Dispute between Cable & Wireless Access Limited and BT relating to BT’s charges for connecting new customers to fully unbundled local loops

23 April 2007

Dispute between: Cable & Wireless Access Limited (“C&WA”) and British Telecommunications plc (“BT”)
Case opened: 5 January 2007
Case closed: 19 April 2007
Issue: C&WA asked Ofcom to resolve a dispute under Section 185(1) of the Communications Act 2003 between C&WA and BT concerning the charges imposed by BT for connecting new customers to fully unbundled local loops during the period 16 December 2004 to 30 June 2006
Relevant instrument: Ofcom intended to resolve this dispute using its powers under Chapter 3 of Part 2 of the Communications Act 2003.

On 19 April 2007 C&WA withdrew this dispute in order to explore further commercial negotiations with BT. Ofcom has therefore closed the case.

Update note – 5 April 2007

Ofcom issued a draft determination in relation to this dispute to the parties on 4 April 2007. Please see the related item.

Ofcom will be consulting on its proposals until 5pm on 20 April 2007. Please send responses to:

Tanya Rofani
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to tanya.rofani@ofcom.org.uk.

End of update note

According to C&WA, when it connected new customers to fully unbundled local loops during the period 16 December 2004 to 30 June 2006, it submitted a “new provide order” to BT, which required that an engineer visit each and every site in question to install a new line (hereafter referred to as the “new provide service”).

The regulatory framework for the provision of the new provide service by BT was set out in Ofcom’s review of the wholesale local access market (see related items). As part of this review Ofcom set the following conditions which are relevant to this dispute:

Condition FA1, which requires that BT provides network access on reasonable request, which shall occur as soon as reasonable practicable and on fair and reasonable terms, conditions, and charges.

Condition FA3, which requires that BT’s charge for the new provide service (amongst others) is reasonably derived from the costs of provision based on a forward looking long run incremental cost approach and allowing an appropriate mark up for the recovery of common costs including an appropriate return on capital employed.

Condition FA9, which requires that BT shall provide local loop unbundling services on fair and reasonable terms, conditions and charges.

C&WA considers that BT’s charge for the new provide service during this period was contrary to Conditions FA3 and FA9 because it did not reflect BT’s actually incurred costs and/or efficiently incurred costs and/or fair and reasonable costs.

In particular, C&WA states that in a significant number of cases, BT overcharged C&WA because a new line was not in fact required (and a site visit by an engineer was unnecessary) or, even where a new line was required, it was provided in an inefficient manner. C&WA further state that in certain cases BT did not make a site visit but C&WA were still charged as if there had been a site visit.

C&WA has also stated that during this time, it requested a different service from BT which would connect customers to fully unbundled local loops but did not require that an engineer visit each and every site in question to install a new line (the “stopped line provide service”).

C&WA considers that BT did not provide the requested stopped line provide service as soon as reasonable practicable, in accordance with Condition FA1, despite repeated requests from C&WA that it do so. C&WA states that the fact that BT already provided a stopped line provide service for WLR services during this time is a material consideration in this respect.

BT does not accept C&WA’s claims and negotiation between the parties has failed to resolve these issues.

Scope of the dispute:

The scope of the dispute is as follows:

  • Whether BT’s charge for the new provide service during the period 16 December 2004 to 30 June 2006 was consistent with its obligations as set out in Condition FA1, FA3 and FA9 and, if not, what (if any) adjustments should be made to payments made by C&WA to BT in respect of the new provide service during this period; and
  • Whether BT has breached Condition FA1 and FA9 by not providing the stopped line provide service to C&WA as soon as reasonably practicable, as required by Condition FA1 and FA9 respectively.

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.

All representations on the scope of the dispute should be submitted to Ofcom by 17 January 2007.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 17 January 2007, 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 31 January 2007.

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.

Case Leader: Tanya Rofani ( e-mail: tanya.rofani@ofcom.org.uk)
Case Reference: CW/00935/11/06