Dispute between Apple Telecom Europe Limited and BT concerning the level of security deposit required for interconnection

25 February 2005

Complainant: Apple Telecom Europe Limited ("Apple")
Complaint against: BT
Case opened: 6 February 2004
Case closed: 3 June 2004
Relevant instrument: Ofcom intends to resolve the dispute under Chapter 3 of Part 2 of the Communications Act 2003

On 3 June 2004 Ofcom published a Determination under sections 188(2) and 190 of the Communications Act 2003 resolving this dispute.

See end of page.

Case Leader: Kath Dinsdale (e-mail: Kath.Dinsdale@ofcom.org.uk)
Case Reference: CW/00745/01/04

Text published when the case was opened

Complainant: Apple Telecom Europe Limited ("Apple")
Complaint against: BT
Case opened: 6 February 2004
Relevant instrument: Ofcom intends to resolve the dispute under Chapter 3 of Part 2 of the Communications Act 2003

Issue:

Apple has requested that Ofcom resolve a dispute regarding the level of deposit required by BT in advance of the provision of particular interconnection services.

Background:

Apple has been in commercial negotiation with BT concerning the supply of certain interconnection services. Apple alleges that the level of security deposit required by BT in advance of the provision of those services is unreasonable and does not bear any relation to BT's commercial risk in providing the interconnection services requested. BT argues that the amount of deposit required is not unreasonable based on, among other things, the potential use of the interconnection services being requested.

In February 2003 the Director General of Telecommunications (the Director) resolved a dispute between BT and a number of communications providers concerning credit vetting and credit control provisions introduced into BT's Standard Interconnect Agreement (SIA). BT's credit vetting policy includes provisions for setting security deposits and dispute resolution. In resolving the matter, the Director determined that it was reasonable in principle for BT to have such a credit vetting policy. However, the Director also proposed that some changes should be made to BT's proposals to satisfy certain concerns raised by communications providers affected by BT's policy. Full details of the Director's decision are available at:
http://www.ofcom.org.uk/static/archive/oftel/publications/licensing/2003/credit0203.htm#ch1

Scope of the dispute:

Ofcom recognises that on the facts of the matter referred to its attention, there appears to be a genuine dispute between the parties that commercial negotiation has failed to resolve and where there is an imbalance of market power between the two parties. Therefore Ofcom intends to make a direction, subject to consultation with each party, concerning the steps they should take to bring resolution to this issue.

Accordingly, the scope of this dispute is for Ofcom to determine the next actions the parties will take to ensure resolution to the issue of what constitutes a reasonable level of security deposit in this case.

Procedural matters:

Guidance on the resolution of the dispute can be found in the joint statement by Oftel and the Radiocommunications Agency `Dispute resolution under the new EU Directives' of 28 February 2003. In addition, stakeholders are referred to the Ofcom consultation 'Draft Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives' of 6 February 2004.

All representations on the scope of the dispute should be submitted to Ofcom by 20 February 2004.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 20 February 2004 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 20 February 2004.

Case Leader: Kath Dinsdale (e-mail: Kath.Dinsdale@fcom.org.uk)
Case Reference: CW/00745/01/04