NOTICE UNDER SECTION 12(2) OF THE TELECOMMUNICATIONS ACT 1984

PROPOSED MODIFICATIONS TO THE LICENCES OF BRITISH TELECOMMUNICATIONS PLC (BT) AND CONCERT COMMUNICATIONS COMPANY

The Director General of Telecommunications (the “Director”), in accordance with section 12(2) of the Telecommunications Act 1984, as amended by the Electronic Communications Act 2000 (the “Act”), hereby gives notice that he proposes to make modifications to the licence granted to British Telecommunications plc (“BT”), on 22nd June 1984, and to the licence granted to Concert Communications Company (“Concert”), on 18th December 1996, by the Secretary of State for Trade and Industry. The effect of the proposed modifications to BT’s licence 2. The effect of the proposed modifications to BT’s licence would be to: (a) extend the present retail price controls (a control on a group of services—local, national and international calls, line rental, connection and operator assistance—focussed on the bottom 80 per cent of BT’s customers by expenditure set at the retail prices index less 4.5 per cent) for one year beginning on 1st August 2001 and ending on 31st July 2002; (b) further control the interconnection charges of “non-competitive” and “prospectively competitive” interconnection services for four years beginning on 1st October 2001 and ending on 30th September 2005; (c) extend controls on the prices for analogue Private Leased Circuits for four years beginning on 1st August 2001 and ending on 31st July 2005; (d) extend the controls on BT’s retention for calls to BTCellnet and Vodafone for four months beginning on 1st April 2002 and ending on 31st July 2002; and (e) to bring under regulatory control the charges for flat rate internet access call origination (FRIACO) at the digital local exchange, by incorporating the charge for FRIACO at the digital local exchange into the network charge controls from October 2001. 3. The reasons the Director is making these proposals are because the current retail price controls and controls on analogue Private Leased Circuits are due to end on 31st July 2001, the current interconnection charge controls are due to end on 30th September 2001, and to align the controls on BT’s retention for calls to BTCellnet and Vodafone with the retail price controls. Furthermore BT has market power in the provision of the relevant services. The effect of the proposed modifications to Concert’s licence 4. The effect of the proposed modifications to Concert’s licence would be to control the charges for “prospectively competitive” interconnection services for four years beginning on 1st October 2001, and ending on 30th September 2005. 5. The reasons the Director is making these proposals is because the current interconnection charge controls are due to end on 30th September 2001. General 6. The text of the proposed modifications and their effects are set out in full in the statement Proposals for Network Charge and Retail Price Controls from 2001, published on Thursday, 1st February 2001. The document is available via Oftel’s website (www.oftel.gov.uk). The Director is seeking comments on the proposed modifications to the licences of BT and Concert. Interested parties have 28 days from the day after publication of this notice to make representations on the proposed modifications. A further period of 14 days will be given in which interested parties may make comments on any comments made during the first period of consultation. In accordance with section 12(6D) of the Act, representations made against the proposed modifications shall be taken to constitute an objection only if they are accompanied by a written statement that they are to be so taken. 7. The proposed modifications are also available from Mike Galvin at Oftel, 50 Ludgate Hill, London EC4M 7JJ, telephone 00 44 0207 634 8869, facsimile 00 44 0207 634 8869, e-mail mike.galvin@oftel.gov.uk. 8. The Director is required by section 12(2) of the Act to consider any representations or objections on the proposed modifications duly made and not withdrawn. Subject to such consideration, and to the consent of BT and Consent for the respective modifications, the Director proposes to make the modifications as soon as practicable after the statutory consultation is completed. 9. Representations on the proposed modifications can be made to Mike Galvin by 2nd March 2001. Comments on responses have to be made by 16th March 2001. 10. Any confidential material should be clearly marked as such and separated out into a confidential annex. All representations and objections received by Oftel, with the exception of material marked confidential, will be made available for inspection in Oftel’s Research and Intelligence Unit. D. A. Edmonds, Director General of Telecommunications 1st February 2001.