OFTEL SAYS BT CHARGES OTHER OPERATORS TOO MUCH FOR USING ITS PAYPHONES

[COI]

OFFICE OF TELECOMMUNICATIONS

65/98 14 August 1998

OFTEL SAYS BT CHARGES OTHER OPERATORS TOO MUCH FOR USING ITS
PAYPHONES

OFTEL today announced that the Payphone Access Charge, charged by
BT, will be reduced.

All calls from BT payphones, whether BT calls or services provided by
other operators, must make a contribution to the cost of running the
payphones. The Payphone Access Charge (PAC) is the amount BT charges
users of freephone numbers, including operators using BT payphones to
offer calling card services.

To make a call from a BT payphone using calling cards (indirect
access), the customer calls a special freephone number and then dials
a PIN number. The PAC is a central cost affecting the price the
customer pays for indirect access.

OFTEL's investigations show that BT is passing on too many of its
operating costs as part of the PAC.

OFTEL has examined BT's calculations and announced that the PAC will
be reduced to 8.10 pence per minute from its current level of
8.61ppm, backdated to 1 December 1997. This will reduce indirect
access operators' costs.

NOTES TO EDITORS

1. The Payphone Access Charge is calculated by dividing the sum of
all relevant operating and capital costs by the total call minutes
from BT payphones. The payphones in question are the (approx) 136,000
BT public and managed call boxes (managed payphones are ones situated
on private property, ie railway stations and airports, but not
private payphones such as ones in pubs and hotels.)

2. Charges were increased in December 1997 from 6.87 ppm (pence per
minute) to 8.61 ppm. After receiving complaints about this price
increase from other operators, OFTEL investigated this price rise and
whether access to indirect access operator services from payphones is
competitive.

3. Condition 13.3 of BT's Licence requires the terms and conditions
of an interconnection agreement to be reasonably derived from costs.
This investigation, launched on 25 November 1997, was to establish
whether the Payphone Access Charge was reasonably derived from costs.

4. As provision of access to indirect access operators and other
users of freephone numbers from payphones was found not to be a
competitive service , the Director General of Telecommunications has
the power to determine what costs can be reasonably included in the
Payphone Access Charge.

5. Costs that should not have been included in the PAC include
charges for bad debts related to payments to BT from other operators,
customer services, marketing, staff redundancy payments and billing
(postage).

6. The two documents Determination of the Payphone Access Charge and
Determination of competitiveness of access to indirect access
operator services from payphones are published today and are
available on OFTEL's website: http://www.oftel.gov.uk. Paper copies
are available to the public from OFTEL's Research & Intelligence Unit
on 0171 634 8761 and to the media from OFTEL Press Office on 0171 634
8991.