Dispute between Sky and BT relating to BT’s provision of MPF New Provide

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Dispute between: (i) British Sky Broadcasting Limited (“Sky”) and (ii) British Telecommunications plc (BT) concerning compensation payments for delayed MPF New Provide.
Case opened: 19 December 2013.
Case closed: 17 April 2014
Issue: Ofcom was asked to resolve this dispute under section 185 of the Communications Act 2003 (the Act) concerning whether BT failed to comply with its SMP obligations to provide LLU services on fair and reasonable terms, conditions and charges by failing to make compensation payments to Sky for its failure to meet service level commitments during the relevant period to which Sky considers it is legitimately entitled.
Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Act.

On 17 April 2014, Ofcom issued its final determination resolving this dispute. A non-confidential version of the determination, published on 22 April 2014, is available under related items.

Update note – 20 March 2014

On 20 March 2014, Ofcom published its provisional conclusions concerning this dispute to BT and Sky (please see related item).

The period for comments on the provisional conclusions will close at 2 pm on Monday, 31 March 2014. Please send responses to:

Francesco Savino
Ofcom
Riverside House
2A Southwark Bridge Road
London
SE1 9HA

Or by e-mail to francesco.savino@ofcom.org.uk

End of update note

BT is subject to regulatory obligations in relation to LLU services pursuant to conditions imposed under section 45 of the Act, including a requirement to provide LLU services (including MPF New Provide) on fair and reasonable terms and conditions.

This dispute concerns the level of service provided by Openreach (a BT Group business) for MPF New Provides.

MPFs (metallic path facilities) are BT’s copper lines between the local telephone exchanges and the customer premises. These can be rented by other communications providers (“CPs”) to connect to their own networks and provide broadband and voice services to end users.

MPF New Provide is the LLU service where Openreach provides a new line for a CP (rather than, for example, where the CP takes over an existing line).

When an order is placed with Openreach for it to supply MPF New Provide, Openreach offers its wholesale customer appointment dates for an Openreach engineer site visit to install the product.

Sky submits that during the period 1 April to 31 October 2012 (“the relevant period”), the terms and conditions pursuant to which this service was supplied were not fair and reasonable on the basis that compensation should have been paid by BT for its failure to meet service level commitments as a consequence of the level of service provided falling below acceptable levels

Openreach argues that Sky is not entitled to compensation.

Sky and Openreach have failed to agree on whether Sky should be paid compensation by Openreach. Sky therefore referred the matter to Ofcom in October 2013.

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 a manner which is consistent with both Ofcom’s general duties under section 3 of the Act, and pursuant to section 4(1)(c) of the Act, the six Community requirements set out in section 4 of the Act which give effect, amongst other things, 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.

Ofcom considers that there is a dispute between the parties within the meaning of s185(1A) of the Communications Act 2003. Ofcom considers that the dispute meets the relevant statutory criteria and it is appropriate for Ofcom to handle it according to section 186 of the Act, and accordingly, Ofcom has accepted the dispute for resolution.

Scope of the dispute:

After consideration of the submissions received from Sky and BT, the scope of the dispute is to determine:

whether BT has failed to comply with its SMP obligations to provide LLU services on fair and reasonable terms, conditions and charges by failing to make compensation payments to Sky for its failure to meet service level commitments during the relevant period to which Sky is legitimately entitled; and
whether Ofcom should direct BT to make SLG payments to Sky (plus interest) in relation to the period 1 April 2012 to 31 October 2012 in accordance with its powers under section 190(2)(b) and/or (d) of the Communications Act 2003.

Procedural matters:

In line with Ofcom’s Guidance on the resolution of disputes published in June 2011, Ofcom is not consulting on the scope of this dispute. Ofcom’s guidelines can be found at: Ofcom's Guidelines for the handling of regulatory disputes

Stakeholders interested in the outcome of this dispute should notify Ofcom by 17 January 2014, describing the relevance of the outcome of this dispute to their business. Stakeholders with relevant information and evidence in respect of this dispute should submit this to Ofcom by 17 January 2014.

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: Francesco Savino (e-mail: Francesco.savino@ofcom.org.uk)
Case Reference: CW/01114/10/13