After a complaint, Oftel has told BT to stop using information about customers transferring to other telecom suppliers to try and dissuade them from switching. For the recent new law on this and the positions of Oftel and BT, who plan to appeal.
Who: Oftel and BT
When: November 2003
Oftel ordered BT Group plc to stop using information about the transfer of customers to alternative telecoms suppliers to undertake marketing activity in order to dissuade those customers from switching.
The practice falls under the ambit of the EU Access and Interconnection Directive 2002/19/EC, which came into force in the UK in 25 July 2003.
It comes into play when a subscriber decides to switch telecoms supplier. The law obliges the new supplier to contact the existing supplier so that the latter can make arrangements to facilitate the switch.
Article 4 (3) of the Directive requires the existing supplier to use the information received from the new supplier solely for the purpose for which it was supplied and not to pass it on to other departments for whom such information could provide a competitive advantage.
These obligations are transposed so as to bind BT by way of General Condition 1.2 of the General Conditions of Entitlement, to be found in Part 2 of Annex B to the Schedule to the notification under s. 45 (1) of the Communications Act 2003.
The case arose out of a formal complaint being lodged with Oftel by BT competitors Broadsystem and Thus. Oftel Director General David Edmonds accepted that BT was entitled to target lapsed customers in order to encourage them to return to BT. However, under the Directive it could not in Oftel's view act on the transfer notification received from the alternative operators in order to carry out this activity.
The telecommunications leviathan claimed that the calls from BT's marketing department to the switching subscribers were to stop customers from being switched to rival telecoms companies without their knowledge (the practice known as "slamming"). Accordingly, BT plans to appeal against Oftel's decision.
Why this matters:
With 40% of consumers changing suppliers and 4 million telephone numbers having been switched by consumers to new operators, BT is clearly facing a potent threat from competitors. It firmly believes that what it is doing is quite legitimate and designed to protect consumer interests against unscrupulous competitors claiming to be "part of BT" or "doing a deal with BT for cheaper calls".
At the moment, Oftel clearly disagrees and it will be interesting to see how the appeal process unfolds.