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

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

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 authors 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.

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

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
ACIF
ACTI
ADR
ANRC
BAT
BIPT
CEDR
CIArb
CISAS
CITC
CTIA
DSB
DSL
EU
FTTP
GATS
GATT
ICSID
ICC
ICA
IDA
ISPA
ITU
LCIA
LLU
MAF
NCC
NGA
OTA2
Otelo
PMSE

American Arbitration Association

tAustralian Communications Industry Forum
Agence des Tlcommunications de Cte dIvoire (Ivory Coast)
alternative dispute resolution
National Regulatory Authority for Communications (Romania)
WTO Basic Agreement on Telecommunications
Belgian Institute for Postal Services and Telecommunications
Centre for Effective Dispute Resolution
Chartered Institute of Arbitrators
Communications and Internet Services Adjudication Scheme
Saudi Communications and Information Technology Commission
Cellular Telecommunications Industry Association (United States)
WTO Dispute Settlement Body
Digital Subscriber Line
European Union
Fibre to the Premises
WTO General Agreement on Trade in Services
WTO General Agreement on Tariffs and trade
International Centre for Settlement of Investment Disputes
International Chamber of Commerce
ICCs International Court of Arbitration
Info-communications Development Authority (Singapore)
Internet Service Providers Association
International Telecommunications Union
London Court of International Arbitration
local loop unbundling
Malaysian Access Forum
Nigerian Communications Council
Next Generation Access
Office of Telecommunications Adjudicator
Office of Telecoms Ombudsman
programme makers and special events

RIO
SMP
TDSAT
TIO
TRAI
TRC
VoIP
WTO

reference interconnection offer

significant market power
Telecommunications Dispute Settlement and Appeals Tribunal
Australian Telecommunication Industry ombudsman
Telecommunications Regulatory Authority of India
Telecommunications Regulatory Commission (Jordan)
voice over internet protocol
World Trade Organization

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

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.

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.

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

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

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.

10

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

H. Brown and A. Marriot, ADR Principles & Practice (2nd Edition, Sweet & Maxwell 1999), p. 2
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)

11

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.

See Walden (n 1) pp. 215-216

12

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

13

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)

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 incumbents employee.
14

14

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 consumers 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

15

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 customers 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

16

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
26
In 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

17

other commitments made under the Annex, operators from other signatory states may be
affected and a dispute may arise.

18

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.

19

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
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.
32

20

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. 2126; see further Lloyd (n 31) pp. 82

21

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 regulators 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/ITUD/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

22

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 outof-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.

23

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 endusers and small businesses. After the promulgation of the Communications Act in 2003,
38

Small businesses that provide telecommunications services do not qualify.

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
39

24

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 Ofcoms 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.

25

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 states 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

26

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 partys 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

27

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 Mexicos international commitments. In
particular, the panels 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

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

55

28

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

29

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

30

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

31

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

32

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

33

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 operators 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)

34

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 BTs 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 BTs 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

35

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

72

See the Facilitation rules at ibid Annex 3, Section 3

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
73

36

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

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
81

37

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 operators 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.tmobile.co.uk/content/pdf/mc22044_codeofpractice.pdf

38

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

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
87

39

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 Ombudsmans 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

40

settlement or an informal mediation95 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

41

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 noncompliance 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

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
101

42

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)

43

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)

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
107

44

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

45

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
TDSATs 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.

46

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)
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
116

47

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

48

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 regulators 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

49

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
Ibid.
128
Ibid.
127

50

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
Tlcommunications de Cte dIvoire (ACTI) provides the platform to resolve interoperator 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

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
130

51

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/ITUD/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.

52

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
134

See Popovici (n 123)

See Bruce (n 21) p. 41

53

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
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
136

54

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 prearbitration 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.
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
142

55

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

56

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 regulators 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

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/ITUD/treg/Events/Seminars/GSR/GSR02/Documents/12-Bruce_document.pdf
147

57

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

58

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

59

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/2008-0722%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

60

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.

Ofcoms 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 interoperator 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

62

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 consensusbuilding 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

63

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66

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68