Draft Determinations to resolve disputes between each of Sky, TalkTalk and Virgin Media and BT regarding BT’s charges for Ethernet services

Summary

1.1 These draft determinations (the Draft Determinations) set out Ofcom's proposals for resolving the disputes brought by TalkTalk Telecom Group plc (TTG or TalkTalk), British Sky Broadcasting Ltd (Sky) and Virgin Media Limited (Virgin) (collectively, the Disputing CPs) against British Telecommunications plc (BT) about BTs charges for certain of its wholesale Ethernet services (the Disputes). We propose to conclude that BT has overcharged for certain Ethernet services and must make repayments to the Disputing CPs for the amounts that it has overcharged them.

Background to the Disputes

1.2 On 27 July 2010, Sky and TTG jointly referred a dispute with BT to Ofcom for resolution. The dispute alleged that BT had overcharged Sky and TTG for certain Backhaul Extension Services (BES) in the period 24 June 2004 to 31 July 2009, on the basis that BT had failed to comply with its obligations to ensure that its charges for BES were cost orientated. Sky and TTG requested that Ofcom determine the level of charges that should have applied for BES and direct BT to refund any overcharge, with interest.

1.3 Virgin submitted a dispute on 10 August 2010, alleging that BT had overcharged Virgin for certain Wholesale Extension Services (WES) as well as certain BES during the period 1 April 2006 to 31 March 2009. Virgin also contended that BT had failed to comply with its cost orientation obligations and requested that Ofcom determine the level of charges that should have applied for the services and direct BT to refund any overcharge, with interest.

1.4 WES and BES are types of wholesale Ethernet services. They provide dedicated transmission capacity at a range of bandwidths between sites. WES are typically used by communications providers (CPs) to assist in the provision of Ethernet-based leased lines from their network to a retail customers premises. BES contribute to providing a high speed data link between a CPs core network and its equipment within an unbundled BT local exchange. Further details of these services are set out in Section 6.

1.5 On 13 September 2010, we decided that it was appropriate for Ofcom to resolve the Disputes on the basis of section 186(3) of the Communications Act 2003 (the "Act"). We proposed that the scope of the Disputes should be whether, in the "Relevant Period" :

"i. BT has overcharged the Parties for the BES and/or WES products concerned and, if so;
ii. by how much the Parties were overcharged during the Relevant Period; and
iii. whether and by how much BT should reimburse the Parties in relation to the overcharge."

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