Guidance and explanatory note on ST FRIACO

Guidance as to how the Director General will consider whether British Telecommunications has acted reasonably in the provision of Single Tandem FRIACO

Issued by the Director General of Telecommunications

Published on 18 July 2001

Contents

The Guidance

Explanatory note

Annex A General principles on the supply of ST FRIACO

Guidance as to how the Director General will consider whether British Telecommunications has acted reasonably in the provision of Single Tandem FRIACO

1. Introduction

1 The Direction published on 15 February 2001 (the ‘Direction’) sets out the framework and main principles pursuant to which British Telecommunications plc (‘BT’) must provide Single Tandem FRIACO. The Director recognises that both BT and other operators need guidance as to what he considers to be reasonable. The Guidance gives BT and other operators the necessary guidance and flexibility in order to be able to implement effectively the obligations contained in the Direction.

2 This Guidance may be amended from time to time by the Director.

3 Except otherwise as defined in the Direction, or in the recitals of the Direction, or in this Guidance, terms defined in BT’s Licence shall have the same meaning for the purposes of this Guidance.

4 Where BT acts in accordance with the Guidance set out below, the Director would normally presume that it has acted reasonably in complying with its obligations under the Direction.

5 In addition, to the extent to which any agreement or conduct, entered into, or carried out, by BT is necessary to comply with the Direction and/or the Guidance, the Director will normally consider that BT has not unduly discriminated in relation to Condition 57 of its Licence. The Director considers the Direction to be a legal requirement within the meaning of Schedule 3, paragraph 5 (3) (a) of the Competition Act 1998. However, if BT acts unreasonably and outside the scope of the Direction the Director may exercise his powers under the Competition Act 1998.

2. Issues addressed by the Guidance

6 This Guidance covers the three main areas where, pursuant to the Direction, BT is required to act reasonably in order to rearrange capacity. These three areas are:

The need for re-arrangements

7 Paragraphs 13 and 14 of the Direction only allow BT to request other operators to reasonably re-arrange where there is no, or insufficient, capacity at a particular Tandem Switch. Section 3 of this Guidance sets out when BT should consider that there is a need for re-arrangement.

8 In addition, paragraph 15 of the Direction states that BT may only carry out re-arrangements provided that it acts in a reasonable manner at all times including, in particular, giving reasonable notice of any such action to the operator.

Reasonable periods

9 Paragraph 9 of the Direction requires BT to offer to provide to the operator, within a reasonable period of the operator’s written request, FRIACO switched through a Tandem Switch, to the operator’s Point of Connection connected to that Tandem Switch.

10 Paragraph 11 of the Direction also obliges BT, where no or insufficient capacity exists at one of its Tandem Switches, to provide to the operator, within a reasonable period of the operator’s written request, Single Tandem FRIACO at that Tandem Switch, subject to reasonable re-arrangements being carried out.

11 In addition paragraph 15 of the Direction requires BT to give reasonable notice of any rearrangements.

12 Section 4 of this Guidance sets out what the Director would normally consider to be a reasonable period to offer to provide Single Tandem FRIACO pursuant to paragraphs 9 and 11 of the Direction.

Reasonable re-arrangements

13 Under paragraph 11 of the Direction, where capacity is not available for the entire duration during which Single Tandem FRIACO is requested by the operator at any Tandem Switches, BT is required to provide Single Tandem FRIACO, subject to reasonable re-arrangements being carried out at that Tandem Switch pursuant to paragraphs 13 and 14.

14 Section 5 of this Guidance sets out what the Director will normally consider to be a reasonable re-arrangement and which traffic may be re-arranged.

3. The need for re-arrangements

15 BT must make a reasonable assessment of the amount of capacity which can reasonably be created at the Tandem Switch where Single Tandem FRIACO is requested, before it may reasonably require an operator (requesting or already having purchased Single Tandem FRIACO) to carry out re-arrangements. This assessment must be in accordance with BT’s normal Advance Capacity Order (‘ACO’) procedure.

4. Reasonable periods

16 Where capacity exists at a Tandem Switch for the entire period for which Single Tandem FRIACO has been requested, the Director will normally consider the following process and time scales reasonable:

	1) BT should, within 15 working days after receiving an ACO for Single Tandem FRIACO, make a reasonable assessment of the available capacity at the particular Tandem Switch in respect of which an operator wishes to place an order.
	2) BT should supply Single Tandem FRIACO within 65 working days from the date on which an operator and BT enter into an agreement for the supply of Single Tandem FRIACO.

17 Where no, or insufficient, capacity exists at a Tandem Switch for the entire period for which Single Tandem FRIACO has been requested, the Director will normally consider the following process and time scales reasonable:

	1) BT should, within 25 working days after receiving an ACO for Single Tandem FRIACO, both make a reasonable assessment of the available capacity at the particular Tandem Switch in respect of which an operator wishes to place an order and agree the details with the relevant operator or operators of the reasonably required rearrangements. If agreement is not reached within the 25 day period, the same process will immediately re-start. Within the first 5 working days of this subsequent 25 day period, BT must assess which other operator would be appropriate to select to carry out the required re-arrangements, and notify that other operator.
	2) Once the assessment and re-arrangements have been agreed, BT may offer to enter into a conditional contract with the operator requesting Single Tandem FRIACO. Such a contract will be conditional on the required re-arrangements having been carried out by that operator and/or another operator, so that BT is in a position to supply Single Tandem FRIACO.
	3) BT should supply Single Tandem FRIACO according to the following time scales:

	a) Within 80 working days from the date on which an operator and BT enter into an agreement (conditional or otherwise) for the supply of Single Tandem FRIACO, provided both BT and the operator, or operators, carrying out the re-arrangements have ‘intermax’ capacity available (Intermax' means Intermediate Maximum, where an operator has spare switch port capacity to enable re-arrangement of traffic routes to take place without any break in service.); or
	b) Within 105 working days from the date on which an operator and BT enter into an agreement (conditional or otherwise) for the supply of Single Tandem FRIACO, if only BT has ‘intermax’ capacity available.
	c) BT should not exceed the 105 days in (b) without showing the reasonable circumstances, such as lack of ‘intermax’ capacity, that necessitate a longer period.
	d) Where subsequent provision and re-arrangement requires only the augmentation of existing routes, the times in (a) and (b) above should be reduced by 40 days.

4) Where an operator fails to make the necessary re-arrangements within the limits set out above, BT shall give that operator 10 working days’ notice if it intends to cease the supply of Single Tandem FRIACO pursuant to paragraphs 18-20 of the Direction.

5. Reasonable re-arrangements

Routes and route types

18 BT should only carry out re-arrangements which are technically sensible and economic. The Director would normally consider the following to be technically sensible and economic:

	1) Re-arrangement is likely to be more economic at DLEs where the direct traffic is greater.
	2) BT-MNO (‘Mobile Network Operator’) routes are likely to be most suitable for re-arrangements if an MNO operator wishes to purchase Single Tandem FRIACO.
	3) Egress routes from an operator to BT would be more suitable for re-arrangement than ingress as the routing is within the control of the operator which can, therefore, use the DLE interconnect routes in High Usage mode.
	4) There should be only one ingress route to an operator from a BT DLE which carries all traffic (geographic and non-geographic). For historical reasons, partly relating to the payment for the route, operators may have multiple incoming route types to BT Tandem Switches, for example Ingress, IDA, NTS, etc. If this approach is repeated with DLE interconnections, the inefficiencies and problems of management will be compounded.

Operators required to re-arrange traffic

19 The Director would normally consider that BT has acted reasonably if it took account of at least the following factors when deciding which other operator should reasonably be required to carry out re-arrangements:

	1) The operator requesting Single Tandem FRIACO at the Tandem Switch where there is no, or insufficient, capacity should normally be the first operator to be required to re-arrange.
	2) The total costs incurred by BT and the re-arranging operator should be minimised as far as possible.
	3) The total amount of re-arrangement a specific operator has already incurred should be taken into consideration. On this basis BT may choose an alternative operator who also has suitable traffic to rearrange but which is not currently in the process of carrying out a significant amount of re-arrangement.

Anonymity of re-arranging operators

20 Paragraph 26 of the Direction requires that BT should not disclose the identity of an operator ordering Single Tandem FRIACO, unless directed to do so by the Director. The Director considers that the identity of an operator required to carry out re-arrangements should also be kept confidential unless otherwise directed.

Explanatory note on the Guidance and commentary on operators’ responses to the consultation on the draft Guidance at Annex 4 of the Direction published on 15 February 2001

Published on 18 July 2001

1 This document provides an explanation of:

	1) the wording of and the principles underlying the attached Guidance, where operators have asked in their responses for clarification;
	2) the principal differences between the final Guidance and the draft Guidance at Annex 4 of the Explanatory Document to the Direction published on 15 February 2001 (the ‘Direction’); and
	3) the wording of and the principles underlying the Direction and its Explanatory Document, where operators have asked in their responses for clarification.

For convenience, this document addresses the issues using the same order and headings as used in the attached Guidance.

The need for re-arrangements

3. Concern was expressed by WorldCom that the draft Guidance did not require BT to take all reasonable measures to minimise the potential burden of rearrangements on other operators, by stipulating that when BT evaluates the amount of spare capacity available, it should ensure the efficient operation of its own capacity management and traffic conveyance at the Tandem level.

4. Although it is not the Director’s intention to refer specifically to this in the Guidance, nevertheless in the event of a dispute arising, the Director may, where appropriate, take such arguments into consideration in judging whether BT has acted in a reasonable manner.

Reasonable periods

5 The Guidance states that rearrangements will not be required where spare capacity exists at a Tandem Switch for the entire period for which Single Tandem FRIACO has been requested. Paragraph 11 of the Direction similarly states that rearrangement obligations arise where no, or insufficient, Capacity Units exist at the relevant Tandem Switch "at any point during the period to which a request relates".

6 The Director considers that the period to which the request relates should equate to the period from the operator’s original request until the start of FRIACO Stage 2, currently set for 1 February 2003. This interpretation is based on the fact that the minimum network spare capacity within that period will set the upper limit on BT’s ability to provide ST FRIACO without rearrangement. From the start of Stage 2, BT will have an unqualified obligation to supply ST FRIACO, without any ability to require rearrangements. In the circumstances, any other time period would require further consultation. Oftel currently intends to engage in such consultation in due course.

7 A suggestion was made that BT should build on the experience it gains in dealing with the initial flow of Single Tandem FRIACO orders to increase the throughput of orders in a short space of time. The Director will review BT’s compliance with the Direction on an ongoing basis, and paragraph 2 of the Guidance gives the Director the power to review the timescales set out if necessary and appropriate, in the light of operation.

8 Energis has requested that, for clarity, the Director should incorporate into the Guidance the 5 working day period noted in Annex 5 of the Explanatory Document to the Direction, at paragraph 10 (a) of Scenario 3. Although it is not intended that the Guidance should contain an exhaustive list of all the requirements upon BT and other operators, this period (which forms part of the 25 working day period for BT to notify and agree rearrangements with another operator) has now been incorporated in paragraph 17 (1) of the Guidance.

9 Paragraph 17 (3) c of the Guidance requires that if BT is unable to supply Single Tandem FRIACO within 105 working days from the date on which an operator and BT enter into an agreement for its supply, where only BT has ‘intermax’ capacity available, then BT must demonstrate the reasonable circumstances, such as lack of ‘intermax’ capacity, which necessitate a longer period. The Director does not consider it necessary to set out other factors which might reasonably necessitate a longer period, since it is not possible to anticipate all the circumstances that might arise.

10 Paragraph 4.17 of the Explanatory Document to the Direction specifies that an appropriate process will be set up to monitor capacity on BT’s network and progress with re-arrangements on the basis of regular reports. Energis has requested that operators have some visibility of this monitoring process.

11 Once the monitoring process has been finalised, the Director intends to publish to operators the details of the items being monitored and the frequency with which they will be monitored. The monitoring process will enable the Director to assess whether BT is acting in a generally reasonable manner, and will provide supporting statistics in the event of a dispute. The Director does not, at this stage, consider it necessary to publish the information collected on a routine basis, although he may publish certain parts of it at any time if circumstances dictate.

12 One operator suggested it might be useful for the Director to monitor BT’s compliance with the timescales. In view of the various timescales involved and the resulting need for provision of large quantities of additional information, the Director does not consider it appropriate to monitor compliance with timescales, preferring instead a self-policing approach whereby if operators do experience problems with compliance, they can be reported to the Director and dealt with appropriately.

Reasonable re-arrangements

13 BT has asked the Director to clarify the principles involved in identification of the next operator for re-arrangement, where the requesting operator does not have sufficient capacity to re-arrange. Paragraph 19 of the Guidance gives, in the Director’s opinion, as much advice as can be given on the selection of operators, including the need to minimise as far as possible the total costs incurred by BT and the re-arranging operator.

14 In response to BT’s suggestion that a next operator identified for re-arrangement would have little incentive to agree to a re-arrangement as it knows that another operator could be approached in the event of its refusal, the Director would state that this is incorrect, since the operator has an obligation to accept all reasonably required re-arrangements, otherwise BT can cease supply of Single Tandem FRIACO in the ways set out in paragraphs 18 to 21 of the Direction.

15 Paragraph 26 of the Direction requires that BT should not disclose the identity of an operator ordering Single Tandem FRIACO, unless directed to do so by the Director. One operator suggested that the confidentiality of the re-arranging operator might also be an issue. The Director has therefore confirmed, in paragraph 20 of the Guidance, that he is minded to consider that the identity of an operator required to carry out re-arrangements should also be kept confidential unless otherwise directed.

16 It was suggested by one operator that the rearrangement commitment could be partly satisfied by the voluntary conversion of an operator’s capacity units at a tandem switch from non-ST FRIACO to ST FRIACO.

17 The Director agrees that such actions would reasonably assist with the creation of additional capacity for ST FRIACO at the tandem switch, and the Director will shortly be consulting on a proposed amendment to the Direction which would reflect this. The Director takes the view that BT would not normally have grounds for refusing to supply ST FRIACO within the shortest timescales possible, particularly if the non ST FRIACO traffic being converted is billed on an unmetered basis to the retail customer.

18 The Director has been asked to clarify that an operator which purchases only DLE FRIACO cannot be required by BT to re-arrange traffic. Paragraphs 13, 14 and 18 of the Direction state, inter alia, that only those operators being supplied with or intending to be supplied with Single Tandem FRIACO may be required to re-arrange.

19 Paragraph 15 (iv) of the Direction requires that traffic re-arrangement should not "materially affect the quality of service provided to the Operator". One operator asked for the Guidance to state the level of service degradation that the Director would regard as being material. Although the Director agrees that this issue forms part of BT’s overall requirement to act reasonably, he does not believe that it is possible to be more specific in the Guidance, preferring instead to consider any related complaints of unreasonable behaviour on an individual basis.

20 Energis asked whether the Director intends to monitor BT’s grade of service obligations on rearranged traffic – as stated above, the Director intends to adopt an approach whereby if operators do experience problems with compliance, they can be reported to the Director and dealt with appropriately.

Other issues

21 BT has asked for additional time to be built into the overall timescales for scenarios not covered by the Guidance, where it needs to seek clarification from the Director. The Director is giving, in his opinion, as much guidance on reasonableness as can be given without being too prescriptive, and will naturally look into any individual complaints that may be raised. Although issues are generally likely to be contractual in nature and therefore for the parties themselves to solve in the first instance, the Director can use his good offices to clarify situations where requested. An increase in timescales is not, however, felt to be appropriate.

22 One operator asked for a statement of the key principles that underpin the whole FRIACO Stage 1 process. As stated above, the Director has created a document which provides guidance without being too prescriptive, and would not want to compromise this outcome by the inclusion of any further principles.

23 Other comments received addressed the separate issues of payment terms, and the incorporation of Single Tandem FRIACO charges into the Network Charge Control. It is not the intention of this document to deal with these issues, which will form the subject of further statement by the Director in due course.

24 Following discussion with BT on a number of issues, a set of general principles has been formulated which the Director believes should be made available to all operators interested in Single Tandem FRIACO. These are incorporated as Annex A to this document.

Annex A to Explanatory Note

General principles on the supply of ST FRIACO

1. Is BT required to invest in additional capacity for metered traffic during Stage 1?

1 Oftel considers that there remains an obligation upon BT to build additional capacity where there is insufficient capacity to meet demand for metered interconnect ports, not only at a particular tandem switch where no ports have been allocated to STF, but also in some circumstances where some ports have been allocated for STF purposes.

2 In essence, during Stage 1, BT is required to invest in tandem capacity where it would have been required to do so had STF not been introduced. In other words, BT is expected to make incremental additions to tandem capacity in order to meet its obligations to supply metered interconnection.

3 STF and rearrangements have made the issue of whether investment is required more complex. However, at a general level, the total demand for tandem capacity at a given switch can be expressed by the following formula:

4 Demand for tandem capacity at a given switch that would have existed had STF not been introduced = Tandem metered capacity at the switch + Non FRIACO capacity that has been rearranged to the DLE as a result of the Direction + Growth on these rearranged routes.

5 If the total capacity on the switch is less than the above demand for tandem capacity at the switch (in the absence of STF) then BT is required to make additional investment in Stage 1 in order to meet its obligations to supply metered interconnect.

6 Note that the above formula underestimates BT’s obligations to invest in capacity in Stage 1. This is because, in the absence of STF, demand for internet access would have had to be met by metered interconnect which BT has an obligation to supply.

7 In order to provide further clarification, we set out below some scenarios in which BT would or would not be required to invest in new capacity during Stage 1.

Scenario 1: No STF is being supplied at the switch. BT receives a request for metered interconnect. No spare capacity is available.

BT’s obligations are unaffected by the STF Direction, and it should install additional capacity in order to meet the demand for additional metered traffic.

Scenario 2: All STF on the switch has been supplied out of rearrangements. BT receives a request for metered interconnect. No spare capacity is available.

In this case BT should invest in additional capacity at the tandem switch in order to meet the demand. The capacity shortage would have arisen regardless of STF, since the STF ports would have been used to provide metered interconnect in any case.

Scenario 3: All STF on the switch has been supplied out of spare capacity. BT receives a request for metered interconnect. No spare capacity is available.

In this scenario, BT could have met demand for metered from the spare capacity if STF had not been introduced. Thus, it would not be reasonable to expect BT to invest in additional capacity.

Scenario 4: STF on the switch has been provided using a combination of spare capacity and rearranged capacity. BT receives a request for metered interconnect. No spare capacity is available.

In this scenario it is necessary to establish whether spare capacity would have been available to meet the demand for metered interconnection had STF not been introduced. This can be done using the following formula:

Spare (in the absence of STF) = Total capacity on switch – metered interconnection – STF provided from rearrangement of non FRIACO traffic – growth on non FRIACO routes rearranged as a result of the Direction.

If BT would not have spare capacity in the absence of STF then it should be required to invest in additional capacity in order to meet the new request for metered interconnection.

2. Can BT be required, under the terms of the February STF Direction, to rearrange traffic in a situation where STF is already being supplied but there is insufficient capacity to meet fresh demands for metered interconnect traffic?

8 Oftel takes the view that there is a possibility that BT might have insufficient capacity to meet new demands for metered traffic, even though it is permitted to assess whether spare capacity exists for the whole period from the operator’s original request until the start of FRIACO Stage 2, because of the inevitable inaccuracies of trends based on long term forecasts from OLOs.

9 It is Oftel’s opinion that the Direction does not permit rearrangements in these circumstances, and that rearrangements can only be required, as the Direction currently stands, when BT receives a new request for STF.

10 However, Oftel intends to consult on an amendment to the Direction allowing BT to carry out rearrangements in order to meet its obligations to continue the supply of STF and supply requests for metered interconnection. It should be emphasised that Oftel will not be seeking to amend the cap on the total amount of rearrangement that an STF operator might be requested to carry out, which will remain at 2 times the STF capacity supplied.

3. What should BT do if it is not required to invest in additional capacity?

11 If circumstances arise where there is insufficient capacity to meet a new request for metered traffic, and where it would be unreasonable for BT to invest in additional capacity (for example, the circumstances that apply in scenario 3 above), Oftel would expect BT to use the tools currently at its disposal (such as "long lining") to resolve the problem.

12 In the unlikely event that this proves impossible, the dispute should be referred to Oftel and it would be judged on its merits.

13 As stated in section 2 above, Oftel considers that rearrangement of traffic in order to guarantee a continuing supply of STF would be a desirable method of facilitating further use of STF. Oftel accepts that this is not open to BT, under the existing terms of the Direction, and intends to consult on a proposal to amend the Direction accordingly in due course.

4. Does BT have an ongoing commitment to provide STF services?

14 Without fettering the Director General’s discretion, the exercise of which would of course depend on the facts as they may arise in an individual case, the Director General is minded to consider that BT would unduly discriminate if it were to cut off supply of STF in order to meet new demands for metered interconnection. Oftel considers that, especially if the proposed new flexibility for rearrangements is introduced, BT would have an ongoing commitment to provide STF services to operators with existing STF connections (subject to reasonable cause for cessation of supply as may be contained within the contract eg defaulting operator), in the same way as it has an ongoing commitment to provide other services, such as metered interconnection.