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Dispute between BT and various operators about NTS discounts

21 Gorffennaf 2004

Dispute between: BT and Various Operators (1st Rate Telecom Ltd, Agregated Telecoms Ltd., Bis Ltd, Cable and Wireless UK, Colt Telecommunications Ltd., Easynet Group plc, EESCAPE Ltd., Energis Communications Ltd., Gamma Telecommunications Ltd., GKC Communications Ltd., IDT Global Ltd., Inclarity plc, Intelnet Communications Ltd., Interweb Design Ltd., MCI WorldCom Ltd., Networks Direct plc, Norbridge Telecom Ltd., NTL Group Ltd., One World Interactive Ltd., Opal Telecom Ltd., Patientline UK Ltd., Pipemedia Ltd., Prodigy Internet Ltd., Seven Telecom Ltd., Skymaker Ltd., Spitfire Network Services Ltd., Swiftnet Ltd., Syntec UK Ltd., Talk Telecom Ltd., Tele2 UK Communications Ltd., Teleglobe International (UK) Ltd., Telstra Europe Ltd., Telxl Ltd., Thus plc, Tiscali UK Ltd., T-Mobile (UK) Ltd., Torch Communications Ltd., United Connect Ltd.)
Case opened: 30 April 2004
Case closed: 27 August 2004
Relevant instrument: Ofcom resolved this dispute under Chapter 3 of part 2 of the Communications Act 2003

On 27 August 2004 Ofcom published a Determination under Section 188 and Section 190 of the Communications Act 2003 resolving this dispute.

Please see related items.

Case Leader: Tanya Rofani (e-mail: Tanya.Rofani@ofcom.org.uk
Case Reference: CW/00766/04/04

Text published when the case was opened

Dispute between: BT and Various Operators (1st Rate Telecom Ltd, Agregated Telecoms Ltd., Bis Ltd, Cable and Wireless UK, Colt Telecommunications Ltd., Easynet Group plc, EESCAPE Ltd., Energis Communications Ltd., Gamma Telecommunications Ltd., GKC Communications Ltd., IDT Global Ltd., Inclarity plc, Intelnet Communications Ltd., Interweb Design Ltd., MCI WorldCom Ltd., Networks Direct plc, Norbridge Telecom Ltd., NTL Group Ltd., One World Interactive Ltd., Opal Telecom Ltd., Patientline UK Ltd., Pipemedia Ltd., Prodigy Internet Ltd., Seven Telecom Ltd., Skymaker Ltd., Spitfire Network Services Ltd., Swiftnet Ltd., Syntec UK Ltd., Talk Telecom Ltd., Tele2 UK Communications Ltd., Teleglobe International (UK) Ltd., Telstra Europe Ltd., Telxl Ltd., Thus plc, Tiscali UK Ltd., T-Mobile (UK) Ltd., Torch Communications Ltd., United Connect Ltd.)
Case opened: 30 April 2004
Relevant instrument: Ofcom intends to resolve the dispute under Chapter 3 of part 2 of the Communications Act 2003

Update note - 21 July 2004

Ofcom published its proposals to resolve this dispute on 21 July 2004. Please see the related item.

Ofcom will be consulting on its proposals until 5pm on 4 August 2004. Please send responses to:

Tanya Rofani
Competition and Markets
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 - 25 May 2004

Following representations, Ofcom clarified the scope of this investigation on 25 May 2004, as follows:

Scope of the dispute

In connection with the BT OCCN of 28 January 2004, to determine whether BT has accurately calculated the average discount rates in connection with the retail revenue for calls for the purposes of NTS call origination services provided by BT. For the avoidance of doubt, Ofcom intends to consider the issue of whether each of BT's retail discounts are 'applicable' discounts for the purposes of net retail call revenue.

In making its determination to resolve the dispute, Ofcom will consider as good regulatory practice in accordance with its duties under Section 3 of the Communications Act 2003 and Article 10 of the EC Treaty whether its resolution of the dispute could produce anti-competitive effects.

End of update note

Issue:
BT referred a dispute on 7 April 2004 under section 191 of the Communications Act 2003 following a breakdown in negotiations between BT and various communications providers over proposed changes to discount rates regarding retail call revenue passed to parties purchasing Number Translation Services ("NTS") call origination from BT, effective 1 April 2004. On 14 April 2004, Energis Group plc (Energis) referred a dispute to Ofcom in connection with the same issues.

Background:
On 28 January 2004, BT issued Operator Charge Change Notices (OCCNs) notifying parties purchasing NTS call origination from BT of changes to the discount rate, effective 1 April 2004. The changes have the effect of a reduction in the retail call revenue passed by BT to these parties. Written acceptance of these charges is a requirement of BT's Standard Interconnect Agreement. The communications providers listed above, including Energis, have failed to sign or have rejected the 28 January 2004 OCCNs.

Stakeholders should note several related Ofcom projects which are ongoing:

  • Ofcom NTS framework re-examination
  • Competition Act Investigation - BT 0845 & 0870 retail price change - Suspected Internet Service Provider (ISP) margin squeeze (CW/00647/07/03)
  • Dispute between BT Wholesale and various communications providers about NTS POLO charges (CW/00740/12/03)

Scope of the dispute:
Ofcom recognises that on the facts of the matter referred to its attention, there appears to be a genuine dispute between the parties that commercial negotiation has failed to resolve and where there is an imbalance of market power between the two parties. Therefore Ofcom intends to make a direction, subject to consultation with each party, concerning the steps they should take to bring resolution to this issue.

Accordingly, Ofcom has determined the scope of this dispute as follows:

In connection with the BT OCCN of 28 January 2004, to determine whether BT has accurately calculated the average discount rates in connection with the retail revenue for calls for the purposes of NTS call origination services provided by BT.

Procedural matters:
Guidance on the resolution of the dispute can be found in the statement by Oftel and the Radiocommunications Agency `Dispute resolution under the new EU Directives' of 28 February 2003. In addition, stakeholders are referred to the Ofcom consultation 'Draft Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives' of 6 February 2004.

All representations on the scope of the dispute should be submitted to Ofcom by 10 May 2004.

Stakeholders interested in the outcome of this dispute should notify Ofcom by 10 May 2004 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 May 2004.

Case Leader: Tanya Rofani (e-mail: Tanya.Rofani@ofcom.org.uk
Case Reference: CW/00766/04/04