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On 19 March 2004, Ofcom published a "Draft resolution of a dispute between BT and Telewest about reciprocal charging arrangements for call termination rates".


This regulatory proceeding concerns the date of application of certain interconnection charges applied by Telewest (a cable-tv network operator, providing voice telephony services) rather than the absolute level of fixed call termination charges of Telewest, but in the context of this dispute resolution, Ofcom clearly confirms its position on fixed call termination (Market 9 of the European Commission's Recommendation on Relevant Markets). 


Ofcom is opening a public consultation, given that its proposed decision affects the position of other fixed operators in the UK. The deadline for comments is 2 April 2004. 



Ofcom expresses its fundamental position of fixed call termination, amongst others by stating the following:


20. Ofcom has not been asked by the parties to consider whether the charges calculated according to the methodology set out in the Proposed Agreement are fair and reasonable, and the specific amount of Telewests fixed geographic call termination charge is not therefore within the scope of this dispute. In any case, as discussed in the market review, Ofcom considers that charges that reflect BTs regulated charges are likely to be fair and reasonable. While ECPs could set other charges if they believed that they were fair and reasonable, Ofcoms view (as set out in the market review) is that charges that are not based on BTs charges would be unlikely to fulfil this condition.


40. As discussed above, Ofcom considers that the reciprocal charging principle prevents terminating ECPs with SMP from setting charges that are not fair and reasonable, that it promotes competitive neutrality and that it provides ECPs with incentives towards cost efficiency.


42. Ofcom considers that, were it to direct BT and Telewest to apply the charging mechanism set out in the Proposed Agreement from any date other than 1 October 2001, it would reduce the incentive on other terminating ECPs to enter into future negotiations in good faith. It would, in fact, provide them with an incentive to delay the acceptance of new agreements. Ofcom considers that to create such an incentive would create an uncertainty in the relevant market that would not be consistent with its duties under sections 3 and 4 of the act to promote competition relevant markets, or with its equivalent duty under the Regulations to consider the promotion of competition and the interests of users.


Consequently, as regards the dispute between BT and Telewest, Ofcom puts forward retrospective application of reciprocal interconnection charges to 1 October 2001.


The full text of the Ofcom consultation document can be accessed by clicking here.