CAT rules in BT’s favour in non-geographic termination rate matter

8 Aug 2011

The UK’s Competition Appeal Tribunal (CAT) has upheld an appeal by fixed line incumbent BT against a decision by the telecom regulator Ofcom that said the telco could not increase termination rates to mobile operators for non-geographic numbers. According to the Financial Times, the CAT has ruled that BT can charge higher fees to cellcos for connecting calls to 0845, 0870 and 0800 numbers, and it is thought that the decision will mean higher payments to BT and other wholesale fixed line voice providers from mobile network operators, unless the cellcos reduce the charges that their customers pay for such calls. The decision allows BT to levy termination charges for 0800 numbers if mobile carriers charge their customers more than GBP0.085 (USD0.14) per minute, while termination rates charged by BT for calls to 0845 and 0870 numbers from mobile numbers will vary depending on the level of charge to the mobile voice customer; the higher the charge from the cellco, the higher the charge the latter must pay BT. The details of the ‘ladder-charging’ system have yet to be finalised by Ofcom.

The issue first arose in 2009, when T-Mobile UK appealed to the watchdog to prevent BT from charging mobile operators for free calls, with fellow cellcos O2 UK and Vodafone UK joining in the dispute soon after. With BT having begun charging mobile networks for terminating calls to non-geographic numbers towards the end of the last decade, last year, Ofcom ruled that these charges were not fair and reasonable.

All parties in the matter are now understood to be considering the impact of this latest decision, with BT noting: ‘It is appropriate that the CAT has ruled that BT’s wholesale termination rates for 0800, 0845 and 0870 numbers are fair and reasonable … We are currently examining the details of the judgment to understand the impact.’ While Ofcom is yet to determine how far payments should be backdated, the incumbent has suggested that the ruling should allow it to recover around GBP19 million in revenues lost since the second quarter of 2010 as a result of the dispute. Mobile operators meanwhile have a month to decide whether or not to appeal the ruling.