BT stayed within the framework of its existing regulatory obligations; and
S.2 The September statement also commenced a statutory consultation on the use of the Director General’s powers under Regulation 15 (4) of the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 (‘the RVTD Regulations’) to amend the relevant paragraph in BT’s Calls and Access contract for the purpose of specifying the circumstances in which BT retained the right unilaterally to amend the contract. S.3 In the subsequent period, negotiations on quality of service standards continued between BT and the Calls and Access Interest Group (CAIG) and have now been satisfactorily concluded. Oftel is therefore withdrawing the Director General’s notice of intention dated 7 September 2000 to make a Direction under Regulation 15 (4) of the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 to amend BT’s Calls and Access contract.
The background to this statement 1.1 Oftel’s goal is to ensure that the UK telecommunications consumers receive the best deal in terms of quality and value for money. This is primarily achieved by promoting sustainable and effective competition. Oftel’s strategy is to ensure that the extent of regulation is adjusted to reflect the level of competition in the market and focused on the area of concern, with a view to move away from formal and intrusive regulation, as competition becomes effective. 1.2 The Director General is of the view that calls and access services, provided on the right terms, offer the opportunity to enhance competition in the market, to the benefit of consumers. In December 1999 Oftel therefore invited BT and CAIG to negotiate binding quality of service standards for the Calls and Access service. In September 2000 Oftel issued its statement requiring the parties to complete negotiations by 29 September on those issues where it appeared that agreement could be met. In general, Oftel believes that it is preferable for commercial parties to agree terms between themselves rather than have them imposed as part of a determination. 1.3 At that stage, however, it appeared unlikely that agreement would be met on the provisions of the contract relating to BT’s right to unilaterally change the terms of the contract. Oftel therefore issued a draft determination relating to this clause of the Calls and Access contract, which appeared to be the major stumbling block in the way of an overall resolution.
1.4 Oftel’s aim in encouraging the development of quality of service standards in BT’s Calls and Access contract is to ensure that, on the one hand, Service Provider and end user confidence is maintained in the Calls and Access product and, on the other, BT is suitably incentivised to provide a ‘fit for purpose’ product and to deliver it to a high quality.
Quality of Service negotiations 2.1 Oftel has been encouraged by the manner in which both BT and CAIG have conducted the contract negotiations. BT and CAIG have committed a great deal of resources in order to reach agreement not just on quality of service issues but also on a number of contract clauses which were initially unacceptable to Calls and Access Service Providers. Oftel recognises that both BT and CAIG have conducted these negotiations in good faith and envisages that the outcome of this exercise will be reflected in a high quality and robust Calls and Access contract. 2.2 The Calls and Access contract sets out the terms and conditions under which Service Providers agree to use the Calls and Access product. The main body of the contract contains sections covering the following: 1
Interpretation 2.3 The Contract also contains a number of annexed schedules as follows; Schedule
1 – Service Schedule 2.4 BT’s Calls and Access Service Provider contract can be accessed on the BT website: http://www.bt.com/terms/in_notification/bt303.pdf 2.5 Both parties have re-negotiated the main body of the contract and five annexed schedules including the service level agreement. In September 2000, CAIG asked for an extension to the quality of service negotiations, as they believed that agreement was imminent. In December 2000, Oftel asked both sides to submit a summary report of the areas in which agreement had not been reached. BT and CAIG reported that four main items remained outstanding: 1
Limitation of liability 2.6 In March 2001, Oftel held a joint meeting with BT and CAIG to confirm the outstanding issues and provide a fresh impetus to seek resolution without the need for formal intervention. 2.7 Detailed below is a summary of Oftel’s opinion on the four clauses referred to it by BT and CAIG. This view was explained to both parties during the joint meeting in March 2001. 2.8 Limitation of liability 2.9 Oftel’s views; Oftel believes that clause 14 of the Calls and Access contract (limitation of liability) falls within its regulatory remit in terms of setting quality of service standards under the RVTD. Under the clause BT accepts liability for the late provision and repair of the service but only to the extent set out in the service level guarantee and in clause 14. [Refer to the Calls and Access contract at the above website] 2.10 Article 10 of the RVTD states that: "National regulatory authorities shall ensure that organisations providing access to fixed public telephone networks...provide a contract. The contract shall specify the service to be provided or shall make reference to publicly available terms and conditions. 2.11 National regulatory authorities…shall be able on their own initiative...to require the alteration of the conditions of contracts referred to in paragraph 1 and the conditions of any compensation and /or refund schemes used insofar as they concern the provisions of this directive in order to protect the rights of users and/or subscribers".
2.12 Since Oftel can require the alteration of conditions of the contract, it may determine financial caps in respect of limitation of liability. 2.13 Clauses 14.4 and 14.5 of BT’s contract have been revised to cap liability at £2 million for any one incident and £5million for all incidents in any period of 12 months. 2.14 BT had already stated that in principle it accepted the inclusion of direct liability. Oftel addressed the specific issues of ‘direct limited liability’ and ‘liability limits’ in its Local Loop Unbundling, (LLU) Access Network Facilities (ANF) agreement, determination February 2001 http://www.oftel.gov.uk/publications/local_loop/anf0201.htm). In that determination Oftel expressed the view, which is in principle applicable in this case also, that BT’s liability should at least equal the economic incentive on BT to supply equipment and services promptly and to avoid breakdown of the system when supplying its own retail customers. Oftel therefore asked BT and CAIG to submit indicative liability caps within two weeks of the date of the meeting. 2.15 Call Data Records (CDRs) 2.16 Oftel’s views; Oftel believes that provision of CDRs falls within its regulatory remit and therefore it would have been open to the Director General to exercise his powers under the RVTD to set quality of service standards. However, submissions from both parties indicated that this issue could be satisfactorily resolved without formal intervention. CAIG had accepted BT’s Calls and Access Alert (CAA) fraud management package, which addressed CAIG’s major concerns on this subject. Both parties felt that they could address the issue of CDRs without Oftel’s intervention and outside the remit of the quality of service negotiations. 2.17 Non- RVTD issues 2.18 BT and CAIG have been unable to agree on two remaining issuing which in Oftel’s opinion do not qualify as quality of service issues and therefore do not fall within Oftel’s regulatory remit in relation to the Director General’s powers under the RVTD. These issues are: a
Exit letter Exit letter 2.19 Oftel’s view: Even though the exit letter does not fall within Oftel’s regulatory remit in relation to quality of service standards, the transfer process and letter have already been subject to an Oftel investigation. Oftel does not believe it appropriate to revisit this issue. BT agreed to consider CAIG’s proposed drafting change to the exit letter. BT’s Deposit Management policy 2.20 Oftel’s views: BT’s deposit management policy does not fall within Oftel’s regulatory remit in relation to quality of service standards as defined under the RVTD. However, any variation in BT’s deposit management policy (which was CAIG’s major concern) is subject to Section 27H of the Telecommunications Act 1984 (the "Act"). Section 27H (2) provides that "the criteria [for the deposit policy] may be varied by the designated operator with the consent of the Director General"; and Section 27H (3) provides that ".before settling, or varying, the criteria the designated operator [in this case BT] shall consult persons or bodies appearing to him to be representative of the persons likely to be affected". 2.21 Section 27I of the Act allows persons affected by the requirement to pay a deposit to refer this matter to the Director: (1): " Any person who is aggrieved by the decision of a designated operator to require him to pay a deposit by –
by the amount which he is required to pay, may refer the matter to the Director". 2.22 It is Oftel’s view that Section 27 of the Act provides adequate protection for Calls and Access service providers. Any change to BT’s deposit management policy requires prior consultation with the Director General and interested parties. In addition any aggrieved parties may refer the decision by a designated Operator to require a deposit or the level of a deposit to the Director General. In light of Sections 27H and I of the Act, CAIG accepted that its members were adequately protected against any changes to BT’s deposit management policy
Outcome of the statutory Consultation on Clause 20.2 of BT’s Calls and Access Service Provider contract 3.1 The Director-General issued a statement in September 2000 setting out Oftel’s position on these activities: Statement on Calls & Access service standards and Statutory consultation on modification of the paragraphs in BT’s Calls & Access contract relating to its right to unilaterally change contractual terms and conditions: This document can be viewed at the Oftel Website http://www.oftel.gov.uk/publications/licensing/call0900.htm. 3.2 Oftel view is that Paragraph 20.2 of the draft Calls & Access contract relating to BT’s ability unilaterally to amend the contract was too restrictive on Service Providers and gave BT too wide a power to make arbitrary changes to the terms on which it provides the service. 3.3 The Director General therefore proposed to use his powers under Regulation 15 (4) of the Telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998 ("The RVTD Regulations") to amend the relevant paragraphs of the Calls & Access contract for the purpose of specifying the circumstances in which BT would retain the right unilaterally to amend the contract. Accordingly, the Director General issued a notice of intent on the 11 September 2000 proposing to amend clause 20.2 of BT’s calls and access contract. 3.4 Responses received from both BT and CAIG during the ensuing consultation are detailed below.
3.5 CAIG’s comments: CAIG confirmed that it would be happy to accept the proposed modification to clause 20.2 and suggested two minor alterations. 3.6 CAIG also stated that although BT had proposed a third party arbitrator to resolve disputes between BT and Calls and Access Service Providers, this was unnecessary as a robust Calls and Access contract should encourage BT and Service Providers to work together to achieve a mutually acceptable solution to any contract issues that arise. 3.7 BT’s Comments: BT stated its intention to comply with the principles of the draft direction and raised a few minor drafting suggestions. 3.8 In addition to Oftel’s proposals, BT stated that it would like to add a dispute resolution process that enabled BT or service providers to refer commercial issues that cannot be agreed to an independent 3rd Party umpire. BT stated that without a third party umpire non-regulatory, commercial developments that are not agreed by either party are, in BT’s view likely to be passed onto Oftel for resolution. 3.9 Oftel’s view: Oftel generally takes the view that intervention by the Director General in every dispute that may arise is unlikely to be the most efficient way of resolving them. Normally, therefore the Director General would expect disputes of this type go to an expert for resolution and not to him. The Director General’s intervention is appropriate in the resolution of disputes, which involve the application of regulatory principles: it is more appropriate for an independent expert to decide what are essentially matters of fact. 3.10 In relation to dispute resolution under the Revised Voice Telephony Regulations ("RVTD Regulations"), Oftel’s policy in respect of investigating disputes between operators is set out in the Statement: Resolving disputes between Fixed Telecommunications Service Operators: September 2000 http://www.oftel.gov.uk/publications/consumer/disp0900.htm 3.11 The statement explains that Oftel will only investigate those disputes where fixed public operators, with Significant Market Power ("SMP") under the RVTD Regulations, take measures that interrupt, terminate or significantly vary or reduce the availability of services provided to other providers of fixed public telephone systems or services. Regulation 21 of the RVTD Regulations requires that Oftel have in place procedures sufficient to address such situations. 3.12 The requirements set out in the September 2000 statement on dispute resolution are met in this situation. BT is a fixed public operator with SMP. Commercial disputes under paragraph 20.2 of the Calls & Access contract qualify as measures that might interrupt/significantly vary or reduce the availability of services provided to other fixed operators. 3.14 Oftel believes that it is appropriate for it rather than a third party, to continue to be responsible for resolving disputes between operators. 3.15 Oftel is required by the RVTD Regulations to ensure that its investigations into disputes between operators are transparent and give the parties an opportunity to state their case, and that reasons are given for the decision reached. If both parties wish to appoint an independent third party to assist in the resolution of, or to resolve, a dispute, the Director must make a direction appointing the third party, pursuant to Regulation 21(4) of the RVTD Regulations. 3.16 In the joint BT/CAIG and Oftel meeting BT and CAIG agreed to work together and redraft clause 20.2.
Conclusions and withdrawal of Director General's notice of intent Following a constructive meeting in March 2001 at Oftel, BT and CAIG agreed on the four major issues that they had referred to Oftel without the need for any formal regulatory intervention. On the 21st March 2001, Oftel received a joint submission from BT and CAIG declaring that agreement had been reached on the quality of service negotiations. On the 30th April 2001 BT formally notified Oftel of the revised conditions for the Calls and Access service. The new Calls and Access service provider contract comes into effect on the 1st June 2001. Accordingly the Director General has decided to withdraw his notice of intent to make a Direction under Regulation 15(4) of the telecommunications (Open Network Provision) (Voice Telephony) Regulations 1998, to alter the paragraph of BT’s Calls and Access contract which allows BT to unilaterally change contractual terms and conditions. The redrafted version of Clause 20.2 can be viewed on the BT website: http://www.bt.com/terms/in_notification/bt303.pdf Oftel is encouraged by the positive approach adopted by both parties during these negotiations and expects their efforts to be reflected in the delivery of a high quality Calls and Access service. In agreeing a binding service level agreement Oftel believes that BT and CAIG have constructively adopted the principles of self-regulation. Keith M Long Director of Compliance A person duly authorised by the Director General pursuant to paragraph 8 of Schedule 1 to the Telecommunications Act 1984
Glossary of terms Calls & Access: A wholesale product available from BT which allows Service Providers to rent a BT Telephone line and then supply it and calls over it to the Service Providers' own customers. CAIG: Calls & Access Interest Group, consisting of Current and Future Service Providers CDR: Call Data Records; Raw Call data gathered by BT relating to individual exchange lines DG: Director General of Telecommunications End User: The Customer who contracts with the Service Provider for the Calls & Access Telephone service OLOs: Other Licenced Operators - companies other than BT, which operate telecom systems. Provisioning: Supply and enable an End User to use the calls and access product Public Switched Telephone Network (PSTN): The Telecommunications networks of the major Operators, on which calls can be made to all Customers of all PSTNs. RVTD Regulations: The Telecommunications (Open Network Provision)(Voice Telephony) Regulations 1998 Service Providers: Businesses which provide telecommunications services to End Users without owning their own networks.
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