Own-initiative investigation about enforcement of General Condition 1.2 regarding losing CPS Providers.

02 September 2005

Complainant: Ofcom own-initiative investigation
Complaint against: Communications Providers that sell services to End-Users using Carrier Pre-selection ('CPS Providers')
Case opened: 8 April 2005
Case closed: 31 August 2005
Issue: Whether information provided to a CPS Provider for the purpose of transferring an End-User from that CPS Provider to another CPS Provider is used for a different purpose during the ten-day transfer period, contrary to General Condition 1.2.
Relevant instrument: General Condition 1.2 ('GC 1.2') of the General Conditions of Entitlement which restricts the use of certain information provided in the context of Network Access arrangements.

Ofcom has closed this investigation by issuing notifications of contravention of GC 1.2 under section 94 of the Communications Act 2003 on 31 August 2005 to the following CPS Providers ('the CPS Providers'): The Carphone Warehouse Group plc (in respect of its brands Talk Talk, Opal and Vartec), Caudwell Communications Limited, Centrica Telecommunications Limited (in respect of its brands Onetel, British Gas, Telco and Comet), Tesco plc and The Post Office Limited (please see links at end of page). Oftel had issued a notification to British Telecommunications plc in relation to such conduct on 7 November 2003, which was upheld by the Competition Appeal Tribunal in its judgment of 9 December 2004 and final order of 12 April 2005.

The CPS Providers have to comply with GC 1.2 by 3 October 2005 by ceasing to market their services to leaving customers during the ten working-day CPS transfer period (in these cases by making modifications to the letter sent to a CPS customer wishing to transfer their calls to another CPS provider). Ofcom will monitor compliance with GC 1.2 and may take further enforcement action, where appropriate, against any one of the CPS Providers.

Representations concerning these notifications

The CPS Providers have until 3 October 2005 to make representations to Ofcom about the matters set out in the notifications.

Case Leader: Selena Bevis ( e-mail:selena.bevis@ofcom.org.uk)
Case Reference: CW/00824/04/05


Text published when the case was opened

Complainant : Ofcom own-initiative investigation
Investigation against: Communications Providers that sell services to End-Users using Carrier Pre-selection ('CPS Providers').
Case opened: 8 April 2005
Issue: Whether information provided to a CPS Provider for the purpose of transfering an End-User from that CPS Provider to another CPS Provider is used for a different purpose during the ten-day transfer period, contrary to General Condition 1.2.
Relevant instrument: General Condition 1.2 (GC 1.2) of the General Conditions of Entitlement which restricts the use of certain information provided in the context of Network Access arrangements.

Under GC 1.2, losing CPS Providers may only use information provided to them to enable the transfer of an End-User (for example a residential customer) to an alternative CPS Provider for the purpose for which it was provided. Therefore, losing CPS providers must not use customer information for any other purpose - for example, to market to, or 'save', leaving customers. However, both gaining and losing CPS providers are required by Ofcom to send a letter notifying the customer of the transfer (setting out, among other things, the date of the transfer). This letter helps protect consumers against 'slamming' (that is, being transferred without their express knowledge and consent).

It has come to Ofcom's attention that some CPS Providers may be marketing to leaving customers during the ten-day CPS transfer period, contrary to GC 1.2.

Ofcom notes that the Competition Appeal Tribunal (the 'Tribunal') issued its judgment in the CPS Appeal on 9 December 2004 (the CPS Judgment). In that judgment, the Tribunal upheld the Director General of Telecommunication's CPS Notification of 7 November 2003 (the 'CPS Notification'). The CPS Notification determined that BT's 'Save activity' contravened GC 1.2. BT appealed the CPS Notification on 7 January 2004 to the Tribunal. The appeal was heard by the Tribunal on 5 and 6 May 2004 . A copy of the CPS judgment is available from the Tribunal's website at: http://www.catribunal.org.uk/documents/Jdg1025BT091204.pdf

Ofcom has therefore decided to open an own-initiative investigation to determine whether or not any CPS Providers are contravening GC 1.2 of the General Conditions of Entitlement and if so, what action should be taken to remedy such contravention.

Case Leader : Selena Bevis ( e-mail: selena.bevis@ofcom.org.uk)
Case Reference: CW/00824/03/05