Dispute relating to BT’s POLOs for 0845 call termination

30 November 2012

Dispute between: (i) Cable & Wireless UK (“CW UK”) and (ii) British Telecommunications plc (“BT”).
Case opened: 03 October 2012
Case closed: 01 February 2012
Issue: CW UK asked Ofcom to resolve a dispute under section 185(1A) of the Communications Act 2003 (“the Act”) in relation to BT’s Payments to Other Licensed Operators (“POLOs”) for 0845 call termination.
Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Act.

On 1 February 2013, Ofcom issued a final determination under sections 188 and 190 of the Act resolving this dispute. A non-confidential version of the determination is available under related items.

Update note – 30 November 2012

On 29 November 2012, Ofcom issued its provisional conclusions concerning this dispute to BT and C&W UK (please see related item).

The period for comments on the provisional conclusions will close at 5 pm on Friday 14 December 2012. Please send responses to:

Costas Pittas
Ofcom
Riverside House
2A Southwark Bridge Road
London
SE1 9HA

Or by e-mail to costas.pittas@ofcom.org.uk

End of update note

This dispute concerns the way in which BT has calculated its POLOs to CW UK for 0845 calls originating on or transiting BT’s network and terminating on CW UK’s network.

Calls to 0845 numbers are within the category of calls referred to as Number Translation Service (“NTS”) calls, which are the subject of a condition imposed on BT under section 45 of the Act.

BT has Significant Market Power (“SMP”) in the wholesale call origination market, and is subject to the NTS call origination condition which requires BT to originate and to retail NTS calls on behalf of the terminating operator. Under the condition, BT is obliged to pay to the terminating operator the net retail revenue it receives from NTS calls originating on or transiting its network, less certain deductions which are set out in SMP Condition AAA11. These payments are known as POLOs.

CW UK alleges that since November 2009, BT has not fairly calculated in its POLOs the amount of 0845 retail revenue payable to CW UK. CW UK believes that BT, in its calculation methodology, has failed to properly apportion and allocate the retail revenue from call allowance fees and line rental that BT has received for its inclusive call packages. These packages include an inclusive call allowance that can be used to make 0845 calls.

Ofcom considers that there appears to be a dispute between CW UK and BT that commercial negotiations have failed to resolve and that the dispute meets the relevant statutory criteria. Ofcom has therefore 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:

  • the appropriate methodology for apportioning retail line rental revenue for the purposes of setting 0845 POLOs payable by BT to Cable & Wireless UK in the period 1 November 2009 to the date of the determination which will be issued by Ofcom to resolve the dispute;
  • the methodology that BT should use to work out whether it should make further payments to Cable & Wireless UK with respect to the period 1 November 2009 to the date of the determination, taking into account the determination of (1) and BT’s acknowledgement that it did not allocate additional package fee revenues to 0845 POLOs before August 2011; and
  • if relevant, whether BT’s pricing letter of 22 March 2012 was a fair and reasonable mechanism to notify Cable & Wireless UK of BT’s proposed change in the level of the 0845 POLO.

Procedural matters:

In line with Ofcom’s Guidance on the resolution of disputes published in June 2011, Ofcom is not consulting on the scope of this dispute. Ofcom’s guidelines can be found at: Ofcom's Guidelines for the handling of regulatory disputes

Stakeholders interested in the outcome of this dispute should notify Ofcom by 29 October 2012, describing the relevance of the outcome of this dispute to their business.

Stakeholders with relevant information and evidence in respect of this dispute should submit this to Ofcom by 29 October 2012.

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: Costas Pittas (e-mail: costas.pittas@ofcom.org.uk)
Case Reference: CW/01092/09/12