NOTICE UNDER SECTION 12(2) OF THE TELECOMMUNICATIONS ACT 1984 (AS AMENDED BY THE ELECTRONIC COMMUNICATIONS ACT 2000)

PROPOSED MODIFICATION TO ALL PUBLIC TELECOMMUNICATIONS OPERATOR LICENCES

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 all 308 licences granted during the period beginning on 22nd June 1984 and ending on 1st November 2000 under section 7 of the Act to particular persons which the Secretary of State has designated by order under section 9 of the Act as having public telecommunications systems, collectively referred to hereinafter as the “PTO licences”.
2. The effect of the modifications which the Director proposes to make is set out in the Schedule below.
3. The reason for the proposed modifications is to relax the regulatory burden on operators with an international business. This is in line with OFTEL’s long term strategy that regulation should be proportionate to the level of competition, with lighter regulation where greater competition exists. The reasons for the proposed modifications and a fuller description of their effect are set out in the Consultative Document of May 2000 entitled International Controls in PTO licences and OFTEL’s Statement on International Controls in PTO Licences of 24th November 2000. The full text of the proposed modifications is set out in Annex C to OFTEL’s Statement of 24th November 2000.
4. Section 12A(7) of the Act provides that a modification is deregulatory if:

(a) the effect of the conditions to be modified is to impose a burden affecting the holder of the licence in which those conditions are included;
(b) the modification would remove or reduce the burden without removing any necessary protection; and
(c) the modification is such that no person holding a licence granted under section 7 (of the Act) to a particular person would be unduly disadvantaged by the modification in competing with the holder of the licence in which those conditions are included.

5. In the opinion of the Director, all of the proposed modifications of the PTO licences are deregulatory within the meaning of section 12A(7) for the reasons set out in the Schedule below.
6. The consultation procedure comprises two stages. In the first stage, representations on or objections to the proposed modifications may be made to Vincent Affleck, OFTEL, 50 Ludgate Hill, London EC4M 7JJ (telephone 020 7634 8819, e-mail vincent.afflect@oftel.gov.uk) by no later than 22nd December 2000.
7. Any confidential information should be clearly marked as such and separated out into a confidential annex. All representations received by OFTEL, with the exception of material marked confidential, will be made available for inspection in OFTEL’s Research and Intelligence Unit and may be published.
8. In the second stage, interested parties are invited to send comments to Vincent Affleck, details as above, by no later than 10th January 2001 on representations or objections received in the first stage.
9. Copies of the proposed modifications, and a full list of PTO licences affected, can be obtained from Vincent Affleck at the above address. A full list of PTO licenses affected by the proposed modifications and OFTEL’s Statement on Competition in International Markets (in which the proposed modifications to condition 47.6 and 55.4 are set out) are also available on OFTEL’s website at www.oftel.gov.uk.
Schedule
Condition 61

1. Condition 61 of the PTO licences would be modified as follows:

(a) Condition 61.1 would be deleted. Condition 61.1 obliges licensees to give prior notice to the Director of accounting rate agreements with operators outside the EEA;
(b) Condition 61.2 would be deleted. Condition 61.2 obliges licensees to notify the Director and other licensees of the terms of any correspondent arrangement which they make with an overseas operator.
(c) Condition 61.3 would be retained although certain minor consequential amendments would be required (as a result of the deletion of Conditions 61.1 and 61.2). Condition 61.3 allows the Director in certain circumstances to direct Licensees not to enter into or to vary accounting rate agreements. The amendments would involve renumbering the condition and inserting a new Condition 61.2 to define “Accounting Rate Agreement” for the purposes of this condition.

2. Condition 61 imposes a burden on licence holders by requiring them to notify the Director and other licence holders of certain accounting rate and correspondent agreements which they enter into with overseas operators. The proposed modification reduces this burden by removing these obligations to notify the Director and other licensees of such agreements. The Director does not consider these provisions to be necessary to protect licence-holders or consumers, and will retain the power to take action where Accounting Rate Agreements are thought liable to prejudice the interests of providers and users of International Conveyance Services in the UK. The proposed modification does not, therefore, remove any necessary protection. Neither does the modification unduly disadvantage any licence holder as it is intended to be made to the licences of all public telecommunications operators. For these reasons, the Director considers this modification of the PTO licences to be deregulatory within the meaning of section 12A(7) of the Act.

Condition 62

1. Condition 62 would be removed from the PTO licences.
2. Condition 62 imposes a burden on licence holders by requiring them to maintain accounting records which deal separately with their International Business carried on in the UK. The proposed modification would reduce the burden by removing this obligation. The Director does not consider condition 62 to be necessary to protect operators or consumers from unfair cross-subsidy. Rather, he considers the condition to impose a burden on operators which is disproportionate to any potential benefit it may confer on other licensees and consumers of telecommunications services. He is therefore of the view that the modification does not remove any necessary protection. Neither does it unduly disadvantage any licence holder as it is intended to be made to all PTO licences. For these reasons, the Director considers this modification of the PTO licences to be deregulatory within the meaning of section 12A(7) of the Act.

Condition 63

1. Condition 63 would be removed from the PTO licences.
2. Condition 63 imposes a burden on licence holders by allowing the Director to make determinations against them in certain circumstances where it appears to him that competition in the UK is being or is likely to be restricted, distorted or prevented as a result of any act or omission of the licence holder and/or an Associated Person. A determination under this condition may require the licence holder to take such steps as directed to remedy the situation. The condition also requires the licence holder to keep records of agreements with Associated persons and of any services, money or other things transferred or supplied by or to the Associated Person. The proposed modification would reduce this burden by removing the condition. The modification does not remove any necessary protection as the provisions of the Competition Act 1998 will continue to provide the Director with adequate powers to deal with agreements or conduct which restrict, distort or prevent competition in the UK. The modification does not unduly disadvantage any licence holder as it is intended to be made to all PTO licences. For these reasons, the Director considers this modification of the PTO licences to be deregulatory within the meaning of section 12A(7) of the Act.

Condition 64

1. Condition 64.16 would be deleted. Condition 64.16 provides for Condition 64.2 not to apply to Condition 62 (Accounting Separation for International Business) or Condition 63 (Maintenance of Effective Competition). The condition will therefore become redundant following the removal of both Conditions 62 and 63 as proposed above.