Dispute between BT and each of Vodafone, T-Mobile, O2, Orange, H3G and Everything Everywhere about BTs termination charges for 0845 and 0870 calls

21 October 2010

Disputes between: British Telecommunications plc (BT) and each of Vodafone Limited (Vodafone), Telefonica O2 UK Limited (O2), T-Mobile (UK) Limited (T-Mobile), Orange Personal Communications Services Ltd (Orange), Hutchison 3G UK Limited(H3G) and Everything Everywhere Limited (-1-) (EE) regarding BT's termination charges for calls to 0845/0870 number ranges.
Case opened: 4 March 2010
Case Closed: 10 August 2010
Issue: Ofcom has been asked to resolve these disputes under section 185(1) of the Communications Act 2003 (the Act) concerning termination charges for 0845/0870 calls introduced by BT on 1 November 2009.
Relevant instrument: Ofcom intends to resolve these disputes using its powers under Chapter 3 of Part 2 of the Act.

Update note: 27 July 2012

Ofcom has issued a determination (see related item) to give effect to the Court of Appeals Order dated 25 July 2012 (the Court of Appeal Order).  The Court of Appeal Order set aside:

(i) the order given by the Competition Appeal Tribunal (the CAT) in respect of case numbers 1151/3/3/10, 1168/3/3/10 and 1169/3/3/10, dated 12 August 2011 (the CAT Order), except for paragraphs 1(2), 1(5) and 4 thereof), and

(ii) the determinations made by Ofcom on 7 October 2011 (case: CW/01076/09/11), 28 February 2012 (case: CW/01076/09/11)  and 2 April 2012 (case CW/01076/09/11) (the Consequential Determinations).

It also restored the following determinations made by Ofcom:

(i) Ofcoms determination made by Ofcom on 5 February 2010 (case: CW/01036/09/09) (the 080 Determination); and

(ii) Ofcoms determination made by Ofcom on 10 August 2010 (case: CW/01042/01/10) (the 0845/0870 Determination).

Further, the Court of Appeal Order ordered that the matter should be remitted to Ofcom pursuant to s.195(4) Communications Act 2003 for Ofcom to direct that:

(i) BT must repay to each of O2, Everything Everywhere, Vodafone and H3G within 28 days of the date of the Court of Appeal Order, such monies as have been paid by each of them to BT pursuant to paragraphs 5 and 6 of the CAT Order and/or the Consequential Determinations that would not have been paid pursuant to the 080 and 0845/0870 Determinations, including, for the avoidance of doubt, amounts paid by each of O2, Everything Everywhere, Vodafone and H3G in respect of periods since the CAT Order; and

(ii) BT must pay interest upon the amounts repayable pursuant to the paragraph above, determined in  accordance with paragraphs 12.7 and/or 13.13 of the BT Standard Interconnect Agreement from the date of each such payment until the date of the repayment by BT.

End of update note

Update note: 21 October 2010

On 11 October 2010, Everything Everywhere and BT filed appeals with the Competition Appeal Tribunal (CAT) against Ofcoms determination to resolve these disputes. Details of the appeals can be found on the CATs website at http://www.catribunal.org.uk/.

End of update note

On 10 August 2010 Ofcom issued a final determination under sections 188 and 190 of the Act resolving this dispute to the parties in dispute and the parties which registered as interested parties. Please see related items for the non-confidential version of the final determination.

Update note: 8 July 2010

Ofcom received submissions on the draft determination from BT, T-Mobile/Orange, H3G, O2, Vodafone, Cable and Wireless Worldwide, Virgin Media and IV Response. Following consideration of these submissions we have amended some of our reasoning and provisional conclusions, although our overall provisional conclusion that NCCNs 985 and 986 are not fair and reasonable remains unchanged. In the light of this we feel that it is appropriate for stakeholders to have an opportunity to comment on these changes. We are therefore undertaking a supplementary consultation specifically on these changes (please see related item). The supplementary consultation will close at 5pm on Wednesday 21 July 2010.

Please submit responses by this date to:

Phil Jones
Ofcom
Riverside House
2A Southwark Bridge Road
London SE1 9HA

Or by e-mail to phil.jones@ofcom.org.uk

End of update note

Update note: 11 June 2010

On 10 June 2010, Ofcom issued a draft determination to the parties and interested parties in relation to this dispute (please see related item). Ofcom will be consulting on its proposals until 5 pm on 24 June 2010.

Please submit responses by this date to:

Phil Jones
Ofcom
Riverside House
2A Southwark Bridge Road
London SE1 9HA

Or by e-mail to phil.jones@ofcom.org.uk

End of update note

Update Note: 20 April 2010

Inclusion of further parties to the dispute

Following publication of the original Competition and Consumer Enforcement Bulletin entry relating to a dispute between Vodafone and BT, we received further dispute submissions from other Mobile Network Operators as follows:

  • On 5 March 2010, T-Mobile asked Ofcom to resolve a dispute between T-Mobile and BT about the termination charges notified in NCCN 985 and NCCN 986.
  • On 11 March 2010, O2 asked Ofcom to resolve a dispute between O2 and BT about the termination charges notified in NCCN 985 and NCCN 986.
  • On 9 April Orange asked Ofcom to resolve a dispute between Orange and BT about the termination charges notified in NCCN 985 and NCCN 986.
  • On 14 April Hutchison 3G asked Ofcom to resolve a dispute between Hutchison 3G and BT about the termination charges notified in NCCN 985 and NCCN 986.

Ofcom recognises that on the face of the additional dispute submissions received, there appear to be disputes between BT and each of O2, T-Mobile, Orange and Hutchison 3G (the Parties) that commercial negotiations have failed to resolve. We therefore consider that it is appropriate for us to handle the additional disputes.

Having considered these requests and decided that it is appropriate for Ofcom to handle these disputes, we consider that the principal issues in dispute between the Parties and BT are essentially the same as the issues we are already considering in the dispute between Vodafone and BT relating to NCCN 985 and NCCN 986.

Accordingly, we consider it appropriate to join the Parties to this dispute.

Interested parties to the dispute

The following have registered their interest in the outcome of the dispute:

  • Cable and Wireless
  • Virgin Media.

Representations on proposed scope

We received representations on the scope from several of the parties. We have considered these and we are of the view that the scope should not be amended from that set out below.

End of update note

This dispute concerns the extension by BT of a new wholesale charging structure for terminating calls to 0845 and 0870 number ranges. The new wholesale charging structure essentially involves BT setting its wholesale charge by reference to the individual retail pricing practices of each originating communications provider ("OCP").

Historically calls to 0845 and 0870 number ranges have been subject to retail charges by all OCPs, and OCPs have typically faced a termination charge that contributes towards the cost of terminating calls and hosting the relevant number range. All OCPs are free to determine their retail pricing for calls to 0845 and 0870 number ranges subject to the provisions of Ofcom's Number Plan (see further the National Telephone Numbering Plan published by Ofcom on 3 August 2009 http://stakeholders.ofcom.org.uk/telecoms/numbering/).

On 2 October, BT notified Vodafone to advise that BT would be amending its termination charges for 0845 and 0870 numbers with effect from 1 November 2009. Under the new charging model, BT levies a new pence-per-minute wholesale charge based on what it considers to be the average retail price that the OCP levies for calls to 0845 and 0870 number ranges. This is additional to the existing charge for terminating calls to these number ranges.

Vodafone does not accept BT's revised charging mechanism and states that it has been unable to reach commercial agreement with BT. On 23 December 2009, Vodafone asked Ofcom to resolve a dispute between Vodafone and BT about the termination charges for calls to 0845/0870 number ranges.

Ofcom recognises that on the face of the referral, there appears to be a dispute between the parties that commercial negotiations have failed to resolve. 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.

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

Scope of the dispute:

After consideration of the submissions received by Vodafone and BT, the scope of the dispute is to:

1. determine whether it is fair and reasonable for BT to apply new termination charges for calls to 0845 numbers hosted on its network, which are based on the level of the retail charge made by OCPs for calls to these numbers, as specifically set out in BT's NCCN 985 dated 2 October 2009; and

2. determine whether it is fair and reasonable for BT to apply new termination charges for calls to 0870 numbers hosted on its network, which are based on the level of the retail charge made by OCPs for calls to these numbers, as specifically set out in BT's NCCN 986 dated 2 October 2009.

Procedural matters:

Guidance on the resolution of the dispute 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 5pm on 15 March 2010.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 5pm on 15 March 2010 describing the relevance of the outcome of the dispute to their business. Stakeholders with relevant information and evidence in respect of this dispute should submit this to Ofcom by 5 pm on 29 March 2010.

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: Phil Jones (e-mail: phil.jones@ofcom.org.uk)
Case Reference: CW/01042/01/10

Footnotes:
1.-Both T-Mobile (UK) Limited and Orange Personal Communication Services Limited submitted separate disputes to Ofcom. On 1 April 2010 a joint venture by France Telecom SA and Deutsche Telekom AG comprising their respective UK businesses was created. On 1 July 2010, a further stage of the integration of the Orange UK and T-Mobile UK businesses took place. The company formally registered as T-Mobile (UK) Limited has been re-registered as Everything Everywhere Limited and both the T-Mobile and Orange brands now operate in the UK under that company. We have treated T-Mobile, Orange and Everything Everywhere as parties to this dispute