Dispute between 4 Payphone Operators and BT about Payphone Access Charge collection terms

13 July 2005

Dispute between: Infolines Public Networks Ltd, Euro Payphone Ltd, Leisure Link Electronic Entertainment Ltd, Premier TeleSolutions ("the payphone operators") and British Telecommunications plc ("BT")
Case opened: 15 April 2005
Case closed: 12 July 2005
Issue: The four payphone operators and BT were in dispute regarding the terms on which BT Wholesale collects the Payphone Access Charge ("PAC") on behalf of the payphone operators and distributes it to them. As a result of failure to resolve the matter through commercial negotiation, the payphone operators referred the matter to Ofcom for resolution.
Relevant instrument: Ofcom intended to resolve this dispute under Chapter 3 of Part 2 of the Communications Act 2003

The payphone operators have withdrawn this dispute. Ofcom therefore closed the case on 12 July 2005.

Case Leader: Ruth Gibson (Ruth.Gibson@ofcom.org.uk)
Case Reference: CW/00825/03/05

Text published when the case was opened

Dispute between 4 Payphone Operators and BT about Payphone Access Charge collection terms

Dispute between: Infolines Public Networks Ltd, Euro Payphone Ltd, Leisure Link Electronic Entertainment Ltd, Premier TeleSolutions ("the payphone operators") and British Telecommunications plc ("BT")
Case opened: 15 April 2005
Issue: The four payphone operators and BT are in dispute regarding the terms on which BT Wholesale collects the Payphone Access Charge ("PAC") on behalf of the payphone operators and distributes it to them. As a result of failure to resolve the matter through commercial negotiation, the payphone operators have referred the matter to Ofcom for resolution.
Relevant instrument: Ofcom intends to resolve this dispute under Chapter 3 of Part 2 of the Communications Act 2003

Part of the service provided by the payphone operators is to make available to payphone users 'free-to-caller' calls, at no charge to the payphone user. An additional charge, known as the PAC, is collected from the 'owner' of the free-to-caller number (for example, a charitable helpline) by the operator terminating the call. The PAC payments are collected by BT Wholesale on behalf of all payphone operators, including BT Retail, and passed to payphone operators after the deduction of an administration charge.

The current administration charge is a charge based on a flat rate payment (the levy collection charge) payable monthly in advance, with an additional charge based on a percentage of the PAC collected for each payphone operator (the levy commission charge) payable in arrears.

The payphone operators can select either of the following tariffs:

(a) £5,000 per month, with 7% commission; or
(b) £11,700 per month, with 0.2% commission

The payphone operators have asked BT Wholesale to review the level and structure of the PAC administration charge. In particular, the payphone operators want a third tariff to be introduced, based solely on a percentage of the PAC collected, rather than a flat rate charge. The payphone operators allege that the current structure of the PAC administration charge discriminates disproportionately in favour of BT Retail, which operates a far greater number of payphones, and therefore the fixed monthly charge represents a much smaller cost per payphone, when allocated as a cost across the total number of BT Retail's payphones, than for the payphone operators.

Additionally, the payphone operators have asked BT Wholesale to provide sufficient call data to allow them to check the PAC payments and to identify the individual payphone from which a free-to-caller call originated.

BT has allegedly refused to review the level and structure of the PAC administration charge, on the basis that it has recently made substantial price reductions for this product, and it would not be economically viable to reduce the price further, as any decline in PAC-generating traffic volumes would leave BT commercially exposed if the administration charge is based on traffic volumes.

Additionally, BT has allegedly refused to provide the additional call data requested by the payphone operators as it argues that it does not currently have systems in place to provide the information required and that it is not feasible for BT to make the necessary software changes.

BT has suggested that it would be possible for the payphone operators to reach a commercial agreement with alternative operators for call conveyance, together with any associated billing and collection arrangements.

Scope of the dispute:

The scope of this dispute is to determine:

  1. whether BT should be required to offer an option in its tariff for the PAC administration charge which would be based only on a percentage of the PAC collected on behalf of the payphone operator, that is to say without any flat rate element; and
  2. whether BT should be required to provide data in electronic form to each payphone operator identifying the number of PAC-generating calls and the length of those calls for each of that payphone operator's individual payphones.

Ofcom does not intend to determine within the scope and timetable of this dispute:

  1. the level of any PAC administration charge based on a percentage of the PAC collected on behalf of the payphone operator; and
  2. any other issues relating to the PAC not set out above.

Procedural matters:

Guidance on the resolution of the dispute can be found in Ofcom's Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives. Please see related items.

All representations on the scope of the dispute should be submitted to Ofcom by 26 April 2005. Stakeholders interested in the outcome of this dispute should notify Ofcom by 26 April 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 10 May 2005.

Case Leader: Ruth Gibson (e-mail: Ruth.Gibson@ofcom.org.uk)
Case Reference: CW/00825/03/05