Redetermination of a dispute about per-customer line transaction charges for Carrier Pre-Selection

17 March 2010

Dispute between: Cable & Wireless plc (C&W), THUS plc (THUS), Gamma Telecom Ltd (Gamma) and Opal Telecom Ltd. (Opal) (together the CPSOs) and British Telecommunications plc (BT)
Case opened: 16 November 2009
Case closed: 16 March 2010
Issue: Following the CAT's Order of 16 November 2009, Ofcom has re-determined the matters in dispute.
Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Act.

On 16 March 2010 Ofcom issued a final re-determination to the parties in dispute. Please see related items for the non-confidential version of the final re-determination.

Update note

On 8 February 2010 Ofcom issued a draft re-determination in relation to this dispute to the parties in dispute (please see the related item). Ofcom will be consulting on its proposals until 5 pm on 22 February 2010. Please send responses to:

Phil Jones
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to phil.jones@ofcom.org.uk

End of note

This dispute is about BTs charge for standalone CPS (Carrier Pre-Selection) set-up transactions (the CPS set-up charge).

The CPS set-up charge is a one-off wholesale charge paid by the CPSOs (Carrier Pre-Selection Operators) to BT when they start to provide calls on a customers line.

The CPS set-up charge is payable when customers transfer from BT Retail to another provider, and when they are transferring between non-BT providers.

Until 16 February 2009, the CPS set-up charge was set at a level that enabled BT to recover some retail costs. The CPSOs submitted that it was not appropriate for BT to recover its retail costs through the CPS set-up charge, and asked Ofcom to resolve a dispute on this basis. The CPSOs considered that any new charges resulting from Ofcoms determination of this dispute should have effect from 28 November 2003.

Ofcom accepted the dispute for resolution. The scope of the dispute was to determine:

1. whether it is appropriate for BT to recover through the CPS set-up charge the costs it incurs in sending the notification of transfer letter and handling the resulting inbound customer calls; and, if not,
2. the amount by which the CPS set-up charge should be reduced to remove the recovery of the costs BT incurs in sending the notification of transfer letter and handling the resulting inbound customer calls; and
3. the date from which Ofcoms determination of points (i) and (ii) above should apply.

On 13 February 2009 Ofcom issued a determination that BT is not entitled to recover through the CPS set-up charge the costs that it incurs in sending the notification of transfer letter and handling the resulting inbound customer calls; and that BT must reduce the CPS set-up charge by 78p to remove the recovery of these costs. This determination took effect from Monday 16 February 2009.

On the same date, Ofcom consulted on its revised proposal that BT should not be required to make any repayments in respect of this charge.

On 6 July 2009 Ofcom issued a further statement in relation to its determination of this dispute, concluding that its determination of 13 February 2009 should apply from that date, and that BT was not required to make repayments to the other parties to the dispute. (-1-)

On 4 September 2009, Cable & Wireless, The Carphone Warehouse and Gamma jointly filed an appeal with the Competition Appeal Tribunal (CAT) against Ofcoms determination to resolve this dispute. Details of the appeal can be found on the CATs website at http://www.catribunal.org.uk/. On 16 November 2009 the CAT made an Order requiring that the appeal be stayed until Ofcom had considered the question of competitive distortion and redetermined the matters in dispute within four months.

Case Leader: Phil Jones ( e-mail: phil.jones@ofcom.org.uk )
Case Reference: CW/01040/11/09

Footnotes:

  1.-http://www.ofcom.org.uk/bulletins/comp_bull_index/comp_bull_ccases/closed_all/cw_999/