Ofcom asked to intervene to resolve BT / TalkTalk charges dispute
BT and TalkTalk have turned to Ofcom to resolve a dispute over charges for “special fault investigation services.” TalkTalk alleges that between 1 April 2011 and 30 June 2014, amounts charged by BT for TRCS, special engineering work outside of normal service level agreements, and SFIs, services requested for deeper investigation into faults on broadband lines, were “inconsistent.” Ofcom will decide whether the charges were justified, and if not, what they ought to have been.

TalkTalk Group (“TalkTalk”) and British Telecommunications plc (“BT”) concerning charges for special fault investigation services (“SFIs”) and time related charges (“TRCs”) Add to Your Pages 26 September 2016

Dispute between: TalkTalk Group (“TalkTalk”) and British Telecommunications plc (“BT”) concerning charges for special fault investigation services (“SFIs”) and time related charges (“TRCs”)

Case opened: 2 June 2016.

Case closed: 17 November 2016

Issue: Ofcom was asked to resolve this dispute under section 185 of the Communications Act 2003 (“the Act”) concerning the level of charges for SFIs and TRCs charged by BT to TalkTalk.

Relevant instrument: Ofcom resolved this dispute using its powers under Chapter 3 of Part 2 of the Act.

On 17 November Ofcom issued its Final Determination resolving this dispute. A non-confidential version of the Final Determination is available under related content. In the same Final Determination, Ofcom has today also resolved a related, but separate dispute between BT and Sky – for further detail and related items see https://www.ofcom.org.uk/about-ofcom/latest/bulletins/competition-bulletins/all-closed-cases/cw_01185

Update note: 26 September 2016

Ofcom has today published its Provisional Conclusions in relation to a dispute between BT and Sky regarding TRC and SFI charges (case CW/001185/07/16) (the Sky Dispute). Part of the scope of the Sky Dispute directly overlaps with TalkTalk’s dispute with BT. Therefore, we consider that responses made in relation to the Sky Dispute may be relevant to the issues raised in this dispute.

Accordingly, we consider that it is appropriate not to issue our final determination of the TalkTalk dispute until we have had the opportunity to consider the implications of any responses to the Sky Dispute and that this constitutes exceptional circumstances for the purposes of section 188(5) of the Act. We will continue to consider the matters so that we can resolve the disputes as soon as practicable following the deadline for responses in the Sky Dispute (10 October 2016)

End of update note

Update note: 12 August 2016

Ofcom has today published its Provisional Conclusions (PDF, 349.3 KB) regarding this dispute.

The period for comments on the Provisional Conclusions will close at 5pm on Friday 26 August 2016.

Please send responses to:

Tarnya Wilkins

Ofcom

Riverside House

2A Southwark Bridge Road

London

SE1 9HA

Or by e-mail tarnya.wilkins@ofcom.org.

End of update note

TRCs are services involving engineering work which is not included within service level agreements with BT. SFIs are services requested by CPs for further investigation of potential broadband faults on MPF and SMPF lines where no fault has been found using the standard Openreach line test.

On 7 October 2010, Ofcom published its 2010 Review of the Wholesale Local Access Market. Ofcom found that BT had significant market power (“SMP”) in the UK market for WLA services and imposed a number of SMP obligations on BT. In relation to TRCs and SFIs, Ofcom imposed ‘basis of charges’ obligations on BT, requiring it to base charges for these services on forward looking costs. In June 2014, Ofcom published its 2014 Fixed Access Market Reviews. Ofcom found that BT continued to have SMP in the provision of wholesale local access services and again imposed a number of SMP obligations on BT. In relation to TRCs and SFIs, Ofcom removed the basis of charges obligations and instead imposed charge controls on each service.

This dispute concerns allegations by TalkTalk that the amounts BT charged it for TRCs and SFIs, in the period between 1 April 2011 and 30 June 2014 (“the relevant period”), were not cost-orientated and were therefore inconsistent with BT’s basis of charges obligations in relation to these services.

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 section 185(1A) of the Act. 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 TalkTalk and BT, the scope of the dispute is to determine:

1) Whether the amount that BT charged TalkTalk for TRCs and SFIs in the relevant period was compliant with SMP Condition FAA4.1; and

2) If not, in order to resolve the dispute between the parties, what amount BT should have charged TalkTalk for TRCs and SFIs in the relevant period and whether any repayments should be made.

Procedural matters:

In line with Ofcom’s Guidelines 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 16 June 2016, 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 16 June 2016.

Stakeholders who wish Ofcom to join them as parties to the dispute must provide evidence, as set out in Ofcom's Guidelines on the resolution of disputes that they are in dispute.

Case Leader: Tarnya Wilkins (tarnya.wilkins@ofcom.org)

Case Reference: CW/01182/05/16