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Interconnect Product Forum

Interconnect Product Forum. 21 st October 2009. STANDARD CONTRACT FORUM SESSION 21 October 2009 Keith Mitchinson. STANDARD CONTRACT FORUM SESSION. What is the CMM?.

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Interconnect Product Forum

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  1. Interconnect Product Forum 21st October 2009

  2. STANDARD CONTRACT FORUM SESSION 21 October 2009 Keith Mitchinson

  3. STANDARD CONTRACT FORUM SESSION What is the CMM? • A process CPs can use to resolve disputed issues when negotiating terms and conditions of supply with BT on SMP (significant market power) products. • Applies to CPs who purchase services from BT. • Stems from the TSR Undertakings

  4. STANDARD CONTRACT FORUM SESSION History of the CMM • CMM Issue 1 published on 22 March 2006 to be reviewed after nine months • Review conducted by industry and BT in Jan 2007 following open invitation to industry to participate • “It was recognised that the CMM had not been used.  It was felt that this was, in part, a reflection of the good work that had been done over the last 12 months to resolve potential CMM issues and find a compromise without needing to resort to the formal CMM process.  It was also recognised that the number of contract negotiations over the last 12 months was not huge.” • CMM Issue 2 published on 1 June 2007 • Agreed to further review at later of 12 months, or 6 months after CMM is first used

  5. STANDARD CONTRACT FORUM SESSION Scope of current CMM • CMM will apply to all disputes arising out of the negotiation of terms & conditions for BT contracts of supply for SMP Products in relation to: • - Reference Offer for new SMP products; and • - Review/variation of existing T&Cs for SMP Products or as a consequence of a regulatory right of either party; and • - Provisions covering the position where a CP has objected to terms and conditions it is being asked to sign up to. • A dispute may be raised on a specific term or condition but CMM will take account of overall context and other T&Cs • Can only use CMM once negotiations on the issue(s) have reached an impasse • Use of the CMM is optional for CPs - BT must participate in process if it is invoked by a CP. CMM can be invoked by one or more CPs

  6. STANDARD CONTRACT FORUM SESSION CMM process • Step 1 – Internal Escalation: Once the CMM is invoked, the parties have 30 days to escalate and discuss the issue internally • Step 2 - Mediation: If not resolved then parties can take to non-binding mediation (BT pays 50% costs of mediation) • [Mediation process as per Chartered Institute of Arbitrators Independent Dispute Resolution Scheme (IDRS) document (see link in CMM)] • Step 3 – Early Neutral Evaluation (ENE): If mediation fails within 2 months then parties can take to non-binding ENE (BT and CP each pay 15% and remained to be allocated as part of the ENE). NOTE EXCEPTIONS SLIDE • [ENE process as per Chartered Institute of Arbitrators Independent Dispute Resolution Scheme (IDRS) document (see link in CMM)] • Caps: - £10,000 per party per dispute (for mediation and ENE) • - £500,000 per party per annum for all CMM disputes.

  7. STANDARD CONTRACT FORUM SESSION Scope of current CMM • CMM will apply to all disputes arising out of the negotiation of terms & conditions for BT contracts of supply for SMP Products in relation to: • - Reference Offer for new SMP products; and • - Review/variation of existing T&Cs for SMP Products or as a consequence of a regulatory right of either party; and • - Provisions covering the position where a CP has objected to terms and conditions it is being asked to sign up to. • A dispute may be raised on a specific term or condition but CMM will take account of overall context and other T&Cs • Can only use CMM once negotiations on the issue(s) have reached an impasse • Use of the CMM is optional for CPs - BT must participate in process if it is invoked by a CP. CMM can be invoked by one or more CPs

  8. STANDARD CONTRACT FORUM SESSION Exceptions to ENE • Unless the parties otherwise agree, the following types of disputes will not be eligible for early neutral evaluation: • Pricing and payment terms; • Limitation of liability or exclusion of loss provisions (except clauses with uncapped liability on part of CP); • Regulatory policy; • Network security or integrity; • Fraud or issues relating to artificial inflation of traffic; • Network policy; • Credit vetting policy and terms; • Termination rights (relating to: insolvency or ceasing to trade; repeated or persistent breach; which provide the party in breach with the opportunity to remedy that breach; for convenience; relating to change of control of BT or change of legal ownership of BT); • Intellectual property rights; and • Third party financial or performance guarantees

  9. STANDARD CONTRACT FORUM SESSION Further information • BTW website: • http://www.btwholesale.com/pages/static/Pricing_and_Contracts/Contract_Management_Mechanism.html • Openreach: • http://www.openreach.co.uk/orpg/products/cmm/cmm.do 

  10. STANDARD CONTRACT FORUM SESSION BTW Credit Vet Review • In MSA, PPC and SIA 2008 Contract Reviews industry looked for review of BTW Credit Vet Policy • Agreed to take as stand-alone exercise “later” in 2009 • Interconnect Briefing 330/09 issued 26 August 2009 to launch • Process generally per MSA Contract Review Guide • Industry issues invited for Wednesday 16 September; BT circulated consolidated list of issues 25 September. Web-site created to chart progress • BT initial responses 13 October; meeting with interested industry players 15 October - notes available shortly • BT to consider and respond – possible further session 5 November

  11. STANDARD CONTRACT FORUM SESSION Updated AIT: Effective date • Industry generally signed up to SIA 2008 AIT Supplementary; Ofcom Determination on final few 28 July 2009 • Interconnect Notification 331/09 issued 28 August 2009 is BT Notification of 1 March 2010 Effective Date - gives agreed six month period for CPs to prepare upstream/downstream arrangements • BT Reference Offer website updated accordingly: revised 2009 AIT Supplemental Agreement for new signers • Session at today’s October IPF/SCF session; further session December • See AIT Review website to follow progress • BT to issue guidance per Ofcom requirement • [Note: all A1 Retention Notices pre-1 March 2010 to existing T&Cs; • all A1 Retention Notices from 1 March 2010 onwards to updated process]

  12. STANDARD CONTRACT FORUM SESSION 2008 SIA Contract Review • 17 March BT circulated a redraft of the SIA • 22 May BT circulated the CP responses to that draft, and proposed an action plan • Things then went quiet…..but are now moving again • Liability meeting held 24 September (also for MSA and PPC) – also discussed SIA Contract Amendment process, TUPE and Force Majeure: CP and BT actions ongoing • The outstanding product/finance issues of • Carrier Price List practice • Retrospection • Adjustment and Default Interest Rates • Periods for Billing/challenging bills • programmed for discussion today

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