Memorandum by the Department
of Trade and Industry
1998 (S.I. 1998/1580)
1. The Committee requested
the Department to submit a memorandum on the following points.
The Department sets out below the questions raised by the Committee
with the Department's response after each question.
(1) Regulation 21
paragraph (2) lays down that "the parties shall abide by
a decision taken in accordance with" the procedures provided
for in paragraph (1). Explain why paragraph (1) contains no reference
to decisions or any description of the nature of the procedures
which it stipulates are to be put in place.
2. The requirement to establish
procedures, and the decisions referred to, in regulation 21 are
to be read against the background of what is already provided
for in the Telecommunications Act 1984 as regards public operators
with significant market power and other public operators on the
one hand and systemless service providers on the other hand.
Public operators are divided
into those with significant market power in the voice telephony
market and other public operators. The Director determined on
20 July 1998 that the operators with significant market power
are (i) British Telecommunications plc ("BT") and (ii)
Kingston upon Hull City Council and Kingston Communications (Hull)
plc ("Kingston") jointly. The minimum requirement of
the regulations is that procedures be established in respect of
These procedures will establish
a consistent framework for the steps that are already taken by
the Director in dealing with complaints under section 49 of the
Telecommunications Act 1984 in respect of the situations described
in the regulation. All of these situations are covered by licence
conditions in the licences of these two operators and by Condition
RVTD9 in the Schedule to these Regulations. The variety of decisions
that may require to be taken both under the relevant licence conditions
and the requirements of the Directive is very wide. An example
would be were one of these organisations to reduce the bandwidth
available from say 2Mbit/s to say 56 Kbit/s in respect of a particular
customer that customer could seek to enforce its contract for
the service at 2 Mbit/s through the courts or it could complain
to the Director that the operator was in breach of the relevant
condition in its licence. The Director on receipt of the complaint
would investigate and having done so reach a decision as to whether
the variation was covered by any of the exceptions or limitations
in the licence of the operator concerned or was a breach of the
licence condition, and inform the parties accordingly. If the
complaint is substantiated, he can either seek an undertaking
from BT or Kingston to remedy the situation or, if he thinks the
breach may be repeated, make a final or provisional order under
sections 16 to 18 of the 1984 Act. The procedures will establish
a consistent framework for the steps that the Director takes in
dealing with such complaints.
In the case of other public
operators the Director may but need not provide procedures in
respect of them and the obligations that arise under their licences
and the provisions of these regulations with regard to the availability
of their services.
Systemless service providers
There are no systemless service
providers with significant market power and it is not likely that
there will be any for the foreseeable future but it is necessary
to have the reserve power in order to comply with the Directive.
The only regulation of them is that which appears in these Regulations.
It is therefore to be left
to the Director to establish a consistent framework for the exercise
of those powers of regulation as he sees fit within the limits
set by regulation 21(3).
As regards procedures in
respect of other public operators and systemless service providers
the possibility of making further Regulations has not been ruled
(2) As regards the
requirement that the subscriber shall be warned before a service
is discontinued for non-payment by the subscriber of the charges
for it, regulation 35 requires measures to be taken by the Director
General of Telecommunications to ensure that warning is given
by the providers of the service and imposes a duty on service
providers to comply with the measures the Director specifies.
Explain why regulation 34 does not impose a like duty on the public
operators to give a like warning (but merely speaks of the authorisation
3. Regulation 34(1) imposes
a duty on the Secretary of State and the Director when exercising
their functions under Part II and sections 47 to 49 of the Telecommunications
Act 1984 to authorise measures to ensure that due warning of any
consequent service interruption or disconnection is given to the
subscriber. Licence Condition RVTD16.1(d), contained in Schedule
V to the Regulations, inserts into all existing relevant licences
a duty on public operators, in the event of non-payment, to give
due warning in advance of any consequent service interruption
or disconnection to the subscriber.
(3) Regulation 40(1)
extends the charge on the public revenues of expenditure of the
Director under the Telecommunications Act 1984 to expenditure
in consequence of his functions under these Regulations. Will
that expenditure be significant in amount?
4. The purpose of this provision
is to extend the charge on the public revenues of the Director
to cover expenditure in consequence of his obligations in respect
of systemless service providers which are not regulated under
the Telecommunications Act 1984. OFTEL has indicated that up to
£300,000 may be required in respect of additional work in
connection with systemless service providers in the first twelve
months of operation of the Regulations.
21st July 1998