‘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.