Dispute between COLT and BT about the level of charges for partial private circuits

08 February 2013

Dispute between: COLT Telecommunications (“COLT”) (-1-) and British Telecommunications plc (“BT”)
Case opened: 2 December 2008
Determinations issued: 14 October 2009 and 8 February 2013
Case closed: 8 February 2013
Issue: COLT asked Ofcom to use its powers under Section 190 of the Communications Act 2003 (“the Act”) to resolve a dispute between COLT and BT concerning the level of BT’s charges for partial private circuits (“PPCs”).
Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Act.

On 8 February 2013, Ofcom issued its final determinations in this dispute and in the related disputes between each of THUS, (-2-) Cable & Wireless, Global Crossing, (-3-) Verizon and Virgin Media (“the Parties”) and BT (CW/00992/06/08) to the parties in dispute.

We have concluded that BT has overcharged COLT and the Parties a total of £2,896,800 for certain PPCs services and that BT is required to make repayments to COLT and the Parties for the full amounts by which it has overcharged them.

We have published a non-confidential version of our final determinations (see related items).

Update note – 18 July 2012

On 19 – 21 June 2012, the Court of Appeal heard the appeal brought by BT against the Competition Appeal Tribunal’s judgment in British Telecommunications plc v Office of Communications (Partial Private Circuits) ([2011] CAT 5) (the “PPCs appeal”). In light of our proposals contained in our further draft determination in relation to these disputes and the comments received from the parties to the disputes, as well as the nature of the arguments put to the Court of Appeal by the parties to the PPCs appeal, we believe that the Court of Appeal’s judgment is likely to be relevant to the issues raised in these disputes.

Accordingly, we consider that it is appropriate not to issue our final determination of these disputes until after the Court of Appeal hands down judgment and we have had an opportunity to consider the implications of the judgment for the matters in dispute in this case.

We will continue to consider the matters in dispute as appropriate, so that we can resolve the disputes as soon as possible following the Court of Appeal’s judgment.

End of update note

Update note – 28 March 2012

On 26 March, Ofcom decided to extend the time to provide responses to its further draft determination until 5 pm on 20 April 2012.

End of update note

Update note: 9 February 2012

On 8 February 2012 Ofcom issued a further draft determination to the Parties in this dispute and in the related disputes between THUS, Cable & Wireless, Global Crossing, Verizon and Virgin Media against BT (CW/00992/06/08). These new draft determinations relate to PPC services not covered in our final determinations of 14 October 2009 and specifically address BT’s charges for 140/155 Mbit/s terminating segment services and 34/45 Mbit/s trunk services. Please see the related item.

The period for comments on the draft determination will close at 5 pm on 5 April 2012. Please send responses to:

Lucas Ford
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to lucas.ford@ofcom.org.uk

End of update note

Update note: 6 January 2010

On 14 December 2009, BT filed an appeal with the Competition Appeal Tribunal (CAT) against Ofcom’s determination to resolve this dispute and the related dispute from THUS, Cable and Wireless, Global Crossing, Verizon and Virgin Media against BT (CW/00992/06/08).Details of the appeal can be found on the CAT’s website at http://www.catribunal.org.uk/

End of update note

Update note: 16 October 2009

A non-confidential version of Ofcom’s final determination of 14 October 2009 is now available (see related items).

End of update note

Update note: 15 October 2009

On 14 October 2009 Ofcom issued a final determination to the Parties in this dispute and the related dispute from THUS, Cable and Wireless, Global Crossing, Verizon and Virgin Media against BT (CW/00992/06/08).

We have concluded that BT has overcharged COLT, THUS, Cable and Wireless, Global Crossing, Verizon and Virgin Media a total of £41.688 million for certain PPC services (2Mbit/s trunk services) and that BT should refund this money with interest.

We also now have concerns about whether BT has overcharged COLT, THUS, Cable and Wireless, Global Crossing, Verizon and Virgin Media for certain other PPC services (140/155 Mbit/s terminating segment services and 34/45 Mbit/s trunk services), in light of actual financial information becoming available for 2008/09. Therefore, we intend to conduct further analysis and issue a separate draft or final determination in relation to these other services.

A non-confidential version of today’s final determination is being prepared and will be published shortly.

End of update note  

Update note 27 April 2009

Ofcom has today issued a draft determination to the parties in this dispute. Please see the related item.

Ofcom will be consulting on its proposals until 5 pm on 29 May 2009. Please send responses to:

Martin Hill
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to martin.hill@ofcom.org.uk

End of update note

Text published when case was opened

The dispute concerns allegations by COLT that BT’s charges for PPCs have been too high since 24 June 2004 and not cost oriented. COLT claims that, as a result, it has significantly overpaid BT for these products and that BT should reimburse the amounts overcharged.

PPCs are interconnection products that are purchased by communications providers and combined with their own networks to provide leased lines to business customers.

The scope of this dispute is identical to the disputes between BT and various other communications providers which were accepted for resolution on 25 July 2008 (see related items). Ofcom considers that on the face of the dispute submission, there appears to be a dispute between COLT and BT that commercial negotiations have failed to resolve.

Ofcom considers that the dispute meets the relevant statutory criteria and that it is appropriate for Ofcom to handle it according to section 186 of the Act and, accordingly, Ofcom has accepted the dispute for resolution.

In resolving disputes Ofcom must act in accordance with the six Community requirements that give effect to Article 8 of the Framework Directive.

In summary, those requirements are:

  • to promote competition in communications markets;
  • to secure that Ofcom contributes to development of the European internal market;
  • to promote the interests of all European Union citizens;
  • to act in a manner which, so far as practicable, is technology-neutral;
  • to encourage, to the extent Ofcom considers it appropriate, the provision of network access and service interoperability; and
  • to encourage such compliance with certain international standards as is necessary for facilitating service interoperability and securing freedom of choice for the customers of communications providers.

Scope of the dispute:
The scope of the dispute is to determine whether, in the period from 24 June 2004 to 30 September 2008:

i. BT has overcharged COLT for PPCs (based on whether or not BT’s charges for the underlying trunk and terminating elements of those PPCs were, during that time, reasonably derived from the costs of provision based on a forward looking long run incremental cost approach and allowing an appropriate mark up for the recovery of common costs including an appropriate return on capital employed) and, if so;
ii. by how much COLT has been overcharged; and
iii. whether and by how much BT should reimburse COLT.

Procedural matters:

Guidance on the resolution of disputes can be found in Ofcom's Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives.

All representations on the scope of the dispute should be submitted to Ofcom by 10 December 2008.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 10 December 2008, describing the relevance of the outcome of this dispute to their business.
Stakeholders with relevant information and evidence in respect of these disputes should submit this to Ofcom by 23 December 2008.
Stakeholders who wish Ofcom to join them as parties to the dispute must provide evidence, as set out in Ofcom's Guidelines, that they are in dispute.

Case Leader: Paul Dean (e-mail: paul.dean@ofcom.org.uk)
Case Reference: CW/01002/11/08

Footnotes:

  1.- Colt is now known as Colt Technology Services

  2.- THUS is now part of Cable & Wireless Worldwide plc

  3.- Global Crossing is now known as Level 3