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Various approaches and current practices in dispute resolution with particular reference to alternative dispute

resolution mechanisms

International Seminar on Dispute Resolution Scenario in the Telecom Sector, New Delhi, India

October 29th, 2004 Helle Röd, e-mail: hro@vtu.dk

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Denmark by numbers• Denmark is situated in Northern Europe• Population of 5.4 million• GDP of about 136 billion US$• As a member of the EU Denmark’s

telecommunications sector is fully liberalized• 3.5 million fixed line subscribers• 4.9 million mobile subscribers

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The Telecommunications Boards

• The boards were created in 1996 to get a fast and inexpensive handling of as well consumers’ as telecommunications companies’ complaints.

• We have a long tradition in Denmark for using settlement Boards

• The task of the two boards was to handle the complaints over decisions made by the new and independent regulator - the National IT- and Telecom Agency (NITA).

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THE TELECOMMUNICATIONS CONSUMER BOARD

• The majority of disputes are complaints over large telephone bills.

• The subscriber is unsatisfied with NITA's decision in his dispute with a network or service provider.

• Complaints to the Board are given suspensive effect.

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WHEN YOUR COMPUTER CALLS OVERSEAS• In 1999 the Board received a complaint concerning

calls to St. Helena a destination far away from Denmark.

• From December 2000 the number of these complaints to foreign islands rose.

• When studying the complainer’s phone bills it was obvious that these overseas calls were related to activity on the Internet. 

• The providers maintained that the calls weren’t caused by any technical failure and that they weren’t responsible for the subscribers choices when using the Internet. NITA agreed with the telecoms.

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• The pattern in the complaints was very similar. • The complainer was using a modem to get

connected to the Internet.• The complainer left the modem on stand-by.• Each call was up to about 30 minutes and cost a

little less than 100 US$. • The calls would stop if somebody started using

the computer. • The subscriber had visited adult sites that claimed

to be ‘ free ‘ or advertised that ‘no credit card is needed’.

• These websites used international dialing to trick subscribers to download a ‘viewer’ or ‘dialer’ program.

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• The downloaded program disconnected the standard Internet connection and reconnected to an international long-distance phone number - at rates up to 3 US$ per min.

• The Telecommunication companies knew the scams were going on as technicians had seen the scam dialers on subscribers' computers when they visited their home investigating a complaint.

• On January 8, 2001 the chairperson of the Telecommunication Consumer Board wrote a letter to the branch organization "The Telecommunication Industry in Denmark" telling about the scams the Board had observed.

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• This letter let to a couple of meetings between the Telecommunication companies, their branch organizations, consumer organizations and authorities in the telecommunication and in the consumer sector.

• Though the telecom companies’ knew about the scam, they had done nothing to warn or to protect their customers.

• The Board had no power to place the responsibility for the scams on the telecom companies’ “shoulders”, though about half of the tariff of 3 US$ per minute would end in the companies “pockets”. 

• The subscribers lost the complaints.

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• The Board decided that each decision should be followed by a letter telling the complainer that even though the complaint was lost, the Board was aware of the fact that the complainer in someway or another had been a victim of a scam.

• And if someday the Board became aware of the fact that the network providers had to change behavior in favor of the subscribers, the Board would contact the complainer again.

• Beside describing the scams in the annual rapports the Chairperson had a meeting with the Minister for Science.

• The Minister for Science put a hard pressure on the network providers to find a voluntarily way to protect their subscribers from scam.

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• The Minister for Science warned the telecoms that he might suggest a regulation to the Parliament in which the responsibility would be placed on the companies shoulders.

• In cooperation with the Consumer Council, TDC made a list over countries from where the scams took place. At the moment there are 50 countries on the list.

• All subscribers are automatically blocked for calls to these countries on the ”Adult Blocking list” unless the subscriber asks TDC to open his line for all the countries or for a specific country on the list.

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The use of GSM-mobils for SMS • Danes claim to have won the unofficial

European Championship in SMS.• 3 billion SMS were send by Danish

subscribers the first six months of 2004. • According to statistics each subscriber

sends 111 per month. • This popularity of the use of SMS came as a

surprise for the telecom companies.

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• The executive order regulating the billing system demands bills which show the number called, the date, the exact hour and minute of the call, the price etc.

• Some of the mobile companies used all their energy on getting subscribers to use SMS – this new golden egg - and forgot completely their obligation to issue bills in accordance to the executive order.

• And of cause the popularity of SMS was followed by complaints.

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• The Board couldn’t agree with NITA’s handling of the complaints.

• On one hand NITA told the companies that they have to set up their billing system according to the rules, but on the other hand NITA told the subscribers that NITA did not have the power to handle the complaints because it was a question of a claim of damage.

• The Board couldn’t agree with NITA and said quite clear to the telecom companies, that they had to follow the demands given in the executive order.

• The subscribers’ possibility to prove that something was wrong with their phone bills depended on a specified bill.

• Subscribers have won all cases concerning bills with SMS-calls, when the number ”called” could not be identified.

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Complaints submitted to The Telecommunications Consumer Board

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100

200

300

400

500

600

700

1996 1997 1998 1999 2000 2001 2002 2003 2004

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The Telecommunications Complaints Board

• The complaints are often based on situations related to the hard competition between the telecom companies. 

• The types of disputes which come within the Board's sphere are many. Only very seldom the Board gets a complaint which is similar or partly similar to a case the Board has handled before.

• The main part of the complaints has to do with new legislation and might be seen as "tests" of NITA handling of authority in new areas. 

• At times there can be a very hard pressure on the Secretariat and the Board to keep the 3-month handling regulation.

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• In 1998 NITA ordered TDC to give Orange access to the raw copper in the local loop.

• In principal the Board could agree with the decision made by NITA as the Board, too, found that the decision would increase the competition in the telecommunications market.

• On the other hand, the Board found that the decision was extremely burdensome for TDC and therefore the Board found that NITA needed a very clear authority in law to make such a decision.

• Access to the raw copper was not mentioned- in a section of the telecommunication bill or,- mentioned in the explanatory notes to the bill or,- as a demand in any EU directive.

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• The Board’s decision was made within two months.

• TDC won the case - but not for long.

• Right after the decision was made, the Minister for Science decided to bring up the question of access to the raw copper in Parliament.

• Shortly after the Parliament agreed on a change of the telecommunications bill and we obtained a regulation of access to the raw copper.

• It took less than four months from the time the dispute of access to the raw copper was brought for the Board, and until there was a clear regulation of the area.

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• Just before Christmas 2002, the Board received a complaint from TDC over the Long Run Average Incremental Cost (LRAIC) model, which NITA had developed as a regulatory tool.

• The model is used for analyzing the cost of interconnection services provided by TDC including particular local loops elements.

• The modeling process started in NITA in the year 2000 with collaborative discussions involving both NITA as well as TDC and the new market entrants. The first LRAIC-based interconnection charges were implemented on January 1, 2003. 

• The LRAIC-model consists of more than 1000 decisions. Out of these 1000 decisions TDC had picked eight decisions they wanted changed.

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• This case made the Board look tightly on it’s role not only because of the complexity of this case, but because the model was a result of a working and negotiating process.

• The process had taken place over several years. • The Board found that TDC under this negotiating process

had directly influence on the final model.• It was the Boards opinion, too, that the model was a

manifestation of “give and take” as you might expect in a situation like this.

• The Board found that the starting point had to be a legal reexamine of the judgment carried out by NITA in connection to the decision, followed by a specific estimate of each of the eight themes of the dispute.

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• In this way the Board would get a full estimate of whether or not the LRAIC- model was in accordance with the Telecommunication Act and a manifestation of an objective balancing of the interests of the involved telecom companies and on the other hand not forgetting the purpose of the LRAIC-model in the future.

• In May 2004 the Board decided that NITA had made their decision about LRAIC in accordance with the legal regulations.

• Now a new challenge is waiting for the Board. This coming winter NITA will start making decisions on the background of 18 market check-ups ordering the market players to change their behavior towards competitors. Some of the market players have been whispering to us – that the Board can expect 18 complaints.

 

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Complaints submitted to The Telecommunications Complaints Board

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2

4

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10

12

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1996 1997 1998 1999 2000 2001 2002 2003 2004