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Notification to Talktalk Telecom Limited and Tiscali UK Limited of a Penalty Under Section 96 of the Communications Act 2003

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Notification to Talktalk Telecom Limited and Tiscali UK Limited of a Penalty Under Section 96 of the Communications Act 2003 Notification to TalkTalk Telecom Limited and Tiscali UK Limited of a penalty under section 96 of the Communications Act 2003 Notification served on TalkTalk Telecom Limited and Tiscali UK Limited (the “TalkTalk Group”) by the Office of Communications (“Ofcom”) This is the non-confidential version. Confidential information and data have been redacted and the Annexes are omitted. Redactions are indicated by [] Issue date: 17 August 2011 0 Contents Section Page Notification to TalkTalk Telecom Limited and Tiscali UK Limited of a penalty under section 96 of the Communications Act 2003 2 Explanatory Statement 1 Explanatory Statement 6 2 Background 10 3 Ofcom’s decision on further action 55 4 Determination of the amount of penalty 77 Annex Page 5 Table of Annexes 133 1 Notification to TalkTalk Telecom Limited and Tiscali UK Limited of a penalty under section 96 of the Communications Act 2003 Subject of this Notification 1.1 This Notification is addressed to TalkTalk Telecom Limited (“TalkTalk”), whose registered company number is 04633015, and Tiscali UK Limited (“Tiscali”), whose registered company number is 03408171 (together, for ease of reference in this Notification and the Explanatory Statement that follows, the “TalkTalk Group”). 1.2 It notifies them of the imposition by the Office of Communications (“Ofcom”) of the following penalties under section 96 of the Communications Act 2003 (“the 2003 Act”):1 a) on TalkTalk, a penalty of £1,524,728; and b) on Tiscali, a penalty of £1,512,392, giving a total penalty of £3,037,120 for the TalkTalk Group. Ofcom imposes these penalties for their contravention of General Condition 11.1 (“GC11.1”) between 1 January and 1 November 2010 notified to them in a notification pursuant to section 94 of the 2003 Act, in respect of 62,055 End-Users.2 Background 1.3 On 1 November 2010 Ofcom issued to the TalkTalk Group, under section 94 of the 2003 Act, a notification (the “s94 Notification”) that Ofcom had reasonable grounds for believing that since 1 January 2010 to the date of that Notification, the TalkTalk Group (both TalkTalk and Tiscali) had contravened, and was contravening, GC 11.1. 1.4 GC11.1 provides that: “The Communications Provider shall not render any Bill to an End-User in respect of the provision of any Public Electronic Communications Services unless every amount stated in that Bill represents and does not exceed the true extent of any such service actually provided to the End-User in question.” 1 As explained in the following Explanatory Statement, the provisions of the 2003 Act, in particular sections 94 – 97, as they applied prior to their amendment on 26 May 2011, continue to apply in this matter. 2 The definition of whom is set out in the following Explanatory Statement. 2 1.5 Ofcom determined, specifically, that we had reasonable grounds for believing that the TalkTalk Group had contravened, and was contravening, GC11.1 by issuing Bills to End-Users in which the amount stated does not represent, and exceeds, the true extent of any relevant service actually provided to the End-User in question. The reasons for Ofcom’s determination were set out in the Explanatory Statement accompanying the s94 Notification. 1.6 In accordance with section 94 of the 2003 Act, the s94 Notification provided the TalkTalk Group with an opportunity of doing the following things: a) making representations about the matters notified; b) complying with GC11.1; and c) remedying the consequences of the notified contravention (or to make representations to Ofcom about how it proposes to remedy the consequences arising from its contravention of GC11.1 by a specified date to be agreed with Ofcom, which Ofcom was not bound to accept). 1.7 Pursuant to section 94(4) of the 2003 Act, Ofcom specified a period of one month (the “Opportunity Period”), during which the TalkTalk Group had the opportunity of doing those things referred to in the previous paragraph. 1.8 The deadline for the TalkTalk Group’s representations was 5.00pm on 2 December 2010. Ofcom received written representations from the TalkTalk Group on 30 November 2010. 1.9 Ofcom considered these representations and conducted further investigation. On 4 July 2011 Ofcom served on the TalkTalk Group a provisional notification of a possible penalty under section 96 of the 2003 Act (the “Provisional Notification”). The Provisional Notification set out Ofcom’s preliminary view that we should impose on the TalkTalk Group a penalty under that section in respect of the Group’s contravention of GC11.1 between 1 January and 1 November 2010 notified to it in the s94 Notification, in respect of 62,055 End-Users. 1.10 It also set out the preliminary view that a penalty of []% of their turnover for relevant business between 1 April 2009 and 31 March 2010 should be imposed on each of TalkTalk and Tiscali. That is, £2,179,440 for TalkTalk and £2,160,560 for Tiscali, giving a total of £4,340,000 for the TalkTalk Group. The reasons for Ofcom’s provisional determination were set out in the Explanatory Statement accompanying the Provisional Notification. 1.11 The Provisional Notification gave the TalkTalk Group until 1 August 2011 to make written representations to Ofcom about the matters set out in it and the accompanying Explanatory Statement. It also gave the TalkTalk Group the opportunity to make oral representations to Ofcom in relation to these matters. The TalkTalk Group made oral representations on 14 July and written representations on 29 July. 3 Sections 96, 97 and 392 of the 2003 Act 1.12 Section 96 of the 2003 Act applies where: a) a notified provider has been given a notification under section 94; b) Ofcom have allowed the notified provider an opportunity of making representations about the matters notified; and c) the period allowed for the making of the representations has expired. 1.13 Section 96 provides that Ofcom may impose a penalty on a notified provider if it: a) has, in one or more of the respects notified, been in contravention of a condition specified in the notification under section 94; and b) has not, during the period allowed under that section, taken the steps Ofcom consider appropriate: i) for complying with the notified condition; and ii) for remedying the consequences of the notified contravention of that condition. 1.14 Section 97 of the 2003 Act provides that the amount of a penalty imposed under section 96 is to be such amount not exceeding ten per cent of the turnover of the notified provider’s relevant business for the relevant period as Ofcom determine to be: a) appropriate; and b) proportionate to the contravention in respect of which it is imposed. 1.15 It also provides, amongst other things, that in making that determination Ofcom must have regard to: a) any representations made to them by the notified provider; b) any steps taken by the provider towards complying with the conditions contraventions of which have been notified to it under section 94; and c) any steps taken by the provider for remedying the consequences of those contraventions. 1.16 Section 392 of the 2003 Act provides that Ofcom must, in determining the amount of any penalty to be imposed by us under section 96, have regard to the guidelines we must publish pursuant to section 392 that are for the time being in force. 4 Determination made by Ofcom 1.17 Having taken account of the available evidence, the TalkTalk Group’s representations, the steps taken by it towards complying with GC11.1 and for remedying the consequences of its notified contravention and of our penalty guidelines, Ofcom has decided to impose on the TalkTalk Group a penalty under section 96. 1.18 This penalty is imposed in respect of the TalkTalk Group’s contravention of GC11.1 between 1 January and 1 November 2010 notified to it in the s94 Notification, in respect of 62,055 End-Users. It is being given to the TalkTalk Group by reason of Ofcom being satisfied that the TalkTalk Group: a) has, in respects notified in the s94 Notification, been in contravention of GC11.1; and b) has not, during the Opportunity Period specified in that Notification, taken the steps that Ofcom considers appropriate for complying with GC11.1. 1.19 Ofcom has determined that a penalty of £1,524,728 be imposed on TalkTalk and a penalty of £1,512,392 be imposed on Tiscali in respect of each company’s contravention of GC11.1 from 1 January to 1 November 2010, giving a total of £3,037,120 for the TalkTalk Group. Each company must pay the penalty imposed on it to Ofcom no later than 30 days after the giving of this Notification. 1.20 The reasons for Ofcom’s decision and determination are set out in the following Explanatory Statement. Interpretation 1.21 Words or expressions used in this Notification have the same meaning as in the General Conditions or the 2003 Act except as otherwise stated in this Provisional Notification. Claudio Pollack (Group Director, Consumer Group) for and on behalf of himself and Stuart McIntosh (Group Director, Competition Group) as decision makers for Ofcom 17 August 2011 5 Section 1 1 Explanatory Statement Executive Summary 1.1 This document is a notification of Ofcom’s imposition of a financial penalty on TalkTalk Telecom Limited (“TalkTalk”) and Tiscali UK Limited (“Tiscali”), together the “TalkTalk Group”, under section 96 of the Communications Act 2003 (“the 2003 Act”). It sets out Ofcom’s decision that such a penalty should be imposed on the TalkTalk Group and our determination of what that penalty should be.3 1.2 The issue of this Notification follows Ofcom’s: a) investigation into the
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