Dispute between Opal Telecom and BT about retrospective CPS charges

16 May 2006

Dispute between: Opal Telecom Limited (“Opal”) and British Telecommunications plc (“BT”)
Case opened: 17 January 2006
Case closed: 16 May 2006
Issue: Opal requested that Ofcom resolve a dispute between Opal and BT regarding the date to which the charges set by Ofcom in its statement and direction Per-provider and Per-customer line costs and charges for Carrier Pre-selection (“the CPS Direction”) of 18 August 2005 should be back dated and whether reductions to the penalty charge for CPS forecast shortfalls should also be back dated.
Relevant instrument: Ofcom resolved this dispute under Chapter 3 of Part 2 of the Communications Act 2003

On 16 May 2006 Ofcom issued a Determination under Sections 188 and 190 of the Communications Act 2003 resolving this dispute.

Please see Related Item.

Case Leader: Martin Hill (020 7783 4334 e-mail: martin.hill@ofcom.org.uk)
Case Reference: CW/00886/01/06

Text published when the case was opened

Dispute between: Opal Telecom Limited (“Opal”) and British Telecommunications plc (“BT”)
Case opened: 17 January 2006
Issue: Opal has requested that Ofcom resolve a dispute between Opal and BT regarding the date to which the charges set by Ofcom in its statement and direction Per-provider and Per-customer line costs and charges for Carrier Pre-selection (“the CPS Direction”) of 18 August 2005 should be back dated and whether reductions to the penalty charge for CPS forecast shortfalls should also be back dated.
Relevant instrument: Ofcom intends to resolve this dispute under Chapter 3 Part 2 of the Communications Act 2003

Update note – 6 April 2006

Ofcom published its proposals to resolve this dispute on 6 April 2006. Please see the related item.

Ofcom will be consulting on its proposals until 5pm on 25 April 2006. Please send responses to:

Martin Hill
Competition and Markets
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to martin.hill@ofcom.org.uk

End of update note

Update note – 15 February 2006

Ofcom has received requests from THUS, Verizon Business (formerly MCI) and Your Communications to be joined as parties to this dispute. It appears to Ofcom that Verizon Business, THUS and Your Communications are in dispute with BT regarding the retrospection of CPS charges.

The scope of the dispute has therefore been amended as set out below:

BT has already offered to repay, with interest, to its CPS customers the difference between the level of CPSO Service Preparation, CPS In Life Management and CPS Transaction Charges actually charged and those set by Ofcom in the August 2005 Direction, for the period 28 November 2003 to 17 August 2005 inclusive. The scope of the dispute is therefore to determine as follows:

  • whether BT must also repay Opal, THUS, Verizon Business and Your Communications, with interest, the difference between the level of the CPS charges actually charged and those set by Ofcom in the August 2005 Direction, for the period 1 October 2002 to 27 November 2003; and
  • whether BT must repay Opal, THUS, Verizon Business and Your Communications, with interest, the difference between the level of the charges actually made by BT for CPS forecasting shortfalls and the reduced charge introduced by BT as a result of the CPS Direction, for the period 1 October 2002 to 17 August 2005 inclusive.

End of update note

On 28 November 2003, Ofcom published its conclusions in the Review of the Fixed Narrowband Wholesale Exchange Line, Call Origination, Conveyance and Transit Markets (“the market review”), which imposed a requirement on BT (in the form of SMP Condition AA8) to provide CPS and charge for the service on a forward looking LRIC basis.

The market review did not review or modify BT's CPS charges but between September and November 2003, BT proposed revised charges for CPS and Ofcom subsequently carried out analysis to identify the appropriate charges that BT should set. This culminated in Ofcom publishing the CPS Direction in August 2005, which set the charges for CPS per provider set-up costs, CPS per provider ongoing costs and CPS per customer line set-up costs.

Following negotiation with industry, BT has offered to apply the new charges back to 28 November 2003 and repay to industry, with interest, any money that it has over-recovered as a result of higher charges being in place during this period. BT advised that it would not be prepared to back date changes to the level of penalties for CPS forecast shortfalls.

Opal has rejected BT's offer, arguing that the charges should be applied back to 1 October 2002 and that the forecast shortfall penalties should also be back dated to 1 October 2002.

Scope of the dispute:

BT has already offered to repay, with interest, to its CPS customers the difference between the level of CPSO Service Preparation, CPS In Life Management and CPS Transaction Charges actually charged and those set by Ofcom in the August 2005 Direction, for the period 28 November 2003 to 17 August 2005 inclusive. The scope of the dispute is therefore to determine as follows:

  • whether BT must also repay Opal, with interest, the difference between the level of the CPS charges actually charged and those set by Ofcom in the August 2005 Direction, for the period 1 October 2002 to 27 November 2003; and
  • whether BT must repay Opal, with interest, the difference between the level of the charges actually made by BT for CPS forecasting shortfalls and the reduced charge introduced by BT as a result of the CPS Direction, for the period 1 October 2002 to 17 August 2005 inclusive.

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 January 2006.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 2 February 2006, 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 2 February 2006. Stakeholders who wish Ofcom to join them as parties to the dispute must provide evidence, as set out in Ofcom's Guidelines, that they are in dispute with BT.

Case Leader: Martin Hill (020 7783 4334 e-mail: martin.hill@ofcom.org.uk )
Case Reference: CW/00886/01/06