Dispute between BT and various providers about 0870 termination rates

17 June 2009

Dispute between: British Telecommunications plc (“BT”) and various communications providers (Affiniti Integrated Solution Ltd, Cable & Wireless U.K., Cheers International Sales Ltd, Colloquium Ltd, COLT Telecommunications, Energis Communications Ltd, Easynet Group Ltd, Magrathea Telecommunications Ltd, Opal Telecom Ltd, Oxygen8 Communications Ltd, Redstone Communications Ltd, Syntec Ltd, Thus Group Holdings plc, 1RT Group Ltd, Aggregated Telecom Ltd, Invomo Ltd, Flextel Ltd, Gamma Telecom Holdings Ltd, Inclarity Ltd, Edge Telecom Ltd, IV Response Ltd, Prodigy Internet Ltd, Sala Trading Ltd, Skytel Ltd, Telxl Ltd, Vectone Network Ltd)
Case opened: 31 August 2007
Case closed: 17 June 2009
Issue: BT asked Ofcom to resolve a dispute under Section 185(1) of the Communications Act 2003 (“the Act”) between BT and various communications providers concerning the payments made by BT to terminating operators for 0870 call termination services.
Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Communications Act 2003.

On 17 June 2009 Ofcom issued a determination resolving the dispute. Please related item.

Update note – 23 April 2009

Following the publication of the Competition Appeal Tribunal’s judgments of 20 May 2008 and 15 August 2008 in the appeals lodged against Ofcom’s determination of disputes between T-Mobile and BT, O2 and BT, Hutchison 3G and BT and BT and each of Hutchison 3G, Orange Personal Communications Services and Vodafone relating to call termination rates [ (-1-)], Ofcom reopened its consideration of this dispute.

Ofcom issued a new draft determination in relation to this dispute to the parties on 23 April 2009. Please see the related item.

Ofcom will be consulting on its new proposals until 5pm on 7 May 2009. 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

Update note – 21 December 2007

In response to concerns raised by BT that certain information contained in the draft determination issued on 16 November 2007 could increase the level of arbitrage activity, Ofcom has now redacted paragraphs 3.10 to 3.13 and 6.126 to 6.134 of the published draft determination which provided a description of such activity and the associated costs.  Ofcom notes, however, that the parties to the dispute have had the opportunity to consider the draft determination which included the redacted information.

End of update note

Update note – 18 December 2007


Ofcom has received comments made in response to the draft determination issued on 16 November 2007 that, before reaching a final conclusion in this dispute, we should await the outcome of the appeals lodged against Ofcom’s determination of disputes between T-Mobile and BT, O2 and BT, Hutchison 3G and BT and BT and each of Hutchison 3G, Orange Personal Communications Services and Vodafone relating to call termination rates [ (-1-)]. We note that those appeals relate to the approach adopted in determining “reasonableness” for the purposes of the end-to-end connectivity obligation, and may therefore be of direct relevance to the outcome of this dispute. We accept that, in light of the responses received, it is appropriate to await the judgment of the Competition Appeal Tribunal in the above appeals before issuing a final determination to resolve this dispute.

Ofcom is therefore of the view that exceptional circumstances have arisen since this dispute was accepted for resolution and that the requirement to resolve this dispute in four months, in accordance with section 188(5) of the Act, will not therefore apply in this case. However, we will keep this under review should a judgment of the Competition Appeal Tribunal not be forthcoming within an appropriate timescale.

End of update note

Footnotes:

1.- See http://ofcom.org.uk/bulletins/comp_bull_index/comp_bull_ccases/closed_all/cw_942/deter.pdf

Update note – 19 November 2007

Ofcom issued a draft determination in relation to this dispute to the parties on 16 November 2007. Please see the related item.

Ofcom will be consulting on its proposals until 5pm on 30 November 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

Update note: 30 October 2007

IV Response Limited has provided evidence to Ofcom of having proposed its own rates to BT for terminating calls to 0870 numbers which were rejected by BT. These proposals have now been included within the scope of this dispute.

Update note: 16 October 2007

THUS plc, Band-x Limited, Cable & Wireless U.K. and Flextel Limited have provided evidence to Ofcom of having proposed their own rates to BT for terminating calls to 0870 numbers which were rejected by BT. These proposals have now been included within the scope of this dispute.

End of update note

This dispute concerns the payments made by BT to other communications providers for terminating calls to 0870 numbers (termination charges).

In accordance with the end-to-end connectivity obligation imposed on BT on 13 September 2006 (see related items) BT is required to purchase wholesale narrowband call termination services on reasonable terms and conditions (including charges).

0870 numbers are examples of non-geographic numbers as the number dialled does not relate to a specific geographic location, but instead relates to a particular service. 0870 numbers are used by organisations and individuals to provide access to a very wide range of services from pay-as-you-go dial-up internet access to financial services, road traffic advice and tele-voting on TV programmes.

On 4 May 2007, BT issued an Operator Charge Change Notice (“OCCN”) giving notice of changes to the termination charges paid by BT to terminating communications providers (TCPs) for calls to 0870 numbers, with effect from 1 February 2008. BT submits that the notified changes to termination charges were driven by the changes to the regulatory regime applicable to calls to 0870 numbers set out by Ofcom in its statement of 19 April 2006, NTS: A way forward (“the NTS Statement”) (see related items).

The TCPs listed above have failed to sign or have rejected the OCCN and certain TCPs have proposed alternative charges for termination of calls to 0870 numbers. Ofcom recognises that on the face of the referral, there appears to be a dispute 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 dispute:

The scope of the dispute is to assess the level of charges payable by BT for call termination on 0870 numbers in respect of each of the TCPs included in the dispute. Specifically, Ofcom will consider whether:

With effect from the date that the changes to the regulatory regime applicable to calls to 0870 numbers as set out in the NTS Statement come into effect, the termination charges proposed by BT or, Thus plc, Band-x Limited, Cable & Wireless U.K. and Flextel Limited are reasonable terms and conditions for the purposes of the end-to-end connectivity obligation.

In considering whether the proposed charges constitute reasonable terms and conditions, Ofcom will consider the responsibility of operators for additonal interconnection charges, including transit (TWIX) and circuit charges.

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 10 September 2007.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 10 September 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 24 September 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/00963/07/07