BT's volume discount scheme for IPStream and DataStream

25 February 2005

Complainants : Energis, Tiscali and Your Communications
Complaint against : BT Wholesale
Case opened : 22 July 2003
Case closed : 20 January 2004
Issue : Alleged abuse of a dominant position by BT regarding its volume discounts for IPStream and DataStream.
Relevant instrument : Chapter II of the Competition Act 1998 (abuse of a dominant position)

Following BT's decision to change the structure of the volume discount scheme as announced on 19 January 2004, Ofcom does not consider that the current discount scheme, to which the original complaint relates, warrants any further investigation. Ofcom is therefore closing the case.

Case leader : Ruth Gibson (020 7783 4340 e-mail : ruth.gibson@ofcom.org.uk)
Case reference : CW/00657/07/03

Text published when the case was opened

BT's volume discount scheme for IPStream and DataStream

Complainants: Energis, Tiscali and Your Communications
Complaint against: BT
Case opened: 22 July 2003
Issue: Alleged abuse of a dominant position by BT regarding its volume discounts for IPStream and DataStream.
Relevant instrument: Chapter II of the Competition Act 1998 (abuse of a dominant position)

Oftel has received a complaint from Energis, Tiscali and Your Communications about BT's volume discounts for IPStream and DataStream. The volume discount scheme applies to IPStream and DataStream rental charges on the basis of predetermined spending commitments by customers. IPStream and DataStream volume discounts can be combined. Customers receive the benefits of the discount in advance when they commit to an annual expenditure, and the discount can be clawed back, with interest, if the customer fails to meet its expenditure target. The discount scheme is structured in 'steps', with the percentage discount increasing from 1% to 1.5% and 2% for higher levels of expenditure.

It has been alleged that by implementing the volume discount scheme for IPStream and DataStream, BT is abusing its dominant position in the markets for the provision of wholesale bitstream services to ISPs and large businesses and corporate customers.

In particular, it is alleged that the volume discounts do not reflect genuine cost savings to BT, but are designed to force customers to place their business with BT. Moreover, it is alleged that the structure of the volume discount scheme will encourage customers to purchase the IPStream service rather than the DataStream service. For example, all the customer's expenditure in relation to the IPStream service will accrue towards the expenditure target, in contrast to DataStream, where expenditure on service elements, other than the End User Data Path charge, will not quality towards the expenditure target.

Oftel is investigating these allegations under the Competition Act.

Case Leader: Ruth Gibson (e-mail: ruth.gibson@oftel.gov.uk)
Case Reference: CW/00657/07/03