EXAMINATION NUMBER: KN978

“ADR in the Telecommunications Sector: An Analysis of the Disputes, Trends in Dispute Resolution and the Growing Need for Alternative

Solutions”

Supervisor: Stavros Brekoulakis

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Table of Contents Acknowledgments............................................................................................................... 3 Tables of Legislation........................................................................................................... 4 Table of Cases..................................................................................................................... 5 List of Abbreviations .......................................................................................................... 5 Chapter 1 - Background and Introduction .......................................................................... 7 Chapter 2 - Common Disputes in Telecommunications ................................................... 11

2.1. Inter-operator Disputes .......................................................................................... 12 2.2. Consumer Disputes ................................................................................................ 14 2.3. International Trade Disputes.................................................................................. 16

Chapter 3 - Traditional Dispute Settlement in Telecommunications and Shifting Trends19 3.1. Regulatory Adjudication in Inter-operator Disputes.............................................. 19 3.2. Consumer Dispute Resolution ............................................................................... 23 3.3. Resolution of International Trade Disputes ........................................................... 25

Chapter 4 - The Role and Benefits of ADR in the Telecommunications Sector .............. 29 4.1. ADR in Inter-operator Disputes............................................................................. 30

4.1.1. Independent ADR providers ........................................................................... 32 4.1.2. Office of Telecommunications Adjudicator ................................................... 34

4.2. ADR in Consumer Disputes................................................................................... 37 4.2.1. Internal Measures to Resolve Disputes........................................................... 38 4.2.2. ADR Schemes................................................................................................. 39

4.3. ADR in International Trade Disputes .................................................................... 43 Chapter 5 - An International Perspective: A Look into Regulatory Approaches and ADR Models............................................................................................................................... 46

5.1. Experiments in Regulatory Adjudication............................................................... 46 5.2. Developments in Inter-operator Disputes .............................................................. 47 5.3. Innovations in Consumer Disputes ........................................................................ 52

Chapter 6 - Future Directions and Recommendations...................................................... 56 6.1. Dispute Prevention................................................................................................. 56 6.2. Spectrum Disputes ................................................................................................. 57 6.3. NGA Disputes........................................................................................................ 59 6.4. Reforms in Consumer Disputes ............................................................................. 60

Chapter 7 - Conclusion ..................................................................................................... 62 Bibliography ..................................................................................................................... 64

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Acknowledgments The author wishes to thank his dissertation supervisor Mr. Stavros Brekoulakis for his continuing support throughout the year. His direction and encouraging comments were invaluable for the author’s research, scope of discussion and structure of writing. The author would also like to express his gratitude to Dr. Ian Walden for his kind comments and input on the research materials. In addition, the author is grateful to Mr. Rory Macmillan who generously assisted the author in his research. The author also wishes to acknowledge the support of his parents and to whom he is forever grateful.

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Tables of Legislation Australia: Telecommunications (Consumer Protection and Services Standards) Act 1999 Belgium: Royal Decree of May 5, 2006 EU Directives: Directive (EC) 2002/21 (Framework Directive) Directive (EC) 2002/19 (Access Directive) Directive (EC) 2002/22 (Universal Service Directive) Directive (EC) 2002/20 (Authorization Directive) International Treaties, Conventions and Agreements: WTO General Agreement on Trade in Services (GATS) WTO General Agreement on Tariffs and Trade (GATT) WTO Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes India: Telecommunication Regulatory Authority of India Act 1997, as amended in 2000 Romania: Decision 1331/2003 on the Procedures Regarding the Settlement of Disputes within the Competence of National Regulatory Authority for Communications Law No. 304/2003 on the universal service and users’ rights relating to electronic communication networks and services Saudi Arabia: Saudi Telecommunications Bylaws 2002 United Kingdom Statutes: Communications Act 2003 Statutory Instruments: Wireless Telegraphy (Spectrum Trading) Regulations 2004, SI 2004/3154 Wireless telegraphy (Spectrum Trading) (Amendment) (No. 2) Regulations 2008, SI 2008/2105

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Table of Cases New Zealand Telecom Corporation of New Zealand v Clear Communications Ltd. [1994] CLC 1312 (PC) WTO DSB Mexico - Measures Affecting Telecommunications Services (Telmex Case) WT/DS204/R

List of Abbreviations AAA American Arbitration Association ACIF tAustralian Communications Industry Forum ACTI Agence des Télécommunications de Côte d’Ivoire (Ivory Coast) ADR alternative dispute resolution ANRC National Regulatory Authority for Communications (Romania) BAT WTO Basic Agreement on Telecommunications BIPT Belgian Institute for Postal Services and Telecommunications CEDR Centre for Effective Dispute Resolution CIArb Chartered Institute of Arbitrators CISAS Communications and Internet Services Adjudication Scheme CITC Saudi Communications and Information Technology Commission CTIA Cellular Telecommunications Industry Association (United States) DSB WTO Dispute Settlement Body DSL Digital Subscriber Line EU European Union FTTP Fibre to the Premises GATS WTO General Agreement on Trade in Services GATT WTO General Agreement on Tariffs and trade ICSID International Centre for Settlement of Investment Disputes ICC International Chamber of Commerce ICA ICC’s International Court of Arbitration IDA Info-communications Development Authority (Singapore) ISPA Internet Service Providers Association ITU International Telecommunications Union LCIA London Court of International Arbitration LLU local loop unbundling MAF Malaysian Access Forum NCC Nigerian Communications Council NGA Next Generation Access OTA2 Office of Telecommunications Adjudicator Otelo Office of Telecoms Ombudsman PMSE programme makers and special events

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RIO reference interconnection offer SMP significant market power TDSAT Telecommunications Dispute Settlement and Appeals Tribunal TIO Australian Telecommunication Industry ombudsman TRAI Telecommunications Regulatory Authority of India TRC Telecommunications Regulatory Commission (Jordan) VoIP voice over internet protocol WTO World Trade Organization

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Chapter 1 - Background and Introduction

The Telecommunications sector has witnessed an immense transformation in its market

structure in the past two decades. The traditional confidence in state-owned monopolies

has been replaced with the more efficacious approach of privatizing and liberalizing

markets.1 The level of effective competition in telecommunication networks, service and

equipment provision at present is a great feat of legislative foresight and ingenuity, which

has benefitted the end-user by increasing choice in service providers, better quality of

service and the continuing reduction in prices. Regulatory leverages and government

policies to encourage investment, improving customer experience and bridging the digital

divide have given impetus to reform and allowed a wide variety of undertakings to enter

the market.2 Commercial disputes are a natural outcome of business activity but in the

telecommunications context such disputes become much more nuanced.

Telecommunications disputes may not only encompass technical matters, additionally

they also impinge on matters of public policy like competition law, consumer protection

and international commitments of the country in question. The disputes have far-reaching

implications on the market structure and the socio-economic position of end users.

National laws have stipulations providing for mechanisms of resolving

telecommunications disputes, with the dispute settlement purview allocated traditionally

to the regulator. Regional3 and international bodies4 have also contributed significantly to

1 For a historical account of the gradual liberalization of the UK telecommunications industry see I. Walden and J. Angel, Telecommunications Law and Regulation (Oxford University Press, 2nd edition, Oxford 2005) pp. 77-104 2 Ibid pp. 590-604 3 For example, the European Commission for matters affected trade between member states.

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the telecommunication dispute resolution jurisprudence. In addition to the more official

forms of dispute resolution, there has been a marked movement towards promoting

Alternative Dispute Resolution (ADR) as a more efficient platform for dispute settlement.

This can clearly be seen in the reference to its application in national and international

legal instruments.5

The aim of this dissertation is to explore the dispute resolution mechanisms present in the

telecommunications sector and to evaluate the growing need and application of ADR

processes, primarily with reference to the UK market. Furthermore, the Dispute

Settlement processes of the World Trade Organization (WTO) and its use of ADR will

also be analyzed. The policy changes introduced by the Communications Act 2003 made

substantial modifications to the role of the regulator and industry in resolving disputes.

ADR is now encouraged in a wide variety of disputes, which were traditionally in the

exclusive jurisdiction of the regulator. Three kinds of disputes and the methodologies of

their resolution will be discussed to demonstrate the function and benefits of ADR. In the

domestic sphere, inter-operator and consumer disputes will be dealt with and on an

international level telecommunications related trade disputes will be covered. It will be

established that the use of ADR leads to a more efficient and flexible regulatory

environment and also helps preserve business relationships between the different

stakeholders. ADR is becoming increasingly relevant in telecommunications and has

4 The Dispute Settlement Body of the WTO has recently become of great importance in dealing with cross border telecommunications disputes, in particular cross-border interconnection and International settlement rate disputes. (e.g. Telmex Case WT/DS204/R) 5 Council Directive (EC) 2002/21 on a common regulatory framework for electronic communications networks and services [2002] OJ L 108/33 (Framework Directive), at Article 20 recognizes the importance of ADR and gives regulators the power to decline to resolve a dispute through adjudication where such mechanisms exist.

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reached a high priority on the policy-makers’ agenda at every level of regulation as they

seek to provide timely, efficient and more cost-effective solutions to disputes.6

Commercial relationships between different entities in the telecommunications sector and

the range of disputes which arise from them are outlined in Chapter Two. The vast

majority of the disputes arise from breaches of legal obligation imposed by the regulator,

or an international body, such as the WTO, administering trade liberalization policies.

Chapter Three explores the traditional methods of dispute resolution which emphasized

direct regulatory intervention in the case of inter-operator disputes and minimal

regulation, with confidence in competition alone, to cater for consumer disputes. The

discussion will illustrate how these archaic models of dispute resolution are being

replaced by more flexible approaches which incorporate ADR. ADR is now encouraged

by regulation in UK to be the appropriate forum for a variety of inter-operator and

consumer dispute scenarios. On the international front, the dispute settlement processes

provided by the WTO are also highlighted.

The benefits of utilizing ADR in the telecommunications sector and the current ADR

regimes applicable to inter-operator and consumer disputes in UK are investigated in

Chapter Four. Professional institutions which specialize in telecommunications related

ADR have been established which assist the market in resolving inter-operator disputes.

The regulator in UK has also set up a specialist body to resolve disputes relating to the

6 See ‘European Workshop on Dispute Resolution’ (Workshop organized by the ITU, 2004) available at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/index.html

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highly complex area of local loop unbundling through ADR. In consumer disputes the

regulator has taken a two-tiered approach. At the first stage it prescribes regulation to

govern the internal complaints handling procedure of operators, and if they fail to reach a

conclusion, two independent ADR Schemes have been established to resolve the dispute

between the aggrieved consumer and the operator. The considerable use of ADR in WTO

dispute settlement proceedings is also examined.

Chapter Five includes an international comparative analysis of the divergent regulatory

approaches to dispute resolution and deployment of ADR schemes. Experiments in

regulatory adjudication, regulatory sponsored ADR and further methods of streamlining

the process from other jurisdictions are considered. These approaches are compared to

the existing UK model for both inter-operator and consumer disputes. Some innovative

and interesting approaches to dispute resolution are highlighted and it will also be

demonstrated that the UK approach to dispute resolution and ADR application in

telecommunications sector is highly advanced and successful.

In Chapter Six, current and upcoming trends in spectrum liberalization and next

generation networks, and the methods of developing ADR processes in these areas, are

discussed. Dispute prevention and consensus building activities within the industry, as a

means of reducing disputes in the sector are assessed. Furthermore, an evaluation of the

current proposed reforms in the area of consumer dispute resolution is included.

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Chapter 2 - Common Disputes in Telecommunications

The focus of this chapter is to delineate some of the main business relationships present

in the telecommunications sector and illustrate how disputes may arise. The complex and

intricate matrix of relationships between the stake-holders in the telecommunications

sector lead to a range of diverse disputes. The traditional nature of such disputes involves

a bilateral recognition of a disagreement. Brown and Marriot describe such as:

“A dispute may be viewed as a class or kind of conflict which manifests

itself in distinct, justiciable issues. It involves disagreement over issues

capable of resolution by negotiation, mediation or third-party adjudication.

The difference inherent in a dispute can usually be examined objectively,

and a third party can take a view on the issues to assess the correctness of

one side or the other”.7

The official sector is becoming increasingly aware of the significance of identifying

disputes and handling them. The challenge for any successful regulatory environment is

to resolve all such disputes in an efficient, just and timely manner. The failure to do so

may have far-reaching implications on the industry and the underlying policy objectives

present. There are several cases8 which have illustrated how cumbersome rules have

resulted in an impediment to the sector policies of liberalisation and introducing

7 H. Brown and A. Marriot, ADR Principles & Practice (2nd Edition, Sweet & Maxwell 1999), p. 2 8 For example, the liberalization process in New Zealand was delayed considerably by a 6 year long litigation that ensued over the interconnection charging scheme employed by the former state-owned monopoly provider Telecom. See Telecom Corporation of New Zealand v Clear Communications Ltd. [1994] CLC 1312 (PC)

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competition to the market. A consequence of such retardation is the postponement of new

technology and infrastructure being deployed and reduced investment. The outcome is

the cost to the welfare of end-users who suffer from high prices and low quality of

service and choice.

2.1. Inter-operator Disputes

The nature of telecommunications requires an ongoing and amicable relationship between

all service providers to achieve the any-to-any principle. Essentially the goal is to allow

the customer of one operator to be connected to the network and customers of every other

operator in the operating area. This end is achieved with complex interconnection

agreements between undertakings which cover a variety of technical, operational and

financial issues. At its most basic level, interconnection involves two networks to be

connected at a ‘point of interconnection’ and require each operator to transfer data over

the point of interconnection which it receives and transmits to its user.9 There is obvious

economic incentive for undertakings to conclude these agreements in an expeditious

manner with the motive of acquiring universal presence.

9 See Walden (n 1) pp. 215-216

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The new regulatory framework of the European Union (EU),10 and in particular the

Access Directive distinguishes between the terms ‘access’ and ‘interconnection’. Access

includes all commercial arrangements under which an undertaking acquires services from

another undertaking to provide services to its own customers.11 Access also includes, in

addition to the logical and physical linking of networks, access to physical infrastructure

such as buildings, exchanges and masts and access to ancillary software. Interconnection

arrangements are a form of access under the new streamlined regulatory package of the

EU.

The regulatory norm has been to identify certain dominant undertakings who are then

obligated to provide access to others requesting it. This asymmetrical regulation has

underpinned the liberalization process. Former incumbent monopolies are mostly

designated a ‘significant market power’ (SMP) and have been subjected to higher levels

of regulatory control compared to new entrants in the market. This serves an important

economic purpose in addition to the liberalization process, as it reduces needless and

inefficient replications of networks and services12 and allows new operators to use the

established incumbent network for a fee. But there are certain basic kinds of regulatory

obligations which are imposed on all authorized telecommunications operators regardless

10 The four relevant directives in the new regulatory framework include: Framework Directive (n 5); Council Directive (EC) 2002/19 on access to, and interconnection of, electronic communications networks and associated facilities [2002] OJ L 108/7 (Access Directive); Council Directive (EC) 2002/22 on universal service and users’ rights relating to electronic communications networks and services OJ L 108/51 (Universal Service Directive); and Council Directive (EC) 2002/20 on the authorization of electronic communications networks and services OJ L 108/21 (Authorization Directive). These directives were implemented in the UK through the Communications Act 2003. 11 Ibid. definition of ‘access’ and ‘interconnection’ can be found in the Access Directive at Article 2(a) and 2(b) respectively. 12 Services which are regulated in this way may include access to the local access network, wholesale products for resale and access to physical infrastructure among other forms of access. See also Walden (n 1) p. 216

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of their market share. The Access Directive, for example, sets out an obligation on all

operators to ‘negotiate’ interconnection with others when so requested.13

Disputes in this process may either arise at the negotiation stage of interconnection

agreements or during the subsistence of these agreements. Some of the common reasons

for disputes to arise may include, inter alia, the failure of an SMP operator to develop and

publish a Reference Interconnection Offer (RIO)14, failure to conclude the negotiations of

the agreement in a timely fashion, disputes over quality of service provided and charges

levied for interconnection, wrongfully using confidential information acquired through

the interconnection and delaying access.15 The lack of bargaining power of new entrants,

in contrast to the entrenched dominant operators leads to predatory behavior and

consequently disputes. There are considerable number of disputes which arise from

access arrangements between undertakings on the same footing as well, whether both

being dominant or non-dominant in their respective markets.

2.2. Consumer Disputes

Disputes between telecommunications consumers and operators are common.

Liberalization and competition in the marketplace leads to an increased number of

disputes, however at the same time they contribute to the consumer welfare in the form of

13 Access Directive Article 4(1) 14 Publishing a RIO, standard commercial terms which extends to all commercial peers, is one of the asymmetric obligations imposed on dominant operators. 15 Typical delaying tactics include setting onerous conditions like allowing physical access only at specific times or access to exchange only under the supervision of the incumbent’s employee.

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greater choice, higher quality of service and lower prices. The presence of dominant

operators in the period of transition to full competition and lack of bargaining power of

consumers may lead to abuses by operators. For this reason many jurisdictions have

chosen to govern this relationship with sector-specific regulation. The purpose of such

regulation is to ensure that consumers are treated fairly and to ensure that minimum

standards of quality are maintained. It also ensures that the users can enjoy services

which are considered essential in this age of information and technology on reasonable

conditions.16

In the EU, the Universal Service Directive17 has given certain areas of consumer

protection the force of law. This is a stark change from the original position of the EU

where it was believed that competition alone will safeguard the consumer’s interest.

Some of the issues covered by the Directive include minimum terms of contracts, quality

of service, operator assistance, number portability and transparent, simple and

inexpensive out-of-court resolution of disputes.18 In other jurisdictions where reactionary

rather than ex ante approach was traditionally taken, with reliance on general principles

for consumer protection, a move towards codification of rights is being witnessed.19

Disputes which are most prevalent in the operator-consumer relationship relate to service

charges and billing. The consumer may claim that the charge being levied is for services 16 See P. Nihoul and P. Rodford, EU Electronic Communications Law: Competition and Regulation in the European Telecommunications Market (Oxford University Press 2004), pp. 7-8 17 End-user interests and rights can be found at Chapter IV of the Directive. 18 These rights are protected by Articles 20, 22, 25, 30 and 34 of the Directive respectively. 19 For example, Bulgaria relied on broad principles of transparency and non-discrimination before entry into the EU in 2007. See further M. Yakimova ‘Methods of resolving disputes in telecommunications under the conditions of new Telecommunication Act’ (Presentation to ITU 2004) p. 3 available at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/Documents/Yakimova_tues.pdf

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which they have not actually used or ordered. Complaints can arise when customer is not

adequately made aware of the charges which would be payable or regarding the terms of

payments of bills. Poor quality of service is a common source of disputes and may arise,

for example, when a customer faces high number of dropped calls or poor connectivity.

Slamming,20 privacy and misleading advertising which coerces customers into believing

false statements of fact are other frequent reasons for customer dissatisfaction and

disputes.21

2.3. International Trade Disputes

Telecommunications technology is essentially an international medium. The fact that

almost everyone utilizing a telecommunication service has access to networks and data

all over the world requires a great deal of cooperation between states. Synergy is required

at technical and operational levels for a smooth operation of cross-national exchange.

The WTO, since the enactment of the General Agreement on Trade in Services (GATS)

agreement with the specific Annex on telecommunications22, has changed how

telecommunications services are perceived in an international context. It has moved the

focus away from it being a mere conduit for conducting trade to be a tradable service in

its own right. Voluntary negotiations entered into at the conclusion of the ‘Uruguay 20 Slamming includes situations where an operator changes a customer’s service provider without their permission. 21 For more detail see R. Bruce and R. Macmillan, ‘Dispute resolution in the Telecommunications Sector: Current Practices and Future Directions’ (study prepared for the International Telecommunications Union and World Bank, 2004) p. 40 available at http://www.itu.int/ITUD/treg/publications/ITU_WB_Dispute_Res-E.pdf accessed 3rd June 2008 22 The Annex can be accessed at http://www.wto.org/english/docs_e/legal_e/26-gats_02_e.htm#anntel

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Round’ for liberalization of trade in the provision of basic telecommunications services

and networks, resulted in the promulgation of the Basic Agreement on

Telecommunications (BAT)23. Also to encourage establishment of pro-competitive and

liberalized regulatory environment, a set of principles were agreed to in the Reference

Paper.24 The final package taken together with the Annex forms the high watermark for

international trade in telecommunications services. It gives rise to several obligations

which states must adhere to in connection with allowing other signatory states to enter

local markets with respect to the commitments made under the schedules of

commitments.25 As more states are entering the WTO and signing onto the BAT and

making commitments under Reference Paper, these international agreements are

becoming increasingly more significant.26

Some of the obligations contained in the WTO Reference Paper include the prevention of

anti-competitive practices by major suppliers27 of host nations28 and requiring

interconnection with major suppliers on non-discriminatory terms in a timely manner and

at cost-oriented rates29. If a signatory state does not implement and uphold these and

23 BAT is the fourth protocol to the GATS which came into force on 5th February 1998. It expanded the scope of the services covered from only value-added services to include basic telecommunications services as well. See http://www.wto.org/english/tratop_e/serv_e/4prote_e.htm; see further http://www.wto.org/english/tratop_e/serv_e/telecom_e/telecom_results_e.htm 24 Reference Paper can be accessed at http://www.wto.org/english/tratop_e/serv_e/telecom_e/tel23_e.htm 25 See further I. Walden (n 1) pp. 489-500 26In a press release WTO DG Pascal Lamy confirmed that by February 2008, 107 WTO member governments had made GATS telecommunications commitments and 80 WTO members had made commitments under the Reference Paper. P. Lamy ‘Symposium on Telecommunications’ (Speech at the 10th anniversary Symposium of the WTO Basic Agreement on Telecommunications by DG Pascal Lamy 2008) available at http://www.wto.org/english/news_e/pres08_e/pr517_e.htm 27 The concept of major supplier the same as an operator possessing significant market power in the European jurisdiction. 28 See Reference Paper (n 24) Article 1 29 Ibid. Article 2

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other commitments made under the Annex, operators from other signatory states may be

affected and a dispute may arise.

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Chapter 3 - Traditional Dispute Settlement in Telecommunications and Shifting Trends

The thrust of this chapter is to look at the official dispute settlement procedures which

have been historically used to resolve telecommunications disputes and how the approach

of the policy-makers is changing. The mandate of the telecommunications regulators

includes control over all issues of policy and regulates the sector accordingly. The

resolution of disputes is an integral part of structuring and policing the sector and even

more so when the sector is going through liberalization.

3.1. Regulatory Adjudication in Inter-operator Disputes

It is prudent to note that in many instances market forces lead to dispute being resolved

without regulatory intervention. However due to market share asymmetries and other

policy reasons the intervention of the regulator is required. Oftel, the predecessor of the

current UK telecommunications regulator Ofcom30, had deliberately set low barriers to

referring a dispute to it. Before 2003, there were no formal criteria which had to be

satisfied by a complainant in order for the dispute to be taken up by Oftel. This

methodology allowed operators to put forward any issue to Oftel without an initial

examination on its own to determine the merits of its claim and actually encouraged

frivolous disputes to be brought forward. With no definite submission and information

requirements the regulator was burdened with allocating large quantity of resources to

30 Ofcom is the new converged regulator for the UK communications sector and has responsibility for television, radio, telecommunication and wireless communication services.

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filter through claims. Extensive use of its investigation and information gathering powers

had to be made to separate the actual disputes from the trivial ones.31

Lawmakers took notice of the shortcomings of the previous approach and the

Communications Act 2003 was promulgated to cure these and other problems which had

arisen due to the changes in the sector. More importantly the new Act incorporates and

enforces the new regulatory framework of the EU. Article 20(1) of the Framework

Directive provides that at the request of an operator, the regulator will issue a binding

decision in the shortest possible time frame and sets a maximum period of four months

for the regulator to reach the decision. Even more interestingly, in Article 20(2)

regulators are given the authority to decline to resolve a dispute when other mechanisms

are available which would be better suited to resolve the dispute.32 However if the matter

is still unresolved after four months, the regulator will take up the dispute and issue a

decision in four months from then. The policy objectives mentioned in Article 8 are

referred, which have to be taken into consideration when resolving a dispute or deciding

to decline to accept it.33 The introduction of time frames has been a welcome addition to

the adjudication process as it leads to greater certainty.

In implementing this procedure, the Communications Act 2003 makes certain

adjustments. Sections 185-191 of the Act cover the law on inter-operator disputes and are

broadly identical to Article 20. Subsection 185(4) reserves the right for Ofcom to

31 See further I. Lloyd and D. Mellor, Telecommunications Law (LexisNexis, Edinburgh 2003), pp. 79-81 32 Mediation is expressly mentioned in text of Article 20(2). 33 Broadly, the policy objectives and regulatory principles which have to be respected are promotion of competition, contribution to the development of the internal market and safeguarding the interests of EU citizens.

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determine the procedure for bringing forward a dispute and to specify the level of

information that is to be included. The regulator has taken a rigid approach and has

provided guidelines for documentary requirements which have to be fulfilled before it

will take up a dispute or complaint.34 The scope of the dispute has to be clearly set out in

the documents. Also, detailed evidence of negotiations, which have taken place prior to

the submission, and an explanation of why they failed have to be submitted. Parties are

expected to use ‘best endeavors’ in the commercial negotiation of the dispute before

Ofcom will hear the dispute and in the event that all other alternatives have not been

exhausted Ofcom will decline to hear the dispute. 35

Furthermore Ofcom, in the spirit of Article 20(2) of the Framework Directive, has

delineated other scenarios where it will not hear a dispute. Where both parties do not

possess SMP or alternatively where both are a SMP on their respective markets, the

dispute will normally be submitted to some form of ADR, when there is no obvious

welfare loss to consumers. This mature attitude is in line with a market which has

undergone and reached a high level competitiveness. The basic need for regulatory

intervention is protecting parties from abuses by dominant operators. Therefore, Ofcom

will only hear disputes where market share asymmetries exist or a large number of parties

34 The ‘Ofcom Guidelines for the handling of competition complaints, and complaints and disputes about breaches of conditions imposed under the EU Directives’ (Guidelines) can be accessed at http://www.ofcom.org.uk/bulletins/eu_directives/guidelines.pdf 35 For a full list of submission requirements see Guidelines ibid. ‘Annex 1 Format for submitting a complaint to Ofcom’ and ‘Annex 2 Format for submitting a request to Ofcom to resolve a dispute’ pp. 21-26; see further Lloyd (n 31) pp. 82

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are involved. In addition, Ofcom will not hear a dispute when similar issues are resolved

in other industries without the intervention of the regulator.36

The raising of the threshold of the submission requirements and requiring proof of failure

of all commercial negotiations frees up the regulator’s resources which were previously

used for fact-finding and information gathering missions. Better use can be made of the

regulatory personnel by passing this responsibility to the individual parties bringing the

dispute. While discouraging trivial dispute and encouraging ADR, there have been

criticisms from certain quarters that the high administrative and financial burden laid on

the operators to reach the evidentiary requirements may cause them not to bring forward

valid complaints.37 Also, the four month period mandated for ADR before regulatory

adjudication permits abuse by dominant operators and can be used as a delaying tactic.

Once Ofcom decides to hear a dispute, section 190 of the Act provides the decision

making powers that it possesses. It has the authority to make a declaration setting out the

rights and obligations of the parties, impose an enforceable obligation, fix the terms and

conditions of the transaction in dispute or order payment on the party found to be

culpable.

36 See Guidelines ibid. p. 15; see further R. Thompson, ‘Regulatory Adjudication and ADR: The Ofcom Experience’ (Ofcom presentation to ITU 2004) p. 11 available at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/Documents/Thompson_Wed.pdf 37 See K. Dick, ‘Ofcom stands firm on anti-competition complaint and dispute guidelines’ (2005) C.T.L.R. 2005, 11(3), 78-80

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3.2. Consumer Dispute Resolution

The traditional approach in consumer dispute resolution has largely been to leave the

resolution of end-user grievances to the industry, with no specific regulation mandating

the obligations in this relationship. The notion being that competition alone will cater for

consumer welfare. Operators were however to offer internal dispute resolution

mechanisms for complaints which might arise. In case a satisfactory resolution was not

reached, the consumer had the opportunity to submit the complaint to the regulator or to

the courts as a last resort. The new regulatory framework of the EU has been the impetus

to the substantial changes made in this regard.

The Universal Service Directive at Article 34(1) states:

“Member States shall ensure that transparent, simple and inexpensive out-

of-court procedures are available for dealing with unresolved disputes,

involving consumers, relating to issues covered by this Directive.

Members States shall adopt measures to ensure that such procedures

enable disputes to be settled fairly and promptly and may, where

warranted, adopt a system of reimbursement and/or compensation.

Member States may extend these obligations to cover disputes involving

other end-users.”

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The end-user interests and rights mentioned in Chapter IV of the Directive are all in the

purview of the dispute settlement procedure. In the UK, Section 52 of the

Communications Act 2003 requires Ofcom to set out the General Conditions of

Entitlement, which have to be fulfilled by every operator to be ‘authorized’ to operate as

an electronic communications networks or services provider. These 22 conditions also

contain the duties imposed by Chapter IV of the Directive. Condition 14.4 requires each

operator to publish and adhere to a Complaints Code of Practice (Code) and Condition

14.7 obligates operators to provide access to independent ADR.

The regulator in UK has paid heed to the wording of Article 34 and extended these rights

to not only domestic end-users but also to small business customers. Businesses of not

more than 10 employees also form part of the group who can benefit from this regime.38

The Code, which has to be approved by Ofcom, must be easily accessible by customers

and distributed free of charge. The requirement is that all ‘publicly available’ electronic

communications service providers have to publish the Code.39 The Code is to state facts

about the tariffs, terms and conditions for the service provided, methods for resolving

disputes and recourse to ADR available.40

UK has taken a novel step by introducing ‘Schemes’ which provide ADR services to end-

users and small businesses. After the promulgation of the Communications Act in 2003, 38 Small businesses that provide telecommunications services do not qualify. 39 There is an ongoing controversy about the status of VoIP providers and whether they are exempt from the strict requirements of other publicly available service providers, the full discussion of which is outside the scope of this paper. But all other traditional providers of fixed and mobile telephony, internet and data services will be in the ambit of the obligations. 40 These requirements are stated at Section 3 of ‘Ofcom Guidelines for Customer Codes of Practice for handling complaints and resolving disputes’ available at http://www.ofcom.org.uk/telecoms/ioi/g_a_regime/gce/newccodes/guidelines.pdf

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Ofcom approved two independent ADR providers to handle consumer complaints. In

2003, OTELO and CISAS were both allowed to operate under the supervision of Ofcom

to deal with disputes which are not resolved by the operators.

Condition 14.7 requires all publicly available electronic communications services

providers to be a member of either one of these schemes and to enforce their decisions.

Failure to remain a member of the Scheme, enforce a decision made by them, or to

publish and adhere to the Code may invoke financial penalties from Ofcom.41 It is also

prudent to note that customers also have a remedy by bringing court proceedings against

the service provider as a last resort. Ofcom itself does not get involved in individual

consumer complaints but a discrepancy regarding either the Code or the Schemes can be

brought to Ofcom’s notice.

This policy shift to encourage ADR contributes to transparency and greater consumer

welfare. Compared to the litigation route, the ADR Schemes are a lot more cost-effective,

time saving and easily accessible to consumers.

3.3. Resolution of International Trade Disputes

Dispute settlement is a central component for the smooth running of international trade.

The International Telecommunications Union (ITU), founded in 1932, is the oldest

41 Under s. 94 of the Communications Act, Ofcom may issue a formal notice requiring compliance. If the operator fails to comply in the time period specified, Ofcom may impose a penalty of up to 10 per cent of its turnover under s. 96.

26

organization concerned with telecommunications in an international sphere. Although it

is has historically been the most significant proponent of international

telecommunications law, it lacks an official dispute settlement platform at which member

states can resolve their disputes and acquire an enforceable decision.

The original dispute settlement process provided for under the General Agreement on

Tariffs and Trade (GATT) in 1947 was more of a conciliation system between states. The

system was not effective because there was no fixed time set out to resolve disputes and

the adoption of rulings was easier to block as they required a consensus between parties.

These reasons delayed the process and disputes lingered on without resolution.42

Subsequently, the culmination of the trade negotiations at the Uruguay Round formed the

Dispute Settlement Body (DSB)43, which is the first international body able to resolve

and enforce matters concerning telecommunications. This is because it has jurisdiction

over matters arising from the GATS Annex, BAT and the Reference Paper. The

procedure provides for a step-by-step process for dealing with disputes with deadlines for

each stage. If the dispute is allowed to reach the first ruling stage, the timeframe is nine

months, or 12 months if it is appealed to the appellate body.44 Only Member governments

can be party to a dispute at the DSB. Individual operators with grievances regarding

WTO law compliance thus have to bring it to their state’s notice.45

42 See further ‘Understanding the WTO: Settling disputes; a unique contribution’ (WTO online resource) at http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm 43 See the Uruguay Round Understanding on Rules and Procedures Governing the Settlement of Disputes (Understanding) available at http://www.wto.org/english/docs_e/legal_e/28-dsu_e.htm 44 Ibid. Article 20 45 In international investment disputes, individual operators have the opportunity to lodge proceedings directly. Telecommunication disputes arising from Bilateral Investment Treaties frequently have the option

27

The emphasis in the process is to use consultations and allow the amicable resolution of

the dispute without much intervention. At the first stage, which has a timeframe of 60

days, the parties are encouraged to use negotiations and mediation to come to a rational

solution to their dispute.46 If settlement is not reached, a party has the option to request

the formation of a Panel by the DSB to make determinations on the issues.47 The panel

makes investigations and hears the parties over duration of six months and then submits

its final report to the parties and the DSB.48 The DSB adopts the final report, over a

period of 60 days, provided there is a consensus between the members of the DSB

regarding the report and there is no appeal to the Appellate Body.49 The DSB then

determines whether a party’s actions are in contravention of WTO law and makes

recommendations on how to rectify the problem.50 A reasonable time is given to the party

to do so.51 In the event that the state in question fails to do so, the DSB may give

permission to suspend trade concessions and other obligations under the GATS.52 The

enforcement mechanism of DSB sets it apart from any other body involved in

international dispute settlement as it provides it with additional legitimacy.53

To date there has only been one case of the WTO DSB to deal exclusively with

Telecommunications under the GATS. In Mexico - Measures Affecting of being referred to International Centre for Settlement of Investment Disputes (ICSID) for arbitration. Such disputes and their resolution are outside the parameter of this dissertation. For further information on investment disputes see: Bruce (n 21) pp. 27-29 46 See Understanding (n 43) Article 4. This process is similar to the EU approach in domestic regulation to mandate use of ADR before formal regulatory proceedings are lodged. 47 Ibid. Article 6 48 See ibid. Articles 11-15 49 Ibid. Article 16 50 Ibid. Article 19 51 Ibid. Article 21 52 Ibid. Article 22 53 See also L. Tuthill ‘WTO Dispute Settlement’ (Presentation to ITU 2004) available at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/Documents/WTO_tuthill_wed.pdf

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Telecommunications Services,54 the DSB Panel acted on claims by US and found

Mexican laws and regulations to be in contravention of the commitments it had made

under the GATS Annex and the Reference Paper. Telmex, the ‘major supplier’ in the

market for termination of international calls, was found to have been allowed by the

Mexican law to act in a way which infringed Mexico’s international commitments. In

particular, the panel’s findings included that Mexico had not provided US operators with

interconnection at cost-oriented rates with the major supplier and the Mexican laws

actually encouraged anti-competitive behavior by the major supplier. Mexico did not

appeal the ruling to bring its laws in line with its commitments under the GATS Annex

and the Reference Paper and consented to the time periods allowed for it to make the

necessary changes.55

54 Telmex Case WT/DS204/R 55 For a detailed discussion of the decision see: C. George ‘WTO Panel condemns anti-competitive behavior in international telecommunications case: Mexico-Measures Affecting Telecommunications Services’ (2004) Int. T.L.R. 2004, 10(5), 106-110; also for a comprehensive commentary on the case see: D. Neven and P. Mavroidis ‘Case Comment – El Mess in Telmex: a comment on Mexico – Measures Affecting Telecommunications Services’ (2006) World T.R. 2006, 5(2), 271,296

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Chapter 4 - The Role and Benefits of ADR in the Telecommunications Sector

The trend towards self-regulation and encouraging ADR is evident from the policy

changes discussed in the previous chapter. Some definitions of ADR do not include

arbitration in their scope, but for present purposes, ADR would encompass all dispute

settlement processes which are alternative to the official route. Litigation at courts and

dispute settlement through regulatory adjudication are obvious examples of formal

dispute resolution. Typical ADR forums in telecommunications include negotiation,

mediation and arbitration. Apart from these clearly defined platforms, there are a range of

hybrid methodologies applied and many other innovative approaches.56

The idea behind promoting ADR in telecommunications is to open a dialogue between

parties to allow them to come to an amicable resolution using negotiations and other

informal processes.57 The alternative process would be litigation or adjudication, which is

adversarial in nature. The clear advantage to the parties is preservation and enhancement

of commercial relationships. An industry which needs harmonious matrix of relationships

between different players, in particular inter-operator relationships with complex

interconnect agreements, requires expedited resolution. With the phenomenon of

convergence and the quick-paced progression of technology in the sector, the regulator

may be left behind with all the knowledge of these new technologies. There is a need for

56 See further R. Macmillan ‘Effective Dispute Resolution: A pressing priority for policy-makers and regulators’ ITU News 10/2004 26-29, pp. 28-29, available at http://www.itu.int/itunews/manager/display.asp?lang=en&year=2004&issue=10&ipage=dispute&ext=html 57 See also S. Roberts and M. Palmer ‘Dispute Processes: ADR and the Primary Forms of Decision Making’ (Law in Context Series, CUP, Cambridge 2005) pp. 113-114

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disputes to be resolved by either the parties themselves or by some third party with

proven proficiency in the area in an ADR process.

ADR processes decrease the burden on the regulator by freeing up resources which

would otherwise be assigned to all disputes arising in the industry. For the parties

involved in the dispute, the method provides increased flexibility, as they can structure

and tailor the ADR processes to their unique needs. In the case of mediation or

arbitration, they also have the opportunity to appoint their own third party mediator or

arbitrator. The use of ADR may also save time for parties and there are indications that it

may be a better option in terms of costs.58 The use of ADR techniques protects the

parties’ confidentiality and has minimum disclosure requirements compared to

adjudication or litigation. The secrecy of the proceedings and the underlying dispute

helps protect vital information and avoids the party having a reputation that it is

confrontational.59

4.1. ADR in Inter-operator Disputes

The traditional institution of regulatory adjudication has its merits. It has a higher

legitimacy than alternative routes and affords the parties the benefit of a guaranteed

enforcement mechanism. In most jurisdictions, the regulator has a skilled staff of

personnel who are able to adjudicate effectively on pressing issues. There is greater

58 This is most obvious in consumer disputes, as most ADR services provided in this area are free of cost for the users. 59 See also Bruce (n 21) pp. 11-22

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accountability of the decisions taken by regulators as there are oversight committees and

appeals tribunals, which can challenge and rectify the decisions.60 On the other hand the

absence of clearly defined timeframes may lead to adjudication being marred by long

running processes. The criticism of having excessive documentary evidence requirements

has already been mentioned.61 In most developing nations, the regulator still relies

heavily on the industry for staffing and in many instances its staff may lack the skills

required to deal with the issues arising in the sector. This problem may be made more

acute by financial difficulties faced by regulators. Conflicting policy objectives of the

regulator and shared competencies and jurisdiction with other regulators may also lead to

anxiety for the parties to a dispute.

ADR is a worthy alternative to adjudication in circumstances where regulator is incapable

of dealing with the load and nature of disputes. Ofcom does not suffer from the

shortcomings mentioned above and is regarded as being one of the most advanced and

innovative regulators. The advantages of a greater use of ADR in telecommunications are

appreciated by Ofcom and it has taken great strides to promote it. The Guidelines62 state

the limited scenarios in which it will choose to accept to adjudicate on a dispute. It sets

out clearly that the documentation provided should prove ‘best endeavors’ were used

unsuccessfully to resolve the dispute through negotiation.63 This approach has pushed the

parties to a dispute to make an initial good faith attempt at exhausting all ADR routes

60 In the UK, appeals from Ofcom lie with the Competition Appeals Tribunal. For further details see http://www.catribunal.org.uk/about/default.aspx 61 See Dick (n 37) 62 See Guidelines (n 34) 63 See ibid. para 13 and 46

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before submitting the matter to Ofcom. In practice most of the cases are resolved without

regulatory intervention.

4.1.1. Independent ADR providers

The prevailing ADR culture and the confidence in these processes have led to the

creation of markets for ADR providers in many countries. These institutions have panels

of mediators and arbitrators, among other services, with technical experience and

commercial know-how in the telecommunications sector. There is a marked increase in

the inclusion of detailed ADR clauses in interconnection agreements, and in most

instances arbitration clauses are becoming the norm. In the UK, Ofcom has recognized

several bodies, with the required expertise, to be an adequate forum for inter-operator

disputes. The International Court of Arbitration (ICA) of the International Chamber of

Commerce (ICC) and the London Court of International Arbitration (LCIA) are among

some of the bodies approved by Ofcom for the purposes of engaging in arbitration. These

institutes also provide other forms of ADR in the field of telecommunications including

mediation, expert evaluation and early neutral evaluation. Centre for Effective Dispute

Resolution (CEDR) is one of the largest ADR providers in Europe and its CEDR Solve

service is frequently used for mediation by the sector.64

64 See also Bruce (n 21) p. 11

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Most private sector independent ADR providers have established their own internal rules

relating to procedure and timeframes.65 Parties can choose between different providers

and services offered to choose an ADR scheme which appropriately meets their

commercial needs. In addition, many of these institutes have specialized expertise in

resolving specific telecommunications disputes. They collaborate with the industry to

keep themselves abreast of the latest developments in technology so they can better

resolve disputes in a sector which has a high rate of technological growth.

The Chartered Institute of Arbitrators (CIArb) based in London is another institution with

endorsement from Ofcom for provision of ADR services to the telecommunications

sector. The institute has a variety of schemes which are utilized by the different

stakeholders. A division of its IDRS66 scheme caters specifically for business-to-business

disputes in the telecommunication industry and provides services such as arbitration,

mediation and independent adjudication. In the past, IDRS has been employed by BT,

Orange and Vodafone to resolve interconnection disputes by mediation and independent

adjudication.67 Smaller operators, like members of the UK Competitive

telecommunications Association, also make frequent use of these ADR services. These

operators may not have the opportunity to lodge a successful complaint with Ofcom due

to the change in policy and the use of the IDRS and other professional ADR providers is

65 These rules apply generally to all disputes brought to these bodies. The American Arbitration Association has specific arbitration rules for the telecommunications sector which will be discussed in section 5.3. 66 IDRS is a wholly owned subsidiary of CIArb and also has an Ofcom approved consumer dispute ADR scheme, CISAS, which will be discussed at section 4.2.2. See further http://www.idrs.ltd.uk/Business/Index.asp 67 See G. Hunt ‘Commercial ADR in the UK Communications Sector’ (IDRS presentation to the ITU 2004) at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/Documents/Hunt_thurs.pdf

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their sole option.68 IDRS claims that 80-85% of the telecommunications disputes which

are referred to mediation are successful in achieving a cordial resolution for parties

involved.69

In addition to ADR provided by institutes, parties involved in an inter-operator dispute

may decide to invoke direct negotiations between them or appoint a third party which has

no affiliation with any ADR institute. Though such a choice may be more convenient in

particular scenarios, in more complex cases the deployment of a body with considerable

expertise in a variety of telecom issues has proven to be a more beneficial route.

4.1.2. Office of Telecommunications Adjudicator

Former monopolistic incumbents which own entrenched network are frequently regulated

under the guise of SMP obligations. In many jurisdictions, the ubiquitous networks of

these operators are not feasible to replicate in order to introduce competition. In order to

liberalize the markets, new operators are allowed to place their equipment at the

exchange of the incumbent and take over the local loop which extends from the exchange

to the individual customers’ premises. The twisted copper pair wires which run from the

exchange are physically reconnected with the other operator’s equipment allowing it to

compete with the incumbent. This process is known as local loop unbundling (LLU).

There has been a trend in Europe to bid away the incumbents’ monopolies by gradually

68 This is not meant to be a criticism as it allows non-SMP operators to resolve their disputes in an expedited manner with a variety of ADR services to choose from to fit their specific needs. 69 See Hunt (n 67)

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applying obligations on them to provide competitors with access to this resource with

certain conditions. The conditions imposed may include producing a RIO, providing LLU

at cost-oriented rates and not to discriminate.70

The regulators in UK were skeptical of endorsing LLU as a wide take-up would hamper

further building out of networks by new operators, who could just easily take over the

existing ‘last mile’ network from BT. The advent of DSL technology and the commercial

realization of providing high-speed internet over the copper twisted pair changed the

scenario. Ofcom was forced to rethink its conservative stance on LLU as it feared UK

might be left behind in the provision of broadband internet services. Following the

Telecommunications Strategic Review in 2004, BT agreed to a voluntary break up of its

wholesale arm to cater for LLU and the BT Openreach, still part of the BT Group, was

formed with the purpose of provide competitors with equality of access to BT’s local

loop. Realizing that the oversight and resolution of disputes in this highly technical and

complex area would be very resource intensive, Ofcom took an innovative step by

introducing the Office of Telecommunications Adjudicator (OTA2)71 in 2004.

The OTA2 as a body is independent both from the industry and the regulator. Some of

the scheme participants include Carphone Warehouse, Virgin and O2, who are all

wholesale customers of BT’s LLU products. It provides facilitation services to corporate

customers of BT Openreach to ensure the smooth take up of LLU and dispute resolution

70 These conditions are enshrined in the Access Directive at Articles 9, 13 and 10 respectively. For a discussion of Local loop unbundling see Walden (n 1) p. 301 71 The Memorandum of Understanding for the OTA2 scheme is available at the OTA2 website at http://www.offta.org.uk/OTA2MoU.pdf

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in the event a dispute arises. In its role as a facilitator it has the authority to make non-

binding recommendations to assist scheme members to reach agreement.72 The priority is

to encourage an environment where the scheme members use the facilitation process to

negotiate mutually agreeable terms and conditions.

When a dispute arises between the parties, the OTA2 provides mediation and

independent adjudication services to bring the dispute to a quick settlement. The Dispute

Resolution Rules73 of the scheme provide that the dispute should be an “adjudicable

dispute” for it to be taken up by the adjudicator and provides the types of disputes which

qualify as such.74 Like the Ofcom approach, OTA2 also has submission requirements and

will entail an exhaustion of all commercial negotiations and OTA2 sponsored facilitation

avenues.75 The process is underpinned by strict timelines to bring about a quick

resolution. OTA2 has 2 days to inform a dispute submitting party of its intention to

resolve the dispute76 and if it is accepted, the other party has 5 working days to submit its

response to the submissions.77 From then onwards OTA2 has to provide a binding

decision within 7 working days. The whole process is completed in 2 weeks.78 The

adjudicator is mandated by the Rules to act as an expert rather than as an arbitrator or a

mediator79 and is required to give independent, objective and fair consideration to the

72See the Facilitation rules at ibid Annex 3, Section 3 73 The Dispute Resolution Rules of the OTA2 are available in scheme Guidelines at http://www.offta.org.uk/ag141020041.pdf 74 Ibid. para 16, r3.2 and r3.3 75 Ibid. para 21 76 Ibid. para 24 77 Ibid. para 31 78 Ibid. see Annex 1 79 Ibid. para 35, r6.1

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submissions of each party in resolving a dispute.80 The adjudicator has to make sure that

BT is providing LLU to corporate customers on the same terms and conditions as it

provides to its own downstream businesses.81

The scheme of providing a dedicated ADR service to a particularly complex field of

telecommunication, with strings of interconnection and access agreements involved, has

been a commendable achievement for Ofcom. The two-tiered approach of providing

facilitation and then adjudication within strict time confines by an independent body,

aptly compliments the quick-paced nature of the LLU sector. It also is a departure from

the Ofcom policy to adjudicate itself only where one party to the dispute has SMP and

refers all LLU disputes to OTA2. Thus, the OTA2 approach even further contributes to

the mobilization of ADR in inter-operator disputes.82

4.2. ADR in Consumer Disputes

Ofcom has completely separated itself as an institution to directly resolve disputes

between individual consumers and operators. The role of the regulator in this regard is to

regulate the way in which operators provide internal measures for dispute resolution and

also to control the ADR Schemes which are used in the event the parties themselves can

not come to an amicable settlement. Ed Richards, the Chief Executive of Ofcom stated in

July 2008:

80 Ibid. para 35, r6.3 81 Ibid. para 35, r6.4.1.1 82 See further P. Brisby, ‘Dispute Resolution in Telecoms – The Regulatory Perspective’ (2005) C.T.L.R. 2005, 11(1), 4- 9, pp. 7-8

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“Effective complaints handling and an accessible scheme for resolving

disputes ensure that individual consumers are able to seek redress when

things go wrong. Inadequate or inappropriate procedures can cause

significant harm and detriment to consumers.”83

4.2.1. Internal Measures to Resolve Disputes

In the event that a dispute arises, the relationship between an operator and a customer is

governed by the Complaints Code of Practice. The Code, a public document which has to

be made accessible free of charge, sets out all the routes a consumer may use to bring the

complaint to the operator’s notice. The Code will ordinarily provide for telephonic,

electronic and postal methods of lodging the complaint. In addition, the procedure to be

followed and the details to be attached by the customer in bringing the complaint are also

laid out. The timeframe in which the operator will formally reply to the complaint and the

conditions of providing an offer of settlement are also made clear at the outset.84

The T-mobile Code of Practice provides a good example of how these measures are

normally dealt with by an operator.85 The T-Mobile Code provides for a 14 day period for

the operator to reply to a complaint and then sets the same amount of time for the

83 See ‘Improving the effectiveness of the consumer complaints process’ (Ofcom news release 10/07/08) available at http://www.ofcom.org.uk/media/news/2008/07/nr_20080710 84 See Customer Code of Practice Guidelines (n 40) para 3.3 85 See ‘Code of Practice – T-Mobile’ available at http://www.t-mobile.co.uk/content/pdf/mc22044_codeofpractice.pdf

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consumer to either accept or make a counter-proposal.86 The 14 day window continues

until a resolution is achieved or either party decides to reject the proposals and issue a

deadlock letter. The procedures and timeframes for complaint handling may differ

between different operators but ultimately have to be approved by Ofcom. In any case,

Ofcom has set a 12 week cap on the period in which a consumer may bring the complaint

to the operator directly before they may escalate it to the next level.87

4.2.2. ADR Schemes

As discussed in the previous chapter, the General Conditions of Entitlement at Condition

14.4 require every publicly available communication service provider to publish and

adhere to the Code. Also Condition 14.7 requires such operators to also be a member of

an Ofcom approved ADR Scheme and to publicize their membership of the Scheme in

their Code.88 Even though the ADR Schemes are funded by its member companies and

are regulated by Ofcom, they are essentially independent and impartial ADR providers.

When the internal complaint handling procedures of an operator are exhausted, the

consumers have the option of lodging their claim with the Scheme to which the operator

holds membership.

Currently in UK there are two ADR providers which are approved by Ofcom for this

purpose. The Office of Telecoms Ombudsman (Otelo) was the first ADR Scheme to be

86 See Ibid. pp. 6-8 87 See Customer Code of Practice Guidelines (n 40) para 4.2 88 For example, the T-Mobile Code specifies its membership of CISAS: see Code of Practice –T-Mobile (n 85) p. 19

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approved by Ofcom in September 2003. The Otelo Terms of Reference state that

domestic and small business customers of Otelo member service providers can bring a

complaint to it 12 weeks after the complaint has been communicated to the operator

without resolution or on the occasion a deadlock letter is issued.89 The ombudsman

service is free of cost for the complainant but the member service providers have to pay

subscription and case fees to Otelo.90 The whole process is streamlined to achieve a

resolution as quickly as possible. The timeframes for resolution may vary depending on

the complexity of the case but the majority of the cases last between 3 to 6 months.91

Currently Otelo has around 250 members which accounts for around 96 per cent of the

fixed line telephone market, over 55 per cent of mobile telephone market and 33 per cent

of the ISP market.92

The Ombudsman’s role is to investigate complaints received pursuant to the Terms of

Reference and facilitate the terms of their resolution.93 On deciding to resolve the dispute,

the Ombudsman is armed with information gathering powers and may validly make

requests to disclose documents concerning the matter in dispute.94 At the preliminary

stage the Ombudsman may decide to provide a mutually acceptable provisional

89 See ‘Telecommunications Ombudsman Service: Terms of Reference’ para 1.7 and 11.1(b), available at http://www.otelo.org.uk/downloads/OteloTOR-071107.pdf 90 Ibid. para 13 91 In an Ofcom mandated independent annual survey conducted in 2008 it was found that 34 per cent of complaints are being resolved within 1 to 2 months while 50 per cent of the cases are taking 3 to 6 months. see ‘Otelo Customer Satisfaction Report 2008’ Para 7.18, available at http://www.otelo.org.uk/downloads/FinalOtelo2008_(3).pdf 92 The complete list of Otelo members can be viewed at http://www.otelo.org.uk/membercompanies.php 93 See Terms of Reference (n 89) para 5 94 Ibid. para 7

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settlement or an ‘informal mediation’95 in the interest of saving time. However, if such

can not be achieved or agreed upon between the parties, a formal investigation may be

engaged.96 In the event the final decision of the Ombudsman finds the service provider

culpable, the Terms of Reference provide for a variety of remedies which the

Ombudsman can provide an aggrieved user. The ombudsman may order the service

provider to provide a particular service or product to the complainant, issue an apology

letter and/or provide the complainant with an award not exceeding £5,000 (inclusive of

VAT).97 If the final decision is formally accepted by the complainant, the decision is

binding on the service provider and has to implement the remedy within 28 days of the

notification.98 The service providers do not have a right of appeal but a complainant

which is not content with the decision may submit it to an internal review procedure,

which Ofcom requires the ADR schemes to provide, or alternatively take the matter to

court.99

The other industry sponsored ADR Scheme functioning in this sphere is the

Communications and Internet Services Adjudication Scheme (CISAS), which was

approved by Ofcom in November 2003. Since January 2007, it is administered by IDRS

under the umbrella of ADR services offered by CIArb. The members of CISAS include

major ISPs including AOL, Yahoo! and Virgin Media and two mobile telephone

95 See ‘Otelo Customer Services FAQ’ para 7, available at http://www.otelo.org.uk/pages/48bycustomersofpubliccommunicationsproviders.php#7 96 See Terms of Reference (n 89) para 8 97 Ibid. para 9.3 98 Ibid. para 9.12 99 See Brisby (n 82) p. 8

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operators Orange and T-Mobile. The Internet Service Providers Association (ISPA) has

also supported the CISAS since its inception in 2003.100

The CISAS Rules101 incorporate a similar approach as Otelo in resolving disputes and at

a preliminary stage proposes an informal settlement between the customer and the

member company. If settlement is not reached at this stage, an adjudicator is appointed,

from the current panel of 11 adjudicators, to resolve the dispute in line with the relevant

law, codes of practice and contracts governing the relationship between the parties. The

procedures, including information gathering and decision making powers, and also the

remedies available for complainants on a successful claim, are identical to those provided

by the Otelo Terms of Reference. The Key Performance Indicators published by CISAS

in its annual report in 2007 suggest that on the whole it is resolving disputes in a more

expeditious manner than Otelo.102

Both the Schemes have to notify Ofcom of any breach of rules of membership and non-

compliance with decisions in order for Ofcom to take the appropriate measures against

the operator. As mentioned earlier, under s. 96 of the Communications Act, Ofcom has

the power to penalize the operator 10 per cent of annual turnover for not implementing a

decision of the ADR Schemes or failing to retain membership of the Scheme. In March

2008, Ofcom initiated an industry wide investigation to ensure all operators comply with

100 The full list of CISAS members can be viewed at http://www.cisas.org.uk/Members.asp 101 The CISAS Rules can be accessed at http://www.cisas.org.uk/Rules.asp 102 The Report states that in 2007, 80 per cent of the cases were completed within 6 weeks of the application by the consumer. See ‘CISAS Annual Report 2007’ p. 9, available at http://www.cisas.org.uk/documents/CISAS2007AnnualReportFINAL.pdf

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the ADR Scheme policy to further strengthen this institution.103 The nomination of two

schemes to provide ADR has the benefit of encouraging competition between the

Schemes. Operators are free to join the Scheme of their choice and shift between them.

This acts as motivation for the Schemes to provide efficient and innovative services to

attract operators. In the five years that these Schemes have been operating they have

resolved thousands of cases and have developed considerable competencies in consumer

dispute resolution in the telecommunications sector.104

4.3. ADR in International Trade Disputes

The WTO DSB has a clearly defined procedure for handling international trade disputes

arising in the telecommunications sector. The process is underpinned with the need to

resolve disputes in a timely fashion.105 The process may not strictly be termed judicial as

it differs from a traditional court or a tribunal process. In resolving a dispute,

considerable encouragement is given to engaging the parties in a dialogue with the aim of

achieving a quick settlement. As mentioned earlier, at the first stage of the process, the

states are allowed an opportunity of 60 days to use consultations, negotiations and

mediation to resolve the dispute themselves. On a request to enter into consultations, the

other party is to reply to the request within 10 days and enter into consultations within 30

days of the request in good faith with a view of achieving a mutually agreeable 103 See ‘Ofcom own-initiative investigation’ available at http://www.ofcom.org.uk/bulletins/comp_bull_index/comp_bull_ocases/open_all/cw_981/ 104 Recent case studies on the matters successfully resolved by Otelo and CISAS against service providers can be viewed in the second half of the Ofcom publication: ‘improving the effectiveness of the consumer complaints process’ (Ofcom news release 10/07/08) at http://www.ofcom.org.uk/media/news/2008/07/nr_20080710 105 See Understanding (n 43) Article 3(3)

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solution.106 If the parties are not able to reach a settlement on their own, the process

allows the parties to request the WTO director-general to mediate on the matter.107 The

interesting approach taken by the WTO is that the consultation and other forms of

ADR108 are still relevant if the dispute has been escalated to the next stages of the

process. The governments are free to approach each other to seek an amicable resolution

of the dispute even when the DSB panel has been appointed to formulate determinations

on the issue at hand.109

In the Telmex case, negotiations were entered into unsuccessfully to resolve the matter

regarding high international call rates to Mexico before US requested the establishment

of a DSB Panel to resolve the dispute. The role of consultations in the process was

evident even after the Panel made its recommendations in its report. Mexico decided not

to appeal to the WTO appellate body due to a mutual understanding reached between the

parties regarding compliance of the report. Mexico agreed to amend its laws to remove

certain regulations which contravened the GATS Annex and the Reference Paper.

However at the same time it was decided that international simple resale, a method by

which US operators would be allowed to establish direct interconnection without going

through Mexican gateway operators, would be prohibited.110

106 Ibid. Article 4(3) 107 Ibid. Article 5(6) 108 Good offices, conciliation and mediation are mentioned in the Understanding at Article 5. Article 25 further states that expeditious arbitration may also be utilized as an alternative to the DSB proceedings with the mutual agreement of the parties. 109 Ibid. Article 5(3) and 5(5) 110 See further George (n 55) pp. 109-110

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There have been other instances where proceedings at the DSB have been initiated by

parties but have been settled through some form of ADR before the Panel could make its

final decision. In the 2001 US proceedings against Belgium, regarding provision of

commercial telephone directory services, the dispute was resolved by consultation

between the parties.111 However it is becoming increasingly evident that it is the threat of

DSB proceedings that is the impetus for many parties to enter into voluntary negotiations

to resolve a dispute. Some countries have used this predatory tactic to their advantage. In

2000, Japan agreed to bring its international interconnection regulation in line with the

Reference Paper in negotiations with the US and EU, due to the threat of WTO

proceedings.112

111 See WTO Report: ‘Overview of the State-of-Play of WTO disputes’ (2001) p. 53 available at http://www.wto.org/english/info_e/search_results_e.asp?SearchItem=wt/DS80/1 112 See Walden (n 1) pp. 498-500

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Chapter 5 - An International Perspective: A Look into Regulatory Approaches and ADR Models

The objective of this chapter is to explore prevailing approaches in other jurisdictions in

the area of telecommunications dispute resolution and to analyze the differences in light

of the UK approach. Nations at varying levels of development in the sector are realizing

the need for competent dispute resolution processes and the correlation of such to

increased productivity and investment in the industry.113

5.1. Experiments in Regulatory Adjudication

The dispute settlement processes offered by the regulator are the cornerstone of a

successful telecommunications regulatory environment. In this regard, the Indian

government took a novel step in 2000 by creating the Telecom Dispute Settlement and

Appellate Tribunal (TDSAT). The TDSAT is an independent statutory tribunal which has

been vested with the authority to resolve all telecoms disputes which were previously in

the realm of the Telecommunications Regulatory Authority of India (TRAI) and also to

act as an appellate body.114

113 In a study conducted by BT, the positive correlation between an effective dispute resolution regime and foreign investment was demonstrated by a series of statistical calculations. See G. Moir ‘Views of a global operator on dispute settlement processes’ (Presentation to the ITU 2004) available at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/Documents/Moir_wed.pdf 114 TDSAT’s authority excludes disputes which are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission and the Consumer Disputes Redressal Forum or Commission which hears individual consumer complaints: s. 14(a)(A) and (B) of the Telecommunication Regulatory Authority of India Act 1997, as amended in 2000.

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The aim of establishing a separate tribunal was to create an environment of increased

credibility, transparency and independence and thus also upholding the doctrine of

separation of powers. It hears disputes which may arise between service providers,

service providers and TRAI and also service providers and groups of consumers.115 Once

proceedings have been lodged at the TDSAT, the exclusive domain of the tribunal bars

any civil proceedings.116 The timeframe for resolution of disputes is 90 days from the

date of filing of the application and since its inception it has dealt with a variety of

disputes ranging from interconnection to licensee fee issues. The separation of

adjudication from the regulatory function and setting up a specialized tribunal, with legal

expertise and dispute resolution competencies, has helped the Indian telecommunications

sector to flourish by means of an expeditious and effectual dispute resolution platform. 117

UK is unlikely to follow such an approach as decisions in inter-operator disputes have the

propensity to interfere with policy.118

5.2. Developments in Inter-operator Disputes

Mediation as a form of ADR has been expressly prescribed in the Framework Directive.

While UK leaves the ADR processes to the industry, in the four month period provided

for utilizing ADR, other members of the European Union have decided to take a more

115 Ibid. s. 14(a) 116 Ibid. s. 15 117 See D. Wadhwa ‘Dispute Resolution Mechanism in Telecom Sector in India’ (Speech by Justice D.P. Wadhwa, Chairperson, TDSAT at ITU-European Regional Workshop on Dispute Resolution 2004) available at http://www.itu.int/ITUD/treg/Events/Seminars/2004/Geneva/Documents/Wadhwa_thurs.pdf; see further R. Macmillan ‘Reflections on Regulation and Dispute Resolution in Indian Telecommunication Sector’ (2005) Volume 47:1 JILI 29-52 (Journal of Indian Law Institute) 118 See Brisby (n 82) p. 9

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proactive approach. The regulator in Belgium, the Belgian Institute for Postal Services

and Telecommunications (BIPT) provides a non-binding mediation procedure to resolve

disputes swiftly between operators.119 A party may apply to a special mediation board

within the BIPT to have the matter mediated upon and the other party is then obliged to

reply in a specified timeframe. The board also has the power to appoint an expert to hear

the parties and gather information. At the end of the procedure, which may not last more

than four months, the board makes a non-binding proposal on the best solution for the

particular dispute. If the parties are still in disagreement, the dispute is escalated to the

Belgian Competition Council which has exclusive jurisdiction over all inter-operator

disputes including interconnection and local loop unbundling.120 Arguably, regulatory

sponsored ADR has a higher probability of success as there will be continuous regulatory

oversight of the process which may motivate parties to make a good faith attempt to

resolve the dispute amicably.121

In the lead up to the accession to the EU in 2007, Romania had been engaged in an

overhaul of its regulatory policies and now has an effectual dispute resolution procedure.

The Decision 1331/2003 on the Procedures Regarding the Settlement of Disputes within

the Competence of National Regulatory Authority for Communications (ANRC) sets out

the dispute resolution system. ANRC has a specialized Disputes Section to handle dispute

resolution. Once a dispute is submitted, it will initially be referred to mediation by the

119 The Royal Decree of May 5, 2006 has shortened the timeframe for the mediation service and provides enhanced confidentiality rules for the procedure in order to encourage ADR. 120 It is interesting to note that BIPT, unlike OFCOM in the UK, does not have jurisdiction over interconnection disputes and they are referred to the competition authority. Also, while UK has created a specialized adjudication scheme for LLU, there is no such mechanism in Belgium. 121 See D. Wallaert ‘Belgium: telecommunications – regulation - new mediation procedures introduced’ (2006) C.T.L.R. 2006, 12(8), 195-196

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Disputes Section. In the thirty days that are allowed for this phase, the ANRC assists the

parties to come to a mutual agreement. The mediation is provided free of charge and is

essentially confidential and facultative in nature. If the parties are not able to reach an

understanding at this stage, or if they do not opt for mediation, the contentious

proceedings stage is initiated. In interests of saving time, the ANRC Commission122

proposes preliminary solutions after examining the facts. If the parties do not agree to the

solution they have the option of requesting a re-analysis. In any event, a final decision is

issued four months after the dispute is filed. Parties are allowed to come to an amicable

solution while the formal proceedings are pending at the ANRC.123

Regulatory mediation is a viable option for regulators where the ADR in the private

sector has not yet established a strong foothold. The Telecommunications Commissioner

in New Zealand is enabled by legislation to adjudicate upon disputes between service

providers. In addition, the Commissioner may also meet informally with the parties to

resolve the dispute by mediation. Although the agreement reached is non-binding, the

parties are allowed to have the solution codified by issuing it as a decision. This allows

the agreement reached by mediation to have greater legitimacy and certainty.124 NITA,

the regulator in Denmark, has also used mediation successfully to resolve disputes

without usurping large amount of the regulator’s resources.125

122 The ANRC Commission is appointed from within the Dispute Section for the specific purpose of resolving the dispute. 123 See S. Popovici ‘Resolution of Disputes in the Light of the New Regulatory Framework’ (ANRC presentation to the ITU 2004) available at http://www.itu.int/ITUD/treg/Events/Seminars/2004/Geneva/Documents/Popovici_Tues.pdf; see further S. Toscano ‘Dispute Resolution’ (ITU Training Workshop on Effective Regulation 2005) document 3.3 at http://www.itu.int/ITU-D/hrd/tc/ITU-EC-Project/DOCS/Index-ws4.html 124 See Bruce (n 21) p. 38 125 Ibid. p. 16

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The approach of Ofcom to only intervene where a market asymmetry exists is present in

other jurisdictions as well. As discussed before, such a self-regulatory approach

encourages parties to resolve disputes through alternative mechanisms and also assists in

developing a market for ADR. The Nigerian regulator accepts application for

adjudication ninety days after no resolution is achieved by negotiations, but only if one of

the parties to the dispute is dominant in the market.126 In Singapore Info-communications

Development Authority (IDA) does not interfere where both parties are non-dominant.

However if both parties consent to it, IDA provides a conciliation service in

interconnection disputes.127 In other less developed markets, regulators have no option

but to accept all disputes submitted to it regardless of the respective market shares of the

parties. OSIPTEL, the regulator in Peru, acts in such a manner and provides an arbitration

procedure to all disputes referred to it.128

The Telecommunications Regulatory Commission (TRC) in Jordan has strict guidelines

and timeframes for ADR. The procedure requires parties to meet for negotiation for at

least 20 days before submitting the dispute for adjudication. The interconnection dispute

process, like the UK, includes a requirement that parties make a good faith effort in such

negotiations to resolve the dispute otherwise TRC may decline to adjudicate. TRC also

encourages parties to refer the dispute to arbitration instead of adjudicating itself upon it.

Regulatory adjudication in Jordan is not a free public good and thus only valid claims are

126 Ibid. p. 34 127 Ibid. 128 Ibid.

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submitted to adjudication by parties. Such measures have led to creation of ADR

resources and expertise in the jurisdiction.129

Similar to UK, the Saudi Telecommunications Bylaws 2002 requires parties to negotiate

the matter in dispute before submitting it to the Saudi Communications and Information

Technology Commission (CITC). However once the dispute is submitted to the CITC, a

flexible approach is taken in deciding whether to adjudicate on the matter or to refer it to

mediation or arbitration. The decisive factors are whether the issues are assessed to have

significant regulatory policy or precedent setting value. One shortcoming of this

approach, which is a matter or argument in Jordan as well, is to ensure that the ADR

mechanisms which are utilized resolve the dispute within the policy parameters of the

regulator. This is catered for in Saudi Arabia by allowing the CITC to intervene if such a

threat exists and resolve the matter through regulatory adjudication.130

Ivory Coast provides an interesting model for dealing with disputes. The Agence des

Télécommunications de Côte d’Ivoire (ACTI) provides the platform to resolve inter-

operator disputes when such are submitted to it. At the first stage, ACTI gathers

information and makes deliberations on whether to accept the dispute. Factors taken into

account include nature of the dispute and prior recourse to negotiation. If it decides to

resolve the dispute, it is referred to the Conciliation Commission which hears the parties

and proposes solutions in a maximum period of 30 days. If an agreement is reached, a

129 Ibid. pp. 19-20 130 Ibid. p. 49; see also ‘ICT Regulation Toolkit: Dispute Resolution’ (Online ICT materials developed by InfoDev in collaboration with ITU) fn 6 available at http://www.ictregulationtoolkit.org/en/Section.2069.html#_ftn6

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protocol of agreement is drafted and signed by the parties. Disputes are only referred to

the Conciliation Commission if they are not regarding interpretation of law, regulation or

contractual documents. If the dispute is regarding such matters or the maximum 30 day

period has expired without a consensus, the issue is escalated to the arbitration phase. The

arbitration stage includes an in-depth evaluation of the issues and expert analysis and

investigation may also be employed for this end. A decision is communicated to the

parties in a maximum period of 60 days. The final phase termed arbitration is in practice

a hybrid form of regulatory adjudication. Nevertheless, the steps taken in the ACTI

policy in sternly vetting disputes brought to it and setting up a Conciliation Commission

are commendable and provide a fine example of an advanced ADR structure in a

developing industry.131

5.3. Innovations in Consumer Disputes

The reluctant attitude of Ofcom regarding direct resolution of consumer disputes has been

stated in the previous chapter. The well established procedure for regulating the

relationship between service providers and users through the Complaints Code of

Practice and ADR Schemes, justifies the non-interventionist regulatory stance

adequately. However, other regulators in the EU have taken a more involved approach.

The Universal Service Law of Romania132 at Article 36 provides for the regulator to

131 See E. Blafond ‘Managing Commercial Disputes among Telecom Operators: The ACTI Experience’ (ACTI presentation to the ITU 2004) at http://www.itu.int/ITU-D/treg/Events/Seminars/2004/Geneva/Documents/Blafond_wed.pdf 132 Law No. 304/2003 on the universal service and users’ rights relating to electronic communication networks and services.

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establish a transparent, simple and inexpensive mediation procedure to amicably, fairly

and promptly resolve consumer disputes. Aggrieved users can approach the ANRC to

initiate the free of charge mediation process and the operator under question is contacted

to provide explanations and information. A period of 60 days is allowed for the parties to

meet, if required, and come to a mutually acceptable understanding. If an agreement is

not reached in this period, ANRC makes proposals as to the best solution to the dispute.

One possible disadvantage of this process is the non-binding nature of the proposal,

whereas decisions of Otelo and CISAS in UK are binding on operators and are backed by

Ofcom enforcement procedures. Apart from the facultative nature of the decision, the

mediation service provided by ANRC is well suited to the unique features of the

Romanian industry.133

While some regulators become directly involved in consumer disputes, others just merely

regulate the relationship between the operator and user. In South Africa, all service

providers are required to publish and adhere to guidelines for internal dispute settlement

procedures. The document, which is very much like the Complaints Code of Practice in

the UK, has to contain certain minimum terms like providing tracking services for

complaints and setting a time limit on the process. It has to be distributed to the

consumers free of charge and adequately publicized.134

The concept of a private industry ombudsman for resolution of consumer disputes has

been present in Australia for over 15 years. The Australian Telecommunication Industry

133 See Popovici (n 123) 134 See Bruce (n 21) p. 41

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ombudsman (TIO) was created in 1993 to provide free, independent, informal and speedy

resolution of consumer disputes. Like Otelo and CISAS in UK, it caters to both domestic

and small business consumers and is industry funded while being independent from the

regulator. As the industry went through liberalization and many new telecommunications

licenses were issued in the previous decade, membership of TIO was made mandatory on

all service providers in 1999.135 The complainants have to exhaust the internal dispute

resolution measures of operators before approaching TIO, which may issue binding

decisions.136 While the procedure is remarkably similar to the one present in UK, the fact

that Ofcom has approved two Schemes to carry out this function differentiates the two

systems. As discussed earlier, competition between the two Schemes in UK has

encouraged the institutes to provide better services in a more efficient manner.137

In the United States138, American Arbitration Association (AAA) provides an arbitration

service for the wireless industry customers, which is sponsored by the Cellular

Telecommunications Industry Association (CTIA),139 and is provided under the AAA

Wireless Industry Arbitration Rules.140 The Rules are administered by the

Telecommunications Panel within the AAA, which has personnel with considerable

expertise in both dispute resolution and telecommunications. The Rules contain three

tracks depending on the amount in claim. The ‘Fast Track’ applies to disputes where less

135 See Part 6 of the Telecommunications (Consumer Protection and Services Standards) Act 1999 136 Further information regarding TIO can be accessed at http://www.tio.com.au/about_tio.htm 137 See further A. Stuhmcke ‘The rise of the Australian Telecommunications Industry Ombudsman’ (2002) Volume 26, Issue 1-2 February-March 2002 Telecommunication Policy 69-85 138 The Federal Communications Commission in the United States becomes directly involved when a complaint is submitted to it by a consumer. It follows a procedure similar to the one explained for Romania but with binding determinations. See further Bruce (n 21) p. 41 139 CTIA is a body which represents all mobile telephony providers in the United States. 140 The AAA Wireless Industry Arbitration Rules can be accessed at http://www.adr.org/sp.asp?id=22010

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than USD 2000 is claimed by the customer. It has a maximum 45 days period for

resolution by expedited arbitration and will normally be decided on the basis of

documents alone. The ‘Regular Track’ applies to cases involving claims of between USD

2000 and 500,000 and includes an optional pre-arbitration mediation.141 ‘Large/Complex

Case Track’ applies to cases with claims above USD 500,000 and has a mandatory pre-

arbitration mediation with multiple arbitrators appointed from the Panel. Customer

agreements with wireless service providers make reference to this procedure and contain

arbitration clauses.142 The streamlined process, with disputes compartmentalized

according to the severity of claims and the provision of pre-arbitration mediation is a high

watermark for a private industry initiative to set up an ADR regime.143

One of the most innovative steps in consumer dispute resolution has been undertaken by

the Nigerian Communications Council (NCC). The NCC in conjunction with a local

television channel has set up a televised Consumer Parliament. Consumers take their

complaints to the forum and are allowed an opportunity to have the matter heard and

explained by representatives of the operators. The broadcasted nature of the proceedings

forces the operators to reduce causes for grievance and acts as a means of increased

accountability. Furthermore, the Consumer Parliament also helps spread awareness of

consumer rights.144

141 Mediation maybe conducted privately or through the AAA under its Mediation Rules. 142 See information provided by Verizon Wireless support section regarding arbitration and mediation according to the AAA Rules at http://support.vzw.com/faqs/Wireless%20Issues/faq_arbitration_and_mediation.html 143 See further ‘ICT Regulation Toolkit: The AAA’ (Online ICT materials developed by InfoDev in collaboration with ITU) at http://www.ictregulationtoolkit.org/en/PracticeNote.aspx?id=1876 144 See Brisby (n 82) p. 8; see further Bruce (n 21) p. 42

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Chapter 6 - Future Directions and Recommendations

The discussion in this chapter will include exploring recent developments in the

telecommunications industry and how new trends are shaping dispute resolution policies;

with recommendations on the use of ADR for such.

6.1. Dispute Prevention

Dispute prevention is a notion which is being widely appreciated as a supplement to

dispute resolution procedures. Industry participants are best placed to make judgments

about technical, administrative and financial matters which give rise to disputes within

the industry. The regulators have taken this into consideration and adopted measures to

allow operators to provide their input in regulatory decisions before they are finalized.

Article 6 of the Framework Directive requires regulators to allow operators to comment

on draft measures before they are implemented. Ofcom carries out this duty by publishing

consultations and inviting comments from interested parties when new regulatory

approaches are being undertaken. Such consensus-building plays a beneficial role by

allowing regulators to recognize potential disputes before they arise.145

The Canadian regulator has established an Interconnection Steering Committee within

itself, comprised of industry experts, to contribute to increased understanding between

operators. The Committee allows the industry to play an active role in developing

145 See further Macmillan (n 56) p. 3

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regulatory policies regarding interconnection146. The telecommunications industry in

Malaysia has set up its own platform, the Malaysian Access Forum (MAF), to foster

consensus between operators. The MAF is independent of the Malaysian regulator and

participates in developing codes and guidelines for interconnection issues.147 Such formal

associations of service providers allow greater unity in the industry and are an effectual

venue for dispute prevention. Although Ofcom does not endorse any such industry-driven

body, and carries out this function through individual submissions to consultations, it

could be advantageous to introduce an industry panel for greater consensus-building. This

would offer the industry an opportunity to engage in a horizontal dialogue with each

other, as opposed to just with the regulator, and allow possible conflicts to be averted

before they occur.

6.2. Spectrum Disputes

Traditionally electromagnetic spectrum has been managed in the UK in a ‘command and

control’ manner with all disputes in the regulator’s ambit. Spectrum licenses were issued

with strict conditions as to its particular technology and service use. The reasons for such

an interventionist approach were mainly the scarcity of the public resource and to control

harmful interference. However, with the switchover from analogue to digital technology,

146 See Bruce (n 21) p. 47 147 Ibid. p. 94; Australia has a similar Industry initiated forum, the Australian Communications Industry Forum (ACIF), to encourage consensus-building and provide input to the regulator on interconnection related matters. See further R. Bruce and A. Marriot ‘Discussion paper on the use of Alternative dispute resolution techniques in the telecom sector’ (2002) pp. 24-25, available at http://www.itu.int/ITU-D/treg/Events/Seminars/GSR/GSR02/Documents/12-Bruce_document.pdf

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the spectrum is being utilized more efficiently and has produced a digital dividend.148 The

freed up spectrum is now being managed in a market-oriented fashion under the new

European principles on management of spectrum and digital dividend. The new approach

embraces principles of technology and service neutrality and allows spectrum to be used

over a range of platforms to provide a variety of services as the converging market thinks

fit.149

An Ofcom impact assessment in 2004150 concluded that the spectrum licenses should be

allowed to be traded openly in the market and consequently the Wireless Telegraphy

(Spectrum Trading) Regulations 2004151 were enacted to give effect to spectrum trading

in prescribed bands. In the drive towards a full secondary market in spectrum, Ofcom has

gradually liberalized more frequency bands and the Business Radio license classes were

open to trading in 2008.152 Ofcom has taken an interesting step in a July 2008

consultation by proposing to appoint a ‘band manager’ to cater for the specific spectrum

needs of programme makers and special events (PMSE) organizers.153 In addition to

pricing and reporting to Ofcom, the duties of the band manager will include, providing

internal and independent external dispute resolution processes for the PMSE users.154

148 See ‘Ofcom Statement: Digital Dividend Review’ (2007) available at http://www.ofcom.org.uk/consult/condocs/ddr/statement/statement.pdf 149 See D. Currie ‘Ofcom perspectives on the European Telecoms Framework Review’ (speech of Ofcom Chairperson David Currie at the 8th ECTA Regulatory Conference 2007) available at http://www.ofcom.org.uk/media/speeches/2007/11/ecta07 150 Regulatory Impact Assessment in the Spectrum Trading and Wireless Telegraphy Register Regulations 2004 151 Wireless Telegraphy (Spectrum Trading) Regulations 2004 SI 2004/3154 152 By virtue of Wireless telegraphy (Spectrum Trading) (Amendment) (No. 2) Regulations 2008, SI 2008/2105 153 PMSE spectrum band is provided for theatres, live event organizers etc. who make use of wireless microphones and cameras for digital television. 154 See Ofcom consultation ‘Digital Dividend Review: Band Manager Award’ (2008) at http://www.ofcom.org.uk/consult/condocs/bandmngr/condoc.pdf

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Disputes related to spectrum use and trading, under the current non-interventionist

regulatory approach, will become more common. The market, with the assistance of the

regulator, will have to set up ADR mechanisms to resolve these disputes quickly to make

the best use of this scarce resource.

6.3. NGA Disputes

Deployment of Next Generation Access (NGA) is currently the most significant task

being undertaken in the UK telecommunications sector. At present, copper and cable

networks are widely being used to provide broadband. However with the phenomenon of

convergence and growing consumer demand for higher bandwidth, fibre-optics networks

utilizing IP-based technology provide further commercial opportunities.155 In 2008, BT

commenced its first fibre to the home rollout in Ebbsfleet, a new build property

development. Virgin Media and H20 have also heavily invested in their fibre deployment

programmes.156

BT Openreach, which has been a success story for LLU in UK, is responsible for NGA

deployment as well. It has established the Openreach Future Access programme to

develop its strategy for NGA and Fibre to the Premises (FTTP).157 Under its existing

obligations pursuant to the Enterprise Act 2002, BT Openreach is required to provide

155 See ‘Ofcom Annual Report 2007-2008: Promoting competition and innovation in converging markets’ at http://www.ofcom.org.uk/about/accoun/reports_plans/annrep0708/innovation/ 156 See Ofcom Consultation ‘Promoting higher speed broadband in new build housing developments’ at http://www.ofcom.org.uk/consult/condocs/newbuild/condoc.pdf 157 The Openreach Future Access programme can be accessed at http://www.openreach.co.uk/orpg/products/nga/nga_hp.do

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LLU at an ‘equivalence of access’ basis. Access requirements regarding any future NGA

networks it builds will also be subjected to the same approach, and will have to be

provided at a wholesale basis to other operators.158 At present Ofcom is undertaking

detailed consultations to determine the best regulatory approach to encourage deployment

of these networks and investment in them.159 There has been no official comment on how

inter-operator disputes regarding NGA will be dealt with. However the Office of

Telecommunications Adjudicator is a possible platform. The OTA2 can offer the

facilitative and ADR services it successfully provides for LLU disputes at present. The

jurisdiction of OTA2 can be enlarged to include other operators who acquire a dominant

position in the NGA market and therefore have wholesale access obligations imposed on

them.

6.4. Reforms in Consumer Disputes

The current procedures in place for consumer dispute resolution in the UK are widely

held to be successful. However, Ofcom has recognized consumer dissatisfaction with

internal dispute resolution processes of operators and also that many are unaware of the

158 Similarly, Virgin Media, H20 or any other service provider which acquires SMP in the NGA market will be subjected to similar obligations. See further ‘Openreach Future Access Forum Presentation July 2008’ at http://www.openreach.co.uk/orpg/products/nga/downloads/2008-07-22%20OFAF%20slide%20desk%20final.pdf 159 Details of regulation for super-fast broadband will be provided by Ofcom in September, 2008. see ‘Ofcom outlines investment plan for super-fast broadband’ (Ofcom news release 03/07/08) at http://www.ofcom.org.uk/media/news/2008/07/nr_20080703a

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existence of the ADR schemes. In a survey conducted by Ofcom, it was discovered that

only 15 per cent of the adult population was aware of the Otelo and CISAS Schemes.160

To address these issues and to make the dispute resolution machinery more efficacious,

Ofcom has proposed certain reforms in a consultation dated 10 July, 2008.161 Regarding

the Complaints Code of Practice, Ofcom has proposed to have a single Code that all

service providers will adhere to instead of approving individual documents of procedure.

The new Code will have certain minimum standards that must be complied with,

including limiting the amount operators can charge for complaints over the phone.

Additionally, Ofcom has proposed to shorten the period consumers must wait before the

complaint may be lodged with an ADR Scheme. Reducing the timeframe from 12 weeks

to the proposed eight weeks will provide consumers with a faster track to ADR. Service

providers may also be required to keep record of all complaints so compliance with the

code can be implemented by Ofcom. Lastly, service providers may have new obligations

to make their customers aware of their Code and the ADR Schemes.

The proposals set out by Ofcom are needed to improve the customer experience and

provide a better dispute resolution environment. However, to increase awareness of the

Code and the Schemes, broadcast and print media maybe a viable option to promote

consumer awareness of their rights. The televised Consumer Parliament in Nigeria

provides a compelling example of the benefits of such an approach.

160 See Ofcom Consultation ‘Review of Alternate Dispute Resolution and Complaints Handling Procedures’ (2008) pp. 17-18 available at http://www.ofcom.org.uk/consult/condocs/alt_dis_res/condoc.pdf 161 Ibid

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Chapter 7 - Conclusion

The application of ADR processes in the telecommunications sector is growing

worldwide and its use has been demonstrated in jurisdictions at divergent levels of

development at chapter 5. On an international platform, ADR has a substantial function

at WTO dispute settlement proceedings. The UK policy on dispute resolution and ADR

has set a high benchmark in terms of transparency, time and certainty.162 Ofcom has

displayed initiative to be innovative and has implemented processes which aptly

compliment the fast-paced and complex technology-driven sector.

Ofcom’s strategy to adjudicate itself only in scenarios where market asymmetries exist,

and even then stipulating the presentation of detailed proof of prior recourse to ADR, has

given impetus to an increased private industry ADR culture. There has been a substantial

growth in the ADR institutes providing telecommunications-specific services for inter-

operator disputes since the promulgation of the Communications Act 2003 and

subsequent change in policy. The Office of Telecommunications Adjudicator is a fine

example of an inventive approach towards ADR in the sector. The two-tiered approach of

facilitation before ADR, administered by specialists in the field of LLU, helps preserve

business relationships and provides resolution of the dispute within 2 weeks.

The regulation of consumer dispute resolution through the Complaints Code of Practice

and the two approved ADR Schemes is widely accepted as being highly effective. The

Schemes are deciding the majority of consumer cases within 6 to 12 weeks at no cost to

162 See Moir (n 109) p. 3

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the consumer; if an agreement is not reached with the operator at the first instance. The

process for consumer disputes will be further expedited by the new reforms being

considered by Ofcom to reduce the time consumers have to wait in order to lodge the

complaint with the Scheme. The proposal for a single Complaints Code of Practice and

measures to increase awareness of the Code and ADR Schemes are positive steps towards

improving an already successful process.

The effective dispute resolution approach and high mobilization of ADR by Ofcom has

led to increased investor confidence in the sector.163 Such models can adequately be

applied to new technologies and trends like next generation access and spectrum trading.

The dispute resolution machinery can further be strengthened by official consensus-

building activities within the industry. Such a forum will allow operators to engage in an

exchange of views with each other, contribute to regulatory processes and thus assist in

dispute prevention. Furthermore, it may be advantageous to introduce a preliminary

Ofcom sponsored mediation or facilitation service in disputes where market asymmetries

exist. The facilitation service offered by OTA2, the facultative mediation provided by the

regulators in Belgium and Romania and the Conciliation Commission within the

regulator in Ivory Coast are convincing initiatives. Such an approach will afford smaller

operators an inexpensive recourse to ADR, while oversight of Ofcom will ensure that

dominant operators do not abuse ADR processes by using them as delaying devices.

163 See ibid. pp. 3-4

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