Ofcom has wide jurisdiction and discretion to accept and resolve disputes

The CAT today rejected BT’s arguments that Ofcom has a narrow jurisdiction to accept and resolve disputes referred to it by Communications Providers pursuant to Section 185 of the Communications Act 2003.

The CAT joined two cases (one relating to ‘ladder pricing’  and one to charges for ethernet services above DSAC) in both of which BT alleged that Ofcom had no jurisdiction to determine the alleged disputes because:

  1. No dispute existed. BT contended that whilst there remained any scope for resolution of issues through, inter alia, future negotiation, no dispute existed. It relied on (i) the 32nd recital of the Framework Directive as modifying the meaning of ‘dispute’ in article 20 of the Framework Directive and article 5 of the Access Directive so as to require that all negotiations have been exhausted; (ii) Ofcom’s 2004 Disputes and Complaints Guidance; and/or; (iii) a ‘floodgates’ policy argument.  The CAT rejected all BT’s arguments.
  2. Alternative dispute resolution means were available. BT argued that (i) future negotiation constituted alternative means; and/or (ii) Ofcom should have used its Condition enforcement powers. The CAT again rejected both arguments.

The Watcher needs to declare an interest: he represented an intervener in this appeal, so readers should ‘filter’ this post accordingly.

Fresh evidence may be introduced in telecoms appeals

Yesterday the Court of Appeal confirmed (in British Telecommunications Plc v Office of Communications [2011] EWCA Civ 245 , judgment of 10 March 2011) that there was no basis for restricting the introduction of fresh evidence into an appeal against a decision of Ofcom made pursuant to the Communications Act 2003.

The procedural point arose in one of the ‘Ladder Pricing’ appeals relating to non-geographic number termination rates (080) – see prior blog post for more detail on the substantive issue – when Ofcom objected to BT’s introduction of fresh expert economic evidence into the appeal. BT’s evidence in question had not been submitted to Ofcom by BT in the course of Ofcom’s first instance dispute resolution process, and Ofcom argued that either: (i) as a matter of statutory construction of the Communications Act; or (ii) as a general principle of common law, the fresh evidence should be excluded.

The CAT decided that BT could introduce fresh evidence at the CAT and Ofcom appealed that decision to the Court of Appeal. The Court of Appeal rejected Ofcom’s submissions, although it noted that there was not an unfettered right to introduce evidence, and that admissibility was at the CAT’s discretion. The question for the CAT was whether in all the circumstances that it considered that it would be in the interest of justice for new evidence to be admitted.

Against the increasing trend for Ofcom decisions to be appealed, this ruling may help to streamline Ofcom’s dispute resolution process as the parties will no longer feel compelled to argue every conceivable point before Ofcom to preserve their position on appeal, but instead will focus on the core issues for Ofcom to consider in what is (at least in theory) meant to be a swift process.

‘Ladder pricing’ for calls to 08 numbers: stairway to litigation?

I have spent the last day and a half in court (British Telecommunications Plc (Termination charges: 080 calls, NCCN 1007) v Office of Communications and British Telecommunications Plc v Office of Communications (Ethernet Extension Services)) helping an intervening client argue, inter alia, that a fundamental disagreement was the same as a dispute. Sometimes these things do seem to end up like mediaeval theological debates. Another issue in the case was whether Ofcom had jurisdiction to accept and determine disputes whilst allegedly similar issues were subject to appeal. Perhaps more interesting to readers of this blog was one of those ‘similar issues’ currently before the CAT in multiple proceedings – a pricing concept described as ‘ladder pricing’.

‘Ladder pricing’ is a methodology for setting interconnection termination charges for calls to certain non-geographic numbers whereby the interconnection termination charges vary by reference to the retail price charged by the originating communications provider. In essence, the greater the retail price, the greater the interconnection charge. Those who like to see the numbers should look at the relevant section of BT’s carrier price list: 1.06 (which implements NCCN 1007 discussed below).

By way of backdrop, within the UK (and more generally the EU) communications providers are generally free to set their own interconnection charges unless and until a regulator has carried out a market review, found that a particular communications provider has market power and imposed appropriate remedies, which may include cost orientation.It would therefore seem to be a simple matter to identify what regulatory constraints (if any) applied and whether they are being complied with. However, in practice this issue turned out to not be quite so simple.

Ofcom first considered the question in its 5 February 2010 Determination to resolve a dispute between BT and each of T-Mobile, Vodafone, O2 and Orange about BT‘s termination charges for 080 calls, in which Ofcom applied rather convoluted reasoning involving three cumulative principles to BT’s proposed introduction of ladder pricing for calls to 080 (Freephone numbers) to reach the conclusion that BT’s pricing proposal was not fair and reasonable and that BT should therefore revert to its prior pricing structure. In fairness to Ofcom, they constructed the principles on top of a prior CAT finding that disputes should be resolved in a way that was fair (as between the parties) and reasonable (from a regulatory perspective). Ofcom’s determination was appealed.

BT then subsequently proposed ladder pricing in relation to calls to 0845 (local numbers) and 0870 (national numbers), and that proposal was considered by Ofcom in its 10 August 2010 Determination to resolve a dispute between BT and each of Vodafone, T-Mobile, H3G, O2, Orange and Everything Everywhere about BT‘s termination charges for 0845 and 0870 calls  in which it applied the same three principles to reject that further proposal. Again, the decision was appealed.

BT then made a different ladder pricing proposal in relation to 080 calls in NCCN 1007, and the most recent appeal concerned whether Ofcom was right to accept that issue as a dispute for resolution.

Meanwhile, there is an open consultation (closing today) on Ofcom’s general policy relating to Non-Geographic Numbers.