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

20 December 2007

Dispute between: Cable & Wireless Access Limited (“C&WA”) and British Telecommunications plc (“BT”)
Case opened: 7 September 2007
Case closed: 19 December 2007
Issue: C&WA asked Ofcom to resolve a regulatory dispute 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 resolved this dispute using its powers under Chapter 3 of Part 2 of the Communications Act 2003.

On 19 December 2007 Ofcom issued a Determination under Sections 188 and 190 of the Communications Act 2003 resolving this dispute.Please see related items.

Update note – 23 November 2007

Ofcom has agreed to a request to extend the consultation period on the draft determination in relation to this dispute until 5.00pm on 3 December 2007.

Attached as a related item is Annex 2 of the draft determination- MPF New Provide process chart which is in the public domain and is not confidential.

End of update note

Update note – 16 November 2007

Ofcom issued a draft determination in relation to this dispute to the parties on 15 November 2007. Please see the related item.

Ofcom will be consulting on its proposals until 5pm on 29 November 2007. Please send responses to:

Andrew Dixon
Competition Group
Ofcom
Riverside House
2a Southwark Bridge Road
London
SE1 9HA

or by email to andrew.dixon@ofcom.org.uk.

End of update note

Text published when case was opened

C&WA has referred a regulatory dispute to Ofcom concerning the amount BT charged C&WA for connecting customers to fully unbundled local loops during the period 16 December 2004 to 30 June 2006.

C&WA considers that when BT was connecting C&WA’s customers, BT always charged for a new line to be installed when in some cases an existing line was available at less cost.  Therefore by always charging for a new line, C&WA considers that BT was recovering costs that were inefficiently incurred.

C&WA also considers that BT has made available to itself those inputs in the wholesale local access market which it uses in its own downstream business (for wholesale line rental) on more favourable terms than those it offers to C&WA and therefore was discriminating against C&WA.

A previous dispute between C&WA and BT involving the same facts had been accepted for resolution by Ofcom on 5 January 2007.  This dispute was subsequently withdrawn by C&WA and the investigation closed by Ofcom on 19 April 2007 without issuing a final determination.

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 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 as soon as reasonably practicable and on fair and reasonable terms, conditions and charges as Ofcom may direct from time to time.

Condition FA2, which requires BT not to unduly discriminate against particular persons or against a particular description of persons, in relation to matters connected with Network Access.

BT does not accept C&WA’s claims. 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 consider:

  • Whether BT’s charge for the New Provide service during the period 16 December 2004 to 31 June 2006 was consistent with its obligations as set out in Condition 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.
  • Whether BT has breached Condition FA2 by making available to itself those inputs in the wholesale local access market which it uses in its own downstream business (for wholesale line rental) on more favourable terms than those it offers to C&WA .

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 September 2007.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 17 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 1 October 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: Andrew Dixon ( e-mail:andrew.dixon@ofcom.org.uk)
Case Reference: CW/00965/08/07