Re-determination of mobile termination rates disputes

19 January 2009

Disputes between: BT and each of H3G, O2, Orange, T-Mobile and Vodafone; and between H3G and each of O2 and Orange.
Case opened: 17 December 2008
Case closed: 16 January 2009
Issue: Following the Competition Appeal’s Tribunal’s (“CAT”) judgments of 20 May and 15 August 2008 on the mobile call termination (“MCT”) rates to be set between BT and each of T-Mobile, O2, H3G, Orange and Vodafone; and between H3G and each of O2 and Orange, the CAT issued an Order on 17 November remitting these dispute determinations to Ofcom. The CAT directed that Ofcom should resolve these disputes by setting the rates as set out in its judgment of 15 August 2008.
Relevant instrument: Chapter 3 of Part 2 of the Communications Act 2003

Update note: 16 February 2009

Ofcom has today published non-confidential versions of the re-determinations issued to BT, T-Mobile, O2, H3G, Orange and Vodafone concerning these disputes. Please see the links below.

End of update note

On 16 January 2009 Ofcom issued re-determinations to BT, T-Mobile, O2, H3G, Orange and Vodafone concerning the disputes outlined above. These re-determinations set the rates for MCT between the relevant parties according to the CAT’s Order of 17 November 2008.

Non-confidential versions of these re-determinations are currently being prepared and will be published shortly.

Text published when the case was opened

On 7 July 2007 (see related item), Ofcom determined five disputes between BT and each of T-Mobile, O2, H3G, Orange and Vodafone concerning the MCT rates charged by each of these five mobile operators to BT for direct interconnection to its network for the following periods:

1 September 2006 to 31 March 2007 with respect to T-Mobile and O2;

1 October 2006 to 31 March 2007 with respect to Vodafone and Orange; and

1 November 2006 to 31 March 2007 with respect to H3G.

In each case, Ofcom upheld the MCT rate charged by the mobile operator to BT for the relevant period (the “BT Disputes Determinations”).

On 10 August 2007 (see related item), Ofcom determined two disputes between H3G and each of O2 and Orange concerning the MCT rates charged by these two mobile operators to H3G for direct interconnection to its network for the following periods:

1 September 2006 to 31 March 2007 with respect to H3G and O2; and

15 August 2006 to 31 March 2007 with respect to H3G and Orange.

In each case Ofcom upheld the MCT rate charged by O2 and Orange to H3G (the “H3G Disputes Determinations”).

On 6 and 7 September 2007, BT, T-Mobile, H3G and a group of fixed network operators lodged four separate appeals against the BT Disputes Determinations with the Competition Appeal Tribunal (“CAT”). H3G also appealed the H3G Disputes Determinations.

On 20 May 2008, the CAT issued its judgment upholding all four appeals. The CAT concluded that the BT Disputes Determinations and the H3G Disputes Determinations should be quashed and remitted to Ofcom with a direction specifying the MCT rates to be set between the parties to resolve the disputes. The CAT invited the parties to provide evidence showing what consideration had been given within the company to the setting of the rates proposed during the relevant periods and to provide the CAT with any contemporaneous correspondence between the parties to the dispute that evidenced the arguments put forward at the time for proposing or rejecting the rates in dispute.

On 15 August 2008, the CAT issued its judgment on the MCT rates that should be set to resolve the disputes between BT and each of T-Mobile, O2, H3G, Orange and Vodafone, and between H3G and each of O2 and Orange, for the relevant periods in order to resolve the disputes (the “Rates Judgment”).

On 17 November 2008, the CAT issued its final Order remitting the BT Disputes Determinations and the H3G Disputes Determinations to Ofcom pursuant to section 195(4) of the Act. The remittal included a direction that Ofcom should resolve the disputes by setting the rates set out in its judgment of 15 August 2008, in accordance with the following procedure:

  1. within 7 days of the making of this order, BT shall notify each of T-Mobile, O2, Vodafone, Orange and H3G of BT’s calculation of the sum of any under or over payment due as between BT and that party, providing sufficient detail to enable that party to see how the sum has been arrived at;
  2. within 10 days of receipt of that notification, each of T-Mobile, O2, Vodafone, Orange and H3G shall notify BT either that it accepts that the sum notified to it by BT is correct or, if it does not accept it as correct, setting out its own calculation of the sum, providing sufficient detail to enable BT to see how the sum has been arrived at;
  3. within 7 days of the making of this order, H3G shall notify each of O2 and Orange of H3G’s calculation of the sum of any under or over payment due as between H3G and that party, providing sufficient detail to enable the other party to see how the sum has been arrived at;
  4. within 10 days of receipt of that notification, each of O2 and Orange shall notify H3G whether it accepts that the sum notified to it by H3G is correct, and if it does not accept it as correct, setting out its own calculation of the sum, providing sufficient detail to enable H3G to see how the sum has been arrived at;
  5. Ofcom shall, as soon as reasonably practicable thereafter, order the payment of any sum agreed to be correct in those cases where there is agreement between the parties and, in any case where the parties are not agreed, Ofcom shall order such payments between the parties as it considers appropriate having regard to the difference between the amounts paid for MCT by BT or H3G in respect of the relevant period and the amount which would have been paid in respect of that relevant period if the rates set in the CAT’s Order of 17 November 2008 had prevailed.
    The CAT further directed that Ofcom should order interest to be paid on any sums payable pursuant to its Order at such rate and for such period as it considers appropriate having regard to the terms of the contracts between the parties.

Ofcom will now re-determine these mobile termination rates disputes, setting the rates out in the CAT’s Order of 17 November 2008.

Case Leader: Sue Merrifield ( email:sue.merrifield@ofcom.org.uk)
Case reference: CW/01008/12/08