Disputes between Hutchison 3G and each of Orange Personal Communications Services and O2 relating to call termination rates

14 August 2007

Disputes between: Hutchison 3G Ltd (‘H3G’) and each of Orange Personal Communications Services Ltd (‘ Orange ’) and O2 (UK) Limited (‘O2’)
Case opened: 12 April 2007.
Case closed: 10 August 2007.
Issue: H3G has asked Ofcom to resolve disputes under Section 185 of the Communications Act 2003 (‘the Act’) between H3G and each of Orange and O2 concerning Orange and O2’s proposed call termination rates.
Relevant instrument: Ofcom intends to resolve these disputes using its powers under Chapter 3 of Part 2 of the Communications Act 2003.

On 10 August 2007 Ofcom issued Determinations under Sections 188 and 190 of the Communications Act 2003 resolving these disputes.

Please see related item.

Update note – 17 July 2007

Ofcom issued draft determinations in relation to these disputes to the parties in dispute on 13 July 2007. Please see the bottom of page.

Ofcom will be consulting on its proposals until 5pm on 27 July 2007. Please send responses to:

Robert MacDougall
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA
or by email to robert.macdougall@ofcom.org.uk

End of update note

Update note: 22 May 2007

Following Ofcom’s consultation on the proposed scope of these disputes, this Competition Bulletin has been amended to make clear that, as an alternative to requesting that the rates payable by H3G to O2 and Orange should be no more than existing 2G rates, H3G has stated that the rates should be determined by an appropriate implementation of the mobile cost model that Ofcom has developed in the context of its review of mobile call termination markets.

End of update note

These disputes concern the prices that H3G pays O2 and Orange for terminating voice calls on their respective networks.

O2 and Orange have each proposed increased call termination rates to H3G which, according to O2 and Orange, reflect the fact that an increasing proportion of calls are being terminated on their third generation (‘3G’) networks. These rates, which are known as ‘blended’ call termination rates, were rejected by H3G. H3G has referred the resulting disputes to Ofcom for resolution, stating that the rates payable by H3G to O2 and Orange should be no more than the existing rates for terminating calls on their second generation (‘2G’) networks. In the alternative, H3G has requested that the rates should be determined by an appropriate implementation of the mobile cost model that Ofcom has developed in the context of its review of mobile call termination markets (see related items).

From 1 April 2007 Ofcom introduced a charge control that controls the rates charged by O2 and Orange (as well as those of H3G, T-Mobile (UK) Ltd and Vodafone Ltd) for terminating calls on both their 2G and 3G networks (see related items).

Ofcom recognises that on the face of the referrals, there appear to be disputes between the parties that commercial negotiations have failed to resolve.

In resolving disputes Ofcom must act in accordance with the six Community requirements that give effect to Article 8 of the Framework Directive.

In summary, those requirements are:

  • to promote competition in communications markets;
  • to secure that Ofcom contributes to development of the European internal market;
  • to promote the interests of all European Union citizens;
  • to act in a manner which, so far as practicable, is technology-neutral;
  • to encourage, to the extent Ofcom considers it appropriate, the provision of network access and service interoperability; and
  • to encourage such compliance with certain international standards as is necessary for facilitating service interoperability and securing freedom of choice for the customers of communications providers.

Scope of the disputes:

The scope of the disputes is to assess the charges proposed to H3G for call termination by O2 and Orange during the periods covered by the respective disputes. Specifically, Ofcom will consider whether there is any reason why H3G should not have been charged on the basis of the disputed call termination charges.

If Ofcom establishes that the answer to this question is ‘yes’, Ofcom will consider whether it is appropriate to determine call termination charges in this case, and if so, will determine what these charges should be. Ofcom will also consider whether it is appropriate to require that any repayments be made in respect of the disputed call termination charges.

Procedural matters:

Guidance on the resolution of disputes 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 disputes should be submitted to Ofcom by 25 April 2007.

Stakeholders interested in the outcome of these disputes should notify Ofcom by 25 April 2007, describing the relevance of the outcome of the disputes to their business. Stakeholders with relevant information and evidence in respect of this disputes should submit this to Ofcom by 9 May 2007.

Stakeholders who wish Ofcom to join them as parties to the disputes must provide evidence, as set out in Ofcom's Guidelines, that they are in dispute.

Case Leader: Robert MacDougall (e-mail: robert.macdougall@ofcom.org.uk)
Case Reference: CW/00950/03/07