Dispute between Vodafone and BT concerning Deemed Consent in relation to the provision of Ethernet Services

08 January 2016

Dispute between: Vodafone Limited (“Vodafone”) and British Telecommunications plc (“BT”) concerning the use by BT of the “Deemed Consent Mechanism” in relation to the provision of certain Ethernet Services.
Case opened: 8 September 2015.
Case closed: 8 January 2016
Issue: Ofcom was asked to resolve this dispute under section 185 of the Communications Act 2003 (“the Act”) concerning whether the use by BT of the “Deemed Consent Mechanism” (as defined in clause 2.3 of the Connectivity Services Agreements (“CSAs”)) over the period 1 September 2012 to 31 January 2014 in relation to the provision of certain Ethernet Services was in accordance with the relevant CSAs.
Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Act.

On 8 January 2016, Ofcom published its Final Determination resolving this dispute. A non-confidential version of the Determination is available under related items.

Please note that this Dispute, brought by Vodafone, is separate to Ofcom’s ongoing own-initiative investigation into BT’s use of Deemed Consent opened on 6 November 2015 (details of which can be found at http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01170/).

Update note – 6 November 2015

Ofcom has today published its Provisional Conclusions regarding the disputes (please see related item).

The period for comments on the Provisional Conclusions will close at 5pm on 20 November 2015.

Please send responses to:

Gala Poole
Ofcom
Riverside House
2A Southwark Bridge Road
London
SE1 9HA

Or by e-mail gala.poole@ofcom.org.uk 

Ofcom has today also announced that it is opening a wider investigation into BT’s use of the Deemed Consent Mechanism during the period 2012 to 2014 in relation to whether the provision of certain Ethernet Services was in accordance with the relevant CSAs. Further information is available at: http://stakeholders.ofcom.org.uk/enforcement/competition-bulletins/open-cases/all-open-cases/cw_01170/

End of update note

On 8 December 2008 and 28 March 2013, Ofcom published its 2008 Business Connectivity Market Review (“BCMR”) Statement and 2013 BCMR Statement respectively. Both these Statements determined that BT has Significant Market Power (“SMP”) in the provision of Ethernet Services(-1-) and imposed SMP Conditions on BT. These included an obligation on BT to provide its services as soon as reasonably practicable and on fair and reasonable terms and to publish and adhere to reference offers for the provision of Ethernet Services. BT has published reference offers for Ethernet Services on its website through its CSAs.

This dispute concerns allegations by Vodafone that, in the period from 1 September 2012 to 31 January 2014, BT has inappropriately used the Deemed Consent Mechanism in the relevant CSAs. Vodafone alleges that this has resulted in Openreach failing to meet its service level agreements on multiple occasions, by delaying provision of its Ethernet Services without Vodafone’s consent, and by failing to compensate Vodafone for these delays in accordance with the CSA.

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 a manner which is consistent with both Ofcom’s general duties under section 3 of the Act, and pursuant to section 4(1)(c) of the Act, the six Community requirements set out in section 4 of the Act which give effect, amongst other things, 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 there is a dispute between the parties within the meaning of section 185(1A) of the Act. 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 from Vodafone and BT, the scope of the dispute is to determine:

1.whether the use by BT of the “Deemed Consent Mechanism” (as contemplated by clause 2.3 of Schedule 4C(i) of the Contract for Connectivity Services (“CSA”)) over the period 1 September 2012 to 31 January 2014 in relation to the provision of Ethernet Services falling within the specific categories identified in Vodafone’s dispute referral of 14 August 2015 was:

a) in accordance with the CSA such that BT complied with Condition HH5.9 (imposed pursuant to a notification of 8 December 2008 and Condition 6.9 (imposed pursuant to a notification of 28 March 2013); and

b) consistent with such services being provided on fair and reasonable terms and conditions in accordance with Condition HH1.2 (imposed pursuant to a notification of 8 December 2008) and Condition 1.2 (imposed pursuant to a notification of 28 March 2013).

2.any appropriate exercise by Ofcom of its powers under section 190(2) of the Communications Act 2003 as part of Ofcom’s determination resolving this dispute.

Procedural matters:

In line with Ofcom’s Guidelines 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 23 September 2015, 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 23 September 2015.

Stakeholders who wish Ofcom to join them as parties to the dispute must provide evidence, as set out in Ofcom's Guidelines on the resolution of disputes that they are in dispute.

Case Leader: Gala Poole (e-mail: gala.poole@ofcom.org.uk)
Case Reference: CW/01165/08/15

Footnotes:
1.- Note that in the BCMR SMP Conditions Ethernet Services are defined as Alternative Interface Symmetric Broadband Origination (“AISBO”) services.