<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From To
COMMISSION FILE NUMBER: 0-26840
TELEWEST COMMUNICATIONS PLC
(Exact Name of Registrant as Specified in Its Charter)
---------------------
ENGLAND AND WALES N/A
(State or Other (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation or
Organization)
GENESIS BUSINESS PARK
ALBERT DRIVE
WOKING, SURREY GU21 5RW
UNITED KINGDOM
011-44-1483-750-900
(Address of Principal Executive Offices)
Securities Registered Pursuant to Section 12(b)
of the Act:
NONE
Securities Registered Pursuant to Section 12(g)
of the Act:
AMERICAN DEPOSITARY SHARES EVIDENCED BY
AMERICAN DEPOSITARY RECEIPTS, EACH REPRESENTING
TEN ORDINARY SHARES OF 10P EACH
(Title of Class)
ORDINARY SHARES OF 10P EACH
(Title of Class)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [_]
AT MARCH 1, 1997, 927,567,600 ORDINARY SHARES OF 10P EACH WERE OUTSTANDING
AND THE AGGREGATE MARKET VALUE OF THE ORDINARY SHARES ON THE LONDON STOCK
EXCHANGE ON SUCH DATE HELD BY NON-AFFILIATES OF THE REGISTRANT WAS APPROXIMATELY
(POUND)299,073,917.
DOCUMENTS INCORPORATED BY REFERENCE
PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996 ARE INCORPORATED BY REFERENCE INTO PART II.
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT, DATED MARCH 26, 1997,
TO BE DELIVERED TO SHAREHOLDERS IN CONNECTION WITH THE 1997 ANNUAL GENERAL
MEETING OF SHAREHOLDERS, ARE INCORPORATED BY REFERENCE INTO PART III.
<PAGE> 2
FORM 10-K
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I
Page
Item 1. Business............................................................................................... 3
Item 2. Properties.............................................................................................50
Item 3. Legal Proceedings......................................................................................50
Item 4. Submission of Matters to a Vote of Security Holders....................................................50
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters..................................52
Item 6. Selected Financial Data................................................................................59
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..................59
Item 8. Consolidated Financial Statements and Supplementary Data...............................................59
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................60
PART III
Item 10. Directors and Executive Officers of the Registrant....................................................60
Item 11. Executive Compensation................................................................................60
Item 12. Security Ownership of Certain Beneficial Owners and Management........................................60
Item 13. Certain Relationships and Related Transactions........................................................60
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................60
</TABLE>
<PAGE> 3
PART I
INTRODUCTORY NOTES:
Telewest Communications plc, formerly known as Telewest plc (the
"Company"), was formed for the purpose of acquiring the issued share capital of
Telewest Communications plc ("Old Telewest") and SBC CableComms (UK) ("SBCC") in
connection with the merger of Old Telewest and SBCC on October 3, 1995 (the
"Merger"). Prior to the Merger with SBCC, Old Telewest was a publicly traded
company traded on the London Stock Exchange and SBCC was a private company owned
by affiliates of SBC Communications, Inc. ("SBC") and an affiliate of Cox
Communications, Inc. ("Cox"). In connection with the Merger (a) all of the
issued share capital of Old Telewest and SBCC were exchanged for shares of the
Company, (b) Old Telewest and SBCC became wholly-owned subsidiaries of the
Company (and currently are indirect wholly-owned subsidiaries), and (c) the
Company became a publicly traded company (with its Ordinary Shares traded on the
London Stock Exchange under the symbol "TWT" and American Depositary Shares
("ADSs") representing its Ordinary Shares traded on the Nasdaq National Market
under the symbol "TWSTY"). All references to the Company prior to completion of
the Merger are to Old Telewest or its predecessor business, TCI/U S WEST Cable
Communications Group (a joint venture (the "Joint Venture") between affiliates
of Tele-Communications, Inc. ("TCI") and affiliates of U S WEST, Inc. ("U S
WEST") that owned and operated cable television and telephony businesses in the
U.K. and was contributed to Old Telewest in connection with its initial public
offering (the "Initial Public Offering") in November 1994.
Unless otherwise indicated, the information contained in this Report
(e.g., number of equity homes) does not reflect the franchise covering the
Lothian area (with approximately 30,000 homes), which was awarded to the Company
on March 20, 1997.
References in this document to homes "passed" are to homes in respect
of which network construction has been completed, and references to homes
"passed and marketed" are to homes passed where marketing has commenced.
References in this document to the number of "equity homes," "equity homes
passed," "equity businesses," equity customers" and "equity lines" are to the
number of homes, businesses, customers or lines, respectively, within franchises
owned by a company multiplied by such company's effective equity interest in
such franchises (e.g., a franchise with 100 homes in which such company has an
effective interest of 25% would represent 25 equity homes for such company).
Unless otherwise indicated in this document, "equity homes," "equity homes
passed," "equity businesses," "equity customers" and "equity lines" are
calculated for the purposes of this document for all periods on the basis of a
company's effective interest in its franchises as at the date of this document.
Unless the context requires otherwise, references in this document to
the Company do not include the Affiliated Companies (as defined herein). All
information with respect to the number of homes and businesses in a franchise
area is based on the most recent published U.K. census data (1991) with respect
to homes and the relevant company's estimates with respect to businesses. All
information with respect to the number of homes "passed" or "passed and
marketed" is based on physical counts made by the relevant company during the
network construction or marketing phases (or in the case of homes acquired after
network construction or marketing was completed by another operator, based on
the records of such operator). All information with respect to the number of
homes in an Affiliated Franchise (as defined herein) is based on the most recent
published U.K. census data (1991), and all other information concerning the
Affiliated Companies has been provided by (or derived from data provided by) the
Affiliated Companies.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS:
All statements other than statements of historical fact included in
this document, including without limitation the statements incorporated herein
from the Company's 1996 Annual Report and 1997 Proxy Statement are, or may be
deemed to be, forward-looking statements within the meaning of Section 21E of
the U.S. Securities Exchange Act of 1934, as amended. Important factors that
could cause actual results to differ materially from those
1
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discussed in such forward-looking statements include, among other things, the
extent consumer preference develops for cable television over other methods of
providing in-home entertainment and for the Company as a viable alternative to
British Telecommunications plc ("BT") (as defined) and others as a provider of
telephony service; the ability of the Company to manage growth and expansion;
the ability of the Company to construct its network in a cost efficient and
timely manner; the ability of the Company to raise additional financing if there
is a material adverse change in the Company's anticipated revenues or expenses
or to finance new initiatives; the ability of the Company to respond to changes
or increases in competition (including the introduction of digital services by
BSkyB (as defined) or other operators) and adverse changes in government
regulation; the extent programming is available at reasonable costs; adverse
changes in the price of telephony interconnection; disruptions in supply of
services and equipment, and the performance of the Affiliated Companies (as
defined herein) (which are not controlled by the Company). All subsequent
written and oral forward-looking statements attributable to the Company or
persons acting on behalf of the Company are expressly qualified in their
entirety by such cautionary statements.
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<PAGE> 5
1. BUSINESS
The Company is a leading provider of cable television and residential
and business cable telephony services in the U.K. The Company owns and operates
26 cable franchises (the "Owned and Operated Franchises") and has minority
equity interests in three U.K. cable operators (the "Affiliated Companies"),
which own and operate seven additional franchises (the "Affiliated Franchises").
As of December 31, 1996, the Owned and Operated Franchises and the Affiliated
Franchises covered approximately 24% of the homes in the U.K. in areas for which
cable franchises have been awarded. The Owned and Operated Franchises and the
Affiliated Franchises together include approximately 5.1 million homes and
approximately 344,000 businesses, of which approximately 4.3 million and
approximately 290,000 are the Company's equity homes and equity businesses,
respectively. As of December 31, 1996, the Company's network in such franchises
had passed approximately 2,892,000 of the Company's equity homes (approximately
2,626,000 of which had been passed and marketed) and the Company had
approximately 600,000 equity cable television customers, 694,000 equity
residential telephone lines and 79,000 equity business telephone lines.
The Company's 26 Owned and Operated Franchises, which include
approximately 3.9 million homes, are managed in seven Regional Franchise
Areas: London South (including Croydon, Kingston and Richmond), Scotland
(including Dundee, Edinburgh and Perth), North East (including Gateshead and
Newcastle upon Tyne), South East (including Basildon, Chelmsford and Gravesend),
Avon and Cotswolds (including Bath, Bristol, Cheltenham and Gloucester), North
West (including St. Helens and Knowsley, Wigan, Preston, Southport, North and
South Liverpool and Blackpool) and Midlands (including Telford, Dudley,
Wolverhampton, Walsall, Worcester and Kidderminster). The seven Affiliated
Franchises include approximately 1.2 million homes and provide the Company with
an additional 396,000 equity homes. The Affiliated Franchise areas include
Birmingham, parts of North London and Windsor.
The Company provides a wide variety of cable television, cable
telephony and on line services. Such services are provided over a hybrid
fibre-coaxial network (i.e., high capacity broadband) which has been designed to
enable the Company to provide customers with a wide range of interactive and
integrated entertainment, telecommunications and information services as they
become available in the future. The Company currently provides analogue services
over the network, and expects to begin introducing digital services over the
network by the end of 1997. Such digital services are expected to include
pay-for-view programming, near-video-on-demand ("NVOD"), cable television
Internet access, electronic mail and home shopping and banking.
As of December 31, 1996, network construction was completed for
approximately 65% of the homes in the Owned and Operated Franchises and 80% of
the Affiliated Franchises and approximately (pound)1,592 million had been
invested in the construction of the network of the Owned and Operated Franchises
and (pound)665 million had been invested in the construction of the networks of
the Affiliated Franchises (in each case including the costs of cable, ducting,
network electronic equipment and subscriber connections). The Company
anticipates that network construction will be completed for more than 78% of the
homes in the Owned and Operated Franchises and 92%
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<PAGE> 6
of the Affiliated Franchises by December 31, 1997 and expects that the remaining
construction of the networks will be substantially completed by the end of 2000.
In addition to the construction of a hybrid fibre-coaxial network in
each of its franchises, the Company is developing an inter-franchise network to
link the individual networks of the Owned and Operated Franchises and the
Affiliated Franchises (the "Interfranchise Network"), carrying voice, data and
video traffic between the franchises. The Interfranchise Network is expected to
provide a number of benefits to the Company, including increased telephony
margins resulting from reduced payments of interconnection fees to national
carriers for domestic long distance calls. The Interfranchise Network is
scheduled to be 75% complete by the end of 1997, with completion planned for the
middle of 1998.
The following table sets forth certain data concerning the Owned and
Operated Franchises and Affiliated Franchises at and for the years ended
December 31, 1994, 1995 and 1996. Except as otherwise noted in the footnotes to
this table, all information with respect to SBCC is included only from and after
October 3, 1995 (the date of completion of the Merger).
<TABLE>
<CAPTION>
Owned and Operated Affiliated
Franchises Franchises(1)
---------------------------------------------- ----------------------------------------
1994 1995 1996 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
CABLE TELEVISION
Homes passed................... 893,372 1,987,344 2,575,142 173,736 242,415 316,878
Homes passed and marketed...... 805,475 1,831,458 2,335,953 167,393 235,196 290,276
Basic customers................ 179,096 401,469 528,142 45,477 56,003 71,457
Basic penetration rate (2)..... 22.2% 21.9% 22.6% 27.2% 23.8% 24.6%
Average monthly revenue per
customer (3)................. (pound)21.33(4) (pound)21.32(4) (pound)22.95 (pound)17.94 (pound)19.16 (pound)20.35
Average churn rate ............ 47.1%(5)(6) 41.0%(5)(6) 33.4%(7) 37.1%(5)(6) 31.5%(5)(6) 28.9%(7)
RESIDENTIAL TELEPHONY
Homes passed................... 658,150 1,750,288 2,396,658 162,284 237,940 299,603
Homes passed and marketed...... 580,708 1,652,604 2,254,734 155,372 229,956 287,701
Residential customers.......... 128,149 429,405 620,377 34,223 48,250 65,724
Penetration rate (8)........... 22.1% 26.0% 27.5% 22.0% 21.0% 22.8%
Residential lines connected.... 128,530 430,926 627,009 34,443 48,549 66,512
Average monthly revenue per
line (9).....................(pound)24.16 (10) (pound)20.48 (10) (pound)20.26 (pound)27.33 (pound)27.25 (pound)27.05
Average churn rate per line.... 17.7%(11)(12) 21.8%(11)(12) 19.6%(7) 26.5%(11)(12) 23.8%(11)(12) 25.8%(7)
BUSINESS TELEPHONY
Business customers............. 5,082 14,225 20,882 1,312 1,760 2,416
Business lines connected....... 15,560 40,021 67,823 5,357 7,496 10,746
Average number of business
lines per customer (13)........ 3.1 2.8 3.2 4.1 4.3 4.4
Average monthly revenue per
line (14)....................(pound)67.66(15) (pound)58.92(15) (pound)54.50 (pound)86.76 (pound)75.39 (pound)71.95
Average churn rate per line
(16)........................... 11.0%(16)(17) 12.4%(16)(17) 14.5%(7) 22.6%(16)(17) 25.0%(16)(17) 24.8%(7)
<CAPTION>
[TABLE RESTUBBED FROM ABOVE]
Total(1)
-----------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
CABLE TELEVISION
Homes passed................... 1,067,108 2,229,759 2,892,020
Homes passed and marketed...... 972,868 2,066,654 2,626,229
Basic customers................ 224,573 457,472 599,599
Basic penetration rate (2)..... N/A N/A N/A
Average monthly revenue per
customer (3)................. N/A N/A N/A
Average churn rate ............ N/A N/A N/A
RESIDENTIAL TELEPHONY
Homes passed................... 820,434 1,986,228 2,696,261
Homes passed and marketed...... 736,080 1,882,559 2,542,435
Residential customers.......... 162,372 477,655 686,101
Penetration rate (8)........... N/A N/A N/A
Residential lines connected.... 162,973 479,465 693,521
Average monthly revenue per
line (9)..................... N/A N/A N/A
Average churn rate per line.... N/A N/A N/A
BUSINESS TELEPHONY
Business customers............. 6,394 15,986 23,298
Business lines connected....... 20,917 47,518 78,569
Average number of business
lines per customer (13)........ N/A N/A N/A
Average monthly revenue per
line (14).................... N/A N/A N/A
Average churn rate per line
(16)........................... N/A N/A N/A
</TABLE>
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Notes:
"N/A" means not applicable.
(1) Information with respect to Affiliated Franchises reflects the Company's
equity interest therein.
(2) Cable television basic penetration rate at a specified date represents (i)
the total number of cable television basic customers at such date, divided
by (ii) the total number of homes passed and marketed for cable television
at such date.
(3) Average monthly revenue per customer for each period represents (i)
one-twelfth of the total cable television revenue for such period, divided
by (ii) the average number of basic cable television customers in such
period.
(4) If the Merger had been completed on January 1, 1994, the average monthly
revenue per subscriber would have been (pound)19.64 and (pound)21.11 in
1994 and 1995, respectively.
(5) Average cable television churn rate for the period represents (i) the
total number of cable television customers who terminated basic service or
whose service was terminated by the Company during such period, divided by
(ii) the average number of basic cable television customers in such
period.
(6) If the Merger had been completed on January 1, 1994, the average cable
television churn rate would have been 52.6% and 44.5% in 1994 and 1995,
respectively.
(7) Prior to 1996, the calculation of churn included those customers who moved
homes and reconnected elsewhere in one of the Owned and Operated or
Affiliated Franchises and consequently overstated customer dissatisfaction
with the service provided. In 1996, the Company revised the basis on which
"churn" is calculated to exclude those customers who moved their cable
service from one premises to another within one of the Owned and Operated
Franchises. Average churn rate for 1996 represents (i) the total number of
customers who voluntarily or involuntarily terminated service during such
period, divided by (ii) the average number of customers in such period.
(8) Residential telephony penetration rate at a specified date represents (i)
the total number of residential cable telephony customers at such date,
divided by (ii) the total number of homes passed and marketed for
residential cable telephony at such date.
(9) Average monthly revenue per residential line for each period represents
(i) one-twelfth of the total residential cable telephony revenue for such
period, divided by (ii) the average number of residential cable telephony
lines in such period.
(10) If the Merger had been completed on January 1, 1994, the average monthly
revenue per line would have been (pound)21.43 and (pound)20.69 in 1994 and
1995, respectively.
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(11) Average residential telephony churn rate per line for the period
represents (i) the total number of residential cable telephony lines
terminated by customers or the Company during such period, divided by (ii)
the average number of residential cable telephony lines in such period.
(12) If the Merger had been completed on January 1, 1994, the average
residential telephony churn rate per line would have been 19.9% and 21.8%
in 1994 and 1995, respectively.
(13) Average number of business lines per customer at a specified date
represents (i) the number of business cable telephony lines at such date,
divided by (ii) the number of business cable telephony customers at such
date.
(14) Average monthly revenue per business line for each period represents (i)
one-twelfth of the total business cable telephony revenue for such period,
divided by (ii) the average number of business cable telephony lines in
such period.
(15) If the Merger had been completed on January 1, 1994, the average monthly
revenue per line would have been (pound)63.72 and (pound)59.39 in 1994 and
1995, respectively.
(16) Average business telephony churn rate per line for each period represents
(i) the total number of business cable telephony lines terminated by
customers or the Company during such period, divided by (ii) the average
number of business cable telephony lines in such period.
(17) If the Merger had been completed on January 1, 1994, the average churn
rate per line would have been 14.9% and 13.1% in 1994 and 1995,
respectively.
RECENT DEVELOPMENTS
The Company's business has grown and developed significantly since the
consummation of the Company's merger with SBCC in October 1995. The Owned and
Operated Franchises and Affiliated Franchises now include more than 24% of the
U.K. homes in areas covered by cable licenses. One of every three homes passed
by the networks of the Owned and Operated Franchises now subscribe for one or
more of the Company's services and more than 49% of the Company's customer's
subscribe for both cable television and cable telephony services.
In 1996, the number of Company customers increased by more than 34%,
from 588,390 at December 31, 1995 to 789,637 at December 31, 1996, and during
the year the number of cable television customers increased by 32%, the number
of residential telephony lines increased by 45% and the number of business
telephone lines increased by 69%. Residential telephony penetration increased by
1.5% in 1996 to 27.5% and revenues from the Company's rapidly expanding business
telephony service increased by 68% to (pound)34.6 million (on a pro forma basis
assuming the Merger had been consummated on January 1, 1995). Although the cable
television penetration remained constant for most of the year, there was an
increase in such penetration at the end of the fourth quarter to 22.6% from
21.2% at the end of the third quarter primarily as a result of the roll-out of
Teleplus, the Company's bundled cable television and cable television services.
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The Company's revenues increased significantly in 1996 to (pound)290.3
million from (pound)144.8 million in 1995, reflecting primarily the inclusion of
the SBCC results for the full year in 1996 and an increase in customers
resulting from the Company's continued network construction and aggressive
marketing efforts. In addition, the Company achieved positive EBITDA (earnings
before share of net losses of affiliates, interest, taxes, depreciation and
amortization) for the three month period ended December 31, 1996.
CABLE TELEVISION
Overview
The Company, through its predecessor companies, began offering cable
television in the U.K. in 1985. The Company derives its cable television
revenues from connection charges, monthly basic and premium service fees,
"pay-per-view" program fees, cable publications and advertising charges. As at
December 31, 1996 the Company had passed and marketed approximately 2,335,953 of
the 2,575,142 homes passed in the Company Owned and Operated Franchises and had
a cable television penetration rate of approximately 22.6%.
Programming
The Company currently offers more than 40 channels to its customers as
part of its basic service and more than 12 channels as part of its premium
service offering (including bonus channels provided in connection with the
subscription for certain premium channels). The Company obtains its programming
from a variety of sources, including satellite operators, terrestrial
broadcasters and other programming suppliers. The Company generally arranges its
programming so that the same programming appears on the same channel number in
each of the Regional Franchise Areas, thereby facilitating the use of the same
marketing materials (including monthly programming guides such as "The Cable
Guide") across the Regional Franchise Areas.
Customers can choose to receive basic service programming alone or
together with premium programming. The following table sets out the basic and
premium service programming currently offered by the Company (most of which is
carried on dedicated channels and some of which is carried on shared channels):
7
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<TABLE>
<CAPTION>
PROGRAMMING DESCRIPTION
----------- -----------
<S> <C>
BASIC SERVICE
- -------------
NEWS AND INFORMATION
Arcade Local text advertisements
Bloomberg Information Television Business news
Cable 17 Local information, lifestyle and news
Channel One News and information for the London area
Channel One Avon News and information for the Avon area
Channel One Liverpool News and information for the Liverpool area
CNN International (1) 24-hour international news service
EBN(1)(2) European business news
Euronews European news service
The Parliamentary Channel (1)(3) Live coverage of Parliament
Sky News (2)(4) 24-hour U.K. news service
The Channel Guide Summary of programming schedule
GENERAL INTEREST
BBC1 Terrestrial television
BBC2 Terrestrial television
Bravo (1)(2) Cult films and television series
Channel 4 Terrestrial television
Channel 5 (5) Terrestrial television
Eurosport International sporting events
ITV Terrestrial television
Live TV (6) Live entertainment and local programming
Live Liverpool Live entertainment and local programming
Live Edinburgh Live entertainment and local programming
NBC U.S. and world news and entertainment
QVC (2) Home shopping
Sci Fi Channel Science fiction programming
Carlton Food Network Culinary programming
Carlton Select Comedy and drama
Sky One (2)(4) Films and general entertainment programming
Sky Two (2)(4) General entertainment programming
Sky Soap (2)(4) Soap operas
Sky Travel (2)(4) Travel programming
The Discovery Channel (1)(2) Documentary programming
Challenge TV (1)(2) Family programming
The History Channel (2)(4) Biographical and historical programming
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
PROGRAMMING DESCRIPTION
----------- -----------
<S> <C>
TLC - The Learning Channel (1)(2) Educational programming
Travel Travel programming
TNT (1) Classic films
UK Gold (1)(2) Classic U.K. television programming
Granada Plus (2) General entertainment and classic UK programming
Granada Men and Motoring (2) Automotive lifestyle channel
Granada Good Life (2) Leisure and lifestyle channel
Granada Talk TV (2) Talkshows on TV
UK Living (1)(2) Lifestyle programming
The Paramount Channel General entertainment
CHILDREN
Nickelodeon (2) Children's entertainment
The Cartoon Network (1) Children's cartoons
TCC (1)(2) Children's entertainment
INTERNATIONAL
Asianet Programming relating to the Asian subcontinent
Deutsche Welle German language programming
RAI UNO Italian language programming
TVE International Spanish language programming
TV5 French language programming
CNE Chinese language programming
MUSIC
Country Music Television Europe (2) Country music videos
MTV (2) Music videos
Performance - The Arts Channel Classical music and opera
The Box Music videos selected by customer requests
The Landscape Channel Classical music accompanying scenic videos
VH-1 (2) Music videos for the 25-49 year old age group
PREMIUM SERVICE
- ---------------
GENERAL INTEREST
The Disney Channel (2) Family and children's entertainment
ZEE TV Asian language
SPORTS
Sky Sports (2)(4) U.K. and international sports
Sky Sports 2 (2)(4) U.K. and international sports
Sky Sports 3(2)(4) U.K. and international sports
</TABLE>
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<TABLE>
<CAPTION>
PROGRAMMING DESCRIPTION
----------- -----------
<S> <C>
The Racing Channel Live horse racing
MOVIES
HVC Adult action, adventure and horror films
Playboy Television (1)(2) Adult entertainment
Sky Movies (2)(4) 24-hour feature films
Sky Movies Gold (2)(4) Classic films
Television X Adult entertainment
The Adult Channel Adult entertainment
The Movie Channel (2)(4) 24-hour feature films
<FN>
___________________________
Notes:
(1) TCI, U S WEST or Cox (or their affiliates) own interests in or manage the
provider of this programming.
(2) Programming distributed or marketed by British Sky Broadcasting Group or
its affiliates ("BSkyB").
(3) The Company owns an interest of approximately 27% in the provider of this
programming.
(4) Programming acquired from BSkyB.
(5) In December 1995, the ITC awarded a license for a fifth terrestrial
broadcast channel, Channel 5. Channel 5, which carries a mix of general
entertainment programming, commences broadcasting in March, 1997.
(6) Live TV is provided by Live TV Ltd., whose ultimate owner is part of The
Mirror Group plc, a leading U.K. newspaper publisher. Lord Borrie QC (a
director of the Company) is a director of The Mirror Group plc. CPP-1, a
joint venture of affiliates of TCI, U S WEST and SBC, together with three
other U.S. companies with interests in U.K. cable operators, has a 10%
interest in Live TV.
</FN>
</TABLE>
The Company's basic service also includes a wide range of terrestrial
and satellite radio stations and, where available, NICAM stereo audio feeds for
television channels. In addition, the Company also offers multi-channel,
digital, audio-only services to business customers (including one service in
which an affiliate of TCI has a 49% interest).
As part of its strategy to offer customers a broader range of
entertainment and to increase revenues, in 1996 the Company introduced its first
two "pay-per-view" programs (the Frank Bruno v. Mike Tyson boxing match in March
1996 and the Mike Tyson v. Evander Holyfield
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boxing match in November 1996). More than 14% of the Company's customers
subscribed to the Bruno v. Tyson fight and 8% of the Company's customers
subscribed to the Holyfield v. Tyson fight. Based on this strong customer
interest, the Company intends to carry other "pay-per-view" programs in the
future as other opportunities become available.
Source of Programming. The Company obtains most of its programming from
suppliers pursuant to arrangements that run for periods from six months to ten
years. The arrangements generally provide for payments by the Company based on
the number of its customers subscribing to that particular channel. In many
cases, the per subscriber charges for the Company decrease as the number of its
customers subscribing to that channel increases. The Company and the Affiliated
Companies contract together for some program channels, which increases the
aggregate number of contract customers and thereby reduces the cost per
subscriber. Under the terms of its PDSLs (as defined herein), the Company is
also required to provide its customers with certain specified terrestrial
television services without charge.
The Company obtains a significant amount of its programming from BSkyB,
a leading supplier of cable programming in the U.K. and the exclusive supplier
of certain programming. Its programming generally is popular in the U.K. and is
important in terms of attracting and retaining cable television customers. In
April 1995, Old Telewest entered into a new seven-year contract with BSkyB (the
"BSkyB Contract") that will expire in April 2002. Pursuant to the terms of the
BSkyB Contract, BSkyB provides the Old Telewest franchises with 10 BSkyB
channels. The former SBCC franchises have, since February 16, 1996, been
provided with BSkyB programming pursuant to an industry rate card, which sets
out the terms and conditions for the supply of programming by BSkyB to those
operators in the U.K. cable industry who do not have separate agreements with
BSkyB. BSkyB also offers this programming (together with additional programming)
to its DTH satellite customers, in competition with the Company and all other
cable operators throughout the U.K. The BSkyB Contract grants to Old Telewest a
non-exclusive right and license to receive BSkyB's channels and "pay-per-view"
services (which, for the purposes of the BSkyB Contract, will include (when
available in the U.K.) NVOD but not video-on-demand) and, subject to available
capacity, to distribute the channels to residential, commercial and public
premises customers and distribute the "pay-per-view" services to residential
customers. The agreement provides for the parties to negotiate in good faith for
the provision of "pay-per-view" services for commercial customers, subject to
the acquisition of programming for such services.
Under the BSkyB Contract, and in respect of the industry rate card for
the former SBCC franchise areas, customer fees payable to BSkyB for each
customer are different for residential, commercial and public premises customers
and vary according to the channels subscribed for and, in the case of commercial
customers, according to the number of rooms for which the service is provided.
Fee arrangements for "pay-per-view" programs are negotiated separately for each
program. The monthly fees for basic channels under the BSkyB Contract and the
industry rate card are subject to annual increases which are equal to the
greater of 7% or the amount of the annual change in the U.K. Retail Price Index
under the contract and the industry rate card. Customer fees for premium
channels are linked to BSkyB's DTH satellite subscription prices. Old Telewest
has the option to bring the former SBCC franchise areas into the contract
subject to
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the satisfaction of certain conditions. The aggregate amount paid by the Company
to BSkyB with respect to the year ended December 31, 1996 was (pound)48.9
million.
In July 1995, the Office of Fair Trading ("OFT") declared that the
BSkyB Contract is registerable under the Restrictive Trade Practices Act of 1976
and that certain of the provisions in the agreement are significantly
anti-competitive. As a result, BSkyB has submitted proposals to the OFT amending
the relevant provisions, and the Company is willing, in principle, to accept
such proposals. The OFT has opined that the proposals address its concerns on
the anti-competitive provisions. However, the European Commission has indicated
that certain of the remaining provisions may contravene European competition
law. If the parties are unable to persuade the European Commission to the
contrary, and the parties do not modify the provisions in issue, the European
Commission may initiate formal proceedings. If at the end of those formal
proceedings the European Commission maintains its original position, it may
issue a decision declaring that such provisions infringe European competition
law and are therefore void. The Company does not anticipate that any such
decision would impose any other sanction.
The Company also obtains a significant amount of its programming (11
programming channels) from providers which Flextech plc ("Flextech"), a publicly
quoted U.K. company (approximately 50.1% of which is owned by an affiliate of
TCI and approximately 7.4% of which is owned by an affiliate of U S WEST), and
other affiliates of TCI either own interests in or manage. In addition,
affiliates of U S WEST, TCI and SBC are partners in CPP-1, a joint venture with
three other U.S. cable operators which has a 10% interest in Live TV. Live TV is
carried by the Company's network. Cox also has an interest in The Discovery
Channel, The Learning Channel, UK Gold and UK Living, all of which are carried
by the Company's network. In March 1997, Cox and Flextech announced an agreement
pursuant to which Cox will sell its interest in UK Gold and UK Living in
exchange for an interest in Flextech (which will dilute the current interests of
the TCI affiliate and U S WEST affiliate). The Company believes that programming
obtained from all the affiliated programming suppliers is obtained on terms no
less favorable than those available to unrelated third parties.
Flextech and BBC Worldwide Limited have agreed to establish two
programming joint ventures. The first joint venture will deliver a number of new
pay television channels in the U.K. covering themes including documentaries,
entertainment, education, culture, sports, music and repeats of popular BBC
programming. The second joint venture will further develop UK Gold (following
Flextech's acquisition of UK Gold) in an analogue format and, in the future, in
a digital format. Each joint venture is expected to have preferential access to
a wide range of existing and future BBC programs for an initial term of 15 years
and an additional term of 15 years (unless the joint venture companies decide to
terminate the arrangement). The Flextech/BBC arrangement is subject to, among
other things, approval by the Flextech shareholders and approval by the
Department of National Heritage. The Company believes that this programming will
be offered to cable operators and will enhance their programming services.
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Advertising
In the twelve months ended December 31, 1995 and 1996, the Company's
revenue from advertising was approximately (pound)399,000 and (pound)1,326,000,
respectively. The Company has allocated one channel on its network for local
advertising (typically text and still graphics). In addition, with the
programming provided to the Company by a number of suppliers (not including
programming supplied by BSkyB or terrestrial broadcasters, which together
currently account for the vast majority of television viewing time by cable
customers in the U.K.), the Company typically is allocated time (usually one or
two minutes per channel per hour) during which the Company can insert
advertising. The Company believes that cable television advertising presents an
attractive opportunity for both local and national advertisers, and that such
advertising will become increasingly popular as cable penetration and viewership
increase and potential advertisers become more familiar with cable television.
Cable television advertising also provides local merchants with an ability to
target local markets that are not available through terrestrial or satellite
broadcasting. The Company currently has 58 employees dedicated to the sale of
advertising time. In 1996 the Company formed a subsidiary operating under the
name "Cable Adnet" which sells advertising for the Company and may in the future
sell advertising for the other companies in the cable industry.
CABLE TELEPHONY
Overview
The Company, through its predecessor companies, began offering cable
telephony in the U.K. in 1992. The Company derives its cable telephony revenues
from connection charges, monthly line rental charges, call charges, residential
service charges (e.g., call waiting), business service charges (e.g., private
business line and centrex) and interconnection fees payable to the Company by
other operators. As at December 31, 1996, the Company had passed and marketed
approximately 2,254,734 homes for cable telephony, had 627,009 residential lines
for 620,377 customers (representing a residential cable telephony penetration
rate of approximately 27.5%) and had installed an aggregate of 67,823 business
lines for 20,882 customers.
Services
The Company seeks to offer residential and business customers reliable
and high-quality telephony services over its broadband network at competitive
prices.
Residential Services. The Company offers local, long distance and
international cable telephony service as well as a broad range of additional
services to its residential customers. The Company's additional services
include: call waiting, call barring (prevents unauthorized outgoing calls), call
diversion (call forwarding), three-way calling and fully itemized monthly
billing. In addition, the Company is currently introducing voice mail and caller
identification throughout its Regional Franchise Areas. The Company's network
architecture provides a flexible platform that will enable it to offer a wide
range of other telephony services as they become available in the future.
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Business Services. The Company markets its cable telephony services to
selected businesses and institutions within its franchise areas. The Company
believes that these targeted businesses and institutions represent attractive
potential customers because (a) they have a high volume of calls, many of which
are high-margin local calls that can be switched and delivered entirely by the
Company, (b) the Company generally can serve these needs with its existing
technology and network and without investing in costly research and development
of new networks and products, (c) the persons making the decisions with respect
to selecting telephony service are usually located in the Company's Regional
Franchise Areas and (d) by targeting specific segments, the Company directs
significant advice and support to a specific, targeted customer base. As of
December 31, 1996, the Company served more than 20,882 business customers and
had installed 67,823 business lines.
The Company offers a range of special business services that it
believes are particularly attractive to small- and medium-sized businesses and
institutions. For example, the Company provides high-capacity private lines to
carry voice and data between two or more locations within a Regional Franchise
Area (e.g., between two branch offices) and will provide high-capacity private
lines to connect voice and data between locations in different Regional
Franchise Areas and other areas of the U.K. when the Interfranchise Network
becomes operational starting by the end of 1997. See "New Initiatives -- The
Interfranchise Network". In addition, the Company offers a "CENTREX" service,
which provides the switching of internal and outside calls for multi-line
businesses from outside the customer's premises, thus saving the customer the
cost of purchasing or leasing its own switching equipment. In 1996, the Company
introduced the "Call Manager" service which provides smaller customers with
switching capability similar to that provided by "CENTREX". The Company
currently also offers ISDN service to its business customers in two of its
Regional Franchise Areas, which permits the high speed, simultaneous
transmission of voice, data and video over the telephone line. The Company
currently anticipates rolling-out the ISDN service over time to the other
Regional Franchise Areas. See "On-Line Service -- Internet Access."
With the introduction of "number portability" in the UK in September
1996, the Company began offering BT and Mercury customers (residential and
business) the opportunity to transfer their service to the Company without
changing their existing telephone number. As of March 1, 1997, the Company had
implemented number portability in four of the seven Regional Franchise Areas and
to date customer interest has been strong, with 32,813 lines being transferred
to the Company during the period of September 1, 1996 through February 28, 1997
and no requests for line transfers from the Company during the same period.
ON LINE SERVICES
Internet Access
In 1996, the Company began offering customers Internet access through
its own Internet service provider, Cable Internet Limited. This access had been
extended to five of the seven Regional Franchise Areas by the end of 1996. The
Company currently provides three Internet access services: dial-up services
primarily for residential customers, leased lines for business
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customers and network access for wholesale customers. The Company also intends
to offer higher speed Internet access to business customers using ISDN lines.
The Company has completed a technical trial of high speed Internet access using
cable modems and intends to begin rolling this product out to several Regional
Franchise Areas in 1997, subject to consumer demand. This service provides high
speed Internet access via a computer over the Company's broadband network,
rather than over the telephone lines (thereby eliminating telephone call charges
and providing access at more than 100 times the speed otherwise available over
the telephone). In addition, the Company plans to offer customers cable
television Internet access as part of the digital services to be rolled-out by
the end of 1997. This service will enable customers to access the Internet over
the Company's broadband network at higher speeds than otherwise available over
the telephone line utilising the customer's television set as a screen and
controlling the service by using either an infra-red remote control or a more
sophisticated alpha-numeric remote keyboard. See " New Initiatives -- Digital
Service."
The "Sega Channel"
In May 1996, the Company launched the "Sega Channel", a cable-exclusive
service that delivers video games on demand, 24 hours a day, direct to the
customer's house. The "Sega Channel" provides up to 50 titles per month,
including preview versions of soon-to-be-released titles, game play tips, news,
contests and promotions. The Company charges an additional fee of (pound)9.95
per month for "Sega Channel" service. The "Sega Channel" currently is offered in
three of the Owned and Operated Franchises and the Company currently has more
than 2000 subscribers to the channel.
NEW INITIATIVES
The Company recently launched two major initiatives intended to enable
the Company to provide its customers with a wider range of attractive
programming and service offerings and increased value for money. These
initiatives are the introduction of digital services and the construction of the
Interfranchise Network.
Digital Service
The Company intends to introduce digital technology in the U.K. by the
end of 1997 and thereby substantially increase utilization of the capacity of
the Company's broadband network and enable the Company to significantly expand
its services. Digital technology allows operators to provide more channels
(through digital compression of analogue signals), and higher quality pictures
and sounds. Through the introduction of digital technology, the Company expects
to be able to offer customers up to 240 programming channels (as compared to the
52 channels currently offered by the Company through its analogue service),
which will enable the Company to provide services such as NVOD and pay-for-view.
It will also enable the Company to use its broadband network to provide
additional services such as cable television Internet access, electronic mail
and home shopping and banking. See "On Line Service -- Internet Access". The
Company believes that digital technology will enable it to offer customers
substantial additional choice and flexibility in selecting the services desired.
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The Company recently appointed General Instruments Corporation
("General Instruments") to provide a turnkey digital service for the Company,
which includes designing, manufacturing and supplying the digital set-top boxes
required to receive digital services, as well as manufacturing and installing
the digital head-end and associated electronics and software. The Company's
digital head-end is being built at its Knowsley franchise, where the programming
and services will be received by satellite, terrestrial broadcast or videotape
and converted into a digital signal for transmission over the Company's
broadband franchise networks and into customer homes and businesses.
Construction of the Interfranchise Network will enable the Company to use a
single digital head-end to transmit the digital signal to remote units in each
of the Company's franchises, thereby avoiding the need to install a separate
digital head-end in each franchise and maintain personnel at each such head-end.
See "The Interfranchise Network."
The Company intends to continue to offer customers analogue services,
as it rolls out the digital services. Customers who subscribe for digital
services will do so by using either an infra-red remote control or a more
sophisticated alpha-numeric remote keyboard. Customers will be able to rent or
purchase the digital set-top box from the Company and the Company currently
anticipates that most digital customers will choose to rent (rather than
purchase) the converter boxes. The Company intends to purchase set-top boxes
from General Instruments as needed to meet customer demand for digital services.
The Interfranchise Network
In 1996 the Company commenced construction of the Interfranchise
Network, which will link the 26 Owned and Operated Franchises and the seven
Affiliated Franchises. The Interfranchise Network is scheduled to be 75%
complete by the end of 1997 (and operational between the portions then
completed) and 100% complete by the middle of 1998.
The Company anticipates that construction of the Interfranchise Network
will increase telephony margins by reducing the payment of interconnection fees
to national carriers for long distance calls between locations in different
franchise areas. The Company expects that construction of the Interfranchise
Network also will create new business telephony revenue opportunities by
enabling the Company to create private networks for businesses with multiple
sites located throughout the various Company and Affiliate Company franchise
areas. In addition, the Company's new national telecommunications will also
permit the Company to link sites of its business customers located outside of
the franchise areas to such private networks by running its own lines from the
Interfranchise Network to such out of franchise sites or linking them to the
Interfranchise Network via an interconnection with another carrier. The
Interfranchise Network will also provide a more cost-effective, centralized
method of delivering digital services to all of its franchise areas by enabling
the Company to use a single digital head-end connected to remote units in each
franchise rather than separate digital head-ends (each with its own staff) in
each franchise.
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When complete, the Interfranchise Network is expected to include
approximately 2,250km of high capacity multi-fibre optic cable, as well as
various high capacity electronics. The Company is seeking to build the network
in a cost effective manner, using a combination of parts of the existing
networks of the Company and the Affiliated Companies, parts newly built by the
Company or built and shared with other service providers and parts consisting of
leased lines (with electronics in place) and leased fibre (without electronics
in place).
PRICING
The Company historically has charged separately for its cable telephony
and cable TV services (although the former SBCC franchises have offered certain
package offerings). In 1996, the Company began offering combined pricing
packages under the brand name Teleplus. More than 32% of the Company's customers
as of December 31, 1996 were receiving services under a Teleplus pricing
package.
Cable TV
The Company currently charges either (pound)14.99 (if the customer
elects the direct debit payment option) or (pound)15.99 per month for its
standard basic cable television service (generally 52 channels and one converter
box which provides cable service to one television). Premium channels range in
price from (pound)5.99 per month per channel to (pound)19.99 per month per
channel, depending on the channels selected. Customers receive discounts for the
purchase of multiple premium channels. An additional monthly fee of (pound)4.49
is charged for each additional converter box. All converter boxes remain the
property of the Company and a refundable (pound)20.00 deposit may be charged for
each box. Typically, the Company charges a one-time cable television connection
fee of (pound)30.00, although the Company often offers reduced or no connection
charges for cable television when service is first provided in an area or an
area is remarketed. All prices indicated above include U.K. value added tax
("VAT").
Cable Telephony
The Company currently seeks to provide its telephony customers with
savings on the cost of calls as compared to BT, its principal competitor. The
Company intends to maintain such savings, although there can be no assurance
that the Company will be able to continue to provide its residential customers
with lower call prices than BT without adverse effects on its profitability,
particularly in light of continued regulatory downward pressure on BT's charges.
See "Certain Regulatory Matters -- Cable Telephony -- Price Regulation".
For residential telephony customers, the Company offers a three-tier
price structure for line charges (which is in addition to the call charges
discussed above). The monthly charge for customers subscribing for the telephony
service only is (pound)7.56 per line, providing a saving of (pound)1.00 per
month over BT's equivalent charge. The monthly charges for special services such
as call waiting or call diversion vary between (pound)1.00 and (pound)2.00 per
service. Initial installation charges are (pound)30.00 as compared to BT's
equivalent charge of (pound)116.33. However, because most telephony customers
already have an existing BT line, the Company's installation fees are often
discounted to encourage customers to switch service providers.
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The Company's line charges for business customers (which are in
addition to the call charges discussed above) also are competitive with those of
BT and Mercury Communications Limited ("Mercury") and other suppliers. The
Company's monthly line rental charge for a business customer as at December 31,
1996 was (pound)9.93 and its line installation charge varied according to the
number of lines installed (from (pound)50 for the first line to (pound)30 for
each subsequent line). All prices indicated above exclude VAT.
Like BT and Mercury, the Company and other cable telephony operators
may require residential customers to pay a security deposit prior to the
commencement of telephony service, providing such customers with an unlimited
amount of credit. In certain Regional Franchise Areas, the Company has begun to
offer its customers a service which provides certain customers a limited amount
of credit for telephony service without the payment of a deposit. This enables
more customers to subscribe for the Company's telephony service, while limiting
the Company's exposure to bad debts.
As a consequence of owning its own switching equipment (as discussed
below), the Company can provide more pricing and feature options to its
customers. For example, the Company currently offers business telephony
customers various discount plans based on usage and other factors.
Teleplus Package Pricing
In order to encourage customers to subscribe for both television and
telephony service, the Company offers five Teleplus pricing packages for
customers subscribing to both services which vary between (pound)19.99 and
(pound)42.99 per month, depending on the Teleplus package chosen. The Teleplus
packages provides different combinations of basic telephony and television
service together with premium channels and free local calls to other customers
within the Company's Regional Franchise Areas. In addition, the installation
charge for customers subscribing for both cable television and telephony
services at the same time is (pound)30.00. Customer benefits from the Teleplus
packages include value pricing as well as the convenience of dealing with a
single provider for two services. The Company believes that Teleplus programs
provide it with an effective way to cross-promote its services and retain
customers. To date the churn rate for customers subscribing under the Teleplus
program has been lower than for those subscribing for cable television service
only.
SALES AND MARKETING
The Vice President of Residential Marketing leads the Company's
residential sales and marketing activities with a staff of sales and marketing
representatives in the field and in the corporate offices handling programming
contracts, advertising, promotion and related matters. In addition, there is a
Director of Residential Sales and Marketing at each Regional Franchise Area who
directs the sales and marketing for that area. A Vice President of Business
Services leads the Company's business service operations, sales and marketing
activities and is supported by Directors of Business Services in the Regional
Franchise Areas. The corporate marketing staff and the field marketing directors
and their staff meet on a frequent basis to review sales and marketing results
at each of the franchises and to exchange ideas with respect to various sales
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and marketing practices. From time to time, the Company also discusses sales and
marketing practices with the Affiliated Companies.
The Company generally markets its residential cable television and
cable telephony services together. This joint marketing approach provides the
Company with significant cost advantages over service providers that offer only
television or telephony services and therefore cannot spread the marketing costs
over multiple services. The Company believes that such integration of services
offers important advantages to both the customer and the Company. For the
customer, it provides additional value and the convenience of a single service
provider for a variety of services. For the Company, it helps increase customer
spending and loyalty. In 1997, the Company expects to expand the packaged
offerings to include options for dedicated lines for Internet access. The
Company also intends to continue to market its services separately to attract
single interest customers who may later be progressively upgraded if they so
choose.
In July 1996, the Company launched "Telewest Communications" as the
brand name for all of the Regional Franchise Areas, linking operations which had
historically developed under several different names. This integration was a
comprehensive project, involving the harmonization of operations from signs and
uniforms to communications and marketing literature. Through national branding,
the Company is able to reduce advertising costs and increase brand awareness.
As the network becomes further built out, the Company is focusing less
on door-to-door sales and more on integrated marketing strategies, which combine
direct sales, telemarketing, direct mail and retail. As part of this approach,
four campaigns were conducted during the year, spreading awareness of "Telewest
Communications" throughout the franchise areas. In communities where the network
is most built out, these integrated strategies are designed to emphasize the
Company's core strengths of value, choice and service.
Due to the specialized nature of the Company's business telephony
products and the competitive nature of the market, the Company has separate
sales and marketing groups to market, service and support business customers.
To maximize the productivity of its sales staff, the Company pays field
representatives on either a salary plus commission or a straight commission
basis. The commissions generally are based on various factors, including
penetration level and revenue from services sold. In order to minimize customer
churn, a portion of the commission may be withheld until a customer retains
service for a given period (typically four months).
CUSTOMER SERVICE
Customer service is primarily handled locally by each of the Regional
Franchise Areas and a Vice President of Customer Services coordinates customer
services operations among the Regional Franchise Areas. Approximately 730
customer service representatives in the Regional Franchise Area offices report
to the Managing Director and Director of Customer Operations at each of the
Regional Franchise Areas.
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The Company has introduced an eight week customer care training course
for telephone based customer service representatives. This program is now being
expanded for all sales staff, installers and repair technicians. The customer
service department is organized so that customers need call only one number to
reach the appropriate service provider to address their cable television and
cable telephone service, billing and repair questions. The Company seeks to
provide customers with prompt telephony and television service repair.
Generally, repair service is done by the Company's own employees and service
installations and terminations are done by a combination of its own employees
and independent contractors.
One important measure of customer satisfaction is the service churn
rate among customers. A customer may terminate service by prior written notice
to the Company. The Company may terminate a customer's service when the customer
becomes delinquent in payment. The Company's experience to date is that the
churn rate is highest shortly after a customer first activates a service. The
Company reduced churn rates for basic cable television service from 41.0% in
1995 to 33.4% in 1996 and for residential telephony line service from 21.8% in
1995 to 19.6% in 1996. The Company believes the reduced churn rates for basic
cable television service and residential telephony line service resulted in part
from the introduction of Teleplus package pricing and the decreased emphasis
placed by the Company on heavily discounted promotional offers, which
traditionally have resulted in high churn rates as the Company and the U.K.
cable industry have matured. The churn rates for business telephony line service
increased from 12.4% in 1995 to 14.5% in 1996 primarily due to the Company's
efforts to market its service to a broader range of business customers. Prior to
1996, the calculation of churn included those customers who moved homes and
reconnected elsewhere in one of the Owned and Operated or Affiliated Franchises
and consequently overstated customer dissatisfaction with the service provided.
In 1996, the Company revised the basis on which "churn" is calculated
(consistent with industry practice) to exclude those customers who moved their
cable service from one premises to another within one of the Owned and Operated.
Average churn rate for 1996 represents (i) the total number of customers who
voluntarily or involuntarily terminated service during such period, divided by
(ii) the average number of customers in such period.
The Company seeks to minimize customer churn by providing customers
with a combination of attractive, competitively-priced programming and telephone
services and strong customer service. The Company regularly surveys its
customers to determine their satisfaction with the service provided and attempts
to improve such service based on the explanations offered by customers who
cancel their service. In order to reduce terminations by customers and improve
debt collection, the Company encourages customers to pay bills by direct debit
by offering lower prices to customers who pay with direct debit. Through
Teleplus package plans, the Company encourages customers to subscribe for both
cable television and cable telephony services because it believes that customers
with both services are less likely to terminate service than those who subscribe
for cable television only. See "Pricing".
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NETWORKS
Construction
Broadband Network. The Company expects that the broadband cable network
in the Owned and Operated Franchises will cover approximately 41,000 kilometers
and pass approximately 3.9 million homes when substantially completed. As at
December 31, 1996, the Company had completed construction of the network passing
approximately 65% of the homes in the Owned and Operated Franchises. The Company
anticipates that the remaining construction will be substantially completed by
the end of 2000. Construction of the broadband cable network has commenced at
all of the 26 Owned and Operated Franchises. The Company plans the construction
in the Owned and Operated Franchises based on various factors, including
construction milestone requirements (as discussed below), network design
considerations (e.g., location of head-end), franchise demographics and
facilitation of interconnection with other the Owned and Operated Franchises.
The Company plans construction of each Owned and Operated Franchise so
that it is able to activate service to customers in stages as the franchise is
developed and thereby benefit from subscriber revenues prior to the completion
of construction of the entire franchise. The Company generally does not incur
the cost of bringing the cable from the curbside duct to the home unless and
until a customer elects to subscribe for service.
Each Telecommunications License (as defined in "Certain Regulatory
Matters") prescribes build obligations ("milestones") that require the Company
to construct its network to pass a specified number of premises (which are
defined for the purposes of the Telecommunications Licenses as homes or
businesses passed for cable television service) by prescribed dates. Although in
the past the Company from time to time has not met certain milestones, it has
generally sought and received appropriate milestone modifications from the
Director General of OFTEL.
The following table sets out the aggregate future milestones for each
of the Company's seven Regional Franchise Areas. The actual milestones that the
Company is required to meet are specified individually for each of the
franchises within the Regional Franchise Areas. Consequently, the Company could
meet the aggregate milestones for a given Regional Franchise Area, but still
fail to meet one or more individual franchise milestones and therefore subject a
Telecommunications License to the risk of revocation or termination.
<TABLE>
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LONDON NORTH SOUTH AVON AND NORTH
AS OF SOUTH SCOTLAND EAST EAST COTSWOLDS WEST MIDLANDS TOTAL
DECEMBER 31,(1) MILESTONE MILESTONE MILESTONE MILESTONE MILESTONE MILESTONE MILESTONE MILESTONE
------------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1997 379,000 537,500 237,000 285,000 440,000 670,000 490,000 3,038,500
1998 379,000 549,000 294,000 379,000 445,000 715,000 614,000 3,375,000
1999 379,000 549,000 340,000 424,000 445,000 760,000 614,000 3,511,000
2000 379,000 549,000 340,000 424,000 445,000 792,000 614,000 3,543,000
<FN>
(1) All milestone information is rounded to the nearest thousand.
</FN>
</TABLE>
21
<PAGE> 24
The aggregate annual build requirements for the Company in order to
meet the milestones is to pass an additional 414,681, 65,000, 120,000 and
120,000 premises in 1997, 1998, 1999 and 2000, respectively. The Company has
initiated discussions with OFTEL regarding the modification of future milestone
obligations and a retrospective modification in respect of a failure to meet
certain of its 1996 milestone obligations. The Company believes that in view of
the substantial portion of its networks constructed to date, its record of
meeting milestones to date and its plans for substantial investment in the
Interfranchise Network and digital technology, the Company will be able to
obtain the necessary modifications to its milestone obligations, although there
can be no assurance it will be successful in so doing.
The following table sets out the aggregate future milestones for each
of the three Affiliated Companies. The actual milestones that the Affiliated
Companies are required to meet are specified individually for each of the seven
franchises within the Affiliated Franchises. Consequently, the Affiliated
Companies could meet the aggregate milestones for a given Affiliated Franchise,
but still fail to meet one or more individual franchise milestones and therefore
subject a Telecommunications License to the risk of revocation or termination.
<TABLE>
<CAPTION>
CABLE CABLE
MILESTONE BIRMINGHAM LONDON CORPORATION
DATE MILESTONE(1) MILESTONE(1)(2) MILESTONE(1)
---- ------------ --------------- ------------
<S> <C> <C> <C>
December 31, 1997 275,000 257,000 264,000
December 31, 1998 325,000 287,000 264,000
January 31, 1999 400,000 409,000 264,000
December 31, 1999 450,000
<FN>
_______________
(1) The milestones for the Affiliated Companies are specified in
the Telecommunications Licenses for 12-month periods ending
on the last day of various months. All milestones are
presented on an annualized pro forma basis for 12-month
periods ending on December 31. All milestone information is
rounded to the nearest thousand.
(2) Revised milestones in respect of certain Cable London
franchises have been approved by OFTEL, but are subject to
formal amendment.
</FN>
</TABLE>
Interfranchise Network. For information regarding the Company's
interfranchise network, see "New Initiatives -- The Interfranchise Network".
Network Architecture
In the U.K., cable operators generally are required to install cable
underground. This significantly increases the cost of construction as compared
with above-ground installations and makes it more time-consuming, costly and
disruptive to customers and others for the Company to replace cable or
underground components in the cable network in order to upgrade and expand
service in the future. As a result, the Company designs its distribution network
(e.g., the
22
<PAGE> 25
fibre-optic cable and underground components) to permit network upgrades and
expansions to be accomplished whenever possible by installing or replacing
equipment at the head-end and/or the customers' premises and without undertaking
significant construction with respect to its existing underground network and
incurring substantial additional construction costs. The Company is currently
upgrading the network to carry digital services and is doing so almost entirely
through the addition of equipment at the head-ends and at customer premises and
without the need for significant network construction costs.
The network architecture of the Company's individual franchises varies
generally depending on when the construction was started. Initially, cable
systems in the U.K. were built to provide only cable television service.
Following the review undertaken by the U.K. government (when the U.K. government
changed the duopoly policy to permit cable operators to operate their networks
to provide cable telephony services and call switching as principals, rather
than only as agents for and under agreements with BT or Mercury (the "Duopoly
Review")) telephony service was often added to existing networks and plans for
future networks were modified to carry both television and telephony services.
In some business areas the Company has built cable telephony only networks. As a
result, there are three types of networks in use or under construction by the
Company: cable television only; cable telephony only; and cable television with
a cable telephony overlay.
Currently, cable television only service is provided to residential
customers in part of the Scotland Regional Franchise Area franchise. The overlay
network is used in all of the Company's other franchises under construction or
previously installed and is being used to upgrade the parts of the Scotland
Regional Franchise Area that currently provides only cable television service.
In some predominantly commercial areas in the Company's franchises, only cable
telephony services are provided.
Switching
Digital telephony switches have been installed in all of the Company's
Regional Franchise Areas. The switches enable the Company to increase its
profitability and operating flexibility by (a) eliminating the need to pay third
parties for switching calls between its customers within a Regional Franchise
Area and reducing the cost of switching calls to other operators outside of a
Regional Franchise Area, (b) receiving revenues from other telephony operators
who use the Company's switches to complete calls to the Company's customers and
(c) eliminating the need to rely upon third parties for the administration of
new customer connections. In addition to the installation of its own switches,
the Company (together with certain other cable operators) has established a
central network service center in Woking that provides 24-hour-a-day centralized
switch engineering, interconnect access administration and related support
services. The costs of the service center are shared by the participating cable
operators. The Company believes that this centralized system is a cost-effective
approach to managing cable telephony networks with multiple switches.
By operating its own switches, the Company is able to gather
information about customer calling patterns and use this information in its
marketing program and to structure customized
23
<PAGE> 26
call pricing plans and discount programs. The availability of this information
also enables the Company to reduce fraudulent activity by identifying unusual or
excessive call activity at an early stage.
As part of the Company's strategy of increasing the volume of calls
switched locally and minimizing interconnect charges payable to national and
regional public telephone operators ("PTOs"), the London Interconnect consortium
(of which the Company is a member) has created an inter-franchise telephony
network that covers the member franchise areas. In addition, the Company is
developing a broadband Interfranchise Network to carry voice, data and video
traffic between the franchises which is expected to be completed in mid-1998.
See "Business -- New Initiatives -- Interfranchise Network."
In December 1996, the Company was awarded an international facilities
license under the Telecommunications Act 1984 by the Secretary of State for
Trade and Industry. This will enable the Company to establish direct
relationships with international PTOs and further reduce the cost of
international carriage. In December 1996, the Company began connecting its
Regional Franchise Areas to Telstra (the Australian PTO) to carry a portion of
the Company's international telephony traffic. See "Certain Regulatory Matters
- -- Interconnection Arrangements."
Sources of Supply
The Company obtains services and equipment for the construction and
operation of its cable systems from numerous independent suppliers. These
services, including civil engineering services, and equipment generally have
been purchased under short-term contracts (e.g., one year or less), although the
contracts for the Company's interconnect services are longer. As a result of its
increased operational size and purchasing needs, the Company seeks to use its
increased buying power to obtain more favorable contract terms covering longer
periods (e.g., one to three years).
The Company believes that it can purchase all of the services and
equipment it needs to operate its business from more than one source. However,
if one of the suppliers of a product which involves significant lead time for
production and delivery were to be unwilling or unable to supply the Company,
the Company could suffer disruptions in the operation of its business, which
could have an adverse effect on the Company.
The Company's principal suppliers include the following: McNicholas
Construction Company Limited, M&N Contractors Limited, AMEC Utilities Limited,
Moywest Limited, Ashbourne Communications U.K. Ltd, JP Fitzpatrick, J Murphy and
Sons Limited, Kelly Communications (civils and activations contractors); Nortel
Ltd and GPT Telecommunication U.K. Limited (telephony switching equipment);
General Instruments Inc. and Scientific-Atlanta Broadbank Europe Inc.
(addressable converter boxes); Antec International and Tratec U.K. Ltd (cable TV
distribution equipment); Nokia Telecommunications and DSC Technics Limited
(telephony transmission equipment); Times Fiber Communications Inc. and
Commscope (coaxial cable); GPT Telephone Cables (fibre-optic and copper cable);
Eltek Limited and Alpha Technologies (power supply equipment).
24
<PAGE> 27
The Company owns all of its cable network equipment other than its
Nortel switches. The Company leases these telephony switches under finance
leases from Nortel and the Royal Bank of Scotland.
The Company intends to contract with General Instruments to provide
digital set-top converter boxes. See "New Initiatives -- Digital Services".
The Company has experienced no significant difficulty in obtaining
timely deliveries of services and equipment within the past 12 months and
believes it maintains adequate inventories of significant equipment. In order to
reduce warehousing expenses, maximize inventory control and minimize the
possibility that the Company will not have the required inventory to proceed
with construction in a timely manner, the Company has centralized warehouse
operations through a third-party supplier of warehousing services.
FRANCHISES
Regional Franchise Areas
The Company owns 26 cable franchises in the U.K. and holds licenses to
provide cable television and cable telephony services within each of its
franchise areas. The Company's 26 franchises are managed in seven Regional
Franchise Areas: London South, Scotland, North East, South East, Avon and
Cotswolds, North West and Midlands. The franchises within each Regional
Franchise Area are clustered together, which provides the Company with several
benefits, including (a) providing substantial economies of scale in the
construction and marketing of the cable network and the management of the
franchises, (b) enabling the Company to provide local switching services for a
large number of customers without incurring the high costs of connecting
geographically dispersed areas, (c) providing a regional market for advertisers
that generally is not available through broadcast or satellite media and (d)
enabling the Company to offer local programming on a more cost-effective basis.
On April 1, 1996, the Company purchased the remaining 4% equity
interest in the Cotswolds Regional Franchise Area (representing 4,223 equity
homes and 367 equity businesses) and the remaining 9.9% equity interest in the
South East Regional Franchise Area (representing 48,821 equity homes and 3,530
equity businesses), each owned by Trans-Global Guernsey Limited
("Trans-Global"), for an aggregate consideration of 7,047,483 Ordinary Shares.
As a result, each of the Owned and Operated Franchises is now wholly owned by
the Company (other than a 0.07% minority interest held by a third party in the
London South Regional Franchise Area (the statistical and other information
contained in this document have not been adjusted to reflect this minority
interest).
25
<PAGE> 28
The following table sets forth certain data concerning the Company's
Regional Franchise Areas at and for the twelve-month period ended December 31,
1996:
<TABLE>
<CAPTION>
(NOTE: (L)=BRITISH POUND)
LONDON NORTH SOUTH AVON AND NORTH
SOUTH SCOTLAND EAST EAST COTSWOLDS WEST MIDLANDS TOTAL
----- -------- ---- ---- --------- ---- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Franchise homes......... 420,703 631,461 354,098 493,140 511,215 828,694 634,839 3,874,150
Franchise businesses.... 29,706 28,584 14,450 35,690 42,891 61,612 47,581 260,514
CABLE TELEVISION
Homes passed............ 378,075 493,621 173,395 182,853 362,495 561,580 423,123 2,575,142
Homes passed and 360,091 447,316 162,559 162,499 327,998 505,695 369,795 2,335,953
marketed ...........
Basic customers......... 82,827 97,250 32,518 44,634 70,606 116,466 83,841 528,142
Penetration rate (1).... 23.0% 21.7% 20.0% 27.5% 21.5% 23.0% 22.7% 22.6%
Additional Outlets...... 33,891 59,788 20,064 24,927 35,192 22,520 18,179 214,561
Average monthly revenue
per customer (1)........ (L)25.27 (L)24.95 (L)23.27 (L)23.67 (L)22.62 (L)20.84 (L)20.80 (L)22.95
Average churn rate (1).. 33.1% 36.6% 32.9% 29.1% 31.9% 32.5% 34.5% 33.4%
RESIDENTIAL TELEPHONY
Homes passed............ 361,801 388,193 170,112 182,853 359,792 537,654 396,253 2,396,658
Homes passed and marketed 336,270 394,201 159,398 162,499 328,116 504,455 369,795 2,254,734
Residential customers (2) 61,151 98,735 48,650 48,654 89,900 153,152 120,135 620,377
Penetration rate (1).... 18.2% 25.0% 30.5% 29.9% 27.4% 30.4% 32.5% 27.5%
Residential lines
connected............... 63,443 101,069 48,653 48,769 91,437 153,152 120,486 627,009
Average monthly revenue
per line (1)............ (L)26.50 (L)20.44 (L)17.93 (L)21.11 (L)20.34( (L)19.67 (L)17.89 (L)20.26
Average churn rate
per line (1).......... 21.6% 18.8% 16.4% 19.0% 16.2% (8)24.1% 17.4% 19.6%
BUSINESS TELEPHONY
Business customers...... 4,054 3,024 1,271 974 4,139 5,041 2,379 20,882
Business lines connected 18,543 8,164 2,627 3,443 13,843 12,324 8,879 67,823
Average number of
business
lines per customer (1) 4.6 2.7 2.1 3.5 3.3 2.4 3.7 3.2
Average monthly revenue
per line (1)............ (L)64.82 (L)53.19 (L)51.51 (L)71.97 (L)44.51 (L)50.86 (L)46.66 (L)54.50
Average churn rate
per line (1).......... 12.2% 18.4% 12.3% 28.1% 13.1% 17.9% 9.2% 14.5%
<FN>
- ----------------------------
Notes:
(1) For the definitions of these terms, see the footnotes to the table on page 4.
(2) The information set forth under "Residential Customers" represents the
number of residential lines connected, which is greater than the actual
number of residential customers.
</FN>
</TABLE>
Description of Regional Franchise Areas
The following is a brief description of each of the Company's Regional
Franchise Areas:
London South. The London South Regional Franchise Area (the "London
South Area") covers approximately 360 square kilometers and includes three
franchise areas (Croydon, Sutton and Merton, and Kingston and Richmond). The
London South Area has approximately 421,000 homes and approximately 30,000
businesses.
The London South Regional Franchise Area includes a suburban section of
Greater London as well as the large business center of Croydon. The Croydon
franchise was awarded in 1983 and is the oldest one owned by the Company.
Construction of the Croydon network began in 1985. Much of the Croydon network
was constructed before cable telephony generally was offered by cable operators
in the U.K. However, the Company has provided cable telephony service to
business customers in the Croydon business center over its telephony-only
network since 1991 and recently began offering telephony service to its
residential customers in Croydon.
26
<PAGE> 29
Construction in Croydon for cable television was substantially completed in 1990
and construction for telephony was completed in 1996. Construction in the Sutton
and Merton franchise began in 1990 and in the Kingston and Richmond franchise in
1991 and are now both complete.
Avon and Cotswolds. The Avon and Cotswolds Regional Franchise Area (the
"Southwest Area") covers approximately 2,120 square kilometers and includes
Bath, Bristol, Cheltenham, Gloucester, Frome, Warminster and Weston-super-Mare.
The Avon and Cotswolds area has approximately 511,000 homes and approximately
43,000 businesses. Construction in the Cotswolds area began in July 1994 and is
ongoing.
The Company granted to Trans-Global a carried interest in respect of
the Avon, South East and Cotswolds Areas in connection with the Company's
acquisition of those Regional Franchise Areas in consideration for services
provided by Trans-Global to the Company in connection with such acquisitions.
The carried interest entitles Trans-Global to certain payments in respect of
each such Regional Franchise Areas either (a) within 60 days after the fifth
anniversary of the date when 50% of the homes within a given Regional Franchise
Area are passed or (b) at Trans-Global's option, at any time prior to such date
upon 60 days' notice. The carried interest payments will equal 0.75% of the
product of ten times the annual operating income of such Regional Franchise
Areas (subject to certain adjustments), after deducting outstanding debt and
equity financing and interest and adding an amount equal to the working capital
of such Regional Franchise Areas (or subtracting an amount equal to their
working capital deficit). The Company does not expect any such payments to have
a material impact on the liquidity or capital resources of the Company.
Construction in the Avon Area began in 1990 and is ongoing.
Scotland. The Scotland Regional Franchise Area (the "Scotland Area")
covers approximately 3,000 square kilometers and includes eight franchise areas
(Edinburgh, the second largest financial center in the U.K., as well as
Cumbenauld and Monklands, Dumbarton, Dundee, Falkirk and Livingston, Glenrothes
and Kirkcaldy, Motherwell and Perth) in the southern region of Scotland. The
Scotland Area covers approximately 631,000 homes and approximately 29,000
businesses. Construction in the Edinburgh franchise began in March 1992 and
construction of the broadband networks in all the other franchises in the
Scotland Area was begun in 1990 by the prior owner of such franchises and is
ongoing by the Company.
North East. The North East Regional Franchise Area (the "North East
Area") covers approximately 640 square kilometers and includes Gateshead,
Newcastle upon Tyne, North Tyneside and South Tyneside. The North East Area has
approximately 354,000 homes and approximately 14,000 businesses. Construction in
the North East Area was commenced by the previous owner in 1990 but was halted
by that owner in 1991. Construction was restarted by the Company in May 1993 and
is ongoing.
South East. The South East Regional Franchise Area (the "South East
Area") covers approximately 1,600 square kilometers and includes two franchise
areas (North Thames Estuary and South Thames Estuary) covering the areas of
Basildon, Chelmsford, Gravesend and
27
<PAGE> 30
Maidstone. The South East Area has approximately 493,000 homes and approximately
36,000 businesses. Construction in the South East Area began in February 1994
and is ongoing.
North West. The North West Regional Franchise Area (the "North West
Area") includes the areas of St. Helens and Knowsley, Wigan, Preston, Southport,
North and South Liverpool and Blackpool. The North West Area includes
approximately 829,000 homes and approximately 62,000 businesses. Construction in
the North West Area began in 1990 and is ongoing.
Midlands. The Midlands Regional Franchise Area (the "Midlands Area")
includes the areas of Telford, Dudley, Wolverhampton, Worcester, Walsall and
Kidderminster. The Midlands Area includes approximately 635,000 homes and
approximately 48,000 . Construction for cable television service began in 1991.
In 1993, a retrofit program was undertaken to make both cable television and
cable telephony services available to all homes previously passed in the
Midlands Area and, since then, all new construction provides both cable
television and cable telephony services. This retrofit program was completed by
the end of 1994, and all homes passed in the Midlands Area are capable of
receiving both television and telephony services. Construction of the Telford
franchise was completed in 1994 and construction of the Dudley, Wolverhampton,
Walsall and Kidderminster franchise is ongoing.
Management of Regional Franchise Areas
The Company manages its Regional Franchise Areas from its corporate
headquarters in Woking, Surrey, England. The Company provides a number of
services on a centralized basis, including finance, legal, management
information services, network design (including switching, centralized planning
and engineering), network service center operations, purchasing of programming
and negotiation and administration of procurement and construction contracts.
Most other matters are handled by the management of the Regional Franchise Areas
under the direction of their Managing Directors. Although marketing programs,
pricing and programming generally are standardized throughout the Company, the
management of each Regional Franchise Area may modify them in order to reflect
local factors.
AFFILIATED COMPANIES
The Company owns minority equity interests in three Affiliated
Companies: Birmingham Cable, Cable London and Cable Corporation. The Affiliated
Companies own an aggregate of seven cable franchises in the U.K. As of December
31, 1996, the aggregate amount invested by the Company in the Affiliated
Companies was approximately (pound)115 million. Of the Company's 4.3 million
equity homes, approximately 401,234 represent the Company's equity interest in
the approximately 1.2 million homes owned and operated by the Affiliated
Companies. These investments have enabled the Company to grow by acquiring
interests in a number of franchises and homes.
The Company believes that it benefits by the regular exchange of
information with the Affiliated Companies. Although the Company has certain
shareholder rights discussed below
28
<PAGE> 31
and a representative on the board of directors of each of the Affiliated
Companies, the Company does not control the day-to-day management operations of
the Affiliated Companies.
The following table sets out, unless otherwise indicated, as at and for
the year ended for December 31, 1996, certain information concerning the
Affiliated Companies:
<TABLE>
<CAPTION>
BIRMINGHAM CABLE LONDON CABLE CORPORATION
------------------------ ---------------------- ------------------------
COMPANY'S COMPANY'S COMPANY'S
EQUITY EQUITY EQUITY
TOTAL INTEREST TOTAL INTEREST TOTAL INTEREST
(100%) (27.5%) (100%) (50.0%) (100%) (16.5%)
-------- ----------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
FRANCHISE HOMES.............. 471,094 129,551 444,978 222,044 293,720 48,464
FRANCHISE BUSINESSES......... 31,200 8,580 35,000 17,465 17,500 2,888
CABLE TELEVISION
Homes passed................. 383,592 105,488 341,508 170,412 248,348 40,977
Homes passed and marketed.... 378,653 104,130 296,416 147,912 231,726 38,235
Basic customers.............. 111,645 30,702 67,477 33,671 42,928 7,083
Penetration rate (1)......... 29.5% 29.5% 22.8% 22.8% 18.5% 18.5%
Additional Outlets........... 33,796 9,294 24,334 12,134 8,669 1,430
Average monthly revenue per
customer (1)............... (pound)18.03 (pound)18.03 (pound)22.14 (pound)22.14 (pound)22.07 (pound)22.07
Average churn rate (1)....... 26.8% 26.8% 30.6% 30.6% 30.4% 30.4%
RESIDENTIAL TELEPHONY
Homes passed................. 374,451 102,974 312,050 155,713 247,976 40,916
Homes passed and marketed.... 369,512 101,616 296,416 147,912 231,354 38,173
Residential customers........ 105,128 28,910 57,495 28,690 49,234 8,124
Penetration rate (1)......... 28.5% 28.5% 19.4% 19.4% 21.3% 21.3%
Residential lines connected.. 105,128 28,910 59,074 29,478 49,234 8,124
Average monthly revenue per
line (1)................... (pound)22.34 (pound)22.34 (pound)26.43 (pound)26.43 (pound)30.06 (pound)30.06
Average churn rate
per line (1)............... 24.9% 24.9% 27.0% 27.0% 24.6% 24.6%
BUSINESS TELEPHONY
Business customers........... 2,994 823 2,560 1,277 1,912 315
Business lines connected..... 11,302 3,108 9,259 4,620 18,290 3,018
Average monthly revenue per
line (1)................... (pound)62.89 (pound)62.89 (pound)67.57 (pound)67.57 (pound)87.79 (pound)87.79
Average churn rate
per line (1)............... 32.4% 32.4% 23.0% 23.0% 20.0% 20.0%
<FN>
_______________
(1) For the definitions of the terms, see the footnotes to the table on page 4.
</FN>
</TABLE>
Description of Affiliated Companies
The following is a brief description of each of the Affiliated
Companies, including a description of the terms of the Company's investments
therein.
Birmingham Cable. Birmingham Cable covers approximately 400 square
kilometers and operates in Birmingham and Solihull. Birmingham Cable has
approximately 471,000 franchise homes and approximately 31,200 businesses
(representing approximately 130,000
29
<PAGE> 32
equity homes and approximately 8,600 equity businesses based on the Company's
current share ownership of Birmingham Cable). The Birmingham cable franchise is
one of the largest in the U.K. in terms of the number of franchise homes.
Telewest Communications (Holdings) Limited ("TWH") (a wholly owned
subsidiary of the Company) and Comcast U.K. Cable Partners Limited ("Comcast")
jointly own 54.9% of the issued share capital of Birmingham Cable. General Cable
PLC ("General Cable") owns the remaining 44.9%. TWH and Comcast hold their
interests pursuant to a co-ownership agreement (the "Co-ownership Agreement"),
which allocates beneficial ownership of the jointly owned shares between TWH and
Comcast based on the amount each has contributed for the purchase of the shares.
Beneficial ownership of the shares currently is divided equally between TWH and
Comcast. Each party has the right to direct the voting of the shares
beneficially owned by it. TWH and General Cable also own interests in Cable
Corporation.
Telewest Communications Group Limited, a wholly-owned subsidiary of the
Company ("TWG"), General Cable and an affiliate of Comcast have entered into
consulting agreements with Birmingham Cable and one of its affiliates
(collectively, the "Birmingham Cable Companies") pursuant to which TWG provides
consulting services relating to cable telephony operations, the Comcast
affiliate provides consulting services relating to cable television operations
and General Cable provides consulting services relating to business telephony
operations. Each consultant also provides consulting services relating to the
financial management of the Birmingham Cable Companies. Under TWG's consulting
agreement, the Birmingham Cable Companies have agreed to pay TWG an annual fee
based on the greater of (a) the number of dwelling units in the Birmingham Cable
franchise area and (b) a percentage of the Birmingham Cable companies
consolidated gross revenues. Each consulting agreement terminates in April 2000,
subject to the Birmingham Cable Companies' right to extend the term of each
agreement by two successive five-year periods and a final three-year period. The
Birmingham Cable Companies have the right to terminate the agreements with TWG
and the Comcast affiliate after April 2000 if TWH and Comcast and their
affiliates together cease to be the holder of the largest percentage of the
issued share capital of Birmingham Cable (constituting the "Principal
Shareholder") and the management agreement referred to below is terminated for
the same reason.
TWG and a Comcast affiliate have entered into a management agreement
with Birmingham Cable that gives TWG and Comcast the right, subject to the
overall direction and control of the directors of the Birmingham Cable
Companies, to manage the day-to-day business and affairs of the Birmingham Cable
Companies. Pursuant to the Co-ownership Agreement, the Comcast affiliate is
entitled to make all the decisions of the co-owners under the management
agreement until the completion of construction passing 90% of the homes in the
Birmingham Cable franchise area and Comcast and its affiliates beneficially own
less than 20% of the shares jointly owned by TWH and Comcast and its affiliates.
Notwithstanding this, TWG retains control over approval of budgets and business
plans relating to cable telephony operations and Comcast retains control over
the budgets and business plans relating to cable television operations.
30
<PAGE> 33
Under Birmingham Cable's articles of association, the consent of
holders of 50% or more in aggregate of its issued ordinary share capital
("Majority Investor") and, in certain cases, the holders of 331/3% or more (in
aggregate) of its issued ordinary share capital ("Significant Investors") is
required before Birmingham Cable and any of its subsidiaries can take certain
actions relating to themselves or their businesses. Currently, TWH and Comcast
are jointly a Majority Investor and General Cable is a Significant Investor. The
Co-ownership Agreement generally requires TWH and Comcast to agree with respect
to the exercise of their rights relating to their jointly-owned shares.
TWH and Comcast (as Majority Investors) have the right to appoint four
directors to Birmingham Cable's board of directors and General Cable has the
right to appoint three directors. TWH and Comcast have the right to nominate the
managing director of Birmingham Cable and General Cable has the right to
nominate its Chief Financial Officer. Under the Co-ownership Agreement, the
directors whom TWH and Comcast are entitled to designate by virtue of their
jointly-owned shares will be designated by TWH and Comcast in proportion to the
number of shares beneficially owned by each. As a result, currently TWH has the
right to appoint two directors. The number of directors that TWH and Comcast
have the right to appoint and maintain decreases in stages as their joint
shareholding falls below 50% of the issued ordinary shares of Birmingham Cable.
TWH and the other shareholders have also agreed to certain restrictions with
respect to their right to apply for Cable Television Licenses and
Telecommunications Licenses in areas adjacent to the Birmingham Cable franchise
area.
The articles of association of Birmingham Cable generally prohibit a
shareholder from transferring legal or beneficial ownership of its shares
without giving each other shareholder a right of first refusal to acquire its
proportionate amount of such shares. Transfers by certain corporate shareholders
to affiliates generally are excluded from this restriction.
In February 1995, Birmingham Cable entered into a ten-year (pound)175
million loan facility to finance the construction of its network and operations
(the "Birmingham Credit Facility"). Pursuant to the terms of the Birmingham
Credit Facility, payments or distributions to the shareholders of Birmingham
Cable, including payments of management fees, dividends, interest and principal
on loans to Birmingham Cable from its shareholders, are restricted based on
certain conditions related to the financial performance of Birmingham Cable and
its subsidiaries. Certain financial covenants in the Birmingham Credit Facility
were amended by a Supplemental Agreement dated March 12, 1997. It was a
condition precedent to the closing of the Supplemental Agreement that the
shareholders of Birmingham Cable contribute an aggregate of not less than
(pound)7 million of debt or equity on or after January 1, 1997.
Cable London. Cable London covers approximately 160 square kilometers
and operates in the Camden, Haringey, Enfield, and Hackney and Islington
franchise areas. Cable London has approximately 445,000 franchise homes and
approximately 35,000 businesses (representing approximately 222,000 equity homes
and approximately 17,500 equity businesses based on the Company's current share
ownership of Cable London).
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The Company and Comcast each own 50.0% of the issued share capital of
Cable London. There is no voting arrangement between the Company and Comcast
with respect to Cable London.
The articles of association of Cable London generally prohibit a
shareholder from transferring legal or beneficial ownership of its shares
without giving each other shareholder a right of first refusal to acquire its
proportionate amount of such shares.
TWG and an affiliate of Comcast have entered into consulting agreements
with Cable London pursuant to which TWG provides consulting services relating to
telephony operations and the Comcast affiliate provides consulting services
relating to cable television operations. Under TWG's consulting agreement, Cable
London has agreed to pay TWG an annual fee based on the greater of (a) the
number of dwelling units in the Cable London franchise areas or (b) a percentage
of the gross revenues of Cable London from telecommunications services. The term
of the consulting agreement expires in accordance with its terms in August 1998.
The consulting agreement may be terminated by TWG upon a change of control of
Cable London.
In June 1995, Cable London entered into a two-year (pound)60 million
loan facility to finance a portion of the costs of the construction of its
network and operations (the "Cable London Facility"). Pursuant to the terms of
the Cable London Facility, payments or distributions to the shareholders of
Cable London, including payments of management fees, dividends and interest and
principal on loans to Cable London from its shareholders, are prohibited, except
for projected management fees financed by equity or subordinated loans. As a
condition precedent to the completion of the Cable London Facility, the Company
and Comcast (as the other principal shareholder of Cable London) entered into
deeds of subordination that provide that any prohibited payments otherwise due
to the shareholders from Cable London and its subsidiaries will accrue and not
be paid for the duration of the Cable London Facility. Cable London is currently
negotiating the terms of a new loan facility to replace the Cable London
Facility, although there can be no assurance that such facility will be
obtained.
Cable Corporation. Cable Corporation covers approximately 490 square
kilometers and operates in the Windsor franchise area (including Windsor,
Slough, Maidenhead, Staines, Ashford and Iver) and the Middlesex franchise area
(including the London boroughs of Hounslow and Hillingdon). Cable Corporation
has approximately 294,000 franchise homes and approximately 17,500 businesses
(representing approximately 49,000 equity homes and approximately 3,000 equity
businesses based on the Company's current share ownership of Cable Corporation).
TWH owns 16.5% of the issued share capital of Cable Corporation. The
remaining 83.5% is owned by General Cable.
TWG has entered into a consulting agreement with Cable Corporation and
certain of its affiliated companies (the "Cable Corporation Companies") pursuant
to which TWG provides consulting services relating to telephony operations.
Under this agreement, the Cable Corporation Companies have agreed to pay TWG an
annual fee based on the greater of (a) the costs incurred in providing
consulting services to the Cable Corporation Companies or (b) a
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percentage of the gross revenues of the Cable Corporation Companies from cable
telephony business. The consulting agreement continues in effect until December
31, 1998 and thereafter is renewable from year to year unless terminated on one
year's notice by either party.
Under Cable Corporation's articles of association, the consent of the
holders of not less than 15% of its issued ordinary share capital ("Significant
Investors") is required before Cable Corporation and any of its subsidiaries can
take certain actions in relation to themselves or their businesses. The Company
is a Significant Investor. Each Significant Investor has the right to appoint up
to two directors to Cable Corporation's board of directors.
The articles of association of Cable Corporation generally prohibit a
shareholder from transferring legal or beneficial ownership of its shares
without giving each other shareholder a right of first refusal to acquire its
proportionate amount of such shares. Transfers by certain corporate shareholders
to affiliates generally are excluded from this restriction.
In March 1996, Cable Corporation entered into financing arrangements
including a nine-year (pound)160 million loan facility and certain finance
leases to finance the construction of its network and operations (the "Cable
Corporation Credit Facility"). Pursuant to the terms of the Cable Corporation
Credit Facility, payments or distributions to the shareholders of Cable
Corporation, including payments of management fees, dividends, interest and
principal on loans to Cable Corporation from its shareholders, are prohibited so
long as there are any amounts outstanding to the banks under the financing
arrangements. Cable Corporation has defaulted on certain covenants under the
Cable Corporation Credit Facility and is currently in negotiations for the
modification of such covenants under the Cable Corporation Credit Facility.
EMPLOYEES
At December 31, 1996, the Company had 4,962 employees. None of these
employees is covered by collective bargaining agreements. The Company believes
that its relationship with its employees is good.
COMPETITION
The Company's cable television and cable telephony businesses compete
with a wide range of companies using a variety of technologies.
CABLE TELEVISION
General
As a result of the policy of the Independent Telecommunications
Commission ("ITC") of not granting more than one broadband cable license within
a franchise area for the foreseeable future, the Company does not compete for
customers with other cable operators within its respective franchise areas. The
Company does, however, compete with television programming provided by
terrestrial stations, DTH satellite services, video cassette rental stores,
satellite master antenna television systems and certain narrowband cable system
operators, and will
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compete with digital terrestrial services and may in the future compete with
programming provided by video-on-demand and other entertainment services
provided by PTOs. The Company also competes with other companies (which may
include PTOs and other cable operators) for the award of new franchises, the
purchase of existing franchises and new sources of capital.
The principal current and potential competitors for the cable
television business of the Company are the following:
Broadcast
Television viewing in the U.K. has long been one of the most popular
forms of entertainment and daily viewing time in the U.K. has been among the
highest in the world (weekly average of more than 26 hours per person during the
fourth quarter of 1996). Four broadcast channels are the predominant source of
television programming. Although the terrestrial television channels in the U.K.
generally are perceived as providing high-quality programming, an independent
market research study indicates that viewers have a preference for a wider
variety of television programming. This study indicates that in the U.K., more
than one-third of all viewing in homes with cable television or satellite
services was of cable or satellite channels. The Company believes that
acceptance of alternative programming, together with the relatively high
penetration of DTH satellite services and VCRs (discussed below) evidences a
willingness by many consumers in the U.K. to pay for additional programming.
The Company believes that its primary competitive advantages over
terrestrial television are significantly more programming options, access in the
future to interactive and integrated entertainment, communication and
information services and, in some areas, improved television reception. The
Company believes that the principal competitive advantage of terrestrial
television is its historical position as the leading source of in-home
entertainment in the U.K.
In December 1995, the ITC awarded a license for a fifth terrestrial
broadcast channel, Channel 5, to Channel 5 Broadcasting Limited. Channel 5,
which carries a mix of general entertainment programming, commences broadcasting
in March 1997.
DTH Satellite
In a DTH satellite system, a satellite television service provider
obtains programming from a variety of sources (including some of those used by
the Company) and transmits the programming signal up to a satellite which then
retransmits the signal down to customers. In order to receive satellite service
in the U.K., the customer must have an outdoor reception dish, which generally
is smaller and less expensive than the "C-band dish" typically used in the U.S.,
and some form of decoder.
DTH satellite services are widely available in the U.K. and are
becoming increasingly popular. DTH satellite penetration has increased from
approximately 500,000 homes in 1989 to 3,446,000 at December 31, 1996. BSkyB is
the leading supplier of satellite programming in the U.K. The "Sky Multi
Channels" package provided by BSkyB (which includes ten channels
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provided by Flextech or a provider in which an affiliate of TCI has an interest)
offers customers 30 basic channels, four premium channels and four bonus
channels.
BSkyB is the principal competitor of the Company in pay television as
well as one of its most important sources of programming. The Company purchases
ten of the channels provided by BSkyB to its DTH satellite customers. BSkyB also
has an interest in one of the two applicants for the U.K. digital terrestrial
television licenses as described below.
In order to encourage customers to change from DTH satellite service to
cable service, the Company has implemented a trade-in program under which it
offers a premium cable television service without charge for a certain period in
exchange for a customer's satellite dish and related equipment.
The Company believes that DTH satellite services will continue to be
significant competitors of the Company in the future. However, the Company
believes that cable television has a number of competitive advantages over DTH
satellite service, including the following: (a) DTH satellite service involves
up-front or ongoing costs for the purchase or rental of a dish and related
equipment, which are substantially higher than the up-front or ongoing equipment
costs for cable television, (b) satellite dishes are considered to be unsightly
by many and are prohibited by some U.K. planning guidelines, (c) cable offers a
sophisticated two way physical link, and in the future will offer interactive
and integrated entertainment, telecommunications and information services in
addition to television programming and (d) DTH satellite television generally
does not provide local programming. The Company believes that the principal
competitive advantage of DTH satellite service is the generally lower monthly
service charges for basic services and premium services than comparable services
provided by cable operators.
BSkyB has indicated that it intends to launch a digital service in late
1997 which may provide up to 200 channels including mulitplexed movies,
interactive services such as home shopping, home banking and "pay-per-view"
sports and movies. The Company intends to launch its digital services at
approximately the same time as the satellite digital offering although there can
be no assurance that this will be achieved and a delay may have a negative
impact on the Company's offering if it is launched after the satellite digital
offering.
Digital Terrestrial Television Broadcasting
Under the Broadcasting Act 1996, the ITC has been given responsibility
for the licensing and future regulation of digital terrestrial television which,
on introduction, is expected to provide 30 or more terrestrial channels serving
between 60% and 90% of the U.K. population. Existing terrestrial broadcasters
are given guaranteed capacity to simulcast their existing analogue services. In
January 1997, BSkyB, Carlton Communications and Granada Group announced they had
formed a joint venture and applied (in competition with another applicant) to
the ITC for three frequency ranges initially to provide 15 digital terrestrial
television channels, which will broadcast programming that may include BSkyB
programming currently available only through DTH satellite or cable television
as well as programming from the BBC. Digital terrestrial television will
broadcast from land-based transmitters and will be receivable by consumers with
conventional aerials. A digital decoder box or integrated
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digital television set would be needed to view the new channels, which are
expected to have digital picture and sound quality. The introduction of digital
terrestrial, as well as digital satellite television will provide additional
competition for the Company. See "Certain Regulatory Matters -- Future
Developments --Digital Broadcasting."
Video Cassette Rentals
In 1996, approximately 80% of the homes in the U.K. owned at least one
VCR. The Company believes that this penetration evidences a willingness by many
consumers in the U.K. to pay for programming in addition to that provided by the
terrestrial broadcasters. The Company believes that the principal competitive
advantages of cable television over videotape rentals include elimination of the
need for consumers to leave their premises to pick up and return the video
cassette and cost (cable programming is significantly less expensive on a
per-program basis than rental of videotapes). The principal advantages of
videotape rental over cable television are that it provides the consumer with
more flexibility in selecting specific programming and the timing of the
delivery of such programming and films generally are released earlier for video
cassette rentals than for satellite and cable television. This advantage may be
reduced by the development by cable operators of pay-per-view programming, which
would give cable customers more control over the specific programming viewed and
the timing of such programming.
Video-on-Demand
Video-on-demand will provide individual customers with the ability to
request a specific program for viewing at a specific time. Currently, no
video-on-demand service is commercially available in the U.K. BT has undertaken
a pilot program for this service to the homes of a limited number of BT
employees. However, the successful introduction of a video-on-demand service in
the Company's franchise areas, particularly by a PTO, would result in the
services of the Company being subject to increased competition.
SMATV and Narrowband Systems
SMATV systems receive television signals from either broadcast or
satellite sources and then distribute them by cable to a discrete area of
customers, typically within a limited geographic area (such as a block of flats)
to less than 1,000 homes. Narrowband systems, which typically serve more than
1,000 homes, are underground cable distribution systems that have significantly
less channel capacity than the broadband systems used by the Company. The
narrowband systems carry only a limited range of broadcast and satellite
programming and provide no voice telephony services. Most narrowband systems are
relatively old and serve only limited geographical areas within certain of the
Regional Franchise Areas (i.e., the Avon and Cotswolds, North East and South
East Regional Franchise Areas). The Company believes that currently there are
only a few SMATV systems licensed for or operating in the franchise areas of the
Company and the Company has a right of first refusal on any new SMATV systems
license issued for its franchise areas. There also are a number of old
narrowband systems that are licensed for or operating in the franchise areas of
the Company. The ITC has asked the Company to specify the date by which each of
the Regional Franchise Areas will be in a position
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to serve all the customers of the respective old narrowband systems in their
franchise areas and has indicated that it will terminate the licenses held by
such narrowband operators at such times. The Company currently expects that all
such narrowband licenses will be terminated by the ITC by 1998.
Other Cable Operators
Although cable operators in the U.K. generally co-operate on a variety
of technical, programming and marketing matters (such as through London
Interconnect), the operators do compete for the award of new franchises, the
purchase of existing franchises and sources of capital. Certain cable operators
that compete with the Company now or in the future may have greater financial
resources or other advantages which may increase their likelihood of obtaining
desirable franchises.
New Technologies
The extent to which new media and technologies will compete with cable
television systems in the future cannot be predicted and such media or
technologies may become dominant in the future and render cable television
systems less profitable or even obsolete.
CABLE TELEPHONY
General
BT is the largest provider of telephony services for residences and
businesses in the U.K. Historically, Mercury has focused on the business market
and long-distance and international telephony services, and has attempted to
increase its share of the business telephony market. Cable operators have
started to expand into the telephony market and, according to the ITC, there
were approximately 2,039,081 cable telephony lines in the U.K. as at December
31, 1996, as compared to approximately 1,287,000 as at December 31, 1995.
BT
BT is the principal competitor of the Company in providing telephony
services to residential and small-and medium-sized business customers. BT has an
established market presence, fully-built network and resources substantially
greater than those of the Company.
The Company seeks to compete with BT primarily by emphasizing the
competitive cost and, to a lesser extent, service advantages of its cable
telephony services.
To date, the Company generally has been able to price its cable
telephony call charges below those of BT. There can, however, be no assurance
that it will be able to continue to do so in the future. BT currently is subject
to regulatory controls over the prices it may charge customers. See "Certain
Regulatory Matters --Cable Telephony -- Price Regulation." As a result of these
controls, BT has in the past implemented and will in the future be required by
its Telecommunications License to reduce its prices further in each of the next
few years. The
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Company has modified its rates in order to maintain its price advantage over BT.
There can be no assurance, however, that any such price cuts will not adversely
impact the profitability of the telephony operations of the Company.
The Company believes that BT's competitive strength has been enhanced
until recently by the lack of number portability in the U.K. The Company
believes that many consumers have been reluctant to transfer their telephony
service away from BT or Mercury service until number portability was available.
The Company began offering number portability in some of its Regional Franchise
Areas in September 1996 and currently is rolling out the service in all of its
Regional Franchise Areas. See "Certain Regulatory Matters -- Cable Telephony
- --Number Portability."
Mercury Communications Limited
The Company also competes with Mercury in providing business telephony
services and, to a lesser extent, residential telephony services. The Company
competes with Mercury primarily based on price and services offered. Mercury has
(and following its announced merger will have) resources substantially greater
than those of the Company, and there can be no assurance that Mercury will not
expand its business or residential telephony services in the Company's existing
markets or that the Company will be able to continue to compete successfully
with Mercury. See "Industry Background and Company History -- Industry
Background."
Energis Communications Limited
Energis has substantially finished construction of a national broadband
network along existing electrical power pylons to provide telephony services. To
date, Energis has not marketed residential telephony lines and generally has
concentrated on the smaller business telephony market. The Company expects to
compete with Energis primarily based on price and services offered.
Other Competitors
The Company also competes in its telephony business with (and may
compete in the future with) new service providers such as Ionica L3 Limited and
Colt Communications. Mobile cellular telephony networks such as Cellnet (in
which BT has a 60% interest), Vodafone, Mercury One2One (in which affiliates of
U S WEST have a 50% interest) and Hutchison Microtel's "Orange" service, also
provide telephony service to customers. Currently, there are a number of
competitors who either are offering national services or are looking to offer
national services. The Company believes that this increased competition will
lead to a broad range of new packages and promotions, thereby resulting in a
decrease in the price of U.K. calls. For smaller customers, these new suppliers
are likely to offer indirect services as they may not be able to justify direct
connection.
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ACQUISITIONS AND DISPOSALS
Although the Company's strategy currently is to build on its existing
customer base and increase penetration and revenues per customer, in order to
increase revenues and economies of scale, the Company may from time to time
acquire one or more new or existing franchises either in public tenders by the
ITC or acquisitions from third parties. The Company believes that there may be
attractive acquisition opportunities in the future as some of the existing
franchise holders decide to divest all or a portion of their U.K. cable
franchises due to shortages of capital or other reasons. In that regard, the
Company has in the past and may in the future, engage in preliminary discussions
regarding acquisitions and business combinations in the U.K., some of which may
be significant and any of which may ultimately lead to acquisitions or business
combinations. Any such acquisitions or combinations may be funded, to the extent
available, from internally generated funds, the incurrence of indebtedness or
the issuance of equity, or a combination thereof.
CERTAIN REGULATORY MATTERS
General
Cable television and cable telephony operators in the U.K. are governed
by legislation, regulations and licenses issued under the Cable and Broadcasting
Act 1984 as construed by the Broadcasting Act 1990 (as amended by the
Broadcasting Act 1996) (the "Broadcasting Act") and the Telecommunications Act
1984 (the "Telecommunications Act"). An operator of a cable television and cable
telephony franchise in the U.K. covering more than 1,000 homes requires the
following two licenses for each franchise area:
(a) a telecommunications license (a "Telecommunications License"),
granted under the Telecommunications Act by the Secretary of State for Trade and
Industry (the "Secretary of State"), which authorizes the installation and
operation of the telecommunications network used to provide cable television and
telecommunications services, and
(b) a cable television license (a "Cable Television License"), which
authorizes the provision of cable television services within a defined
geographical area and which may be either:
(i) a prescribed diffusion service license ("PDSL"), granted
under the Cable and Broadcasting Act 1984 prior to
January 1, 1991 by the Cable Authority and continued in
effect by virtue of provisions of the Broadcasting Act,
which allows an operator to provide cable television
services by means of a cable network; or
(ii) a local delivery service license ("LDSL"), granted since
January 1, 1991 under the Broadcasting Act by the ITC
which allows an operator to deliver television and other
licensed programming services by means of a licensed
telecommunications network, including a cable network or
microwave distribution system.
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The Telecommunications Licenses and Cable Television Licenses contain
various conditions concerning the operation of the licensed telecommunication
system and the provision of broadcast services, respectively and, in the event
that such conditions are breached, the Director General or the ITC, as
appropriate, may take action to enforce compliance with such licenses. The ITC
or the Secretary of State has the power ultimately to revoke such licenses.
CABLE TELEVISION
The Broadcasting Act
The Broadcasting Act 1990 established the ITC to license and regulate
commercial television services (terrestrial and satellite) and the Radio
Authority to regulate radio services. The ITC's functions are, among other
things, to grant licenses for television broadcasting activities and to regulate
the commercial television sector by issuing codes on programming, advertising
and sponsorship, monitoring programming content and enforcing compliance with
the Broadcasting Act and license conditions. The ITC has the power to vary
licenses and impose fines and revoke licenses in the event of a breach of the
license conditions. The ITC also enforces ownership restrictions on those who
hold or may hold an interest in licenses issued under the Broadcasting Act. The
Broadcasting Act 1990 has been amended by the Broadcasting Act 1996. The
licensing provisions remain substantially the same, although some amendments
were made with regard to broadcast and radio services, including ownership
restrictions (see below).
Cable Television Licenses
General. As at December 31, 1996, Cable Television Licenses had been granted
for franchise areas covering approximately 17.9 million homes in the U.K. The
ITC has indicated that for the foreseeable future it will grant only one LDSL
for each geographical area. The ITC is also advertising and awarding LDSLs to
extend coverage to those areas not otherwise licensed. To date, the Company has
applied for three such licenses and it has been awarded two (for the Southport
and Blackpool franchises), and has been notified by the ITC that its bid for the
East Lothian franchise has been successful. LDSLs are awarded under competitive
bids to the applicant submitting the highest cash bid (payable annually over the
15-year term of the LDSL), unless it appears to the ITC that there are
"exceptional circumstances" (primarily geographic coverage) which make it
appropriate to award the license to another applicant. In addition, all
applicants must undertake to pay a percentage of qualifying revenue ("PQR") to
the ITC in each year of the license together with an annual sum equal to the
cash bid indexed against inflation plus certain other payments.
Under the Broadcasting Act, cable operators may carry certain licensed
services on their networks. Cable Television Licenses also require cable
operators to ensure that advertising and certain foreign satellite programs
carried by them as part of their services conform to the restrictions set forth
in the codes on advertising, sponsorship and programming issued by the ITC.
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All new LDSLs awarded to the Company since December 1994 include build
milestone obligations.
Term, Renewal and Revocation of Broadcasting Licenses. The Company holds both
PDSLs and LDSLs. The terms and renewals of such licenses are governed by the
Broadcasting Act as follows:
(a) Each of the Company's PDSLs was issued for a 15-year term but
applications may be made to the ITC for supplemental licenses which have the
effect of extending the term of the PDSLs for up to an additional eight years if
the cable operator holds a 23-year Telecommunications License. Fees continue to
be payable on the same basis as the PDSLs, but no PQRs or sums equal to the cash
bids will be payable during this extended term. If the Company elects to extend
the PDSL (as the Company has done in certain cases), upon expiration of such
PDSLs as so extended, the Company would be required to apply for a new LDSL
under the competitive bid procedures described above. If the Company elects not
to extend a PDSL, the Company may apply to the ITC (no earlier than five years
prior to the expiration of the PDSL) for a 15-year LDSL with respect to which it
must agree with the ITC on the amount of the cash bid and the PQR payments that
will be payable over the term of the LDSL.
(b) Each of the Company's LDSLs was issued for a 15-year term and this
term corresponds to the term of the predecessor PDSL or to a term commencing on
December 31, 1990, whichever is later. The term of the Company's LDSLs may not
be extended, but the Company may apply to the ITC (no earlier than five years
prior to the expiration of the LDSL) for a new 15-year LDSL, with respect to
which it must agree with the ITC on the amount of cash and PQR payments that
will be payable over the term of the LDSL.
The ITC can, after consultation with the Department of Trade and
Industry (the "DTI") and the Director General, revoke a Cable Television License
if an operator fails to comply with its conditions or with any direction of the
ITC and the ITC considers revocation to be in the public interest. If there is
any change in either the nature or characteristics of an operator that is a
corporate entity, or any change in the persons controlling or having an interest
in it, the ITC can revoke the license if it would not have awarded the license
had the new ownership or control existed at the time the application for the
license originally was considered. The ITC also can impose fines and shorten the
license period for licenses issued under the Broadcasting Act.
A Cable Television License is transferable with the consent of the ITC.
Ownership Restrictions. The ITC has a general duty to ensure that Cable
Television Licenses are held by "fit and proper" persons and may exercise
control over who may hold a license where financial assistance is provided to,
or influence is exercised over, a licenseholder which may produce results
adverse to the public interest. The Broadcasting Act also contains specific
restrictions on the types of entities which may hold Cable Television Licenses
or interests therein. Cable Television Licences may not be held by, among
others, the BBC, a local authority, a religious or political body (or one of its
officers) or any advertising agency or any entity controlled by it.
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The Secretary of State is also empowered to control accumulations of
interests in different licensed activities.
Price Regulation. Cable television pricing in the U.K. is not subject
to pricing restrictions, including pricing limitations, rate of return
assumptions or similar mechanisms of the kind imposed under U.S. cable
regulations. However, cable television pricing is subject to fair trading
regulation by the ITC and to the application of general competition law.
Digital Broadcasting
The Broadcasting Act 1996 introduced provisions for the licensing of
digital terrestrial broadcasting and introduced a "must carry" requirement on
cable companies where both program provider and cable operator use digital
technology to ensure the universal availability of designated free-to-air
service channels. Must carry obligations concerning public service channels
already apply to holders of PDSLs.
The Broadcasting Act 1996 permits the initial availability of six
television multiplexes, or frequency bands giving substantial national
terrestrial coverage, each with the ability to carry several television
channels. The new legislation includes provisions for the ITC's licensing of
"multiplex providers", who would initially be allocated, in aggregate, the six
multiplexes for 12-year license periods. Each multiplex provider will contract
with broadcasters for the transmission of the broadcasters' television services
via its allocated frequency band. The BBC has been separately allocated its own
multiplex on which it has announced it will broadcast its existing and
additional broadcast services. The Channel 3 companies and Channel Four have
applied to the ITC for another multiplex, on which they are required to
simulcast their existing analogue services, with capacity available for
additional services. The ITC announced on October 31, 1996 that it would accept
applications for licenses to provide terrestrial digital television services. On
January 31, 1997, the deadline for applications, the ITC had received two
competing applications for three of the multiplexes. One of the applicants is a
joint venture by BSkyB, Carlton Communications plc and Granada Group plc. S4C,
the Welsh fourth channel, has applied for another multiplex, on which half the
capacity in England, Scotland and Wales is reserved for Channel 5, and the other
half would be for S4C. The ITC had indicated it may award the licenses in Spring
1997.
The Advanced Television Services Regulations, which implemented the
Advanced Television Services Directive (Council Directive 95/47/EC on the use of
standard for the transmission of television signals) (the "ATS Regulations")
came into effect on January 7, 1997. The ATS Regulations cover the provision of
digital television services by means of conditional access systems. They also
amend the Telecommunications Act 1984 to include subscriber management services
as telecommunications services, and the systems over which these services are
provided as telecommunication systems, in each case subject to the general
telecommunications licensing and regulatory regime. The ATS Regulations amended
existing telecommunications licences so that conditional access services may
only be provided under the Class License for the running of telecommunications
systems for the provision of conditional access services (the "Conditional
Access Class License"). The ATS Regulations impose an enforceable statutory duty
on the provider of conditional access services to ensure that the system used to
provide those services has the necessary technical capability for cost effective
transcontrol at cable head-ends allowing for the possibility for full control by
cable television
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operators at local or regional level of the services using that conditional
access system. "Transcontrol" is the process by which the conditional access
operator's control data is removed and replaced so as to enable the rebroadcast
of the programming using the cable operator's own conditional access system.
There is also a supplemental duty on the conditional access service provider to
co-operate with the cable television operator (including by provision of
information on a timely basis) to ensure that the latter can take advantage of
the primary duty. The ATS Regulations impose duties on the operators of
conditional access services who do not simply self-provide (i.e., who do not
produce and market those services to third parties) to offer technical services
to broadcasters of digitally transmitted services on fair reasonable and
non-discriminatory terms so that viewers can receive the broadcasters' services
over their own networks.
Apart from the effect of the ATS Regulations, the provision of
conditional access services is regulated under the Conditional Access Class
License, granted on January 7, 1997. The Conditional Access Class License
regulates the provision of encryption services, subscriber authorization
services, subscriber management services and any other conditional access
service in connection with digital television services. The provider of such
services is required, unless it is only a self-provider, to offer them to
broadcasters on a fair, reasonable and non-discriminatory basis and to
co-operate to ensure the interconnectivity and interoperability of its system so
that the relevant services can be provided. Where a cable operator retransmits a
broadcaster's digital television services, the operator of a conditional access
service who provides conditional access services to the broadcaster must
co-operate with the cable operator so that the cable operator can transcontrol
and re-transmit those services cost-effectively and without incurring
unnecessary and unreasonable expense. The Conditional Access Class License also
incorporates the "fair trading" condition and other conditions including those
relating to prohibition on undue preference and undue discrimination, linked
transactions, publication of charges, essential interfaces, intellectual
property rights and separation of financial accounts. The Director General has
published, on a consultative basis, draft guidelines on the operation of the
Conditional Access Class License and final guidelines are expected shortly.
Media Ownership
The Broadcasting Act 1996 amends the media ownership rules contained in
the Broadcasting Act 1990. It relaxes the earlier rules limiting ownership
between terrestrial television, satellite and cable broadcasters, except for
those broadcasters which are already more than 20% owned by a newspaper with
more than 20% national newspaper circulation. Qualifying terrestrial
broadcasters are now allowed to have controlling interests in cable and
satellite companies, provided their total interests do not exceed 15% of the
total television market (defined by audience share including public service
broadcasters) and qualifying cable companies will be able to control terrestrial
television companies, subject to the 15% total television market limit and
certain restrictions on the number of terrestrial licenses held. Newspaper
groups with less than 20% national newspaper circulation are now able to control
television broadcasters constituting up to 15% of the total television market,
subject to a limit on the number of terrestrial licenses held, unless the ITC
decides that such control would be against the public interest. Newspaper
companies, the license holders of Channel 3 and Channel 5 and satellite and
cable broadcasters, are to have the ability to control any number of digital
terrestrial television licenses, in addition to any analogue licenses.
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Previous U.K. Government proposals have also contemplated a more
integrated system of media ownership and control in the longer term, to take
account of the increasing number of broadcasters and technological convergence,
and involving regulation of the media-market as a whole. The Company can give no
assurance as to whether these proposals for regulation will be enacted or, if
they were enacted, as to what their content would be or what effect they might
have on the Company's business.
CABLE TELEPHONY
The Telecommunications Act
The Telecommunications Act provides a licensing and regulatory
framework for telecommunications activities in the U.K. and established the
office of the Director General (supported by OFTEL), as an independent
regulatory authority. Telecommunications policy is overseen by the DTI. The
Secretary of State also has primary licensing authority under the
Telecommunications Act, although he may delegate that authority to the Director
General. The principal functions of the Director General are, among other
things, to monitor and enforce compliance with Telecommunications License
conditions, establish and administer standards for telecommunications equipment
and contractors, investigate complaints and exercise certain functions to
promote or ensure competition in telecommunications markets. The Director
General may modify Telecommunications Licenses either with the agreement of the
licensee following a statutory period of public consultation or following a
report of the MMC. The Director General is also empowered to issue enforcement
orders requiring compliance with Telecommunications License conditions which
have been breached.
Telecommunications Licenses
General. A Telecommunications License authorizes a cable operator to install
and operate the physical network used to provide cable television and
telecommunications services. It also authorizes the operator to connect its
system to other television and telecommunications systems, including those
operated by the terrestrial broadcasting authorities, satellite broadcasters and
PTOs. Although the Telecommunications License granted to a cable operator is for
a particular franchise area, it is not exclusive and, as a result, a cable
telephony operator is subject to competition in its franchise area with respect
to the provision of telephony services from PTOs (such as BT, Mercury and Colt)
and other telephony service providers.
A cable operator's Telecommunications License contains conditions
regulating the manner in which the licensee operates its telecommunications
system, provides telecommunications services, connects its systems to others and
generally operates its business. A cable operator's Telecommunications License
also contains a number of detailed provisions relating to the technical aspects
of the licensed system (e.g., numbering, metering and the use of technical
interfaces) and the manner in which the licensee conducts its business (e.g.,
publicity of certain prices, terms and conditions). In addition, a cable
operator's Telecommunications License contains prohibitions on undue preference
and discrimination in providing service and unfair cross-subsidy of other
services. The cable operator's Telecommunications License also
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<PAGE> 47
requires the licensee to comply with certain codes of practice and to provide
information which the Director General may require to carry out his statutory
functions.
All the Company's Telecommunications Licences are due to be amended by
the Director General of OFTEL to replace a number of existing conditions dealing
with specific forms of anti-competitive behavior with a "fair trading"
condition. This will enable the Director General to act against anti-competitive
behavior such as predatory pricing and undue cross-subsidization. The Director
General has published guidelines on the types of behavior which he considers to
be anti-competitive and on the enforcement procedure to be used. In addition to
those Telecommunications Licenses obtained for its cable franchise areas, the
Company was also awarded Telecommunication Licenses on January 14, 1997 for all
those geographic areas for which it does not hold Broadcasting Licenses and an
International Facilities Licences on December 17, 1996.
The fees payable for the Telecommunications License consist of an
initial fee payable on the grant of the license and annual fees thereafter. The
fees are based on a proportion of the costs of the Director General in
exercising his functions under the Telecommunications Act.
A Telecommunications License is not transferable. However, a change of
control of a licensee may be permitted subject to compliance with a notification
requirement, provided the proposed change is not, in the opinion of the
Secretary of State, against the interests of national security or relations with
the government of a country or territory outside the U.K.
Network Construction. Other than for LDSL licenses granted since December
1994, each Telecommunications License prescribes milestones that require the
licensee to construct its network to pass a specified number of premises by
certain dates. All but the final milestones may be varied by the Director
General "if he considers it to be in the interests of sound commercial
development" of the system. The final milestone can be modified only following a
public comment period and with the approval of the Director General. If the
milestones are not met, the Director General may take enforcement action which,
if not complied with, could result in the revocation of the Telecommunications
License by the Secretary of State.
A cable operator is not required to provide voice telephony services,
but where it does so and achieves a 25% or more share of the relevant market (as
determined by the Director General) within its licensed area, the licensee may,
at the direction of the Director General, be required to ensure that voice
telephony services are available to anyone in the licensed area who reasonably
requests them. No such direction has been received by the Company.
Under a Telecommunications License, the cable operator is subject to
and has the benefit of the Telecommunications Code promulgated under the
Telecommunications Act. The Telecommunications Code provides certain rights and
obligations with respect to installing and maintaining equipment such as ducts,
cables and cabinets on public or private land (including the installation of
equipment on public highways). Cable operators also have the benefit of the New
Roads and Street Works Act 1991 which provides them with the same rights and
responsibilities with respect to construction on public highways as other public
utilities. Cable operators generally are required to post bonds with local
authorities in respect of their obligation to ensure
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reinstatement of roads and streets in the event the operators becomes insolvent,
ceases to carry on business or has its Telecommunications Licenses terminated.
In order to install equipment on private property, cable operators must obtain
the agreement of occupiers, property owners and others.
Term, Renewal and Revocation of Telecommunications Licenses.
Telecommunications Licenses for cable operators originally were granted for an
initial period of either 15 or 23 years (depending on the technology used by the
licensee), commencing on the date service was first provided to customers. In
July 1992, following the Duopoly Review, technology-related discrimination in
license length was abandoned. The U.K. government invited all holders of 15-year
Telecommunications Licenses to apply for new 23-year licenses. However, a
licensee also had the right to extend a 15-year Telecommunications License to 23
years if it provided certain technical undertakings within five years of the
date of the original license grant. To date, the Company has given such
undertakings with respect to all of its Telecommunications Licenses and,
consequently, the Company's Telecommunications Licenses will expire at various
times between 2008 and 2017.
Upon expiration, a Telecommunications License cannot be renewed and
application must be made for a new license.
A Telecommunications License may be revoked if the licensee fails to
pay the license fees when due, if the licensee fails to comply with an
enforcement order, upon the occurrence of certain insolvency-related events or
if any Cable Television License relating to a licensee's system is revoked. A
Telecommunications License may also be revoked if, among other things, the
licensee fails to give the required notification to the DTI of changes in
shareholdings and agreements affecting control of the licensee or if the DTI
concludes that any such change would be against the interests of national
security or the U.K. government's international relations.
Duopoly Review
In 1991, the U.K. government concluded in its Duopoly Review that the
termination of the duopoly policy (which permitted only BT and Mercury to
operate local, national or international fixed-link networks in the U.K. to
provide public telephony services) might increase competition and benefit
consumers in the U.K. telecommunications market. As a result, the U.K.
government revised its policy and determined that applications for licenses
would be considered from any person seeking to operate new telecommunications
networks over local or national fixed links within the U.K. Such licenses
normally would be granted subject to the general statutory duties of the
Director General to ensure the provision of telecommunications services, to
satisfy all reasonable demands for them, and the ability of a person providing
the services to finance their operations. At the time of the Duopoly Review, the
exclusive right of BT and Mercury to provide international fixed links within
the U.K. was maintained. On December 17, 1996, the Government removed this
protection and licensed more than 40 companies (including the Company) to
provide full international telecommunications facilities.
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Interconnect Arrangements
The ability of cable operators to provide viable voice and other
telecommunications services is dependent on their ability to interconnect
cost-effectively with the telecommunications networks of the other PTOs in order
to complete calls that originate from a customer on their cable network but that
terminate off their network or that originate from a customer off their cable
network and terminate on their network. Since the Duopoly Review, cable
operators with contiguous franchises have been able to connect their networks
without regard to whether they are under common ownership without using the
services of BT or Mercury, and with national telecommunications licenses, cable
operators are able to link non-contiguous franchises over their private networks
(such as the Company's Interfranchise Network).
PTOs are required under their telecommunications licenses to enter into
interconnection agreements with other PTOs such as the Company (if requested to
do so by such a PTO), and the Company has interconnection agreements with BT,
Mercury and Telstra, as well as certain other cable operators. The BT agreements
may be terminated by either party upon two years' notice, the Mercury agreement
may be terminated by either party upon one years' notice and, the Telstra
Agreement may be terminated by either party on 90 days notice (but not to take
effect prior to September 3, 1997). If the Company is unable to negotiate
acceptable terms (including pricing) with BT, Mercury or Telstra in connection
with any continuation or extension of these agreements or scheduled reviews of
these agreements, the Company may request that the Director General determine
such terms. A recent case has established that it is possible for a regulated
company to challenge in the U.K. courts a determination by the Director General
of terms of interconnection agreements. The Director General also has the power
to make determinations in respect of certain obligations of any party under an
interconnection agreement.
OFTEL currently determines standard interconnect charges. The first
interim charge determination covered the period from April 1, 1995 to March 31,
1996. Interim charges are based on forecast financial statements (on a fully
allocated costs basis). OFTEL is currently assessing final charges based on BT's
final financial statements for that period. A draft determination was published
by OFTEL in February 1997. Final charges may involve a readjustment of charges
made under the interim determination where appropriate. At the end of 1996,
OFTEL published interim charges for the period from April 1, 1996 to March 31,
1997, which will be finalized later in 1997 or in early 1998.
On March 20, 1996, the Director General published a consultation paper
in which OFTEL proposed basing interconnection charges on forward looking
incremental costs. It is proposed that this would take effect from October 1997,
subject to a network price cap. This would impose an RPI-X% cap on interconnect
prices. Within that cap it is proposed that OFTEL would impose floors and
ceilings for interconnection services which would control BT's prices for its
various interconnection services. BT's prices are also subject to control by the
fair trading condition in its license which prohibits anticompetitive charging
and other behavior.
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In June and December 1996, the Director General published statements in
which he made it clear he is proposing to replace the annual determination of
charges with a system of network controls for those services which are not
competitive, using baskets of interconnection services, each subject to a charge
cap formula of RPI minus X%. Charges for those services which are expected to
become competitive during the next price control period (i.e., from October 1997
until the middle of 2001), will not be included in the network baskets, but will
be governed by safeguard caps of RPI plus 0%. Charges for those services which
are expected to become competitive before October 1997 or which are determined
by the Director General to be competitive during the control period, will be
free of network controls. The value of "X" has not as yet been decided and
neither have the starting values of the various interconnect charges and the
"floors and ceilings" of prices within the baskets. Further work on these areas
and on the model by which the Director General is to base charges on incremental
costs is to be carried out in 1997. The current proposals were subject to public
consultation, which ended on February 13, 1997. OFTEL has said it will publish a
further informal consultative document and its final proposals with license
modifications for formal consultation in 1997. If BT agrees to them, these
modifications to BT's license (including with respect to the new interconnect
charge regime) will become effective on October 1, 1997. If BT were to fail to
agree, there may be a reference to the Monopolies and Mergers Commission (the
"MMC"). In the period before recommendations of the MMC were implemented, the
current interconnection regime would continue.
Price Regulation
Although to date the Company generally has been able to price its cable
telephony call charges below those of BT, there can be no assurance that it will
be able to continue to do so in the future. BT currently is subject to controls
over the prices it may charge customers, including a requirement that the
overall charges it makes for a basket of services, including local,
long-distance and international calls, which for the period up to July 31, 1997
may not be increased by more than (or must be reduced by) an amount equal to the
change in the Retail Price Index ("RPI") less 7.5% per annum. As part of its
ongoing review of BT's pricing, in February 1996 OFTEL removed the price
controls on BT's line charges, thus enabling BT to rebalance line and call
charges. For the period July 31, 1997 to July 31, 2001, OFTEL has implemented a
new price cap on BT of RPI-4.5%. This price cap is to be applied to BT
residential customer prices only, and all BT business prices are excluded. In
general, the price controls impose downward pricing pressure in the U.K.
telephony market, and any change in such controls may influence the Company's
pricing policies.
BT's license has also now been modified to include the fair trading
conditions which prohibits BT from engaging in anti-competitive activity. This
provision gives OFTEL broad powers to stop anti-competitive activity by BT,
including with respect to pricing. Procedural guidelines have been issued
regarding the quality of the condition.
The level of cable telephony service prices charged by the Company and
other service providers other than BT currently are not regulated by the
Director General (although they are subject to general competition law
provisions). However, conditions prohibiting undue
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discrimination and unfair cross-subsidy are contained in the Company's
Telecommunications Licenses, and will shortly be replaced by a "fair trading"
condition and associated obligations.
Number Portability
In September 1996, with the introduction of "number portability" in the
U.K., the Company began offering BT and Mercury customers (residential and
business) the opportunity to transfer their service to the Company without
changing their existing telephone number. As of March 1, 1997, the Company had
implemented number portability in four of the seven Regional Franchise Areas and
to date customer interest has been strong, with 32,813 lines being transferred
to the Company during the period of September 1, 1996 through February 28, 1997
and no requests for line transfers from the Company during the same period. The
Company expects to have number portability introduced in all of its franchises
by September 1997.
Restrictions on National PTOs - Video-on-Demand
The Duopoly Review maintains restrictions upon BT and other national
PTOs (except Ionica and Liberty) which prevent BT from conveying or providing
entertainment services (such as the cable television services currently provided
by the Company) over their national telecommunications networks. The U.K.
Government stated that the restrictions upon the conveyance of such services may
be reviewed in 1998, but the restrictions regarding provision by the PTOs
themselves would not be reviewed until at least 2001. The Duopoly Review policy
did not, however, prevent the national PTOs from providing cable television
services of the kind currently provided by the Company so long as such services
are provided by separate subsidiaries of the national PTOs under separate
licenses similar to those held by the Company This policy may be changed in the
event of a change of government following the General Election to be held on May
1, 1997. Although full details are not available, it is understood that the
Labor Party is prepared to lift the restrictions on BT in return for BT
continuing to provide Internet access to schools and libraries.
The ITC's policy of granting one broadband license for each geographic
area ensured that no national PTO subsidiaries could compete directly with the
Company in the provision of cable television services in the same area. BT
currently owns and operates a single broadband cable franchise in the U.K., in
Westminster, Central London and has been successful in its bid for the Milton
Keynes franchise. Since April 1, 1994, such services may be provided locally by
the national PTOs without requiring separate subsidiaries, however, all other
licensing requirements, including the need for the national PTO to obtain an
LDSL to provide cable services within each locality, apply.
On September 29, 1993, the ITC issued a statement in which it concluded
that a national PTO such as BT could provide a "video-on-demand" service
nationally over its telecommunications network without requiring further
regulatory approvals in respect of the conveyance of such services. A
video-on-demand service was defined by the ITC as a service in which individual
programs are transmitted to only one household at a time in response to a
particular request. As such, a video-on-demand service in this context does not
embody cable television services of the kind provided by the Company for
simultaneous reception in multiple
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residential households. The ITC noted that its conclusions were shared by other
regulatory bodies (i.e., the DTI and OFTEL), but that the issue could only be
definitively resolved in the courts.
In a statement issued on December 7, 1993, the Director General
emphasized his commitment to the Duopoly Review policies and noted his concern
that a video-on-demand service which might be offered by BT should be made
available on terms which are fully consistent with the U.K. policy on the
competitive provision of telecommunication services. These policies have again
been reaffirmed by Ministers with responsibility for telecommunications policy
and by the Director General during the evidence to the enquiry conducted by the
Trade and Industry Select Committee of the House of Commons (the "Select
Committee") concerning optical fibre networks. The Select Committee issued a
report in July 1994 and recommended certain changes intended to encourage the
development of unfranchised areas by all PTOs and reduce uncertainty concerning
current restrictions with respect to entertainment services. The ITC issued a
statement on July 27, 1994 in which it confirmed that it attaches considerable
importance to the stability of the existing regulatory environment. Both OFTEL
and the DTI endorsed this view in November 1994. OFTEL published its response to
the Select Committee's report and the DTI gave its response in a paper entitled
"Creating the Superhighways of the Future: Developing Broadband Communications
in the U.K." Both stressed the importance of developing broadband services
together with the necessary broadband infrastructure so that customers can
benefit from new opportunities in the future. The DTI paper concluded that it
would not at this time undertake a fundamental revision of the regulatory regime
covering cable and local delivery franchising. In February 1997, the Department
of National Heritage re-affirmed the Government's commitment to this policy.
2. PROPERTIES
The Company's principal properties consist of numerous offices,
technical facilities, warehouses, customer services centers and retail outlets
in the various Regional Franchise Areas and Woking, Surrey. As of April 1, 1997,
the Company owned and leased an aggregate of approximately 750,000 square feet
(258,000 square feet of which was owned and 492,000 square feet of which was
leased). The Company's headquarters and network service center occupy
approximately 80,000 square feet of leased space located in Woking, Surrey. The
Company believes that its current properties are adequate for its current needs
and additional space can be obtained on reasonable terms to accommodate future
growth, if needed.
3. LEGAL PROCEEDINGS
The Company has not been involved in any legal or arbitration
proceedings which have had during the 12 months preceding the date of this
Report, or which are reasonably likely to have, a significant effect on the
Company's financial position, nor, so far as the Company is aware, is any such
proceeding pending or threatened.
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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* * * * *
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instructions G(3), the following information is
included as an additional item in Part I:
<TABLE>
<CAPTION>
Name Age(1) Position Held
---- ------ -------------
<S> <C> <C>
Stephen J. Davidson 41 Chief Executive Officer
Charles Burdick 45 Finance Director
Lynn C. Rexroth 58 Chief Operations Officer
Simeon Galpert 49 Senior Vice President of Finance(2)
Bruce D. Langham 49 Senior Vice President of Digital Services
Roger P. Wilson 45 Senior Vice President of Residential Services
Geoffrey Cheetham 50 Vice President Business Services
Howard Watson 33 Vice President Network Operations
Victoria M. Hull 34 General Counsel and Company Secretary
<FN>
- -------
(1) As of March 1, 1997
(2) Mr. Galpert has submitted his resignation from the Company effective as of March 31, 1997.
</FN>
</TABLE>
Mr. Davidson has served as a director of the Company since April, 1994
and as the Finance Director of the Company from January, 1993 until August,
1996. He was appointed acting Chief Executive Officer in August, 1996 following
the departure of Mr. Michels, and was confirmed as the Chief Executive Officer
in February, 1997. Previously, he worked for four years at Bankers Trust Company
in London where he was a Managing Director with responsibility for clients in
the media business throughout Europe.
Mr. Burdick was appointed Finance Director in February, 1997. He was
acting Chief Financial Officer from September, 1996. Prior thereto, he was Vice
President Finance and Assistant Treasurer at US WEST Inc. Prior to joining US
WEST in 1990, he worked in Treasury and Corporate Development roles at Time
Warner and Carnation International.
Mr. Rexroth has served as Senior Vice President of Group Operations
since January, 1996. Previously, he was Senior Vice President of
Telecommunications of the Company since December, 1992. He has more than 32
years of experience with U S WEST in the areas of marketing, network, carrier
service, finance, operations and regulatory matters. Before coming to the U.K.,
Mr. Rexroth's responsibilities included the provision of long-distance services
and interconnection to over 500 independent telephone companies located in U S
WEST's geographical area. He has been active in the U.S. States Telephone
Association and other national and regional telephone company organizations. Mr.
Rexroth's secondment term is scheduled to end in August, 1997.
Mr. Galpert has served as Senior Vice President of Finance of the
Company since June, 1994. Previously, he was a partner of the Westbury
Consulting Partnership from 1993 to 1994
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and group finance director and company secretary of the Birkdale Group PLC from
1991 to 1993 and Director of the Treasury of WPP Group plc from 1987 to 1991.
Mr. Galpert resigned from his position as Senior Vice President of Finance
effective as of March 31, 1997.
Mr. Langham has served as Senior Vice President of Digital Services
since September, 1996 and currently is responsible for the Company's digital
service. Previously, from January, 1994, he was Senior Vice President of
Operations for the Company's Midlands, Avon and Cotswolds, South East and London
South Regional Franchise Areas. Prior thereto, he was Managing Director of the
London South Regional Franchise Area from March 1993 to January 1994 and
Managing Director of the Scotland Regional Franchise Area from 1991 to 1993.
Prior to joining the Company, Mr. Langham was involved in the airline industry,
where he held several senior positions, including Managing Director of Scottish
European Airways Plc from 1989 to 1991.
Mr. Wilson has served as Senior Vice President of Operations since
September, 1996. Previously from October, 1995, he was responsible for the
Company's Scotland, North East and North West Regional Franchise Areas. Mr.
Wilson was also the Senior Vice President-Operations of SBCC from June, 1995 to
October, 1995 From October, 1993 to October, 1995, Mr. Wilson was the Managing
Director of Cable Midlands. From October, 1992 to September, 1993, Mr. Wilson
was the Vice President of Marketing for the SBCC Group. From 1991 until
September, 1992, Mr. Wilson was the Managing Director of Videotron Hampshire
Limited. Prior to joining Videotron Hampshire Limited, Mr. Wilson was the
Managing Director for Swindon Cable Limited from 1988 to 1991.
Mr. Cheetham has served as Vice President of Business Services since
March, 1995. Previously, from November 1991 to March 1995 he was the principal
partner in Breath of Fresh Air. From September 1988 to October 1991 he was the
General Manager of Marketing of British Telecom plc.
Mr. Watson has served as Vice President of Network Operations since
November, 1995. Previously, from June, 1993 to October, 1995, he was Director of
Engineering. From 1991 to June, 1993 he was Engineering Manager of Cablecom
Group of GPT.
Ms. Hull has served as General Counsel and Company Secretary since
July, 1994. Prior to joining the Company she was a solicitor in the corporate
department of Clifford Chance, where she qualified in 1987.
PART II
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
MARKET PRICE OF ORDINARY SHARES AND AMERICAN DEPOSITARY SHARES; RECORD HOLDERS;
DIVIDENDS
The information required by this item is included in the 1996 Annual
Report to
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shareholders under the heading, "Share and ADS Information," "Registrar and
Depositary" and "CREST - Share Settlement System" on page 88 and is incorporated
herein by reference.
CERTAIN TAX CONSEQUENCES OF OWNERSHIP OF ORDINARY SHARES AND ADSS.
GENERAL
The following generally summarizes the principal U.K. and U.S.
federal income tax consequences of the purchase, ownership and disposition of
Ordinary Shares or ADSs (evidenced by ADRs) to beneficial owners that are
residents or citizens of the U.S. and hold the Ordinary Shares or ADSs as
capital assets ("U.S. Holders"). BECAUSE THIS IS A GENERAL SUMMARY, PROSPECTIVE
PURCHASERS OF ORDINARY SHARES OR ADSS WHO ARE U.S. HOLDERS ARE ADVISED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL
TAX CONSEQUENCES, AS WELL AS TO THE U.K. TAX CONSEQUENCES, OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF ORDINARY SHARES OR ADSS APPLICABLE IN THEIR
PARTICULAR TAX SITUATIONS.
The statements of U.S. federal income tax and U.K. tax law set out
below are based (a) on the laws in force, and as interpreted by the relevant
taxation authorities, as of the date of this Proxy Statement, and are subject to
any changes (which may apply retroactively) in U.S. or U.K. law, or in the
interpretation thereof by the relevant taxation authorities, or in the
conventions between the U.S. and the U.K. relating to income and capital gains
(the "Income Tax Convention") and estate and gift taxes (the "Estate and Gift
Tax Convention"), occurring after such date and (b) in part, on representations
of the Depositary and on the assumption that each obligation in the Deposit
Agreement and any related agreement will be performed in accordance with its
terms.
This summary does not address the laws of any state or locality or
any foreign government (other than the U.K.). Further, this summary does not
address the tax consequences to particular classes of taxpayers that are subject
to special rules including, without limitation, dealers in securities or
currencies, insurance companies, tax exempt organizations, financial
institutions, persons that hold their Ordinary Shares or ADSs as part of a
straddle, hedging or "conversion transaction", persons whose functional currency
is other than the U.S. dollar, tax-exempt investors or persons owning directly,
indirectly or constructively, 10% or more of the Company's stock. This summary
does not address the U.K. or U.S. tax treatment of persons who hold Ordinary
Shares or ADSs through a partnership or other pass-through entity. Except to the
limited extent discussed below, it does not consider the U.K. tax or U.S. tax
consequences to a person other than a U.S. Holder (a "Non-U.S. Holder").
For purposes of the Conventions and the Code, U.S. Holders will be
treated as the owners of the Ordinary Shares represented by ADSs evidenced by
ADRs. Accordingly, and except as noted below, the U.K. tax and U.S. federal
income tax consequences discussed below apply equally to beneficial owners of
both Ordinary Shares and ADSs that are U.S. Holders.
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TAXATION OF DIVIDENDS
For the purposes of this summary, the term "Eligible U.S. Holder"
means a beneficial owner of an ADS or an Ordinary Share (a) that derives and
beneficially owns the cash dividend paid thereon, (b) that is an individual, a
corporation, a trust or estate resident in the U.S. (and, in the case of a
corporation, not also resident in the U.K. for U.K. tax purposes) for the
purposes of the Income Tax Convention and (c) whose holding is not effectively
connected with a "permanent establishment" through which the Eligible U.S.
Holder carries on business in the U.K. with a "fixed base" in the U.K. from
which the Eligible U.S. Holder performs independent personal services. Such term
excludes, however, (a) a beneficial owner who owns at least 10% of the Ordinary
Shares in respect of which the dividend is paid, (b) under certain
circumstances, a corporation 25% or more of the capital of which is owned
directly or indirectly by one or more persons who are not individual residents
or nationals of the U.S. and (c) a U.S. corporation that controls, directly or
indirectly (either alone or with one or more associated corporations), 10% or
more of the voting stock of the Company.
The Company is required, when paying a dividend in respect of the
Ordinary Shares, to account to the U.K. Inland Revenue for a payment known as
advance corporation tax ("ACT"). The rate of ACT at present is equal to 25% of
any dividend paid to shareholders, which is equivalent to 20% of the sum of the
dividend and the related ACT.
An Eligible U.S. Holder is entitled under the Income Tax Convention
and current U.K. law to claim from the U.K. Inland Revenue a refund of an amount
equal to the ACT paid by the Company in respect of the dividend (the "Tax Credit
Amount"), but subject to a 15% U.K. withholding tax on the combined sum of the
dividend paid and the related Tax Credit Amount. For example, assuming
continuance of ACT at the rate of 25% of a dividend paid, a dividend of
(pound)8.00 paid to such an Eligible U.S. Holder would generally entitle the
Eligible U.S. Holder to claim (pound)0.50 (a Tax Credit Amount of (pound)2.00
less a withholding of (pound)1.50) from the U.K. Inland Revenue, giving a total
cash received, after U.K. taxes but before U.S. taxes, of (pound)8.50.
If the Eligible U.S. Holder is a U.S. trust or estate, the Tax Credit
Amount will be available only to the extent that the income derived by such
trust or estate is subject to U.S. tax as the income of a resident either in its
hands or in the hands of its beneficiaries, as the case may be.
For U.S. federal income tax purposes, the gross amount of a dividend
plus the Tax Credit Amount, including the 15% U.K. withholding tax thereon, (a)
will be included in gross income by a U.S. Holder and (b) will be treated as
foreign source dividend income to the extent paid out of current or accumulated
earnings and profits as determined for U.S. federal income tax purposes. Subject
to certain limitations, the 15% U.K. withholding tax will be treated as a
foreign income tax eligible for credit against such Eligible U.S. Holder's
federal income tax (or, alternatively, a deduction in computing such U.S.
Holder's taxable income). The consequences of these limitations will depend on
the nature and sources of each Eligible U.S. Holder's income and the deductions
appropriately allocated or apportioned thereto. In general, no dividends
received
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<PAGE> 57
deduction will be allowed with respect to dividends paid by the Company. The
amount of the dividend will be the U.S. dollar spot value of the dividend on the
date of receipt, regardless of whether the payment is in fact converted into
U.S. dollars on such date. Exchange gain or loss, if any, recognized by an
Eligible U.S. Holder on a sale or other disposition of pounds received pursuant
to the dividend will generally be U.S. source ordinary income or loss.
Arrangements exist with the U.K. Inland Revenue under which certain
Eligible U.S. Holders of ADSs (i.e., (a) a U.S. corporation, (b) an individual
resident in the U.S. and not resident in the U.K. or (c) a trust or estate all
the beneficiaries of which are resident in the U.S. or Canada) generally will
receive directly from the Company together with the payment of the associated
dividend payment of the Tax Credit Amount to which such Holder is entitled, net
of the applicable U.K. withholding tax, without the need to file a claim for
refund. To claim the benefit of the arrangements, the registered holder must
complete the declaration on the reverse of the dividend check confirming the
Eligible U.S. Holder's entitlement to the Tax Credit Amount and present the
check for payment within three months from the date of issue of the check. These
arrangements can be terminated or altered without notice by the U.K. Inland
Revenue.
In addition, arrangements exist with the U.K. Inland Revenue under
which an Eligible U.S. Holder of Ordinary Shares will receive payment of the
U.K. tax credit at the same time as and together with the payment of the
associated dividend. In order to receive such payment, the Eligible U.S. Holder
must have the Ordinary Shares registered in the name of a nominee approved by
the U.K. Inland Revenue for such purpose, and the nominee must follow certain
procedural requirements. In addition, the qualifying holder must be either: (a)
an individual who: (i) is not resident in the U.K. and does not retain the use
of any accommodation in the U.K., (ii) has not during the previous four years
been in the U.K. for as much as three months a year on average, or for a period
or periods amounting in the aggregate to six months in the relevant U.K. income
tax year; (iii) has not been absent from the U.S. for a complete U.S. tax year
in any of the previous four years; (iv) does not have a permanent establishment
in the U.K. and (v) does not own 10% or more of the class of shares in respect
of which the dividend is paid; or (b) a corporation: (i) which is managed and
controlled in the U.S. and does not have a permanent establishment in the U.K.;
(ii) which does not, either alone or together with one or more associated
corporations, control, directly or indirectly, 10% or more of the voting power
in the Company; (iii) which does not own 10% or more of the class of shares in
respect of which the dividend is paid; (iv) which is liable for U.S. tax on the
dividend and (v) at least 75% of the capital of which is owned directly or
indirectly by persons who are U.S. residents. These arrangements will be
extended to trusts, estates in the course of administration, pension funds,
foundations and similar bodies only with the prior approval of the U.K. Inland
Revenue.
Certain Eligible U.S. Holders who are not entitled to receive payment
of the U.K. Tax Credit Amount from the Company with payment of the associated
dividend but who, nevertheless, are entitled to a refund of the Tax Credit
Amount, net of the U.K. withholding tax, must file a claim for the Tax Credit
Amount in the manner described in U.S. Revenue Procedure 80-18, 1980-1 C.B. 623,
as modified by U.S. Revenue Procedures 81-58, 1981-2 C.B. 678; 84-60, 1984-2
C.B. 504, and 90-61, 1990-2 C.B. 657. Claims for tax refund must be made within
six years of the U.K. year of assessment (generally the 12-month period ending
April 5 in each year)
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in which the related dividend was paid. The first claim by a claimant for a tax
credit under these procedures is made by sending the appropriate U.K. form
(FD/13) in duplicate to the Director of the Internal Revenue Service Center with
which the holder's last U.S. federal income tax return was filed. Forms may be
available from the U.S. Internal Revenue Service Assistant Commissioner
(International), 950 L'Enfant Plaza South, S.W., Washington, D.C. 20024,
Attention: Taxpayers Service Division. Because a refund claim is not considered
made until the U.K. tax authorities receive the appropriate form from the U.S.
Internal Revenue Service, forms should be sent to the U.S. Internal Revenue
Service well before the end of the applicable limitation period. Any claim by a
claimant after the first claim by such a U.S. Holder for payment under these
procedures should be filed directly with the U.K. Financial Intermediaries and
Claims Office, Fitz Roy House, P.O. Box 46, Nottingham, England, NG2 1BD.
Under Section 812 of ICTA 1988, the U.K. government has the power to
deny the payment of associated U.K. tax credits under the Income Tax Convention
to a corporation that controls, directly or indirectly, either alone or together
with one or more corporations, which are treated as associated for the purposes
of the Income Tax Convention, at least 10% of the voting power of the Company,
if it or an "associated company" (as defined in Section 416 ICTA 1988) has a
"qualifying presence" (as defined in Section 812 ICTA 1988) in a state in the
U.S. which operates a unitary system of corporation taxation. These provisions
will come into force only if the U.K. government so determines by statutory
instrument. No such instrument has yet been made.
Subject to the discussion below regarding backup withholding tax, a
Non-U.S. Holder of Ordinary Shares or ADSs generally will not be subject to U.S.
federal income or withholding tax on dividends received on Ordinary Shares or
ADSs, unless such income is effectively connected with the conduct of a trade or
business in the U.S. and, in general, in the case of a Non-U.S. Holder entitled
to benefits under a tax treaty, attributable to a permanent establishment or
fixed base in the U.S.
TAXATION OF CAPITAL GAINS
A U.S. Holder who is not resident or ordinarily resident in the U.K.
for U.K. tax purposes will not be liable for U.K. tax on capital gains realized
or accrued on the sale or other disposal of Ordinary Shares or ADSs unless the
Ordinary Shares or ADSs are held in connection with a trade, profession or
vocation carried on by such U.S. Holder in the U.K. through a branch or agency
which constitutes a permanent establishment or fixed base and the Ordinary
Shares or ADSs are or have been used, held or acquired for the purposes of such
trade, profession or vocation of such branch or agency. A U.S. Holder will be
liable for U.S. federal income tax on such gains to the same extent as on any
other gains from sales or disposition of stock.
Assuming that gain on the disposition of Ordinary Shares or ADSs
would not be subject to U.K. tax, such gain would be U.S. source income for U.S.
foreign tax credit limitation purposes. Deposits and withdrawals of Ordinary
Shares by U.S. Holders in exchange for ADSs will not result in the realization
of gain or loss for U.K. capital gains tax or U.S. federal income tax purposes.
Subject to the discussion below of backup withholding, a Non-U.S. Holder of
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<PAGE> 59
Ordinary Shares or ADSs will not be subject to U.S. federal income or
withholding tax on gain realized on the sale of Ordinary Shares or ADSs unless
(i) such gain is effectively connected with the conduct by the Non-U.S. Holder
of a trade or business in the U.S. and, in general, in the case of a Non-U.S.
Holder entitled to benefits under a tax treaty, such gain is attributable to a
permanent establishment or fixed base in the U.S. or (ii) in the case of gain
realized by an individual Non-U.S. Holder, the Non-U.S. Holder is present in the
U.S. for 183 days or more in the taxable year of the sale and certain other
conditions are met.
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders are generally subject to information reporting
requirements with respect to dividends paid in the U.S. on Ordinary Shares or
ADSs. Under existing regulations, such dividends are not subject to back up
withholding. However, under proposed regulations such dividends paid in the
United States would be subject to back up withholding. Non-U.S. Holders will not
be subject to information reporting or back up withholding with respect to
dividends on Ordinary Shares or ADSs, unless payment is made through a paying
agent (or office) in the U.S. Non-U.S. Holders generally will be subject to
information reporting (and, under proposed regulations, could be subject to back
up withholding at a rate of 31%) with respect to the payment within the U.S. of
dividends on Ordinary Shares or ADSs, unless the holder provides a taxpayer
identification number, certifies to its foreign status, or otherwise establishes
an exemption.
U.S. Holders generally will be subject to information and back up
withholding at 31% on proceeds paid from the disposition of Ordinary Shares or
ADSs unless the U.S. Holder provides an IRS Form W-9 or otherwise establishes an
exemption. Non-U.S. Holders generally will be subject to information reporting
and back up withholding at a rate of 31% on the payment to or through the U.S.
office of a broker, whether domestic or foreign, of proceeds from the
disposition of Ordinary Shares or ADSs, unless the holder provides a taxpayer
identification number, certifies to its foreign status or otherwise establishes
an exemption. Non-U.S. Holders will not be subject to information reporting or
back up withholding with respect to the payment by a foreign office of a broker
of proceeds from the disposition of Ordinary Shares or ADSs provided, however,
that, if the broker is a U.S. person or "U.S. related person," information
reporting (but not back up withholding) will apply, unless the broker has
documentary evidence in its records of the Non-U.S. Holder's foreign status, the
Non-U.S. Holder certifies to its foreign status under penalties of perjury or
otherwise establishes an exemption. For this purpose, a "U.S. related person" is
a broker or other intermediary that is a controlled foreign corporation for U.S.
federal income tax purposes or that is a person 50% or more of the gross income
from all sources of which, over a specified three year period, is effectively
connected with the conduct of a U.S. trade or business.
The amount of any back up withholding will be allowed as a credit
against such holder's U.S. federal income tax liability and may entitle such
holder to a refund, provided that the required information is furnished to the
U.S. Internal Revenue Service.
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PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS
The Company generally will be a passive foreign investment company
("PFIC") for U.S. federal income tax purposes for any taxable year (i.e., the
period from January 1 to December 31) in which either (a) 75% or more of its
gross income is passive income or (b) on average for the taxable year, 50% or
more of its assets (measured by U.S. tax basis) produce or are held for the
production of passive income. The Internal Revenue Service has indicated that
cash balances, even if held as working capital, are considered to be passive
assets that produce passive income. As of the date of this Proxy Statement, the
Company does not believe it is a PFIC for U.S. federal income tax purposes, and,
based on current projections, the Company does not anticipate that it will
become a PFIC. No assurance can be given, however, that the Company will not
become a PFIC in the future.
The Company will monitor its status and, promptly following the end
of any taxable year, will notify shareholders if it believes that it is properly
classified as a PFIC for that taxable year, in which case it will comply with
the reporting requirements necessary for U.S. Holders to elect to treat the
Company as a "qualified electing fund" (a "QEF election"). If the Company were a
PFIC, U.S. Holders of Ordinary Shares or ADSs may suffer unfavourable U.S.
federal income tax consequences. This summary does not address the consequences
were the Company determined to be a PFIC. U.S. Holders should consult their own
tax advisers concerning the U.S. tax consequences of holding Ordinary Shares or
ADSs if the Company were considered to be a PFIC, including the consequences of
making a QEF election.
U.K. ESTATE AND INHERITANCE TAX
An Ordinary Share or ADS beneficially owned by an individual U.S.
Holder who is domiciled in the U.S. for the purposes of the Estate and Gift Tax
Convention and is not domiciled in the U.K. for such purposes is not subject to
U.K. inheritance tax on the individual's death or U.K. gift tax on a gift made
by the individual during his lifetime except where the Ordinary Share or ADS is
part of the business property of a U.K. "permanent establishment" of the
individual or pertains to a U.K. "fixed base" of an individual used for the
performance of independent personal services. The Estate and Gift Tax Convention
generally provides for tax paid in the U.K. to be credited against any tax
payable in the U.S. and for tax paid in the U.S. to be credited against any tax
payable in the U.K., based on priority rules set forth in that Convention, in a
case where an Ordinary Share or ADS is subject both to U.K. inheritance tax and
to U.S. federal gift or estate tax. There are special individual rules applying
to trusts. Ordinary Shares or ADSs held in a trust created by a U.S. Holder who
is not domiciled in the U.K. normally will fall outside the scope of U.K.
inheritance tax.
STAMP DUTY AND STAMP DUTY RESERVE TAX
Stamp duty reserve tax at the then-applicable rate arises upon the
deposit with the Depositary of the Ordinary Shares. The current rate of stamp
duty reserve tax is (pound)1.50 per (pound)100 (or part thereof). The stamp duty
reserve tax on the initial deposit of the Ordinary Shares represented by the
ADSs was paid by the Company. On the transfer of further Ordinary Shares to
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the Depositary, stamp duty reserve tax will be payable by the Depositary and
under the Deposit Agreement, holders of ADRs must pay an amount equal to such
tax to the Depositary.
Provided that the instrument of transfer is not executed in the U.K.
and remains at all subsequent times outside the U.K., no U.K. stamp duty will be
payable on the acquisition or transfer of ADSs evidenced by ADRs, nor will an
agreement to transfer ADSs evidenced by ADRs give rise to a liability to stamp
duty reserve tax.
A transfer of Ordinary Shares by the Depositary or its nominee to the
beneficial owner of the relevant ADS or its nominee when the beneficial owner is
not transferring beneficial ownership will give rise to U.K.
stamp duty at the rate of 50p per transfer.
Purchasing Ordinary Shares, as opposed to ADSs, will normally give
rise to a charge to U.K. stamp duty or stamp duty reserve tax at the rate of 50p
per (pound)100 (or part) of the price payable for the Ordinary Shares. Stamp
duty and stamp duty reserve tax generally are the liabilities of the purchaser.
Where such Ordinary Shares are later transferred to the Depositary's nominee,
further stamp duty or stamp duty reserve tax will normally be payable at the
rate of (pound)1.50 per (pound)100 (or part thereof) of the value of the
Ordinary Shares at the time of transfer. However, where Ordinary Shares being
acquired are transferred directly to the Depositary's nominee, the only charge
will generally be the higher charge of (pound)1.50 per (pound)100 (or part) of
the price payable for the Ordinary Shares so acquired.
The U.K. government has announced its intention to abolish both stamp
duty and stamp duty reserve tax in respect of the transfer of securities from a
date which has not yet been announced.
6. SELECTED FINANCIAL DATA
The information required by this item is included in the 1996 Annual
Report to Shareholders under the heading "Supplementary Financial Information --
Five Year Summary" on page 87 and is incorporated herein by reference.
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is included in the 1996 Annual
Report to Shareholders under the heading "Financial Review" on pages 24 to 31
and is incorporated herein by reference.
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included in the 1996 Annual
Report to Shareholders under the heading "Financial Statements under U.S. GAAP"
on pages 67 through 86 and is incorporated herein by reference.
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9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to executive
officers is set forth in Part I under the caption "Executive Officers of the
Registrant".
The information required by this item with respect to directors is
included in the Proxy Statement under the headings "Appointment of Directors"
and "Compliance with Section 16(a) of the U.S. Securities Exchange Act of 1934"
and is incorporated herein by reference.
11. EXECUTIVE COMPENSATION
The information required by this item is included in the Proxy
Statement under the heading "Executive Compensation" and is incorporated herein
by reference.
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is included in the Proxy
Statement under the headings "Security Ownership of Principal Shareholders" and
"Security Ownership of Directors and Executive Officers" and is incorporated
herein by reference.
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included in the Proxy
Statement under the heading "Certain Relationships and Related Transactions" and
is incorporated herein by reference.
PART IV
14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
1. FINANCIAL STATEMENTS.
Included in Part II, Item 8 of this report (by incorporation by reference to the
1996 Annual Report to Shareholders) are the following:
Independent Auditors' Report
Consolidated Statement of Operations for the years ended December 31,
1996, 1995 and 1994
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Consolidated Balance Sheet at December 31, 1996 and 1995
Consolidated Statement of Cash Flows for the years ended December 31,
1996, 1995 and 1994
Consolidated Statement of Shareholders' Equity for the years ended
December 31, 1996, 1995 and 1994
Notes to the Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES.
All schedules are omitted because the required information is not applicable or
is included in the financial statements or related notes.
3. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
(a) Exhibits.
<S> <C> <C>
3.1 -- Memorandum of Association of the Company. (Incorporated by reference to the Company's
Registration Statement on Form 8-B, filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
3.2 -- Articles of Association of the Company. (Incorporated by reference to the Company's
Registration Statement on Form 8-B, filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
4.1 -- Amended and Restated Deposit Agreement, dated as of November 30, 1994 (as amended as
of October 2, 1995), among the Company, The Bank of New York, as Depositary, and the
holders from time to time of American Depositary Receipts issued thereunder.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
4.2 -- Form of American Depositary Receipt (included in Exhibit 4.1).
4.3 -- Senior Debenture Indenture, dated as of October 3, 1995, between the Company and The
Bank of New York, as Trustee. (Incorporated by reference to the Company's 1995 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on April 1,
1996).
4.4 -- Senior Discount Debenture Indenture, dated as of October 3, 1995, between the Company
and The Bank of New York, as Trustee. (Incorporated by reference to the Company's 1995
Annual Report on Form 10-K filed with the Securities and Exchange Commission on April
1, 1996).
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
4.5 -- Form of Senior Debenture (included in Exhibit 4.3).
4.6 -- Form of Senior Discount Debenture (included in Exhibit 4.4).
4.7 -- Deposit Agreement, dated as of October 3, 1995, between the Company and The Bank of
New York, as Book-Entry Depositary. (Incorporated by reference to the Company's 1995
Annual Report on Form 10-K filed with the Securities and Exchange Commission on April
1, 1996).
10.1 -- Relationship Agreement, dated as of November 22, 1994, by and among Old Telewest,
certain subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by
reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 1995).
10.2 -- Shareholders Agreement, entered into as of November 22, 1994, between certain
subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by reference
to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1995).
10.3 -- Registration Rights Agreement, dated October 3, 1995, among the Company, the TCI
Affiliate, the U S WEST Affiliates, the SBC Affiliates and the Cox Affiliate.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
10.4 -- Co-Operation Agreement, dated October 3, 1995, between the SBC Affiliates and the Cox
Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 1, 1996).
10.5 -- Share Dealing Agreement, dated October 3, 1995, among the TCI Affiliate, the U S WEST
Affiliates, the Company and the SBC Affiliates. (Incorporated by reference to the
Company's 1995 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996).
10.6 -- Tax Deed, dated November 22, 1994, between TCI International Holdings, Inc., U S WEST
Holdings and Old Telewest. (Incorporated by reference to Old Telewest's 1994 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March 31,
1995).
10.7 -- Trademark License Agreement, effective as of November 22, 1994, between Old Telewest
and U S WEST. (Incorporated by reference to Old Telewest's 1994 Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 1995).
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
10.8 -- Tradename Agreement, effective as of November 22, 1994, between Old Telewest, TCI and
TCI/U S WEST Cable Communications Group. (Incorporated by reference to Old Telewest's
1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 1995).
10.9 -- Tax Deed, dated October 3, 1995, among the Company, the SBC Affiliates and the Cox
Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 1, 1996).
10.10 -- Consultant Agreement for Operational Assistance, dated July 17, 1992, among Birmingham
Cable Corporation Limited ("BCCL"), Birmingham Cable Limited ("BCL") and Telewest
Communications Group Limited ("Telewest CGL"). (Incorporated by reference to Old
Telewest's Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on April 29, 1994, as amended (Registration No. 33-78398)).
10.11 -- Supplemental Agreement, dated April 8, 1994, relating to the Consultant Agreement
referred to in Exhibit 10.5 (Incorporated by reference to Old Telewest's Registration
Statement on Form S-1 filed with the Securities and Exchange Commission on April 29,
1994, as amended (Registration No. 33-78398)).
10.12 -- Management Agreement, dated April 25, 1990, among BCCL, BCL, U S WEST Holdings and
Comcast Cablevision of Birmingham Inc. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.13 -- Assignment and Amendment Agreement, dated August 5, 1992, relating to the Management
Agreement referred to in Exhibit 10.7 (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.14 -- Consultant Agreement, dated August 16, 1989, between Cable London plc and U S WEST
Cable Communications Limited. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
10.15 -- Consultant Agreement for Technical Assistance, dated July 15, 1992, among Cable
Corporation, Windsor Television Limited, Middlesex Cable Limited and Telewest CGL.
(Incorporated by reference to Old Telewest's Registration Statement on Form S-1 filed
with the Securities and Exchange Commission on April 29, 1994, as amended
(Registration No. 33-78398)).
10.16 -- Cable Affiliation Agreement, dated December 14, 1993, between Cable Programme Partners
- Limited Partnership, Telewest CGL and other parties signatory thereto. (Incorporated
by reference to Old Telewest's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on April 29, 1994, as amended (Registration No.
33-78398)).
10.17 -- Agreement, dated October 1, 1993, among Alan Stewart MacDonald Robinson, Jack Forrest
Gill, Raman Subba Row Limited and TUCCI. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.18 -- Co-ownership Agreement, dated March 12, 1990, between U S WEST Holdings and Comcast
Cablevision of Birmingham, Inc. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.19 -- Letter, dated April 29, 1992, relating to the Co-ownership Agreement referred to in
Exhibit 10.13. (Incorporated by reference to Old Telewest's Registration Statement on
Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
amended (Registration No. 33-78398)).
10.20 -- Letter, dated November 27, 1992, relating to the Co-ownership Agreement referred to in
Exhibit 10.13. (Incorporated by reference to Old Telewest's Registration Statement on
Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
amended (Registration No. 33-78398)).
10.21 -- Agreement to License and Provide Consulting Services, effective as of November 22,
1994, between Old Telewest and an affiliate of U S WEST. (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.22 -- Agreement, dated December 4, 1987, between United Cable Television Corporation on
behalf of itself and United Artists Communications, Inc. and Trans-Global (U.K.)
Limited. (Incorporated by reference to Old Telewest's Registration Statement on Form
S-1 filed with the Securities and Exchange Commission on April 29, 1994, as amended
(Registration No. 33-78398)).
</TABLE>
64
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<TABLE>
<CAPTION>
<S> <C> <C>
10.23 -- Agreement to License and Provide Consulting Services, effective as of November 22,
1994, between Old Telewest and TCI. (Incorporated by reference to Old Telewest's 1994
Annual Report on Form 10-K filed with the Securities and Exchange Commission on March
31, 1995).
10.24 -- Novation Agreement relating to Birmingham Cable, dated November 21, 1994, among
General Cable, TUCCI, U S WEST Holding and other parties signatory thereto.
(Incorporated by reference to Old Telewest's 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31, 1995).
10.25 -- Subscription and Shareholders Agreement, dated January 30, 1995, among Videotron
Corporation Limited, United Artists Communications (London South) Limited, Cable
London, Elt Acquisition Company Limited, Nynex CableComms Limited, Cable Corporation,
London Interconnect Limited, Independent Cable Sales Limited, London Interconnect PPV
Limited and London Interconnect Limited. (Incorporated by reference to the Company's
Registration Statement on Form 8-B filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
10.26 -- Form of BT Interconnect Agreement, a copy of which was executed by BT and various of
the Company's affiliated entites.*
10.27 -- Interconnection Agreement, dated July 15, 1994, between Mercury and United Artists
Communications (Scotland) Limited. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)). **
10.28 -- Mercury Marketing and Operations Agreement, dated August 10, 1993, between Telewest
CGL and Mercury. (Incorporated by reference to Old Telewest's Registration Statement
on Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
amended (Registration No. 33-78398)). **
10.29 -- Letter Agreement, dated August 23, 1995, between SBCC and Mercury. (Incorporated by
reference to the Company's Registration Statement on Form 8-B filed with the
Securities and Exchange Commission on September 22, 1995, as amended). ***
</TABLE>
65
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<TABLE>
<CAPTION>
<S> <C> <C>
10.30 -- Programming Agreement, dated June 30, 1995, among British Sky Broadcasting Limited,
British Sky Broadcasting Group plc and Old Telewest. (Incorporated by reference to Old
Telewest's Quarterly Report on Form 10-Q for the six months ended June 30, 1995).***
10.31 -- General Purchasing Agreement, dated March 1, 1993, among Telewest CGL, various entities
related to Telewest CGL, and Northern Telecom Europe Limited. (Incorporated by
reference to Old Telewest's Registration Statement on Form S-1 filed with the Securities and
Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).**
10.32 -- Purchase Agreement, dated August 27, 1993, between Southwestern Bell International
Holdings and GPT Limited. (Incorporated by reference to the Company's Registration
Statement on Form 8-B filed with the Securities and Exchange Commission on September
22, 1995, as amended).
10.33 -- Network Services Center Agreement, dated May 16, 1994, among Telewest CGL, BCCL, Cable
London, and certain other signatories thereto. (Incorporated by reference to Old
Telewest's Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on April 29, 1994, as amended (Registration No. 33-78398)).
10.34 -- The Old Telewest Restricted Share Scheme. (Incorporated by reference to Old Telewest's
1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 1995).
10.35 -- The Telewest 1995 Restricted Share Scheme. (Incorporated by reference to the Company's
Registration Statement on Form 8-B filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
10.36 -- The Old Telewest Sharesave Scheme. (Incorporated by reference to Old Telewest's 1994
Annual Report on Form 10-K filed with the Securities and Exchange Commission on March
31, 1995).
10.37 -- The Telewest 1995 Sharesave Scheme. (Incorporated by reference to the Company's
Registration Statement on Form 8-B filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
10.38 -- The Old Telewest Executive Share Option Scheme No. 1. (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.39 -- The Telewest 1995 Executive Share Option Scheme No. 1. (Incorporated by reference to
the Company's Registration Statement on Form 8-B filed with the Securities and
Exchange Commission on September 22, 1995, as amended).
</TABLE>
66
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<TABLE>
<CAPTION>
<S> <C> <C>
10.40 -- The Old Telewest Executive Share Option Scheme No. 2. (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.41 -- The Telewest 1995 Executive Share Option Scheme No. 2. (Incorporated by reference to
the Company's Registration Statement on Form 8-B filed with the Securities and
Exchange Commission on September 22, 1995, as amended).
10.42 -- The Old Telewest Share Participation Scheme. (Incorporated by reference to Old
Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.43 -- The Telewest 1995 Share Participation Scheme. (Incorporated by reference to the
Company's Registration Statement on Form 8-B filed with the Securities and Exchange
Commission on September 22, 1995, as amended).
10.44 -- Executive Secondment Agreement, dated November 21, 1994, between
U S WEST Overseas and Telewest CGL (identical
agreements were entered into between an affiliate of
TCI and Telewest CGL). (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March
31, 1995).
10.45 -- Form of Executive Secondment Agreement, dated August 10, 1995, between the Company and
the SBC Affiliates. (Incorporated by reference to the Company's Registration Statement
on Form 8-B filed with the Securities and Exchange Commission on September 22, 1995,
as amended).
10.46 -- Form of Executive Secondment Agreement, dated August 10, 1995, between the Company and
the Cox Affiliate. (Incorporated by reference to the Company's Registration Statement
on Form 8-B filed with the Securities and Exchange Commission on September 22, 1995,
as amended).
10.47 -- Employment Agreement, dated November 21, 1994, between Alan Michels and Telewest CGL.
(Incorporated by reference to Old Telewest's 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31, 1995).
10.48 -- Letter dated December 23, 1996, between Alan Michels and Telewest CGL.*
</TABLE>
67
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<TABLE>
<CAPTION>
<S> <C> <C>
10.49 -- Employment Agreement, dated November 21, 1994, between Stephen J. Davidson and
Telewest CGL. (Incorporated by reference to Old Telewest's 1994 Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 1995).
10.50 -- Employment Agreement, effective December 1, 1992, between Lynn C. Rexroth and U S WEST
Overseas Operations, Inc. ("U S WEST Overseas"). (Incorporated by reference to Old
Telewest's Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on April 29, 1994, as amended (Registration No. 33-78398)).
10.51 -- Letter of Understanding, dated January 10, 1996, between Lynn C. Rexroth and U S WEST
Overseas. (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 1, 1996).
10.51.1 -- Addendum to the Letters of Understanding, dated August 28, 1996, between Lynn C.
Rexroth and U S WEST Overseas.*
10.52 -- Employment Agreement, dated May 6, 1994, between Simeon Galpert and Telewest CGL.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
10.53 -- Employment Agreement, dated March 7, 1996, between Roger Wilson and Telewest CGL.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
10.54 -- Employment Agreement, dated February 16, 1996, between Bruce Langham and the Telewest
CGL.*
10.55 -- Letter Agreement, dated September 30, 1996, between Bruce Langham and Telewest CGL.*
10.56 -- Non-Executive Directors Appointment Letter, dated August 1, 1995 between the Company
and Anthony W.P. Stenham. *
10.57 -- Non-Executive Directors Appointment Letter, dated August 1, 1995 between the Company
and Sir Gordon Borrie QC. *
10.58 -- Non-Executive Directors Appointment Letter, dated August 1, 1995, between the Company
and Lord Griffiths of Fforestfach. *
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
10.59 -- Loan Agreement, by and among Telewest Communications Networks Limited, as borrower,
The Bank of New York, CIBC Wood Gundy plc, Chase Investment Bank Limited, NatWest
Markets and The Toronto-Dominion Bank, as arrangers, and CIBC Wood Gundy plc, as agent
and security trustee, dated as of May 22, 1996, as amended pursuant to an Amendment
Agreement, dated as of May 31, 1996 and a Second Amendment Agreement, dated as of
August 2, 1996. (Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the six months ended June 30, 1996).
13 -- The Company's 1996 Annual Report to Shareholders (only those portions of the Company's
1996 Annual Report specifically incorporated by reference herein shall be deemed filed
by the Company herewith). *
21 -- List of Subsidiaries of the Company. *
27 -- Financial Data Schedule. *
99 -- Only those portions of the Company's 1997 Proxy Statement expressly incorporated by
reference herein shall be deemed filed by the Company herewith.
</TABLE>
_________________________
* Filed herewith
** Portions of this agreement have been accorded confidential treatment
by the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act of 1933, as amended.
*** Portions of this agreement have been accorded confidential treatment
by the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
(b) Reports on Form 8-K.
None.
69
<PAGE> 72
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Telewest Communications plc
By: /S/ STEPHEN J. DAVIDSON
---------------------------
Name: Stephen J. Davidson
Title: Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS THAT EACH INDIVIDUAL WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS STEPHEN J. DAVIDSON AND CHARLES BURDICK,
AND EACH OF THEM, HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT WITH FULL POWER
OF SUBSTITUTION AND RESUBSTITUTION, FOR HIM AND IN HIS NAME, PLACE AND STEAD, IN
ANY AND ALL CAPACITIES, TO SIGN THIS REPORT AND ANY AND ALL AMENDMENTS TO THIS
REPORT, AND TO FILE THE SAME WITH ALL EXHIBITS THERETO, AND ALL DOCUMENTS IN
CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING UNTO
SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND AUTHORITY TO
DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE
IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE MIGHT OR
COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEYS-IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS SUBSTITUTE OR
SUBSTITUTES, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ A. GARY AMES Director March 24, 1997
- ------------------------------------------------
A. Gary Ames
/ S/ JOHN H. ATTERBURY III Director March 24, 1997
- ------------------------------------------------
John H. Atterbury III
</TABLE>
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<PAGE> 73
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ LORD BORRIE Director March 25, 1997
- ------------------------------------------------
Lord Borrie
/S/ LORD GRIFFITHS OF FFORESTFACH Director March 25, 1997
- ------------------------------------------------
Lord Griffiths of Fforestfach
/S/ CHARLES M. LILLIS Director March 25, 1997
- ------------------------------------------------
Charles M. Lillis
Director
- ------------------------------------------------
James O. Robbins
/S/ ADAM N. SINGER Director March 25, 1997
- ------------------------------------------------
Adam N. Singer
/S/ ANTHONY W.P. STENHAM Director March 24, 1997
- ------------------------------------------------
Anthony W. P. Stenham
Director
- ------------------------------------------------
Fred A. Vierra
/S/ STEPHEN J. DAVIDSON Director and Chief Executive Officer March 25, 1997
- ------------------------------------------------ (Principal Executive Officer)
Stephen J. Davidson
/S/ CHARLES BURDICK Director and Chief Financial Officer March 25, 1997
- ------------------------------------------------ (Principal Financial and Accounting Officer)
Charles Burdick
</TABLE>
71
<PAGE> 74
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibits No. Description
- ------------ -----------
<S> <C> <C>
3.1 -- Memorandum of Association of the Company. (Incorporated by reference to the Company's
Registration Statement on Form 8-B, filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
3.2 -- Articles of Association of the Company. (Incorporated by reference to the Company's
Registration Statement on Form 8-B, filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
4.1 -- Amended and Restated Deposit Agreement, dated as of November 30, 1994 (as amended as
of October 2, 1995), among the Company, The Bank of New York, as Depositary, and the
holders from time to time of American Depositary Receipts issued thereunder.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
4.2 -- Form of American Depositary Receipt (included in Exhibit 4.1).
4.3 -- Senior Debenture Indenture, dated as of October 3, 1995, between the Company and The
Bank of New York, as Trustee. (Incorporated by reference to the Company's 1995 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on April 1,
1996).
4.4 -- Senior Discount Debenture Indenture, dated as of October 3, 1995, between the Company
and The Bank of New York, as Trustee. (Incorporated by reference to the Company's 1995
Annual Report on Form 10-K filed with the Securities and Exchange Commission on April
1, 1996).
</TABLE>
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<S> <C> <C>
4.5 -- Form of Senior Debenture (included in Exhibit 4.3).
4.6 -- Form of Senior Discount Debenture (included in Exhibit 4.4).
4.7 -- Deposit Agreement, dated as of October 3, 1995, between the Company and The Bank of
New York, as Book-Entry Depositary. (Incorporated by reference to the Company's 1995
Annual Report on Form 10-K filed with the Securities and Exchange Commission on April
1, 1996).
10.1 -- Relationship Agreement, dated as of November 22, 1994, by and among Old Telewest,
certain subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by
reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities
and Exchange Commission on March 31, 1995).
10.2 -- Shareholders Agreement, entered into as of November 22, 1994, between certain
subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by reference
to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 31, 1995).
10.3 -- Registration Rights Agreement, dated October 3, 1995, among the Company, the TCI
Affiliate, the U S WEST Affiliates, the SBC Affiliates and the Cox Affiliate.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
10.4 -- Co-Operation Agreement, dated October 3, 1995, between the SBC Affiliates and the Cox
Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 1, 1996).
10.5 -- Share Dealing Agreement, dated October 3, 1995, among the TCI Affiliate, the U S WEST
Affiliates, the Company and the SBC Affiliates. (Incorporated by reference to the
Company's 1995 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on April 1, 1996).
10.6 -- Tax Deed, dated November 22, 1994, between TCI International Holdings, Inc., U S WEST
Holdings and Old Telewest. (Incorporated by reference to Old Telewest's 1994 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March 31,
1995).
10.7 -- Trademark License Agreement, effective as of November 22, 1994, between Old Telewest
and U S WEST. (Incorporated by reference to Old Telewest's 1994 Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 1995).
</TABLE>
73
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<TABLE>
<CAPTION>
<S> <C> <C>
10.8 -- Tradename Agreement, effective as of November 22, 1994, between Old Telewest, TCI and
TCI/U S WEST Cable Communications Group. (Incorporated by reference to Old Telewest's
1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 1995).
10.9 -- Tax Deed, dated October 3, 1995, among the Company, the SBC Affiliates and the Cox
Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 1, 1996).
10.10 -- Consultant Agreement for Operational Assistance, dated July 17, 1992, among Birmingham
Cable Corporation Limited ("BCCL"), Birmingham Cable Limited ("BCL") and Telewest
Communications Group Limited ("Telewest CGL"). (Incorporated by reference to Old
Telewest's Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on April 29, 1994, as amended (Registration No. 33-78398)).
10.11 -- Supplemental Agreement, dated April 8, 1994, relating to the Consultant Agreement
referred to in Exhibit 10.5 (Incorporated by reference to Old Telewest's Registration
Statement on Form S-1 filed with the Securities and Exchange Commission on April 29,
1994, as amended (Registration No. 33-78398)).
10.12 -- Management Agreement, dated April 25, 1990, among BCCL, BCL, U S WEST Holdings and
Comcast Cablevision of Birmingham Inc. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.13 -- Assignment and Amendment Agreement, dated August 5, 1992, relating to the Management
Agreement referred to in Exhibit 10.7 (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.14 -- Consultant Agreement, dated August 16, 1989, between Cable London plc and U S WEST
Cable Communications Limited. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
</TABLE>
74
<PAGE> 77
<TABLE>
<CAPTION>
<S> <C> <C>
10.15 -- Consultant Agreement for Technical Assistance, dated July 15, 1992, among Cable
Corporation, Windsor Television Limited, Middlesex Cable Limited and Telewest CGL.
(Incorporated by reference to Old Telewest's Registration Statement on Form S-1 filed
with the Securities and Exchange Commission on April 29, 1994, as amended
(Registration No. 33-78398)).
10.16 -- Cable Affiliation Agreement, dated December 14, 1993, between Cable Programme Partners
- Limited Partnership, Telewest CGL and other parties signatory thereto. (Incorporated
by reference to Old Telewest's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on April 29, 1994, as amended (Registration No.
33-78398)).
10.17 -- Agreement, dated October 1, 1993, among Alan Stewart MacDonald Robinson, Jack Forrest
Gill, Raman Subba Row Limited and TUCCI. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.18 -- Co-ownership Agreement, dated March 12, 1990, between U S WEST Holdings and Comcast
Cablevision of Birmingham, Inc. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)).
10.19 -- Letter, dated April 29, 1992, relating to the Co-ownership Agreement referred to in
Exhibit 10.13. (Incorporated by reference to Old Telewest's Registration Statement on
Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
amended (Registration No. 33-78398)).
10.20 -- Letter, dated November 27, 1992, relating to the Co-ownership Agreement referred to in
Exhibit 10.13. (Incorporated by reference to Old Telewest's Registration Statement on
Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
amended (Registration No. 33-78398)).
10.21 -- Agreement to License and Provide Consulting Services, effective as of November 22,
1994, between Old Telewest and an affiliate of U S WEST. (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.22 -- Agreement, dated December 4, 1987, between United Cable Television Corporation on
behalf of itself and United Artists Communications, Inc. and Trans-Global (U.K.)
Limited. (Incorporated by reference to Old Telewest's Registration Statement on Form
S-1 filed with the Securities and Exchange Commission on April 29, 1994, as amended
(Registration No. 33-78398)).
</TABLE>
75
<PAGE> 78
<TABLE>
<CAPTION>
<S> <C> <C>
10.23 -- Agreement to License and Provide Consulting Services, effective as of November 22,
1994, between Old Telewest and TCI. (Incorporated by reference to Old Telewest's 1994
Annual Report on Form 10-K filed with the Securities and Exchange Commission on March
31, 1995).
10.24 -- Novation Agreement relating to Birmingham Cable, dated November 21, 1994, among
General Cable, TUCCI, U S WEST Holding and other parties signatory thereto.
(Incorporated by reference to Old Telewest's 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31, 1995).
10.25 -- Subscription and Shareholders Agreement, dated January 30, 1995, among Videotron
Corporation Limited, United Artists Communications (London South) Limited, Cable
London, Elt Acquisition Company Limited, Nynex CableComms Limited, Cable Corporation,
London Interconnect Limited, Independent Cable Sales Limited, London Interconnect PPV
Limited and London Interconnect Limited. (Incorporated by reference to the Company's
Registration Statement on Form 8-B filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
10.26 -- Form of BT Interconnect Agreement, a copy of which was executed by BT and various of
the Company's affiliated entites.*
10.27 -- Interconnection Agreement, dated July 15, 1994, between Mercury and United Artists
Communications (Scotland) Limited. (Incorporated by reference to Old Telewest's
Registration Statement on Form S-1 filed with the Securities and Exchange Commission
on April 29, 1994, as amended (Registration No. 33-78398)). **
10.28 -- Mercury Marketing and Operations Agreement, dated August 10, 1993, between Telewest
CGL and Mercury. (Incorporated by reference to Old Telewest's Registration Statement
on Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
amended (Registration No. 33-78398)). **
10.29 -- Letter Agreement, dated August 23, 1995, between SBCC and Mercury. (Incorporated by
reference to the Company's Registration Statement on Form 8-B filed with the
Securities and Exchange Commission on September 22, 1995, as amended). ***
</TABLE>
76
<PAGE> 79
<TABLE>
<CAPTION>
<S> <C> <C>
10.30 -- Programming Agreement, dated June 30, 1995, among British Sky Broadcasting Limited,
British Sky Broadcasting Group plc and Old Telewest. (Incorporated by reference to Old
Telewest's Quarterly Report on Form 10-Q for the six months ended June 30, 1995).***
10.31 -- General Purchasing Agreement, dated March 1, 1993, among Telewest CGL, various entities
related to Telewest CGL, and Northern Telecom Europe Limited. (Incorporated by
reference to Old Telewest's Registration Statement on Form S-1 filed with the Securities and
Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).**
10.32 -- Purchase Agreement, dated August 27, 1993, between Southwestern Bell International
Holdings and GPT Limited. (Incorporated by reference to the Company's Registration
Statement on Form 8-B filed with the Securities and Exchange Commission on September
22, 1995, as amended).
10.33 -- Network Services Center Agreement, dated May 16, 1994, among Telewest CGL, BCCL, Cable
London, and certain other signatories thereto. (Incorporated by reference to Old
Telewest's Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on April 29, 1994, as amended (Registration No. 33-78398)).
10.34 -- The Old Telewest Restricted Share Scheme. (Incorporated by reference to Old Telewest's
1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 31, 1995).
10.35 -- The Telewest 1995 Restricted Share Scheme. (Incorporated by reference to the Company's
Registration Statement on Form 8-B filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
10.36 -- The Old Telewest Sharesave Scheme. (Incorporated by reference to Old Telewest's 1994
Annual Report on Form 10-K filed with the Securities and Exchange Commission on March
31, 1995).
10.37 -- The Telewest 1995 Sharesave Scheme. (Incorporated by reference to the Company's
Registration Statement on Form 8-B filed with the Securities and Exchange Commission
on September 22, 1995, as amended).
10.38 -- The Old Telewest Executive Share Option Scheme No. 1. (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.39 -- The Telewest 1995 Executive Share Option Scheme No. 1. (Incorporated by reference to
the Company's Registration Statement on Form 8-B filed with the Securities and
Exchange Commission on September 22, 1995, as amended).
</TABLE>
77
<PAGE> 80
<TABLE>
<CAPTION>
<S> <C> <C>
10.40 -- The Old Telewest Executive Share Option Scheme No. 2. (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.41 -- The Telewest 1995 Executive Share Option Scheme No. 2. (Incorporated by reference to
the Company's Registration Statement on Form 8-B filed with the Securities and
Exchange Commission on September 22, 1995, as amended).
10.42 -- The Old Telewest Share Participation Scheme. (Incorporated by reference to Old
Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 31, 1995).
10.43 -- The Telewest 1995 Share Participation Scheme. (Incorporated by reference to the
Company's Registration Statement on Form 8-B filed with the Securities and Exchange
Commission on September 22, 1995, as amended).
10.44 -- Executive Secondment Agreement, dated November 21, 1994, between
U S WEST Overseas and Telewest CGL (identical
agreements were entered into between an affiliate of
TCI and Telewest CGL). (Incorporated by reference to
Old Telewest's 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March
31, 1995).
10.45 -- Form of Executive Secondment Agreement, dated August 10, 1995, between the Company and
the SBC Affiliates. (Incorporated by reference to the Company's Registration Statement
on Form 8-B filed with the Securities and Exchange Commission on September 22, 1995,
as amended).
10.46 -- Form of Executive Secondment Agreement, dated August 10, 1995, between the Company and
the Cox Affiliate. (Incorporated by reference to the Company's Registration Statement
on Form 8-B filed with the Securities and Exchange Commission on September 22, 1995,
as amended).
10.47 -- Employment Agreement, dated November 21, 1994, between Alan Michels and Telewest CGL.
(Incorporated by reference to Old Telewest's 1994 Annual Report on Form 10-K filed
with the Securities and Exchange Commission on March 31, 1995).
10.48 -- Letter dated December 23, 1996, between Alan Michels and Telewest CGL.*
</TABLE>
78
<PAGE> 81
<TABLE>
<CAPTION>
<S> <C> <C>
10.49 -- Employment Agreement, dated November 21, 1994, between Stephen J. Davidson and
Telewest CGL. (Incorporated by reference to Old Telewest's 1994 Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 1995).
10.50 -- Employment Agreement, effective December 1, 1992, between Lynn C. Rexroth and U S WEST
Overseas Operations, Inc. ("U S WEST Overseas"). (Incorporated by reference to Old
Telewest's Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on April 29, 1994, as amended (Registration No. 33-78398)).
10.51 -- Letter of Understanding, dated January 10, 1996, between Lynn C. Rexroth and U S WEST
Overseas. (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on April 1, 1996).
10.51.1 -- Addendum to the Letters of Understanding, dated August 28, 1996, between Lynn C.
Rexroth and U S WEST Overseas.*
10.52 -- Employment Agreement, dated May 6, 1994, between Simeon Galpert and Telewest CGL.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
10.53 -- Employment Agreement, dated March 7, 1996, between Roger Wilson and Telewest CGL.
(Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed with
the Securities and Exchange Commission on April 1, 1996).
10.54 -- Employment Agreement, dated February 16, 1996, between Bruce Langham and the Telewest
CGL.*
10.55 -- Letter Agreement, dated September 30, 1996, between Bruce Langham and Telewest CGL.*
10.56 -- Non-Executive Directors Appointment Letter, dated August 1, 1995 between the Company
and Anthony W.P. Stenham. *
10.57 -- Non-Executive Directors Appointment Letter, dated August 1, 1995 between the Company
and Sir Gordon Borrie QC. *
10.58 -- Non-Executive Directors Appointment Letter, dated August 1, 1995, between the Company
and Lord Griffiths of Fforestfach. *
</TABLE>
79
<PAGE> 82
<TABLE>
<CAPTION>
<S> <C> <C>
10.59 -- Loan Agreement, by and among Telewest Communications Networks Limited, as borrower,
The Bank of New York, CIBC Wood Gundy plc, Chase Investment Bank Limited, NatWest
Markets and The Toronto-Dominion Bank, as arrangers, and CIBC Wood Gundy plc, as agent
and security trustee, dated as of May 22, 1996, as amended pursuant to an Amendment
Agreement, dated as of May 31, 1996 and a Second Amendment Agreement, dated as of
August 2, 1996. (Incorporated by reference to the Company's Quarterly Report on Form
10-Q for the six months ended June 30, 1996).
13 -- The Company's 1996 Annual Report to Shareholders (only those portions of the Company's
1996 Annual Report specifically incorporated by reference herein shall be deemed filed
by the Company herewith). *
21 -- List of Subsidiaries of the Company. *
27 -- Financial Data Schedule. *
99 -- Only those portions of the Company's 1997 Proxy Statement expressly incorporated by
reference herein shall be deemed filed by the Company herewith.
</TABLE>
_________________________
* Filed herewith
** Portions of this agreement have been accorded confidential treatment
by the Securities and Exchange Commission pursuant to Rule 406 of the
Securities Act of 1933, as amended.
*** Portions of this agreement have been accorded confidential treatment
by the Securities and Exchange Commission pursuant to Rule 24b-2 of
the Securities Exchange Act of 1934, as amended.
80
<PAGE> 1
EXHIBIT 10.26
SUBJECT TO CONTRACT
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DATED # 1996
STANDARD
INTERCONNECT AGREEMENT
BETWEEN
#[OPERATOR]
AND
BRITISH TELECOMMUNICATIONS PLC
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INDEX
1 Definitions and Interpretation
2 Commencement and Duration
3 Interconnection and Standards
4 System Alteration
5 Scope
6 Quality of Service
7 Transfer Charge Calls
8 New Services
9 Forecasts and Capacity
10 Provision of Information
11 CLI
12 BT Services
13 Operator Services
14 Charges and Payment
15 Billing
16 System Protection and Safety
17 Approved Attachments and Customer Equipment
18 Numbering
19 Review
20 Determination
21 Confidentiality
22 Force Majeure
23 Limitation of Liability
24 Intellectual Property Rights
25 Assignment
26 Disputes
27 Breach, Suspension and Termination
28 Notices
29 Entire Agreement
30 Variations
31 Waiver
32 Restrictive Trade Practices
33 Independent Contractors and Agency
34 Severability
35 Governing Law
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SPECIFICATIONS
Generic Electrical & Physical Interface Specification
Generic C7 Signalling Interface Specification
Generic Transmission Interface Specification
Generic SDH Interface Specification
ANNEXES
Annex A Planning and Operations
Annex B Billing and Payment
Annex C Schedules
Annex D Definitions
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THIS AGREEMENT is made the # day of #[month] 1996
between
#[Operator] registered in England No. #[number] having its registered office at
#[address]
and
BRITISH TELECOMMUNICATIONS PUBLIC LIMITED COMPANY registered in England No.
1800000 having its registered office at 81 Newgate Street, London, EC1A 7AJ.
WHEREAS
A A licence was granted to the Operator on #[date] under section 7
of the Telecommunications Act 1984 to run the Operator System.
B A licence was granted to British Telecommunications on 22 June
1984 under section 7 of the Telecommunications Act 1984 to run its
telecommunication system and pursuant to paragraph 20 of schedule
5 to such Act such licence has effect as if granted to BT to run
the BT System.
C The Parties have agreed to connect the Operator System to the BT
System and to the supply of services and facilities, on the terms
and conditions of this Agreement.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, except if the context requires otherwise, words
and expressions are as defined in Annex D.
1.2 The Interpretation Act 1978 shall apply for the purpose of
interpreting this Agreement as if this Agreement were an Act of
Parliament.
1.3 The following documents form part of this Agreement and, in the
event of any inconsistencies between them, the order of precedence
shall (unless expressly stated to the contrary) be as follows:
1. main body of this Agreement
2. Annex D
3. Annexes A and B
4. Specifications
5. Annex C
6. Carrier Price List
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1.4 It is hereby expressly agreed that the Manuals, the Technical
Master Plan and the Customer Service Plan are not legally binding.
2. COMMENCEMENT AND DURATION
2.1 This Agreement takes effect on the date hereof and shall continue
until:
2.1.1 either Party ceases to hold a licence granted to it
pursuant to section 7 of the Act to run a Telecommunication
System; or
2.1.2 termination pursuant to this Agreement.
2.2 A Party may terminate this Agreement by giving at any time to the
other not less than 24 months' written notice to terminate.
2.3 After a notice has been given pursuant to paragraph 2.2 a Party
may request the other Party to carry on good faith negotiations
with a view to entering into a new agreement.
2.4 Following a request pursuant to paragraph 2.3, if, on termination
of this Agreement either Party would be obliged under its Licence
to enter into a new interconnection agreement with the other Party
then the Parties shall carry on good faith negotiations with a
view to entering into a new agreement to take effect on
termination of this Agreement.
3. INTERCONNECTION AND STANDARDS
3.1 The Parties shall connect and keep connected the BT System and the
Operator System at Points of Connection using Customer Sited
Interconnect or In-span Interconnect in accordance with this
Agreement (to such extent permitted by the Operator Licence).
3.2 If this Agreement does not contain a Schedule for the joint
provision by the Parties of In-span Interconnect and BT notifies
the Operator that BT requires Capacity between particular Switch
Connections on a particular date, the Operator shall include such
Capacity in its next Capacity Profile. The Operator shall place a
Capacity Order in a timely manner for such Capacity by way of
Customer Sited Interconnect between the same Switch Connections,
being an order for not less than the Capacity required by BT. No
such Capacity Order shall be cancelled nor any resulting
Interconnect Link rearranged by the Operator without BT's written
consent. The provisions relating to payment for duct for such
Interconnect Links shall not apply and the Capacity by way of
Customer Sited Interconnect provided pursuant to this paragraph
shall, unless otherwise agreed, be used solely for Traffic Types
for which BT has responsibility pursuant to Annex A.
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3.3 Each Party shall comply with the Specifications in so far as they
apply to the provision of services pursuant to this Agreement.
3.4 In the practical implementation of the Specifications relating to
the interconnection of the BT System and the Operator System the
Parties shall apply standards and operating guidelines which in
the first instance have due regard to the following in the order
of precedence specified below:
3.4.1 any legal requirements imposed upon each of them including
requirements arising from Condition 13B of the BT Licence
and the equivalent Condition of the Operator Licence; and
3.4.2 any relevant specification notified by the Director General
in implementation of the recommendations of the NICC; and
3.4.3 any recommendations by ETSI; and
3.4.4 any recommendations by ITU-T; and
3.4.5 the GSM memorandum of understanding (where applicable)
4. SYSTEM ALTERATION
4.1 A Party wishing to make a System Alteration shall give to the
other Party not less than 7 months written notice prior to the
date of the anticipated System Alteration. The notice shall
specify the technical details of the System Alteration and the
date of the anticipated System Alteration. Following such
notification each Party shall supply to the other such information
as the other may reasonably request including in the case of the
Party giving the notice, to the extent reasonably practicable, the
potential impact on the other Party's System.
4.2 The Party receiving the notice pursuant to paragraph 4.1 shall
notify the other as soon as practicable, but in any event not more
than one month after receipt of such notice, of any alterations
required to that Party's System as a result of the proposed System
Alteration and, if the provisions in paragraph 4.6 do not apply, a
quotation for the cost of such alterations calculated on the basis
of the minimum cost consistent with good engineering practice.
4.3 If the Party giving the notice pursuant to paragraph 4.1 agrees
the alterations required to the other Party's System and agrees
the quotation (if any), the Parties shall agree a plan within
three months of receipt of the notice referred to in paragraph 4.2
to implement the System Alteration and the other Party shall carry
out such alterations in accordance with the agreed plan.
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4.4 If the provisions in paragraph 4.6 do not apply, and if the Party
giving the notice pursuant to paragraph 4.1 does not agree the
alterations required and/or the quotation (if any), that Party
shall so notify the other Party, and the Parties agree to treat
the matter as a Dispute. The Party giving the notice pursuant to
paragraph 4.1 shall not implement the relevant System Alteration
until the Dispute is resolved.
4.5 On completion of the relevant alteration the Party receiving the
notice pursuant to paragraph 4.1 shall invoice the other Party for
such alteration for an amount not exceeding the agreed quotation.
4.6 Each Party shall pay its own costs arising out of the System
Alteration if:
4.6.1 the Parties agree in writing to change their respective
Systems for their mutual benefit; or
4.6.2 the System Alteration is lawfully directed by the Director
General who also lawfully directs each Party to pay its own
costs; or
4.6.3 the System Alteration is unanimously agreed by NICC; or
4.6.4 the altering Party is BT and the System Alteration is a
change to the signalling system, which change is consistent
with an upgrade path agreed by NICC.
4.7 The Parties shall amend the Specifications prior to a System
Alteration.
4.8 If a Party makes a System Alteration it shall ensure that Calls
handed over from the other Party are not prevented to any greater
extent or hindered in any manner different from the generality of
Calls made by the altering Party's Customers.
5. SCOPE
5.1 The Parties shall convey Calls and provide the services and
facilities pursuant to the Schedules.
5.2 For the avoidance of doubt and notwithstanding the interconnection
of the BT System and the Operator System neither Party shall hand
over to the other Party, nor have an obligation to convey Calls of
any category, unless the other Party has agreed to convey Calls of
that category and there is express provision to convey Calls of
that category in a Schedule.
5.3 Neither Party shall be obliged to provide or be entitled to access
Ancillary Services unless there is express provision for the
particular Ancillary Service in a Schedule.
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6. QUALITY OF SERVICE
6.1 BT shall use reasonable endeavours to meet the Target Performance,
applicable at the time of provision of the relevant Standard
Service, specified in the Quality Schedule.
7. TRANSFER CHARGE CALLS
7.1 If having been allocated an entire NNG the Operator has the
exclusive use of that NNG and requests BT not to offer Transfer
Charge Calls to Operator Customers on such NNG then subject to the
Operator:
7.1.1 taking reasonable steps to ensure that Operator Customers
on such NNGs do not accept or agree to pay for Transfer
Charge Calls; and
7.1.2 giving BT written notice that the Operator does not wish
Transfer Charge Calls to be conveyed to the relevant NNG;
BT shall instruct BT Operators not to make available Transfer
Charge Calls to Operator Customers on such NNG, request operators
of Authorised Overseas Systems not to make available Transfer
Charge Calls to Operator Customers on such NNG, and request Third
Parties who run Telecommunication Systems that provide public
switched telephony within the United Kingdom pursuant to licences
granted under the Act, other than licences available to classes of
persons, not to make available Transfer Charge Calls to Operator
Customers on such NNG.
7.2 If the Operator has complied with the provisions of paragraph 7.1,
the Operator shall be released from any obligation to pay for
Transfer Charge Calls conveyed to the relevant NNG 28 Working Days
after the date of receipt of the notice pursuant to paragraph
7.1.2.
7.3 If BT releases the Operator from the obligation to pay for any
Transfer Charge Call pursuant to paragraph 7.2, the Operator shall
release BT from the obligation to pay the Operator for the
conveyance of such Call unless the Call was connected by the BT
Operator.
8. NEW SERVICES
8.1 Either Party may, at any time, request from the other Party an
agreement to interconnect their respective Systems for the
provision of any service or facility which the other Party
provides under interconnection agreements to Third Party Operators
which, in the case of a request to:
8.1.1 BT, is an agreement which BT is required to enter into
under Condition 13 of the BT Licence; or
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8.1.2 the Operator, is an agreement which the Operator is
required to enter into under the equivalent Condition of
the Operator Licence.
8.2 BT shall, following a request by the Operator, offer to enter into
an agreement to interconnect the Parties' respective Systems for
the provision of the service or facility to the Operator on BT's
then current standard terms. Upon acceptance of such offer, this
Agreement shall be amended by the addition of a Schedule
containing the terms applicable to such service or facility or, if
appropriate, the Parties shall agree and enter into a new
interconnection agreement.
8.3 The Operator shall, following a request by BT, enter into good
faith negotiations with BT to agree terms for interconnection of
the Parties' respective Systems for the provision of the service
or facility by the Operator to BT on fair and reasonable terms.
Upon terms being agreed, this Agreement shall be amended to give
effect to the agreed terms or, if appropriate, the Parties shall
agree and enter into a new interconnection agreement.
8.4 If a Party requests from the other Party an agreement for
interconnection for the provision of a service or facility which
is not made available by such other Party to Third Party Operators
and such agreement is one which, if BT is the other Party, BT is
required to enter into under Condition 13 of the BT Licence or, if
the Operator is the other Party, the Operator is required to enter
into under the equivalent Condition of the Operator Licence, the
Parties shall enter into good faith negotiations to enter into an
agreement for interconnection for the provision of such service or
facility in accordance with paragraphs 8.5 - 8.9 (inclusive) or
otherwise as the Parties may agree.
8.5 The Party requesting the other Party under paragraph 8.4 (the
"Requesting Party") shall provide at the time of such request the
other Party (the "Requested Party") with a written statement of
its requirements addressing the matters contained in the New
Services Manual.
8.6 Not later than 5 Working Days after receipt by the Requested Party
of the statement of requirements, the Requested Party shall
acknowledge such receipt in writing.
8.7 Not later than 30 calendar days after the acknowledgement under
paragraph 8.6, the Requested Party shall confirm whether or not
the statement of requirements is sufficient for the purpose and,
if not, the Requested Party shall request and the Requesting Party
shall provide such further clarification of the statement of
requirements as the Requested Party may reasonably require. The
Parties shall use their reasonable endeavours to ensure that the
Requested Party shall be in a position to confirm the sufficiency
of the statement of requirements (with clarification, if any)
within such 30 calendar day period.
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8.8 Subject to the Requested Party confirming the sufficiency of the
Requesting Party's statement of requirements under paragraph 8.7,
the Requested Party shall not later than:
8.8.1 60 calendar days after the acknowledgement under paragraph
8.6, confirm in writing to the Requesting Party whether it
accepts an obligation to enter into an agreement to meet
those requirements in accordance with the cost and other
principles embodied in the Requested Party's Licence; and
8.8.2 if it does accept an obligation to do so, 75 calendar days
after the acknowledgement under paragraph 8.6, endeavour to
agree with the Requesting Party a plan which addresses:
8.8.2.1 the testing of the feasibility of the requirements
and, if so feasible, the implementation of those
requirements;
8.8.2.2 the terms and conditions, including price,
applicable to the requirements; and
8.8.2.3 any other relevant matter.
8.9 If the Requested Party does not accept under paragraph 8.8.1 an
obligation to meet the Requesting Party's requirements or the
Requested Party does accept under paragraph 8.8.1 an obligation to
meet the Requesting Party's requirements but the Parties fail to
agree on any aspect of the plan within the timescale referred to
in paragraph 8.8.2, then the Requesting Party without prejudice to
its other rights and remedies may immediately request a
determination from the Director General under the provisions of
the Requested Party's Licence.
8.10 If the Requested Party does not accept under paragraph 8.8.1 an
obligation to meet the Requesting Party's requirements,
negotiations to agree terms for interconnection for the provision
of the service or facility may nevertheless continue, whether by
further clarification of the statement of requirements or
otherwise and without prejudice to the Requesting Party's right to
request a determination from the Director General as referred to
in paragraph 8.9.
8.11 The provisions of this paragraph 8 are intended to establish a
framework for the interconnection of the Parties' respective
Systems for the provision of any service or facility not already
agreed to be provided under this Agreement, but are not intended
to prejudice the rights, liabilities and obligations of the
Parties created by and under their Licences.
9. FORECASTS AND CAPACITY
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9.1 The Parties shall supply to each other forecasts in accordance
with Annex A and as may be required in a Schedule.
9.2 The Parties shall order and provide Capacity in accordance with
Annex A and as may be required in a Schedule.
10. PROVISION OF INFORMATION
10.1 Each Party shall provide free of charge, one copy of the
information specified in paragraph 10.3 of the main body and in
paragraphs 3, 7 and 16 of Annex A, and such other information as
is reasonably required from time to time by the other Party for
interconnection of the Systems and the provision of services or
facilities pursuant to this Agreement.
10.2 Each Party shall promptly supply to the other upon request details
of services and facilities which it provides to its Customers to
which paragraph 8 may apply.
10.3 Subject to a Party's obligations of confidentiality to a Third
Party, a Party may request and the other Party shall provide
information on protocols in use by that other Party which are
required for interconnection, conveyance of Calls or the provision
of services specified in this Agreement between the BT System and
the Operator System if such other Party has relevant information
and the provision of such information is necessary as a
consequence of the absence of international standards.
10.4 Notwithstanding any provision of this Agreement a Party shall not
be obliged to provide information which is subject to a
confidentiality obligation to a Third Party unless such Third
Party consents to such disclosure.
10.5 The Disclosing Party will use reasonable endeavours to ensure that
information disclosed is correct to the best of its knowledge at
the time of provision of such information.
10.6 If a Disclosing Party provides information to a Receiving Party,
the Disclosing Party shall have obtained all appropriate Third
Party consents.
10.7 Subject to paragraph 23, the Receiving Party shall indemnify the
Disclosing Party and keep it indemnified against all liabilities,
claims, demands, damages, costs and expenses arising as a
consequence of any failure by the Receiving Party to comply with
the conditions imposed and identified at the time when the
information was provided.
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10.8 Nothing in this Agreement shall require a Party to do anything in
breach of any statutory or regulatory obligation of
confidentiality, including without prejudice to the generality of
the foregoing, any obligation pursuant to the Data Protection Act
1984, the BT Licence or the Operator Licence as appropriate or any
code of practice on the confidentiality of customer information
issued by the Director General.
11. CLI
11.1 If a Party's System requests CLI from the other System the
originating System shall generate and convey CLI to the System
requesting it to the extent that the originating System has such a
capability.
11.2 A Party whose System receives CLI following a request pursuant to
paragraph 11.1 shall only use the CLI for the following purposes:
11.2.1 routing Calls; and
11.2.2 compilation of inter Party bills; and
11.2.3 agreed administrative use in accordance with accepted
industry practice from time to time which includes, at the
date of this Agreement, call trace, malicious call
identification, compilation of statistics relating to call
origin and PRS Fraud prevention and detection; and
11.2.4 display to Customers subject to compliance with the "Code
of Practice" as referred to in the definition of CLI in
Annex D as such code may be amended or replaced from time
to time.
11.3 A Party conveying Calls handed over from a Third Party System or
an Authorised Overseas System shall convey, to the extent
received, the CLI associated with those Calls.
11.4 Notwithstanding other provisions of this Agreement a Party may use
CLI to pass telephone numbers to Emergency Organisations.
11.5 The cost of generating and conveying CLI is included in the
relevant conveyance rates for Calls. Neither Party shall apply
additional charges for CLI.
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11.6 If a Party desires to charge separately for the generation or
conveyance of CLI such Party may initiate a review of this
paragraph 11 pursuant to paragraph 19.1.3 on 1 April 1997 and each
1 April thereafter.
11.7 If there is a change in applicable law or regulation materially
affecting the operation of CLI, the Parties shall change the
operation of CLI to the extent necessary to comply with the
applicable law or regulation.
12 BT SERVICES
12.1 If, at the commencement of the Financial Year In Question, the
Director General has not determined the Interim Charge for a
Standard Service (other than a Competitive Standard Service), the
Pre-Interim Charge for that Standard Service shall be the same as
the Interim Charge (or the Actual Charge, if applicable, for the
relevant period) for that Standard Service for the Financial Year
immediately preceding the Financial Year In Question provided
always that such Interim Charge has been determined for such
immediately preceding Financial Year.
12.2 If, for the Financial Year In Question, the Director General has
not determined, before 1 July of such year, the Interim Charge for
a Standard Service (other than a Competitive Standard Service)
referred to the Director General pursuant to Condition 16B.2 of
the BT Licence, BT shall, as soon as reasonably practicable
following publication in the Carrier Price List of the determined
Interim Charge for the Financial Year In Question, adjust and
recalculate the charges in respect of such Standard Service for
the Financial Year In Question using the determined Interim Charge
and calculate any sum overpaid or underpaid.
12.3 As soon as reasonably practicable following a determination by the
Director General of a charge (or the means of calculating that
charge) for a Standard Service, BT shall make any necessary
alterations to the Carrier Price List so that it accords with the
full list of Standard Services maintained by BT pursuant to
Condition 16B.8 of the BT Licence and shall send a copy of the
alterations to the Carrier Price List to the Operator as soon as
reasonably practicable.
12.4 After the Director General has determined the Final Charge (or the
means of calculating that charge) for a Standard Service, BT
shall, as soon as reasonably practicable following publication in
the Carrier Price List of the determined Final Charge for the
Financial Year In Question, adjust and recalculate the charges in
respect of such Standard Service for the Financial Year In
Question in accordance with the provisions of Condition 13.5A.3B
of the BT Licence and calculate the interest for any sums overpaid
or underpaid in accordance with the Oftel Interest Rate. For the
purposes of this paragraph 12.4 Pre-Interim Charges shall be
treated as Interim Charges.
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12.5 If the Director General determines that a Standard Service is a
Competitive Standard Service, BT may, specify and vary from time
to time, the charge for such Competitive Standard Service by
publication in the Carrier Price List and such charge shall take
effect on the Effective Date being a date not earlier than the
date of such publication. If BT increases the price of a
Competitive Standard Service the Effective Date shall in addition
be not earlier than 28 calendar days after the date of such
publication.
12.6 If a determination referred to in paragraphs 12.3, 12.4 or 12.5 is
subject to a legal challenge, the Parties shall, without
prejudice, treat the determination as valid until the conclusion
of the legal proceedings, unless the court otherwise directs. If
the court finds a determination to be unlawful then the Parties
agree to revert to the charges payable immediately prior to such
determination being made and BT shall make any necessary
alterations to the Carrier Price List. As soon as reasonably
practicable following a redetermination by the Director General
(as a result of a legal challenge) of a charge (or the means of
calculating that charge) for a Standard Service, BT shall make any
necessary alterations to the Carrier Price List so that it accords
with the full list of Standard Services maintained by BT pursuant
to Condition 16B.8 of the BT Licence and shall send a copy of the
alterations to the Carrier Price List to the Operator as soon as
reasonably practicable. BT shall, as soon as reasonably
practicable following publication in the Carrier Price List of the
redetermined charge for the Financial Year In Question, adjust and
recalculate the charges in respect of such Standard Service for
the Financial Year In Question and calculate the interest for any
sums overpaid or underpaid in accordance with the Oftel Interest
Rate.
12.7 For a service which is not a Standard Service or is a Standard
Service for which there is no determined charge, BT may, specify
and vary from time to time, the charge for such a service by
publication in the Carrier Price List and such charge shall take
effect on the Effective Date being a date not earlier than the
date of such publication.
12.8 Subject to paragraphs 12.9 and 12.10, the charge payable during
the course of the relevant Financial Year In Question for each
Standard Service, other than a Competitive Standard Service, shall
be that specified in the column headed Interim Charge in the
Carrier Price List for the relevant Financial Year In Question.
12.9 Subject to paragraph 12.10, the charge payable during the course
of the relevant Financial Year In Question for each Standard
Service, other than a Competitive Standard Service or a Standard
Service for which there is no determined charge, in respect of a
period for which there is no charge specified in the column headed
Interim Charge, shall be that specified in the column headed
Pre-Interim Charge in the Carrier Price List for the relevant
Financial Year In Question.
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12.10 The charge payable for each Standard Service, other than a
Competitive Standard Service, in respect of a period for which a
charge is specified in the column headed Actual Charge, shall be
the charge specified in the column headed Actual Charge in the
Carrier Price List for the said period for the relevant Financial
Year In Question.
12.11 An adjustment and recalculation which is to be carried out using
the Final Charge shall be based on the charge specified in the
column headed Final Charge in the Carrier Price List for the
relevant Financial Year In Question.
12.12 The charge payable for each Competitive Standard Service and a
service which is not a Standard Service, shall be the charge
specified from time to time in the column headed BT Charge in the
Carrier Price List.
12.13 If there is a difference between a charge for a Standard Service
(other than a Competitive Standard Service) specified in the
Carrier Price List and a charge determined by the Director
General, the charge determined by the Director General shall
prevail.
12.14 All references to an entry in the Carrier Price List for Standard
Services are references to the Carrier Price List relating to the
Financial Year In Question.
12.15 The date of publication in the Carrier Price List shall be the
date that BT first makes available or sends the Carrier Price List
containing the relevant entries to a person other than BT.
13. OPERATOR SERVICES
13.1 As soon as reasonably practicable following agreement of a charge
(or the means of calculating that charge) for a service provided
by the Operator to BT, BT shall make any necessary alterations to
the Carrier Price List so that it accords with that agreement and
shall send a copy of the alterations to the Carrier Price List to
the Operator as soon as reasonably practicable.
13.2 If the Parties have agreed on a provisional basis an Interim
Charge for a service provided by the Operator to BT, such
provisionally agreed charge shall be reviewed on:
13.2.1 a date agreed by the Parties; or
13.2.2 a date that a determination by the Director General of an
Interim Charge for an equivalent service for the relevant
Financial Year In Question is published;
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13.2.3 a date that a determination by the Director General of a
Final Charge for an equivalent service for the relevant
Financial Year In Question is published;
whichever is the earlier and any variation to the provisionally
agreed charge shall take effect from the date of the original
agreement.
13.3 In circumstances other than where Condition 13.5.(1)(i) of the BT
Licence or the equivalent Condition of the Operator Licence
applies, if the Parties are unable to reach agreement of a charge
(or the means of calculating that charge) for a service provided
by the Operator to BT under the Agreement, either Party may serve
a review notice on the other Party under paragraph 19.1.
13.4 If the Director General has previously determined the charge for a
service provided by the Operator to BT, and if, at the
commencement of the Financial Year In Question, the Director
General has not determined the Interim Charge for that service,
the Pre-Interim Charge for that service shall be the same as the
Interim Charge for that service for the Financial Year immediately
preceding the Financial Year In Question provided always that such
Interim Charge has been determined for such immediately preceding
Financial Year.
13.5 If the Director General has previously determined the charge for a
service provided by the Operator to BT, and if, for the Financial
Year In Question, the Director General has not determined, before
1 July of such year, the Interim Charge for that service, the
Operator shall, as soon as reasonably practicable following
publication in the Carrier Price List of the determined Interim
Charge for the Financial Year In Question, adjust and recalculate
the charges in respect of that service for the Financial Year In
Question using the determined Interim Charge and calculate any sum
overpaid or underpaid.
13.6 As soon as reasonably practicable following a determination by the
Director General of a charge (or the means of calculating that
charge) for a service provided by the Operator to BT, BT shall
make any necessary alterations to the Carrier Price List so that
it accords with the determination and shall send a copy of the
alterations to the Carrier Price List to the Operator as soon as
reasonably practicable.
13.7 If the Director General has determined an Interim Charge for a
service provided by the Operator to BT, after the Director General
has determined the Final Charge (or the means of calculating that
charge) for that service, the Operator shall, as soon as
reasonably practicable following publication in the Carrier Price
List of the determined Final Charge for the Financial Year In
Question, adjust and recalculate the charges in respect of that
service for the Financial Year In Question in accordance with the
provisions of Condition 13.5B.1A of the BT Licence and calculate
the interest for any
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sums overpaid or underpaid calculated in accordance with the Oftel
Interest Rate. For the purposes of this paragraph 13.7 Pre-Interim
Charges shall be treated as Interim Charges.
13.8 If the Director General has determined an Interim Charge for a
service provided by the Operator to BT then either Party may
request the Director General to determine the Interim Charge for
that service for the next Financial Year In Question.
13.9 If a determination referred to in paragraphs 13.3, 13.6, 13.7 or
13.8 is subject to a legal challenge, the Parties shall, without
prejudice, treat the determination as valid until the conclusion
of the legal proceedings unless the court otherwise directs. If
the court finds a determination to be unlawful then the Parties
agree to revert to the charges payable immediately prior to such
determination being made and BT shall make any necessary
alterations to the Carrier Price List. As soon as reasonably
practicable following a redetermination by the Director General
(as a result of a legal challenge) of a charge (or the means of
calculating that charge) for such service, BT shall make any
necessary alterations to the Carrier Price List so that it accords
with redetermination and shall send a copy of the alterations to
the Carrier Price List to the Operator as soon as reasonably
practicable. The Operator shall, as soon as reasonably practicable
following publication in the Carrier Price List of the
redetermined charge for the Financial Year In Question, adjust and
recalculate the charges in respect of such service for the
Financial Year In Question and calculate the interest for any sums
overpaid or underpaid in accordance with the Oftel Interest Rate.
13.10 Subject to paragraphs 13.11 and 13.12, the charge payable during
the course of the relevant Financial Year In Question for each
service provided by the Operator to BT, shall be that specified in
the column headed Interim Charge in the Carrier Price List for the
relevant Financial Year In Question.
13.11 The charge payable during the course of the relevant Financial
Year In Question for each service provided by the Operator to BT
for which there is no determined charge, in respect of a period
for which there is no charge specified in the column headed
Interim Charge, shall be that specified in the column headed
Pre-Interim Charge in the Carrier Price List for the relevant
Financial Year In Question.
13.12 An adjustment and recalculation which is to be carried out using
the Final Charge shall be based on the charge specified in the
column headed Final Charge in the Carrier Price List for the
relevant Financial Year In Question.
13.13 If any charge (or the means of calculating that charge) for a
service provided by the Operator to BT has retrospective effect
then the Operator shall adjust and recalculate the charges in
respect of such service for the Financial Year
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In Question using the new charge and calculate the interest for
any sum overpaid or underpaid at the Oftel Interest Rate.
13.14 If there is a difference between a charge for a service provided
by the Operator to BT specified in the Carrier Price List and a
charge determined by the Director General, the charge determined
by the Director General shall prevail.
13.15 All references to an entry in the Carrier Price List for services
provided by the Operator are references to the Carrier Price List
relating to the Financial Year In Question.
13.16 The date of publication in the Carrier Price List shall be the
date that BT first makes available or sends the Carrier Price List
containing the relevant entries to a person other than BT.
14. CHARGES AND PAYMENT
14.1 Each Party shall pay the charges calculated in accordance with,
and within the time specified in, this Agreement.
14.2 No charges shall be payable under this Agreement by one Party to
the other unless such charges are specifically referred to in this
Agreement.
14.3 The charges in this Agreement are exclusive of VAT unless such
charges are stated to be inclusive of VAT.
14.4 Invoices are due and payable in pounds sterling.
14.5 Each Party shall pay the other Party the relevant charges
specified in this Agreement for all Calls conveyed between the
Parties except that if a Party has a Third Party Interconnect, and
the other Party has a Third Party Interconnect Agreement
containing provisions such that charges for Calls conveyed via the
Third Party Interconnect are paid directly to that other Party by
that Third Party, then the first Party shall be released from
payment for such Calls subject to such Calls being conveyed in
agreed separate Traffic Routes.
14.6 If an Operator has a liability to pay BT Access Deficit
Contributions for Calls handed over directly to BT that liability
shall continue notwithstanding that the Operator conveys such
Calls to BT via a Third Party.
14.7 If the Operator hands over a Call to a Third Party Operator system
and such Call is subsequently handed over to the BT System and
conveyed to a BT Network Termination Point the Operator shall pay
BT (in relation to such a Call) the same contribution to BT's
Access Deficit as the Operator would
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have been liable to pay BT if such a Call had been handed over
directly from the Operator System to the BT System.
14.8 The Operator shall not pay any Access Deficit Contribution in
respect of a Call made on or after 8 February 1996.
15. BILLING
15.1 Each Party shall provide to the other invoices of all amounts due
to it, calculated in accordance with the provisions of Annex B and
the Carrier Price List.
16. SYSTEM PROTECTION AND SAFETY
16.1 Each Party is responsible for the safe operation of its System and
shall take all reasonable and necessary steps in its operation and
implementation of this Agreement to ensure that its System does
not:
16.1.1 endanger the safety or health of employees, contractors,
agents or Customers of the other Party; or
16.1.2 damage, interfere with or cause any deterioration in the
operation of the other Party's System.
17. APPROVED ATTACHMENTS AND CUSTOMER EQUIPMENT
17.1 Neither Party shall connect or knowingly permit the connection to
its System of anything that is not approved by the relevant
approvals authority for attachment to its System.
17.2 If a Customer ceases wholly or partly to be a Party's Customer at
any one site and becomes a Customer of the other Party, the first
Party shall not hinder the second Party from:
17.2.1 gaining access to equipment rooms owned or occupied by the
Customer,
17.2.2 gaining access to ducting and wiring owned by the Customer,
and/or
17.2.3 obtaining consents and wayleaves from any Third Party
as shall be required for such access.
18. NUMBERING
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18.1 Each Party shall use numbers in accordance with the United Kingdom
national numbering scheme and shall comply with the numbering
provisions in Annex A.
19. REVIEW
19.1 A Party may seek to amend this Agreement by serving on the other a
review notice if:
19.1.1 either Party's Licence is materially modified (whether by
amendment or replacement); or
19.1.2 a material change occurs in the law or regulations
(including codes of practice whether or not having the
force of law) governing telecommunications in the United
Kingdom; or
19.1.3 this Agreement makes express provision for a review or the
Parties agree in writing that there should be a review; or
19.1.4 a material change (including enforcement action by any
regulatory authority) occurs which affects or reasonably
could be expected to affect the commercial or technical
basis of this Agreement; or
19.1.5 this Agreement is assigned or transferred by the other
Party except if prior written consent to the assignment or
transfer is not required under paragraph 25.1; or
19.1.6 there is a general review pursuant to paragraph 19.4; or
19.1.7 there is to be a review of charges for which a Review Date
is specified in a Schedule.
19.2 A review notice shall set out in reasonable detail the issues to
be discussed between the Parties.
19.3 Save as provided in paragraphs 19.4 or 19.5, a Party shall serve a
review notice not later than the expiration of a 1 year period
commencing on the date set opposite each paragraph as follows:
------------------------------------------------------------------------
PARAGRAPH PERIOD COMMENCING ON THE DATE:
------------------------------------------------------------------------
19.1.1 of publication of the modifications to the Licence
------------------------------------------------------------------------
19.1.2 of occurrence of material change
------------------------------------------------------------------------
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------------------------------------------------------------------------
19.1.3 of entitlement or occurrence of the date of written
agreement
------------------------------------------------------------------------
19.1.4 of occurrence of the material change
------------------------------------------------------------------------
19.1.5 of notification of assignment or transfer
------------------------------------------------------------------------
19.4 A Party may initiate a general review of this Agreement by serving
a review notice during the period of three months commencing on
1st April 1998 and 1st April every 2 years thereafter.
19.5 A Party may initiate a review of charges in a Schedule or the
Carrier Price List if there is a Review Date specified, by serving
a review notice during the period of three months commencing on
the Review Date.
19.6 On service of a review notice, the Parties shall forthwith
negotiate in good faith the matters to be resolved with a view to
agreeing the relevant amendments to this Agreement.
19.7 A variation of charges payable by one Party to the other following
a review notice pursuant to paragraph 19.1.7 shall take effect as
of the Review Date. All other variations of charges resulting from
a determination by the Director General shall, except where agreed
otherwise, take effect from the date of the relevant review
notice.
19.8 For the avoidance of doubt, the Parties agree that notwithstanding
service of a review notice this Agreement shall remain in full
force and effect.
20. DETERMINATION
20.1 If the Parties fail to reach agreement on the subject matter of a
review notice within 3 months (or within 6 months for a review
notice under paragraph 19.4) in each case from the date of service
of such review notice, either Party may, not later than 3 months
after the expiration of the relevant period, request in writing
the Director General to determine:
20.1.1 the matters upon which the Parties have failed to agree;
20.1.2 whether this Agreement should be modified to take account
of such matters; and, if so
20.1.3 the amendment or amendments to be made.
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The Parties may, at any time, agree in writing a variation to the
time periods specified above in relation to a particular review
notice.
20.2 On receipt of a request for a determination the Director General
may make a determination if he is satisfied that:
20.2.1 the requirements of the relevant paragraphs in paragraph
19.1 have been satisfied; and
20.2.2 the modifications sought to this Agreement are material.
20.3 A determination by the Director General shall be limited to:
20.3.1 the subject matter of the request for a determination; and
20.3.2 matters on which the Parties have failed to agree which the
Director General would have power to determine under either
Condition 13 of the BT Licence or under the equivalent
Condition of the Operator Licence if there was no agreement
between the Parties.
20.4 In making a determination, the Director General shall act pursuant
to the criteria contained from time to time either in Condition 13
of the BT Licence or in the equivalent Condition of the Operator
Licence. The Parties shall have the rights and remedies whether
arising at law or otherwise in relation to such determination as
would be available under either Condition 13 of the BT Licence or
under the equivalent Condition of the Operator Licence.
20.5 The Parties shall enter into an agreement to modify or replace the
Agreement in accordance with the Director General's determination
unless the determination is subject to a legal challenge.
20.6 If the determination is subject to a legal challenge then the
Parties shall subject to paragraphs 12.6 and 13.9 modify or
replace the Agreement at the conclusion of the legal proceedings
in accordance with the Director General's determination and the
result of the legal proceedings.
20.7 For the avoidance of doubt, determination of a charge may include
a determination of the basis for calculating that charge.
21. CONFIDENTIALITY
21.1 Subject to the following provisions of this paragraph 21, a
Receiving Party shall keep in confidence Confidential Information
and will not (and will use its reasonable endeavours to ensure
that its directors, employees, and professional advisers will not)
disclose such information to any Third Party.
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21.2 A Receiving Party shall exercise no lesser degree of care of
Confidential Information than would a reasonable person with
knowledge of confidential nature of the information. A Receiving
Party shall exercise no lesser security or degree of care than
that Party applies to its own Confidential Information of an
equivalent nature.
21.3 A Receiving Party shall restrict disclosure of Confidential
Information relating to the other Party to those persons who have
a reasonable need to know. Confidential Information shall be used
solely for the purposes for which it was disclosed.
21.4 A Receiving Party may disclose Confidential Information to an
Associated Company, subject to the Associated Company undertaking
to comply with obligations equivalent to these contained in this
paragraph 21.
21.5 A Receiving Party may disclose Confidential Information to a
contractor or agent, subject to the contractor or agent
undertaking to comply with obligations equivalent to those
contained in this paragraph 21.
21.6 The following shall not constitute a breach of this paragraph 21:
21.6.1 a disclosure authorised in writing by the Disclosing Party
to the extent of that authority; or
21.6.2 a disclosure to an Emergency Organisation; or
21.6.3 publication of all or part of this Agreement or details of
it pursuant to the BT Licence or publication in the Carrier
Price List or Quality Schedule except in so far as the
Director General has consented to the exclusion of any
matter pursuant to Condition 16A of the BT Licence; or
21.6.4 a disclosure which is properly made pursuant to the
Operator Licence or the BT Licence or a relevant statutory
or other regulatory obligation; or
21.6.5 a disclosure properly and reasonably made to the Director
General under paragraph 20, to an arbitrator, expert or any
person appointed by the Parties for the resolution of a
Dispute; or
21.6.6 a disclosure to obtain or maintain any listing on any
recognised stock exchange,
subject to in the case of any disclosure specified in paragraphs
21.6.4 to 21.6.6 the Receiving Party informing the Disclosing
Party as soon as reasonably practical, after such disclosure.
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21.7 Unless otherwise agreed in writing, a Receiving Party shall not
use the other Party's Confidential Information to provide
commercial advantage to its retail business.
22. FORCE MAJEURE
22.1 Neither Party shall be liable for any breach of this Agreement
caused by act of God, insurrection or civil disorder, war or
military operations, national or local emergency, acts or
omissions of government, highway authority or other competent
authority, compliance with any statutory obligation, industrial
disputes of any kind (whether or not involving BT's or the
Operator's employees), fire, lightning, explosion, flood,
subsidence, weather of exceptional severity, acts or omissions of
persons for whom neither Party is responsible or any other cause
whether similar or dissimilar outside its reasonable control and
any such event or circumstance is a force majeure.
22.2 The Party initially affected by a force majeure shall promptly
notify the other of the estimated extent and duration of its
inability to perform or delay in performing its obligations
("force majeure notification").
22.3 Upon cessation of the effects of the force majeure the Party
initially affected by a force majeure shall promptly notify the
other of such cessation.
22.4 If as a result of a force majeure, the performance by the Party
initially affected of its obligations under this Agreement is
affected, such Party shall, subject to the provisions of paragraph
22.6, perform those of its obligations not affected by a force
majeure. In performing those of its obligations not affected by a
force majeure, the Party initially affected by a force majeure
shall deploy its resources such that (when taken together with
other obligations to its Customers and Third Parties) there is no
undue discrimination against the other Party.
22.5 To the extent that a Party is prevented as a result of a force
majeure from providing all of the services or facilities to be
provided under this Agreement, the other Party shall be released
to the equivalent extent from its obligations to make payment for
such services or facilities or complying with its obligations in
relation thereto.
22.6 Following a force majeure notification and if the effects of such
force majeure continue for:
22.6.1 a continuous period of not more than 6 months from the date
of the force majeure notification (whether or not notice of
cessation has been given pursuant to paragraph 22.3) any
obligation outstanding shall be fulfilled by the Party
initially affected by the force majeure as soon as
reasonably possible after the effects of the force majeure
have ended,
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save to the extent that such fulfilment is no longer
possible or is not required by the other Party;
22.6.2 a continuous period of 6 months or more from the date of
the force majeure notification (and notice of cessation has
not been given pursuant to paragraph 22.3), the Party
receiving the force majeure notification shall be entitled
(but not obliged) to terminate this Agreement by giving not
less than 30 days written notice to the other Party,
provided that such notice shall be deemed not to have been
given if notice of cessation is received by the Party
receiving the force majeure notification prior to the
expiry of the 30 days notice. If this Agreement is not
terminated in accordance with the provisions of this
paragraph 22.6.2, any obligations outstanding shall be
fulfilled by the Party initially affected by the force
majeure as soon as reasonably possible after the effects of
the force majeure have ended, save to the extent that such
fulfilment is no longer possible or is not required by the
other Party.
23. LIMITATION OF LIABILITY
23.1 Neither Party has an obligation of any kind to the other Party
beyond the obligations to exercise the reasonable skill and care
of a competent telecommunications operator in performing its
obligations under this Agreement.
23.2 Subject to paragraph 23.4 if a Party is in breach of any of its
obligations under this Agreement to the other Party (excluding
obligations arising under this Agreement to pay moneys in the
ordinary course of business), or otherwise (including liability
for negligence or breach of statutory duty) such Party's liability
to the other shall be limited to one million pounds sterling (Stg
(pound)1,000,000) for any one event or series of connected events
and two million pounds sterling (Stg (pound)2,000,000) for all
events (connected or unconnected) in any period of 12 calendar
months.
23.3 Neither Party excludes or restricts its liability for death or
personal injury caused by its own negligence or liability arising
under Part I of the Consumer Protection Act 1987.
23.4 Neither Party shall be liable to the other in contract, tort
(including negligence or breach of statutory duty) or otherwise
for loss (whether direct or indirect) of profits, business or
anticipated savings, wasted expenditure or for any indirect or
other consequential loss whatsoever arising in connection with the
operation of this Agreement, howsoever caused.
23.5 Each provision of this paragraph 23 is a separate limitation
applying and surviving even if one or more such provisions is
inapplicable or held unreasonable in any circumstances.
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23.6 The amounts specified in paragraph 23.2, as adjusted pursuant to
this paragraph 23.6, shall be adjusted on each 1st April after the
date of this Agreement by the percentage change in the retail
price index (published in the General Index of Retail Prices (RPI)
published by the Central Statistical Office (or any successor
index)) for the month of September immediately preceding each 1st
April compared with the RPI published in September in the previous
year.
24. INTELLECTUAL PROPERTY RIGHTS
24.1 Except as expressly provided otherwise in this Agreement,
Intellectual Property Rights shall remain the property of the
Party creating or owning the same and nothing in this Agreement
shall be deemed to confer any assignment or licence of the
Intellectual Property Rights of one Party to the other Party.
25. ASSIGNMENT
25.1 Unless otherwise agreed in writing, and subject to paragraph 25.2,
no rights, benefits or obligations under this Agreement may be
assigned or transferred, in whole or in part, by a Party without
the prior written consent of the other Party.
25.2 No consent is required under paragraph 25.1 for an assignment of
rights, benefits or obligations under this Agreement (in whole or
in part) to a successor to all or substantially all of the
assigning Party's System or to an Associated Company provided that
such successor or Associated Company shall have had a licence
granted to it under section 7 of the Act to run the
Telecommunication System of the assigning Party.
25.3 The assigning Party shall promptly give notice to the other Party
of any assignment permitted to be made without the other Party's
consent. No assignment shall be valid unless the
assignee/successor agrees in writing to be bound by the provisions
of this Agreement.
26. DISPUTES
26.1 If a Party ("the disputing Party") wishes to invoke the dispute
procedure specified in this paragraph it shall as soon as
reasonably practicable notify the other Party's liaison contact
specified from time to time in the Customer Service Plan. The
disputing Party shall include with such notice all relevant
details including the nature and extent of the Dispute.
26.2 Following a notification under paragraph 26.1 the Parties shall
consult in good faith to try to resolve the Dispute at level 1. If
agreement is not reached at level 1 the Dispute may be escalated
to level 2. If agreement is
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not reached at level 2 the Dispute may be escalated to level 3. If
a Party escalates a Dispute it shall record for the benefit of the
next level all relevant details including what is agreed and what
is not agreed concerning the Dispute.
26.3 The name of each Party's liaison contact and representatives at
each level of consultation shall be as specified from time to time
in the Customer Service Plan. No change to a liaison contact or
representative shall be effective until it has been notified to
the other Party.
26.4 The above procedures are without prejudice to any other rights and
remedies that may be available in respect of any breach of any
provision of this Agreement.
26.5 Nothing herein shall prevent a Party from:
26.5.1 seeking (including obtaining or implementing) interlocutory
or other immediate relief; or
26.5.2 referring the Dispute to the Director General in accordance
with any right (if any) either Party may have to request a
determination or other appropriate steps for its
resolution.
27. BREACH, SUSPENSION AND TERMINATION
27.1 If a Party's System adversely affects the normal operation of the
other Party's System, or is a threat to any person's safety, the
other Party may suspend, to the extent necessary, such of its
obligations hereunder, and for such period as it may consider
reasonable to ensure the normal operation of its System or reduce
the threat to safety.
27.2 If a Party is in material breach of (including failure to pay a
sum due under) this Agreement, the other Party may serve a written
notice (the "breach notice") on the Party in breach specifying the
breach and requiring it to be remedied within:
27.2.1 30 calendar days from the date of receipt of such breach
notice; or
27.2.2 in case of emergency, within such shorter period as the
Party not in breach may reasonably specify.
27.3 If, the Party in breach fails to remedy the breach within such
period as may be specified by the Party not in breach pursuant to
paragraph 27.2 the Party not in breach may, until such breach is
remedied, suspend performance of such of its obligations under
this Agreement as is reasonable in the circumstances.
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27.4 If the Party in breach fails to remedy the breach within the
period stated in the breach notice the Party not in breach may
terminate this Agreement on three months' written notice provided
always that if the Party in breach remedies the breach within such
three months' notice period, this Agreement shall not terminate as
a result of such notice.
27.5 This Agreement may be terminated by either Party by written notice
forthwith (or on the termination of such other period as such
notice may specify) if the other Party:
27.5.1 is unable to pay its debts within the meaning of section
123 (1) (e) of the Insolvency Act 1986; or
27.5.2 has a receiver or administrative receiver appointed in
relation to all or any of its assets; or
27.5.3 has an order made or a resolution passed for its winding up
(other than for the purpose of amalgamation or
reconstruction); or
27.5.4 has an administration order made in respect of its
business; or
27.5.5 enters into a voluntary arrangement under section 1 of the
Insolvency Act 1986; or
27.5.6 ceases to carry on business.
27.6 Upon termination or expiry of this Agreement each Party shall take
such steps and provide such facilities as are necessary for
recovery by the other Party of equipment (if any) supplied by that
other Party. Each Party shall use reasonable endeavours to recover
equipment made available by it.
27.7 If 30 calendar days after the termination or expiry of this
Agreement, a Party fails to recover equipment in good condition
(fair wear and tear excepted) because of the acts or omissions of
the other Party (or a Third Party appearing to have control of a
site where such equipment is situate) the first Party may demand
reasonable compensation from the other Party which shall be paid
by the other Party within 10 calendar days of the date of the
demand.
27.8 Without prejudice to a Party's rights upon termination or expiry
of this Agreement, a Party shall refund to the other a fair and
equitable proportion of those periodic sums (if any) paid under
the Agreement for a period extending beyond the date of such
termination or expiration.
27.9 Termination or expiry of this Agreement shall not be deemed a
waiver of a breach of any term or condition of this Agreement and
shall be without
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prejudice to a Party's rights, liabilities or obligations that
have accrued prior to such termination or expiry.
27.10 Notwithstanding the termination or expiry of this Agreement
paragraphs 10.6, 17.2, 21, 23, 27.6 to 27.11 inclusive shall
continue in full force and effect.
27.11 Each of the Parties' right to terminate or suspend performance of
this Agreement pursuant to this paragraph 27 is without prejudice
to any other rights or remedies available to either Party.
28. NOTICES
28.1 A notice shall be duly served if:
28.1.1 delivered by hand, at the time of actual delivery;
28.1.2 sent by facsimile, upon its receipt being confirmed;
28.1.3 sent by recorded delivery post, 4 calendar days after the
day of posting.
28.2 Except if otherwise specifically provided all notices and other
communications relating to this Agreement shall be in writing and
shall be sent as follows:
If to the Operator:
#[Operator]
If to BT:
Contract Liaison Manager, #[Operator]
PP #
British Telecommunications plc
Tenter House
45 Moorfields
London
EC2Y 9TH
or to such other addresses as the Parties may notify from time to
time pursuant to this paragraph 28.
29. ENTIRE AGREEMENT
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29.1 This Agreement supersedes all previous understandings,
commitments, agreements or representations whatsoever, whether
oral or written, in relation to the subject matter of this
Agreement.
30. VARIATIONS
30.1 Except as expressly provided in this Agreement, no variation of
this Agreement shall be effective unless agreed in writing by the
Parties and signed by a person nominated in writing on behalf of:
30.1.1 BT, by the director, UK Carrier Services (or his
successor); and
30.1.2 the Operator, by a director or the company secretary (or
equivalent office holder) of the Operator.
31. WAIVER
31.1 The waiver of any breach of, or failure to enforce, any term or
condition of this Agreement shall not be construed as a waiver or
a waiver of any other breach of the same or any other term or
condition of this Agreement. No waiver shall be valid unless it is
in writing and signed on behalf of the Party making the waiver.
32. RESTRICTIVE TRADE PRACTICES
32.1 Notwithstanding any other provision of this Agreement no provision
of this Agreement, by virtue of which this Agreement is subject to
registration (if such be the case) under the Restrictive Trade
Practices Acts 1976 and 1977, shall take effect until the day
after the date on which particulars of the Agreement have been
furnished to the Director General of Fair Trading pursuant to the
requirement of those Acts. In this paragraph the expression "this
Agreement" includes any agreement or arrangement of which this
Agreement forms part and which is registrable, or by virtue of
which this Agreement is registrable, under those Acts.
33. INDEPENDENT CONTRACTORS AND AGENCY
33.1 Each of the Parties is and shall remain at all times an
independent contractor fully responsible for its own acts or
defaults (including those of its employees or agents). Neither
Party is authorised and neither of the Parties nor their
employees, agents or representatives shall at any time attempt to
act or act on behalf of the other Party to bind the other Party in
any manner whatsoever to any obligations. Neither Party nor its
employees, agents or representatives shall engage in any acts
which may lead any person to believe that such Party is an
employee, agent or representative of the other Party. Nothing in
this Agreement shall be deemed to constitute a partnership between
the Parties.
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33.2 If either Party appoints an agent for the purposes of this
Agreement, and notifies the other Party, then the other Party
shall deal with the appointed agent for such purposes until the
first Party notifies the other Party that the appointment has been
terminated.
34. SEVERABILITY
34.1 The invalidity or unenforceability of any provision of the
Agreement shall not affect the validity or enforceability of the
remaining provisions of this Agreement.
35. GOVERNING LAW
35.1 The interpretation, validity and performance of this Agreement
shall be governed in all respects by the laws of England and Wales
and the Parties submit to the exclusive jurisdiction of the
English Courts.
IN WITNESS WHEREOF THIS AGREEMENT was entered into the day and
year first before written.
SIGNED for and on behalf of
#[OPERATOR]
Signed: ______________________________________
Name: ________________________________________
Position: ____________________________________
SIGNED for and on behalf of
BRITISH TELECOMMUNICATIONS plc
Signed: ______________________________________
Name: ________________________________________
Position: ____________________________________
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[BT LOGO and GRAPHIC]
GENERIC
ELECTRICAL & PHYSICAL
INTERFACE SPECIFICATION
FOR CUSTOMER SITED INTERCONNECT
I/C SPECIFICATION 0200
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GENERIC ELECTRICAL & PHYSICAL INTERFACE SPECIFICATION
CONTENTS
<TABLE>
<S> <C>
1.GENERAL...................................................................................... 34
2. PHYSICAL INTERFACE.......................................................................... 34
3. ELECTRICAL INTERFACE........................................................................ 35
3.1. General Characteristics.......................................................... 35
3.2. Specifications at the output ports............................................... 35
3.3. Specifications at the input ports................................................ 35
3.4. Earthing of screen............................................................... 35
3.4.1. Output Ports.......................................................... 35
3.4.2. Input Ports........................................................... 35
3.5. Interference..................................................................... 35
3.6. Jitter........................................................................... 36
3.6.1. Maximum jitter at output ports........................................ 36
3.6.2. Tolerance of input ports to jitter and wander......................... 36
3.6.3. Measurement of Jitter................................................. 36
3.7. Wander at BT and Operator input ports............................................ 36
4. BT AND OPERATOR NETWORK SYNCHRONISATION..................................................... 36
4.1. General.......................................................................... 36
4.2. Synchronisation requirements for Master/Slave working............................ 39
4.3. Operator wishing to effect their own synchronisation............................. 39
5. FUNCTIONAL CHARACTERISTICS OF THE INTERFACE................................................. 39
5.1. Signalling....................................................................... 39
5.2. Timeslot '0'..................................................................... 40
5.3. Alarm Indication Signal (AIS).................................................... 40
5.4. Channel Time Slot Encoding....................................................... 40
6. SAFETY AND PROTECTION....................................................................... 40
6.1. Dangerous Voltages............................................................... 40
6.2. Radiation Hazards................................................................ 41
7. REFERENCES.................................................................................. 42
8. GLOSSARY.................................................................................... 42
9. HISTORY..................................................................................... 44
</TABLE>
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1. GENERAL
This document defines the physical and electrical characteristics of Customer
Sited Interconnect links, between the BT System and the Operator System. All
references to ITU Recommendations refer to the White Book unless otherwise
indicated.
2. PHYSICAL INTERFACE
The interconnection between the BT System and the Operator System shall be
provided by a BT digital path that terminates on a BT Circuit Termination Unit
(CTU) located within the building housing the Operator Switch. The BT CTU will
present a G703 interface on two 75 ohm coaxial cables direct to either the
Operator Switch or an Operator Digital Distribution Frame (DDF) which is
co-located with the Operator Switch. The Point of Connection shall be the 75 ohm
G703 coaxial connector at the BT end of the cables connecting the CTU to the
Operator Switch (or co-located Operator DDF) (See Fig 1). The coaxial cables
connecting the CTU to the Operator Switch shall have a loss not exceeding 6dB at
1024 kHz (see Fig 1).
[FIGURE 1 GRAPHIC OMITTED]
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3. ELECTRICAL INTERFACE
The following section shall apply to a 2Mbit/s interface using the coaxial pair
option of ITU-T Recommendation G.703 (Physical/Electrical Characteristics of
Hierarchical Digital Exchanges).
3.1. GENERAL CHARACTERISTICS
These shall conform with section 6.1 of ITU-T Rec. G703
3.2. SPECIFICATIONS AT THE OUTPUT PORTS
These shall conform with section 6.2 of ITU-T Rec. G.703 (Table 6).
3.3. SPECIFICATIONS AT THE INPUT PORTS
These shall conform with section 6.3 of ITU-T Recommendation G.703.
3.4. EARTHING OF SCREEN
3.4.1.OUTPUT PORTS
At output ports the cable screen shall be bonded to the
equipment metalwork at the equipment boundary or as near as
possible to it.
3.4.2.INPUT PORTS
The input port cable screen shall be earthed via a capacitor
(typically 0.1 (mu)F) to the equipment. Provision shall be
also made at this point for providing a DC connection to
earth. The equipment shall be set-up with the DC earth not
connected, this is illustrated in figure 1. A suitable ferrite
tube ferrule should be threaded onto the cable so as to be
located at a point between the bonding point and the equipment
circuitry
3.5. INTERFERENCE
The input ports shall tolerate, without error, interference from a non
synchronous standard test signal (ITU-T Recommendation 0.151- Error
Performance Measuring Equipment for Digital Systems At The Primary Bit
Rate and Above) at a level 18dB lower than the wanted signal.
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3.6. JITTER
3.6.1. MAXIMUM JITTER AT OUTPUT PORTS
Under worst case operating conditions (i.e. fault
free) the output jitter shall not exceed 0.05 UI when
measured in the frequency range 20 Hz to 100 kHz.
Note:
This assumes that the Operator Switch meets:
1. the input jitter tolerances given in
section 3.6.2.
2. the jitter transfer function given in
Figure 5 of ITU-T Recommendation Q.551
(Transmission Characteristics of Digital
Exchanges).
3.6.2.TOLERANCE OF INPUT PORTS TO JITTER AND WANDER
The tolerance of both the BT and the Operator input
ports to jitter shall be as defined in section 3.1.1
of ITU-T Recommendation G.823 (Jitter And Wander
Tolerance of Digital Input Ports).
3.6.3.MEASUREMENT OF JITTER
A jitter measuring set conforming to the requirements of ITU-T
Recommendation O.171 (Timing Jitter Measuring Equipment for
Digital Systems) shall be used. BT and the Operator shall
co-operate in the application of testing methods as described
in ITU-T Recommendation G.823 (The Control of Jitter and
Wander Within Digital Networks Which Are Based on the 2048
Kbit/s Hierarchy).
3.7. WANDER AT BT AND OPERATOR INPUT PORTS
The tolerance of the BT and Operator input ports to wander shall be as
defined in section 3.1.1 of ITU-T Recommendation G.823.
4. BT AND OPERATOR NETWORK SYNCHRONISATION
4.1. GENERAL
The BT System employs a central master clock to maintain a co-
operatively synchronised system within ITU-T recommended frequency
limits. The synchronisation utilities that co-operate to establish the
synchronous clock rate
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are geographically located to ensure that any point in the BT
System is contained within an 18 microsecond phase deviation
(wander). The Operator System shall conform to the requirements
listed below, which will ensure that Operator Switches are
synchronised to the BT System.
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[GRAPHIC OMITTED]
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4.2. SYNCHRONISATION REQUIREMENTS FOR MASTER/SLAVE WORKING
The BT System and the Operator System shall function synchronously, in
a master/slave relationship. To meet this requirement the Operator
System shall take its timing from BT nominated 2 Mbit/s links carrying
normal traffic between the BT and the Operator Switch Connections. The
synchronisation from BT will be from the highest order timing source
traceable to a G811 quality clock. If the Operator Switch is taking
timing information from the BT System via a 2 Mbit/s link which fails
(i.e. AIS is detected) then it must meet the following requirements:
A. Switching to an alternative 2Mbit/s synchronisation
link, if available.
B. If no synchronisation links are available, entering
holdover mode and keeping within the limits of holdover
operation specified in section 2.2.3 of ITU-T
Recommendation G.812 (Holdover Operation).
4.3. OPERATOR WISHING TO EFFECT THEIR OWN SYNCHRONISATION
Timing information shall be exchanged between the BT System and the
Operator System, for the purpose of minimising timing perturbations in
general and slip rates in particular, drawing for guidance on the
objective characteristics for the performance of digital clocks and of
slip rate given in ITU-T recommendations G.811 and G.822.
5. FUNCTIONAL CHARACTERISTICS OF THE INTERFACE
Functional characteristics of the 2 Mbit/s interface shall be in accordance with
ITU-T Recommendations G.704 (Synchronous Frame Structures used at Primary and
Secondary Hierarchical Levels) and G.706 (Frame Alignment and Cyclic Redundancy
Check (CRC) Procedures Relating To Basic Frame Structures Defined In Rec. G704)
with the following additions and clarification's:
5.1. SIGNALLING
If Time Slot 16 is not required for signalling information, it must not
be used as a traffic carrying channel within the BT System. Signalling
across the interface is not specified in this document.
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5.2. TIMESLOT '0'
Chapter 2.3 of Rec. G.704 (Basic Frame Structure at 2048 Kbit/s)
applies. Bits 4-7 in time slot zero not containing the frame alignment
signal should be set to "1". The use of bit 8 for the return direction
shall be determined by BT at each location. On some systems bit 8 will
be set to "1" in the go and return direction. On other systems when BT
detects one or more errors in the frame alignment word, this bit 8, in
the return TSO "not" word, will be set at a "1" state on two successive
occasions; when no errors are detected bit 8 will be set to the "0"
state. If possible, the Operator Switch should make the same use of
this bit 8, if not it should be tolerant to the sending of bit 8 in the
return direction and set it to "0" in the go direction.
5.3. ALARM INDICATION SIGNAL (AIS)
Under certain fault conditions AIS is used in the BT System. AIS is
indicated by a continuous stream of binary 1's. When transmitted AIS is
controlled by a free running 2048 kbit/s crystal oscillator (accuracy
within +/- 50 ppm).
The strategy for detecting the presence of AIS should be such that AIS
is detectable, even in the presence of an error ratio of 1 in 1000.
However, a signal with all bits except the frame alignment word in the
'1'state, should not be mistaken as an AIS.
5.4. CHANNEL TIME SLOT ENCODING
The 64 kbit/s channel time slots comprising the 2048 kbit/s stream
shall carry 'A' law encoded information as defined in ITU-T
Recommendation G.711 (Pulse Code Modulation (PCM) Of Voice
Frequencies).
The idle channel bit pattern transmitted over the Interconnect Link
shall be compliant with ITU-T Recommendation Q.522 section 2.12 (Bit
Patterns Generated By The Exchange In Idle Channel Time slots).
6. SAFETY AND PROTECTION
6.1. DANGEROUS VOLTAGES
In order to protect personnel and equipment on both sides of a Point Of
Connection, it is necessary to provide protection against the
transmission of excessive voltage across the interface.
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Excessive voltages shall be as defined in BS 6301: 1989. For equipment
which uses or generates excessive voltages the interface shall be
electrically isolated from those voltages. Suitable devices are
described in BS 6301: 1989.
6.2. RADIATION HAZARDS
Where radio equipment is used, arrangements shall be made to protect
all personnel from levels of radiation exceeding 1 milliwatt per square
centimetre.
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7. REFERENCES
ITU-T
G.703 Physical/Electrical Characteristics of Hierarchical
Digital Exchanges
G.704 Synchronous Frame Structures used at Primary and Secondary
Hierarchical Levels.
G.706 Frame Alignment and Cyclic Redundancy Check (CRC)
Procedures Relating To Basic Frame Structures Defined In
Rec. G704
G.711 Pulse Code Modulation (PCM) Of Voice Frequencies.
G.811 International Connections Terminating on Synchronous
Network Nodes
G.812 section 2.2.3 (Holdover Operation).
G.823 The Control of Jitter and Wander Within Digital Networks
Which Are Based on the 2048 KBIT/S Hierarchy
G.823 section 3.1.1 Jitter And Wander Tolerance of Digital Input
Ports
O.151 Error Performance Measuring Equipment for Digital Systems
At The Primary Bit Rate and Above
O.171 Timing Jitter Measuring Equipment for Digital Systems
Q.522 Section 2.12 Bit Patterns Generated By The Exchange In
Idle Channel Time slots
Q.551 Transmission Characteristics of Digital Exchanges
BS6301 1989. Safety Requirements for Apparatus for Connection to
British Telecommunication Networks
8. GLOSSARY
(micron)F - Micro Farad
(micron)s - Microsecond
2Mbit/s - 2048Kbit/s
AIS - Alarm Indications Signal
BS - British Standard
CTU - Circuit Terminating Unit.
dB - Decibel
DC - Direct Current
DDF - Digital Distribution Frame
ITU-T - International Telecommunication Union - Telecommunications
Kbit/s - KiloBits per second
kHz - Kilo Hertz
Mbit/s - Megabits per second
ppm - Parts per million
UI - Unit Interval
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9. HISTORY
Issue 1 January 1994
Issue 2 draft 1 June 1994
Issue 2 July 1994
Issue A August 1994
Issue B Sept 1994
Issue C January 1996
END OF SPECIFICATION
BT Networks and Systems
Interconnect Standards
PP 311 Angel Centre
403 St John St
London
EC1V 4PL
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[BT LOGO and GRAPHIC]
GENERIC
C7 SIGNALLING
INTERFACE SPECIFICATION
I/C SPECIFICATION 0300
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GENERIC C7 SIGNALLING INTERFACE SPECIFICATION
1. BACKGROUND
The C7 signalling interface between BT and the Operator Systems shall
be as defined in the Public Network Operator - Interconnect Standards
Committee - (PNO-ISC) specifications of the Network Interfaces
Co-ordination Committee - (NICC). ISC specifications 5 and 6 form the
basis for the Generic C7 Signalling Interface Specification
The Operator shall provide a compliance statement for each
specification shown in the table below. The compliance statements shall
be discussed by BT and the Operator and when agreed shall confirm that
the Operator Exchange type and build is suitable for interconnection of
the BT and Operator Systems.
2. REQUIREMENTS FOR COMPLIANCE STATEMENTS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
ISC SPECIFICATION DESCRIPTION COMPLIANCE STATEMENT REQUIREMENTS
FROM OPERATOR
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
ISC 5 Message Transfer Part (MTP) Define features relevant to Calls
and services set out in this
agreement.
-----------------------------------------------------------------------------------------------------------
ISC 6 Section 2 and 3 IUP. Library of messages, codes Statement for Calls and services
and common procedures
-----------------------------------------------------------------------------------------------------------
ISC 6 Section 4 onwards IUP. Message sequence diagrams and Statement for Calls and services.
descriptions for basic and
supplementary services.
-----------------------------------------------------------------------------------------------------------
</TABLE>
Some ISC specifications await ratification by NICC. Prior to such
ratification, ISC CPs and equivalent documents may be used (An example
is PNO-ISC CP001). Once the ISC specifications are ratified by NICC
they shall take precedence.
3. INTERCONNECT TO BT ISC
The statements given above on C7 IUP also apply when an Operator
interconnects to a BT ISC. For interconnect to a BT ISC using Telephony
User
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Part - TUP the signalling interface shall comply with CCITT recs.
Q.701 to Q.708, Q.723 and Q.724.
4. GLOSSARY
NICC: The Network Interfaces Co-ordination Committee set up by OFTEL
comprising members of industry for the purpose of advising the Director
General on interfaces for interconnection between licensed operators.
PNO-ISC: Public Network Operators - Interconnect Standards Committee.
Secretariat:-
Network Interfaces Co-ordination Committee ISC Secretariat
Mercury House
Waterside Park
Longshot Lane
Bracknell Berkshire
CCITT: The International Telegraph and Telephone Consultative Committee
is now succeeded by the ITU(T) and (R) International Telecommunications
Union (Telecommunications) and (Radio).
5. HISTORY
Issue 1.0 January 1994
Issue 1.1 February 1994
Issue 1.2 April 1994 Issue
Issue A August 1994
Issue B August 1994
Issue C January 1996
BT Networks and Systems
Interconnect Standards
PP 311 Angel Centre
403 St John St
London EC1V 4PL
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[BT LOGO and GRAPHIC]
GENERIC
TRANSMISSION
INTERFACE SPECIFICATION
I/C SPECIFICATION 0100
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GENERIC TRANSMISSION INTERFACE SPECIFICATION
CONTENTS:
<TABLE>
<CAPTION>
<S> <C>
1. GENERAL....................................................................................... 50
2. RESPONSIBILITIES.............................................................................. 50
3. RELEVANT PARAMETERS........................................................................... 51
4. OVERALL TRANSMISSION LOSS..................................................................... 51
4.1 Loudness Rating(LR).................................................................. 51
5. APPORTIONMENT OF OVERALL LOUDNESS RATING (OLR)................................................ 51
5.1 End to End Requirements.............................................................. 51
5.2 GSM/PCN Loudness Control............................................................. 52
5.3 RLR And Receive GSM Volume Control................................................... 52
6. TRANSMISSION TIME............................................................................. 52
6.1 Transmission Delays Within The Fixed Network - Without echo
control.................................................................................. 52
6.2 Preferred Apportionment Of Transmission delay........................................ 53
6.3 Calls that involve an International Gateway.......................................... 53
6.4 Maximum delay under route failure conditions......................................... 53
6.5 Transmission Delays Within The Fixed Network - With echo
control.................................................................................. 53
6.6 Transmission Delays Involving Digital Mobile/Wireless Access......................... 54
6.6.1 Transmission Delays Between Digital Mobile/wireless
access and the Fixed Network - With echo control................................ 54
6.6.2 Transmission Delays Within Digital Mobile/wireless
access Networks - With echo control............................................. 54
6.7 Transmission Delays On International Calls - With echo control....................... 54
7. ECHO LOSS..................................................................................... 54
7.1 GSM/PCN Echo Loss.................................................................... 56
7.2 Echo Control - International Conformance............................................. 56
7.3 Echo Control - GSM................................................................... 56
8. STABILITY LOSS................................................................................ 56
9. QUANTISING DISTORTION......................................................................... 57
9.1 Fixed Network Limits................................................................. 57
9.2 Mobile Network limits................................................................ 57
10. CODING STANDARDS.............................................................................. 57
11. NOISE......................................................................................... 58
12. ATTENUATION DISTORTION........................................................................ 58
13. GROUP DELAY DISTORTION........................................................................ 58
13.1 Sidetone Masking Rating - Normal Telephony Customer to BT
PSTN..................................................................................... 58
13.2 Sidetone Masking Rating BT PSTN to GSM/PCN.......................................... 59
14. ERROR PERFORMANCE............................................................................. 59
</TABLE>
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<TABLE>
<S> <C>
15. NON SPEECH LEVELS............................................................................. 59
16. GSM/PCN HEADSET AND HANDSET SENSITIVITY/FREQUENCY
CHARACTERISTICS............................................................................... 59
17. REFERENCES.................................................................................... 60
18. HISTORY....................................................................................... 61
</TABLE>
GENERAL
This Specification sets out the transmission requirements and objectives to be
met by BT and the Operator for the interconnection of the BT and Operator
Systems. The requirements are based on the relevant International
Telecommunications Union (ITU), European Telecommunications Standards Institute
(ETSI) and Public Network Operator - Interest Group (PNO-IG) Recommendations.
References to Global Systems Mobile / Personal Communications Networks (GSM/PCN)
are based upon ETSI/ GSM recommendation. 3.5 phase 1. This recommendation is
currently under review and will be updated to ETSI 300 540 GSM Phase 2.
End to end requirements involve the performance of Customer equipment which is
outside BT and the Operators controls.
Customer networks as referred to throughout this document typically consist of
at least one item of Customer Premises Equipment (CPE) situated beyond the
Network Terminating Point (NTP).
Where this Specification sets out matters that the Parties endeavour to agree,
and agreement is not reached, such matters shall be disputes.
RESPONSIBILITIES
The responsibility for overall transmission quality is held by the Party
selected by the Customer to carry the Call. If the Call is an indirect access
Call then the indirect access Operator is responsible for the end to end quality
of the Call.
If the overall transmission quality for a Call cannot be met because either
Party is unable to comply with the reasonable requests of the other Party, then
neither Party will be obliged to convey the Call.
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RELEVANT PARAMETERS
Overall performance is affected by the following parameters:
Overall loss
Transmission Time (Absolute delay and propagation delay)
Echo and Stability
Quantising distortion
Coding standards
Attenuation distortion
Group delay distortion
Sidetone loss
Crosstalk
Errors
Jitter and Wander
BT and the Operator shall endeavour to achieve the requirements and objectives
for overall loss, delay, echo loss, quantising distortion, and coding standards
given in sections 4 to 10 inclusive. BT and the Operator shall each plan in
accordance with the guidance given for the remaining parameters listed above.
It should be noted that for some parameters the CPE may have a significant
effect on the end to end performance.
OVERALL TRANSMISSION LOSS
LOUDNESS RATING (LR)
The limits for overall loss expressed in terms of Loudness Ratings (LR)
are defined in ITU-T Recommendation P. 76 (Blue book November 1989).
APPORTIONMENT OF OVERALL LOUDNESS RATING (OLR)
END TO END REQUIREMENTS
BT and the Operator shall endeavour to:
a) Provide connections which fall within the ITU-T G111 recommended OLR
range of 8dB to 20dB for all analogue or mixed analogue/digital
routings. For all digital routings the mean value for OLR shall be in
the range 8dB to 12dB.
b) avoid connections which exceed the ITU-T Recommended limiting OLR
value of 29dB
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C) minimise the range of different Transmission levels experienced by
any one Customer.
GSM/PCN LOUDNESS CONTROL
Cellular network operators may utilise digital level control in the
mobile switched network to control Send Loudness Rating (SLR) and
Receive Loudness Rating (RLR). values.
.
RLR AND RECEIVE GSM VOLUME CONTROL
The use of any Customer controlled receive volume control shall not
decrease (i.e. make more sensitive) the RLR, by more than 10 dB for
planning purposes.
TRANSMISSION TIME
TRANSMISSION DELAYS WITHIN THE FIXED NETWORK - WITHOUT ECHO CONTROL
For UK Calls not employing echo control, the NTP - NTP one way delay
shall be less than 13 ms for at least 95% (See (1)) of Calls. Assuming
that Customer network delays at each end of the Call do not exceed 5
ms, then the total end to end delay shall be less than 23 ms.
For the small proportion of Calls that exceed the 13ms limit, an
absolute limit of 25ms excluding Customer networks shall be observed.
Previous investigations have identified that customers may find such
Calls to be unacceptable since Customer network delays could increase
the end to end delay to over 30ms.
- --------
(1) The 95% limits in 0, 0, 0, 0, 0 & 0 shall be implemented such that the
possibility of individual Customers always encountering unacceptable performance
is minimised.
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PREFERRED APPORTIONMENT OF TRANSMISSION DELAY
[GRAPHIC OMITTED]
The apportionment principles presented in Figure 1 ensure that BT or Operator
Customers experience acceptable levels of transmission delay. Any
reapportionment of the segment boundaries (Collection, Transport and Delivery)
shall be subject to joint agreement.
CALLS THAT INVOLVE AN INTERNATIONAL GATEWAY
For International Calls the one way delay from the NTP to the
International Switching Centre (ISC) shall be no greater than 7 ms for
95% of Calls, with an absolute limit of 12 ms.
MAXIMUM DELAY UNDER ROUTE FAILURE CONDITIONS.
In situations where Calls have to be re-routed around failed sections
of the BT or Operator Network, it is acceptable for the proportion of
Calls meeting recommended delay limits to fall below 95%, however the
absolute limits given above shall not be exceeded.
TRANSMISSION DELAYS WITHIN THE FIXED NETWORK - WITH ECHO CONTROL
Where echo control is provided over the fixed network, the one-way
delay limit for at least 95% of national Calls shall be less than 125
ms. No Calls shall exceed the absolute one-way delay limit of 150 ms.
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TRANSMISSION DELAYS INVOLVING DIGITAL MOBILE/WIRELESS ACCESS
TRANSMISSION DELAYS BETWEEN DIGITAL MOBILE/WIRELESS ACCESS AND
THE FIXED NETWORK - WITH ECHO CONTROL
The one way delay limit for at least 95% of Calls between mobiles
on digital networks or wireless access networks and the fixed
network shall be less than 125 ms. No Calls shall exceed the
absolute one-way delay limit of 150 ms.
TRANSMISSION DELAYS WITHIN DIGITAL MOBILE/WIRELESS ACCESS
NETWORKS - WITH ECHO CONTROL.
The one way delay limit for at least 95% of Calls between mobiles
on digital networks or wireless access networks within the UK
shall be less than 215 ms. No connection shall exceed 230 ms one
way delay.
TRANSMISSION DELAYS ON INTERNATIONAL CALLS - WITH ECHO CONTROL.
The maximum one way delay for an International Call using echo control
will depend upon the nature of the destination network e.g. fixed,
digital mobile or wireless access and the transmission media e.g.
satellite or cable.
International Calls using echo control should not exceed 400 ms, it is
however recognised that under cable circuit failure/congestion
conditions, satellite backup circuits may not meet this requirement.
ECHO LOSS
BT and the Operators shall seek to meet the design objective for echo loss (as
defined in ITU-T Recommendation G122) presented at the Switch Connection with
equal relative levels for both directions of transmission of 20dB, with no
connections being less than 15dB for practical implementation.
CPE connected via a 2-wire interface can have significant effect on echo losses.
For planning purposes BT and the Operator shall assume that CPE will present an
impedance of 600 ohms or the network shown in fig 5 of BS6305 at the 2 wire NTP.
CPE and Customer networks are likely to determine the largest part of echo
losses in the case of 4-wire connection to the BT and the Operator Systems. For
planning purposes BT and the Operator shall assume that the CPE meets the 20dB
echo loss objectives given in the Oftel Network Code of Practice (for the Design
of Private Telecommunications Networks) - NCOP.
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GSM/PCN ECHO LOSS
The echo loss under operational conditions for a GSM/PCN based system
shall be at least 46 dB referred to the Switch Connection with any
Customer volume control set to its maximum output (i.e. loudest)
position. ETSI/GSM 03.50/1 Section 3.4.1 provides further information
related to echo loss. ITU-T Recommendation G165 provides guidance for
the performance of echo control devices when switched into a
connection. ITU-T Recommendations G151 and G473 refer.
ECHO CONTROL - INTERNATIONAL CONFORMANCE
Echo control devices for international connections to and from BT shall
conform to ITU-T. Rec.G.165 on echo cancellers.
ECHO CONTROL - GSM
The GSM/PCN system shall provide echo protection as stated in ETSI/GSM
03.50/1 Section 3.4.2.
STABILITY LOSS
For International Calls and National Calls stability loss considerations shall
be satisfied by the following requirement.
The loss presented at the Switch Connection with equal relative levels for both
directions of transmission shall not be less than 6dB at any frequency up to
4kHz. Account shall be taken of all conditions presented at the Switch
Connection under normal operating conditions and any customer volume controls
should be at maximum output.
CPE connected via a 2-wire interface may have a significant effect on stability
loss. For planning purposes BT and the Operator shall assume the CPE may present
either open circuit or short circuit conditions at a 2-wire NTP.
CPE and Customer networks are likely to largely determine the stability losses
in the case of 4-wire connection to the BT and the Operator Systems. For
planning purposes BT and the Operator shall assume that the CPE meets the 6dB
stability loss requirement given in the NCOP.
It is recognised by the Parties that stability losses of less than 6 dB could
cause oscillation.
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QUANTISING DISTORTION
FIXED NETWORK LIMITS
In order to meet international and UK requirements the following limits
for quantising distortion units (qdu) shall be met:
A1) Max end to end International 14 qdu
B1) Public network collection (access network) 5 qdu
C1) National transport/Trunk Network 0 qdu
D1) Public network delivery (access network) 5 qdu
MOBILE NETWORK LIMITS
D2) Max end to end International 18 qdu
A2) Collection (access network) 7 qdu
B2) National transport/Trunk Network 0 qdu
C2) Delivery (access network) 7 qdu
For planning purposes BT and the Operator shall assume that Customer
networks do not introduce more that 2 qdu.
CODING STANDARDS
At a digital interface it is a requirement that analogue information shall be
encoded using the 8bit, A-law characteristic in accordance with ITU-T
Recommendation G711 such that a 64kbit/s time slot at the Switch Connection can
be decoded using a 8 bit, A-law decoder.
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NOISE
The limits for single tone or narrow band noise shall be more stringent than the
limits for wideband noise to avoid Customer annoyance. As a general rule, the
power in any individual tone should be 10dB less than the psophemetric noise
power in the circuit (ITU-T Recommendation P11).
The following ITU-T recommendations shall be complied with to give appropriate
limits.
Digital Exchanges - Recommendations Q.551 and Q.554
PCM line systems - Recommendation G.712
GSM/PCN systems - ETSI/GSM 3.50/1 section 3.2
The limits in Recommendation G.123 are of particular importance as they control
the level of noise on International Calls.
ATTENUATION DISTORTION
In order to adequately control attenuation distortion each component of the
connection shall have a suitable distortion limit. The following ITU-T
Recommendations apply.
Digital Exchanges - Recommendations Q.551 and Q.554
Digital Line Systems - Recommendation G.712
GROUP DELAY DISTORTION
The following ITU-T Recommendations give suitable limits for the group delay
distortion introduced by line transmission systems and coding processes in
digital exchanges:
Digital Exchanges - Recommendations Q.551 and Q.554
Digital Line Systems - Recommendation G.712
SIDETONE MASKING RATING - NORMAL TELEPHONY CUSTOMER TO BT PSTN.
The Sidetone Masking Rating (STMR) for telephony CPE connected to a BT
Network Terminating Point shall nominally be taken as 7 dB for planning
purposes.
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SIDETONE MASKING RATING BT PSTN TO GSM/PCN
The Sidetone Masking Rating (STMR) for telephony CPE allowing users to
gain access through the GSM system shall be nominally taken as outlined
in ETSI/GSM 03.50/1 for STMR and LSTR.
ERROR PERFORMANCE
Error performance of digital networks is of key importance as it determines the
end to end performance of both end to end digital services and analogue services
supported by the BT and Operator Systems.
The allocation principles of Recommendation G. 821 shall be used when
determining the error for individual transmission systems.
NON SPEECH LEVELS
The use of any non-speech signals within an established Call, or during the
phase of Call set-up or clear down, for such purposes as signalling (e.g. DTMF)
shall comply with the principles set in Section 4 of BS6305 : 1992, that have
been based upon a 0 dBr interface.
Interfaces that are not taken as a 0 dBr point shall be planned as if they were
a 0 dBr for purposes of realising interconnection between the BT System and a
PCN/ GSM System.
GSM/PCN HEADSET AND HANDSET SENSITIVITY/FREQUENCY CHARACTERISTICS
The GSM/PCN system shall provide a performance in accordance with Section 3.8 of
ETSI/GSM Recommendation 03.50/1.
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REFERENCES
ITU-T RECOMMENDATIONS
G.111 Loudness Ratings in an International Connection
G.122 Influence Of National Systems On Stability, Talker Echo and
Listener Echo In International Connections
G.123 Circuit Noise In National Circuits
G.151 General performance objectives applicable to all modern Internat
ional and National extension circuits.
G165 Echo cancellers
G473 Interconnect of a Maritime Mobile satellite system with the
International automatic switched telephone service: Transmission
aspects
G.711 Pulse code modulation (PCM) of voice frequencies.
G.712 Performance characteristics of PCM channels between 4-wire
interfaces at voice frequencies.
G.821 Error performance of an International digital connection forming
part of an integrated services digital network.
P.11 Effect Of Transmission Impairments
P.16 Subjective effects of direct crosstalk; Thresholds of audibility
and intelligibility
P.76 Determination of Loudness rating; Fundamental principles
Q.551 Transmission characteristics of digital exchanges.
Q.554 Transmission characteristics at digital interfaces of a digital
Exchange.
BS SPECIFICATIONS
BS 6305
NCOP - OFTEL Network Code Of Practice for the design of Private
Telecommunications Networks
ETSI SPECIFICATIONS
ETSI/GSM Recommendation 03.50
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HISTORY
ISSUE 1.0 JANUARY 1994
ISSUE 1.1 FEBRUARY 1994
ISSUE 2 DRAFT 1 JUNE 1994
ISSUE 2 JULY 1994
ISSUE 2.1 7 JULY 1994
ISSUE A AUGUST 1994
ISSUE B AUGUST 1994
ISSUE C JANUARY 1996
END OF SPECIFICATION
BT Interconnect Standards
PP 311, Angel Centre
403 St John St
London
EC1V 4PL
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[BT LOGO and GRAPHIC]
GENERIC
SYNCHRONOUS DIGITAL HIERARCHY
INTERFACE SPECIFICATION
I/C SPECIFICATION 0120
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GENERIC SYNCHRONOUS DIGITAL HIERARCHY INTERFACE
SPECIFICATION
INTERCONNECT REQUIREMENTS
The Synchronous Digital Hierarchy interface between the BT and Operator
Systems shall be as defined in the "Technical Recommendation" agreed in
the Public Network Operator - Committee for SDH Interconnect PNO-CSI
(The PNO-CSI is a sub committee of the NICC - PNO-IG Network
Interoperability Consultative Committee, Public Network Operators
Group).
The Operator shall provide a suitable compliance statement against the
above Technical Recommendation. This compliance statement shall be
discussed by BT and the Operator and when agreed shall confirm that the
SDH system is suitable for interconnection of the BT and Operator
Systems.
FUNCTIONAL CHARACTERISTICS OF THE 2 MBIT/S INTERFACE
The functional characteristics of the 2 Mbit/s interface shall be as
specified in the BT Generic Electrical and Physical Interface
Specification.
REQUIREMENTS FOR COMPLIANCE STATEMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------- --------------------------------------------------
SPECIFICATION DESCRIPTION
- --------------------------------------------------------- --------------------------------------------------
<S> <C>
SDH interconnect between UK Licensed Operators - Defines interworking requirements at the Point of
Technical Recommendation Connection for all SDH network layers
- --------------------------------------------------------- --------------------------------------------------
Electrical and Physical Specification Section 5 functional characteristics of the
2Mbit/s interface.
- --------------------------------------------------------- --------------------------------------------------
</TABLE>
Copies of the PNO-IG SDH Technical Recommendation are available from
NICC to members.
HISTORY
Issue D January 1996
BT Interconnect Standards
PP 311, Angel Centre
403 St John St, London
London EC1V 4PL
- --------------------------------------------------------------------------------
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ANNEX A
PLANNING AND OPERATIONS
INDEX
A1 Definitions
A2 General
A3 Network Information
A4 Location of Switch Connections
A5 Routing Principles
A6 ISI Interconnect Link Architecture
A7 Capacity Provision
A8 Traffic Forecasts
A9 Capacity Profiles and Advance Capacity Orders
A10 Capacity Orders and Testing
A11 Capacity Order Timescales
A12 Numbering
A13 Technical Review Meetings
A14 Switch Testing
A15 Transmission and Signalling
A16 Performance Standards
A17 Operations
A18 Services
APPENDICES
A BT/Operator Network Information
B BT/Operator Interconnect Information
C Commercial
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1. DEFINITIONS
1.1 In this Annex, the Appendices and tables a reference to a paragraph or
Appendix, unless stated otherwise is to a paragraph or appendix of this
Annex. Words, abbreviations and expressions have the meanings given in
Annex D.
2. GENERAL
2.1 This Annex details the planning and operational principles for
conveying Calls between the BT System and the Operator System and
provides the technical basis for the Specifications and for the
Manuals. The Specifications define the characteristics of the interface
between the BT System and the Operator System. The Manuals provide
procedures for the provision and rearrangement of Capacity
(Provisioning Manual), testing (Testing Manual) and operations and
maintenance (Operations and Maintenance Manual).
2.2 This Annex contains provisions on the planning and operation of
services provided under this Agreement. The details of the interconnect
between the Parties' Systems and the plans for future developments
relating to interconnect shall be recorded in the Technical Master
Plan. The Customer Service Plan shall contain details of the points of
contact within the Operator's and BT's organisation. The Parties shall
endeavour to keep these documents up to date.
3. NETWORK INFORMATION
3.1 Insofar as not previously provided, each Party shall provide to the
other the information listed in Appendix A as soon as reasonably
practicable and in any event not more than 20 Working Days from the
date of this Agreement.
3.2 In addition to the requirements set out in paragraph 4 of the main body
of this Agreement, each Party will provide to the other information on
any proposed introduction, closure, replacement or modification to any
Switch referred to in paragraph 3.1 and where relevant, adjustments to
the Number Ranges supported by such Switches as soon as practicable
and, in any event, at not less than 4 months prior to the
implementation.
3.3 Each Party will provide to the other, on request, information on the
availability (or otherwise) of sufficient transmission capacity at any
BT or Operator building for establishing IECs from that location.
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4. LOCATION OF SWITCH CONNECTIONS
4.1 BT SWITCH CONNECTIONS
4.1.1 The Operator shall nominate by written notice to BT, the BT
Switch Connections at the following BT Exchanges identified
in accordance with paragraph 3.1 (where the Operator wishes
to handover Calls from the Operator System to the BT System):
(a) Any BT Tandem Exchange;
(b) Any BT DLTE;
(c) Any BT DLE;
(d) Any BT ISC.
4.1.2 BT shall nominate by written notice to the Operator, BT
Switch Connections where BT wishes to handover Calls (for
which BT has responsibility in accordance with paragraph
5.1.3) from the BT System to the Operator System.
4.1.3 The Operator shall nominate by written notice to BT, BT
Switch Connections where the Operator wishes Calls (for which
the Operator has responsibility pursuant to paragraph 5.1.3)
to be handed over from the BT System to the Operator System.
4.2 OPERATOR SWITCH CONNECTIONS
4.2.1 BT shall nominate by written notice to the Operator, Operator
Switch Connections at an Operator Exchange identified in
accordance with paragraph 3.1 at which BT wishes to handover
Calls from the BT System to the Operator System.
4.2.2 The Operator shall nominate by written notice to BT, Operator
Switch Connections at which the Operator wishes to handover
Calls (for which the Operator has responsibility in
accordance with paragraph 5.1.3) from the Operator System to
the BT System.
4.2.3 BT shall nominate by written notice to the Operator, Operator
Switch Connections where BT wishes Calls (for which BT has
responsibility pursuant to paragraph 5.1.3) to be handed over
from the Operator System to the BT System.
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4.3 AGREEMENT OF SWITCH CONNECTIONS
4.3.1 The Parties shall endeavour to agree which Switch Connections
shall be used for the conveyance of Calls between the
Parties. In the event that agreement cannot be reached either
Party may notify the other in writing of a Dispute
5. ROUTING PRINCIPLES
5.1 RESPONSIBILITIES
5.1.1 Each Party shall route the other Party's traffic in
accordance with the following routing principles:
(a) routing within a Party's System shall be equivalent
to the routing of similar types of traffic for the
generality of such Party's Customers including
alternative routing where appropriate;
(b) insofar as practicable routing shall avoid analogue
routing within a Party's own System. The Parties
acknowledge that some International Calls and Calls
to or from Third Party's systems may involve analogue
routing.
5.1.2 The Parties shall develop and apply network traffic
management strategies and procedures to maintain customer
service quality and to protect the Parties' Systems as are
appropriate. Full details of the network traffic management
provisions are set out in the Operations and Maintenance
Manual. These shall include:
(a) designation of specific Traffic Routes to restore
service if a route loss occurs;
(b) establishment of overflow procedures if there is
route congestion;
(c) establishment of special procedures for busy circuits
enabling either diversion of a Call to a different
routing or diversion to an agreed tone or message.
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5.1.3 The responsibilities for Traffic Types are set out in Table A
below. The responsibilities include choice of Switch
Connections, provision of Traffic Forecasts, provision of
Capacity Profiles and placing of Capacity Orders.
TABLE A
<TABLE>
<CAPTION>
------------------------------------ -----------------------------------------
TRAFFIC TYPE PARTY HAVING THE RESPONSIBILITIES SET OUT
IN PARAGRAPH 5.1.3
------------------------------------ -----------------------------------------
<S> <C>
Calls to geographic telephone
numbers
BT to Operator BT
Operator to BT Operator
------------------------------------ -----------------------------------------
Calls to non-geographic telephone
numbers
BT to Operator BT
Operator to BT Operator
------------------------------------ -----------------------------------------
International Calls
BT to Operator to overseas BT
Operator to BT to overseas Operator
------------------------------------ -----------------------------------------
Transit Calls
BT to Operator to transit
destination BT
Operator to BT to transit
destination Operator
------------------------------------ -----------------------------------------
Number Translation Services Calls
BT to Operator
Operator to BT BT
Operator
------------------------------------ -----------------------------------------
Indirect Access Calls
BT to Operator Operator
Operator to BT BT
------------------------------------ -----------------------------------------
BT Operator services calls
Operator to BT Operator
------------------------------------ -----------------------------------------
Emergency Calls
Operator to BT Operator
------------------------------------ -----------------------------------------
</TABLE>
5.1.4 Each Party shall ensure that a Route Type is provided on each
Interconnect Link for the conveyance of Traffic Types for
which that Party has responsibility in accordance with
paragraph 5.1.3. Where a Party wishes to segregate its
traffic into different Traffic Types it may order additional
Route Types in accordance with Schedule 01 or 130 as
appropriate. Where a Traffic Route is used for the conveyance
of Calls for both Parties in accordance with the provisions
of paragraph 5.2.8(2), a single Route Type may be used.
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5.2 INTERCONNECT TRAFFIC ROUTE STRUCTURE
5.2.1 Subject to the provisions of paragraph 5.2.6 the Parties shall
establish Interconnect Links to convey Calls between the BT
System and the Operator System on Traffic Routes between each
Operator Switch Connection and at least one BT DMSU. For
Operators with geographic Number Ranges, such BT DMSU (except
in the geographic area served by the 0171 and/or 0181 Director
Area Numbers):
(1) is a Parent BT Exchange for BT DLEs supporting Number
Ranges for geographic NNGs shared between BT and the
Operator; or
(2) is a Parent BT Exchange for BT DLEs supporting Number
Ranges for geographic NNGs serving the same
geographic area as geographic NNGs used by the
Operator and any Third Party Operator.
5.2.2 Subject to the provisions of paragraph 5.2.3, if the Operator
uses Number Ranges in the geographic area served by the 0171
and/or 0181 Director Area Numbers and the adjacent BT Charge
Groups, Traffic Routes shall be provided between each Operator
Switch Connection supporting number ranges in such geographic
area (served by the 0171 and/or 0181 Director Area Number or
the adjacent BT Charge Groups) and at least one BT DJSU.
5.2.3 If the Operator delivers traffic to a BT Switch Connection at:
(a) a single BT DMSU; or
(b) a BT DMSU and a single BT DJSU;
and if BT chooses to deliver traffic from more than one BT
Switch Connection to the Operator System, then the relevant
Interconnect Link shall be for BT's exclusive use and provided
at BT's expense.
5.2.4 If the Operator wishes to provide Traffic Routes to more than
one BT DJSU, the Parties shall agree the combination of DJSUs
and the Traffic Streams to be routed through them. Under
normal operations alternative routing of traffic between the
Traffic Routes described in paragraphs 5.2.1 and 5.2.2 will
not be available.
5.2.5 The Operator may choose to deliver International Calls
(excluding those to Republic of Ireland) to the BT System to
one or more BT ISC.
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5.2.6. Notwithstanding the provisions of paragraph 5.2.1 if the
Operator wishes to deliver only International Calls to the BT
System (for conveyance to Authorised Overseas Systems other
than the Republic of Ireland) the Operator may choose to
deliver International Calls to one or more BT ISCs only.
5.2.7 If the Parties fail to agree the BT Tandem Exchanges or the BT
ISC referred to in this paragraph 5.2 then either Party may
notify the other in writing of a Dispute.
5.2.8 Interconnect Links shall have Traffic Routes such that:
(1) for ISI, Traffic Routes shall be established to
convey only those Traffic Types for which a Party has
responsibility in accordance with paragraph 5.1.3;
and
(2) for Customer Sited Interconnect, Traffic Routes shall
be established, either:
a) in accordance with the provisions for ISI
set out in (1) above; or
b) for all Traffic Types.
5.2.9 Traffic Routes will be supported by not less than one
Signalling Link Set, except for Traffic Routes to a BT ISC
where the Operator has Interconnect Links to more than one BT
ISC and uses C 7 (TUP) signalling.
5.2.10 The Party whose Switch Connection conveys the relevant Calls
to the other's System shall assign Traffic Streams (identified
by destination) to a particular Traffic Route. BT and the
Operator shall, subject to paragraph 5.4 below, advise each
other which Traffic Streams are assigned to which Traffic
Route. Unless otherwise agreed, each Party shall use its
reasonable endeavours to ensure that traffic is directed in
accordance with the advice given to the other. Traffic so
routed is primary traffic as described in paragraph 5.4.
5.2.11 Where there is a Traffic Route to or from a Switch Connection
and notification has been given by either Party that the
relevant Switch Connection is to be removed then no additional
Capacity shall be provided on that Traffic Route save that
agreed in the Advance Capacity Order current on the date when
notification was given.
5.2.12 If BT conveys Emergency Calls from the Operator System BT
shall allocate the same priority to Emergency Calls handed
over from the
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Operator System as it provides to Emergency Calls from BT
Customers.
5.2.13 A BT DLE is available solely for the delivery or collection of
Calls to or from the Number Ranges served by that BT DLE. A BT
DLTE is available for the delivery or collection of Calls to
or from Number Ranges served by that BT DLTE and by BT DLEs
directly connected to that BT DLTE.
5.2.14 All Calls to BT Number Translation Services shall be handed
over at BT DMSUs.
5.2.15 All International Calls sent via the BT System shall be handed
over at either BT DMSUs or BT ISCs and comply with the
provisions of paragraph 5.6.
5.3 INTERCONNECT TRAFFIC ROUTE DIMENSIONING
5.3.1 Except as described in paragraphs 5.4.2 and 5.4.3 whereby two
Traffic Routes may in combination provide the Fully Provided
Capacity for a single Traffic Stream, Traffic Routes shall be
Fully Provided to carry only the traffic for which Capacity
has been ordered in accordance with this Annex and such
Traffic Routes shall be operational at no worse than the
required grade of service.
5.3.2 Where Traffic Route is used for the conveyance of Traffic for
both Parties, the forecast requirement of Capacity shall be
based upon the route busyhour. The forecasts shall be based
upon a proposed grade of service of better than 0.008 subject
to the route dimensioning giving a grade of service of better
than 0.02 at 10 per cent traffic overload and better than 0.05
at 20 per cent traffic overload, unless the Parties agree
otherwise.
5.4 INTERCONNECT ROUTING RULES
5.4.1 Traffic other than primary traffic shall be identified as
overflow traffic. Overflow traffic has a lower priority than
primary traffic. However:
(a) overflow traffic from the Operator System which has
overflowed because of a physical or operational
failure of the BT System shall be given the same
priority by BT as primary traffic;
(b) overflow traffic from the BT System which has
overflowed because of a physical or operational
failure of the Operator System shall be given the
same priority by the Operator as primary traffic; and
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(c) when a Call (which was part of the overflow traffic)
is switched and the Call has seized a circuit on a
Traffic Route, such Call shall lose the overflow
categorisation and be treated in the same manner as
the other traffic on that Traffic Route.
5.4.2 Operator to BT Traffic
(1) The Operator may convey an entire Traffic Stream in
one Traffic Route to one BT Switch Connection. These
Calls shall be primary traffic.
(2) The Operator may overflow a Traffic Stream to a BT
Tandem Exchange provided that the Operator has a
Traffic Route to that Switch. These Calls shall be
overflow traffic.
(3) For Calls conveyed on the Operator's written request
to BT DMSU, BT DLTEs or BT DLEs BT shall arrange with
the Operator for dual paths to be provided within the
BT System. The design objective will be to split the
Traffic Stream between two Traffic Routes in the
ratio 1:1, with a maximum variation of + or - 1/3.
These Traffic Routes shall be dimensioned to convey
the expected Traffic Streams at the required grade of
service. Calls may be initially offered to one
Traffic Route or the other, with traffic re-routing
to one Traffic Route or the other.
(4) For Calls conveyed on the Operator's written request
to BT DJSUs, BT shall arrange with the Operator for
dual paths to be provided within the BT System,
subject to the Parties agreeing the split of the
traffic between any Traffic Routes. If the Parties
fail to agree the traffic split, then either Party
may notify the other in writing of a Dispute.
(5) Any such arrangement shall provide for traffic
carried on the planned routings in accordance with
the planned traffic split to be primary traffic, with
all traffic on a routing outside the permitted split
as overflow traffic.
(6) The Operator may choose between the following routing
arrangements:
1st choice to planned route - primary traffic
2nd choice to unplanned route - overflow traffic
or
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1st choice to planned route - primary traffic
2nd choice to planned route - primary traffic
(7) BT may charge reasonable additional rates for
overflow traffic after two years from the date on
which the BT System and the Operator System were or
are to be interconnected where such overflow traffic
results from a failure to order adequate Capacity to
convey the relevant traffic.
(8) Notwithstanding paragraph 5.4.2 (7), the Operator
shall not pay additional rates for overflow traffic
as a result of a physical or operational failure of
the BT System.
5.4.3 BT to Operator Traffic
(1) BT shall hand over traffic to Operator Switch
Connections in accordance with the provisions of
paragraph 5.2.1.
(2) The following provisions shall apply if there is more
than one Operator Switch Connection:
(a) BT may convey an entire Traffic Stream in
one Traffic Route to one Operator Switch
Connection. These Calls shall be primary
traffic.
(b) BT may overflow a Traffic Stream to another
Operator Switch Connection provided that BT
has a Traffic Route to that Switch. These
Calls shall be overflow traffic.
(c) For Calls conveyed on BT's written request
to Operator Exchanges the Operator shall
arrange with BT for dual paths to be
provided within the Operator System. In this
instance, the design objective will be to
split the Traffic Stream between two Traffic
Routes in the ratio 1:1, with a maximum
variation of + or - 1/3. These Traffic
Routes shall be dimensioned to convey the
expected Traffic Streams at the required
grade of service. Calls may be initially
offered to one Traffic Route or the other,
with traffic re-routing to one Traffic Route
or the other.
(d) Arrangement under paragraph 5.4.3(2)(c)
shall provide for traffic carried on the
planned routings in accordance with the
planned traffic to be split as primary
traffic, with all traffic on a routing
outside the permitted split as overflow
traffic.
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(e) BT may choose between the following routing
arrangements:
1st choice to planned route - primary traffic
2nd choice to unplanned route - overflow traffic
or
1st choice to planned route - primary traffic
2nd choice to planned route - primary traffic
(f) The Operator may charge reasonable additional rates
for overflow traffic after the period of two years
from the date on which the BT System and the Operator
System were or are to be interconnected where such
overflow traffic results from a failure to order
adequate Capacity to convey the relevant traffic.
(g) Notwithstanding paragraph 5.4.3 (2)(f), BT shall not
pay additional rates for overflow traffic as a result
of a physical or operational failure of the Operator
System.
5.4.4 BT-Operator Indirect Access Traffic
(a) If the Parties have agreed in a Schedule to convey
Indirect Access Calls, the Operator shall nominate a
BT Switch Connection to receive Indirect Access Calls
from each BT Number Range in accordance with the
technical principles contained in the Generic
Transmission Interface Specification.
(b) For Indirect Access Calls received at a BT Switch
Connection and on the Operator's written request, BT
shall arrange not less than one alternative path to
be provided to the Operator System. Routing from the
nominated BT Switch Connection to the Operator System
shall be limited to Traffic Routes from that BT
Switch Connection.
5.4.5 Operator to BT Number Translation Services Traffic
The Operator shall convey Calls for BT Number Translation
Services to a BT DMSU Switch Connection which is as near as
practical to the origination of the Call, having regard to any
requirements necessary to identify the intended destination.
5.5 INTERCONNECT ROUTE DIVERSITY AND SECURITY
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5.5.1 Where either Party requests physical route diversity it shall
take account of the Signalling Links and the Traffic Routes.
5.5.2 The Traffic Route(s) between an Operator Switch Connection and
the relevant BT Switch Connection shall, subject to the normal
planning practices of the relevant Party, ensure that a single
failure of equipment does not give rise to failure of a
Traffic Route.
5.6 ROUTING OF INTERNATIONAL TRAFFIC
5.6.1 The Operator may choose to hand over International Calls to BT
DMSUs and/or BT ISCs, provided that, if the Operator has an
obligation in the Operator Licence to provide "International
Connection Services", International Calls shall only be routed
and handed over via Interconnect Links established to one or
more BT ISCs.
5.6.2 If an Operator chooses to hand over International Calls direct
to an ISC and has Interconnect Links to more than one BT ISC,
BT shall inform the Operator which BT ISC shall be first
choice routing for a particular international destination and
the Operator shall so route its International Calls.
5.6.3 Where agreed, or for NNGs allocated to the Operator for the
provision of Land Mobile Radio Services for a digital service
(GSM, PCN), Calls may be handed over to the Operator System
from a BT ISC. Calls from an international destination to
other NNG or "DE" Number Ranges assigned to the Operator shall
be routed by BT from the BT ISC to the relevant BT DMSU to be
handed over to the Operator System.
5.6.4 International Calls for conveyance to the Republic of Ireland
shall be handed over to BT at a BT DMSU.
5.7 RECORD OF ARRANGEMENTS
The Parties shall record the physical arrangements and Number Ranges,
or part thereof, for each of the Traffic Routes on an Interconnect
Link. Information shall be provided in accordance with the Provisioning
Manual and a record of these arrangements shall be maintained in the
Technical Master Plan.
6. ISI INTERCONNECT LINK ARCHITECTURE
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ISI Interconnect Links shall be transmission systems using either PDH
or SDH technology, where the interfaces are set out in the Generic
Electrical and Physical Interface Specification and, in the case of
SDH, additionally in the Generic SDH Interface Specification.
6.1 ISI INTERCONNECT LINKS USING PDH
(a) Equipment
The manufacturer and type of equipment used to terminate the
ISI Interconnect Link shall be the same at each end of the
fibre and be one of those agreed and listed in the
Provisioning Manual.
(b) Procedures
Operational procedures for the provision of PDH ISI
Interconnect Links are described in the Provisioning Manual
and their maintenance is described in the Operations and
Maintenance Manual.
(c) IECs
Interconnect Extension Circuits may be used to complete ISI
Interconnect Links to Remote Switch Connections.
(d) Path Protection
Where the Operator requests Path Protection using PDH, as set
out in Schedule 01, the manufacturer and type of equipment
used to effect the Path Protection shall be the same at each
end of the fibre and be one of those agreed and listed in the
Provisioning Manual as suitable for supporting Path
Protection.
6.2 ISI INTERCONNECT LINKS USING SDH
(a) Configuration
ISI Interconnect Links will deliver the equivalent
functionality to an ISI Interconnect Link using PDH
technology.
For the avoidance of doubt if an ISI Interconnect Link uses
SDH technology all traffic within the BT System flowing to or
from the 155 Mbit/s STM-1 Add-Drop Multiplexor will be carried
by Intrabuilding Links or IECs and there shall, unless the
Operator has requested Path Protection, be one single physical
path between the 155 Mbit/s STM-1 Add-Drop Multiplexors.
(b) Equipment
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The manufacturer and type of equipment that BT shall use to
terminate the SDH ISI Interconnect Link shall be those listed
in the Provisioning Manual. The Operator may use any equipment
that conforms to the Generic SDH Interface Specification.
(c) Management
Neither Party shall exercise management control of the other
Party's 155 Mbit/s STM-1 Add-Drop Multiplexor. In particular,
the transmission messages to the other Party via the Data
Communications Channel (DCC) in the STM-1 Add-Drop Multiplexor
section overhead shall be inhibited.
(d) Testing and Operational Procedures
If the Operator chooses to use equipment that has not been
validated to ensure that it interworks with the equipment that
BT uses, the Parties shall test the equipment to ensure that
the performance standards are met. Unless otherwise agreed
such testing shall be completed before an order for such an
Interconnect Link is placed. If the Parties agree to carry out
the testing after an order is received that order shall be
subject to adjustment of the delivery date to include such
tests. Operational procedures for the provision of SDH
Interconnect Links are described in the Provisioning Manual
and their maintenance is described in the Operations and
Maintenance Manual.
(e) IECs
Interconnect Extension Circuits shall be provided using PDH or
SDH at the suppliers election solely for the completion of ISI
Interconnect Links to Remote Switch Connections.
(f) Path Protection
If the Operator requests Path Protection, all VC paths shall
terminate on a single add-drop Multiplexor at the BT Switch
Connection. This configuration shall be used where VC Path
Protection is deployed in the SDH equipment terminating the VC
paths.
7. CAPACITY PROVISION
7.1 INITIAL INTERCONNECTION
Prior to the first Capacity Order under this Agreement:
7.1.1 the Operator shall provide BT with the following information:
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(1) details about the proposed Operator Exchange or
Exchanges, software build level and of the relevant
Operator Switch Connections nominated by the
Operator;
(2) details of the relevant BT Switch Connections
nominated by the Operator;
(3) details of the services (as in the Schedules) which
the Operator requires on the first Ready for Service
Date;
(4) Number Ranges served by and that may be accessed via
the Operator System;
(5) a statement of the conformity of the Operator System
to the Specifications;
(6) the first Capacity Profile (as described in paragraph
9 below);
(7) the first Traffic Forecasts (as described in
paragraph 8 below);
(8) proposed Traffic Routes, by Number Ranges (in the
form set out in the Provisioning Manual);
(9) details of proposed Points of Connection and
Interconnect Links;
(10) Where the Operator intends to send Emergency Calls to
the BT System, and the Operator Licensed Area is
smaller than the geographic area covered by the BT
System, the Operator shall provide BT with a map
showing the boundary of the area from where Emergency
Calls are to be sent to the BT System to a scale of
approximately 1:50,000.
7.1.2 BT shall provide the Operator with the following information:
(1) proposed signalling and testing requirements within
the time scale set out in paragraph 14.2 below;
(2) details of the relevant Operator Switch Connections
and BT Switch Connections nominated by BT (if any),
within 20 Working Days of a written request by the
Operator;
(3) proposed Traffic Routes by Number Ranges if the
Operator is planning to use more than one Operator
Switch Connection at the first Ready for Test Date
within 20 Working Days of a written request by the
Operator.
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7.1.3 The information specified in paragraphs 7.1.1 and 7.1.2 above
shall be exchanged in the manner detailed from time to time in
the Provisioning Manual. A summary of that information
specified is set out in Appendix B to this Annex. The Parties
shall hold such meetings as are required for this exchange of
information.
7.2 Where the Operator is seeking an initial interconnection to the BT
System to transfer traffic generated by an established customer, the
Operator shall provide BT not less than 20 Working Days prior to the
first planning meeting referred to in paragraph 7.1.3 above with the
following information:
(1) traffic volumes from the Operator System to the BT System for
each proposed BT Switch Connection;
(2) traffic volumes from the BT System to the Operator System for
each proposed BT Switch Connection; and
(3) specific requirements for the transfer of the Operator's
existing Number Ranges.
8. TRAFFIC FORECASTS
8.1 GENERAL
Traffic Forecasts shall be used by the Parties for planning sufficient
switch and distributive network capacity to meet subsequent Capacity
Order requirements. While the Parties shall use reasonable endeavours
to provide accurate Traffic Forecasts, they shall not be legally
binding except to the extent stated otherwise in this Agreement.
8.2 TRAFFIC FORECAST CONTENT
8.2.1 Traffic Forecasts for each BT Switch Connection shall be
prepared by the Operator being the aggregate of the Traffic
Types listed in Table A of this Annex for which the Operator
is stated to have the responsibility as defined in paragraph
5.1.3.
In addition the Operator shall prepare Traffic Forecasts for
each Operator Switch Connection being the aggregate of the
specific Traffic Types listed in Table A for which BT is
stated to have the responsibilities as defined in paragraph
5.1.3. However BT shall forecast this traffic when it is
mature, that is when the dominant factor in forecasting future
traffic trends is the general economic trends affecting the
UK.
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All Traffic Forecasts shall be in the form set out in the
Provisioning Manual.
8.2.2 Where a BT ISC is used as a BT Switch Connection, Traffic
Forecasts shall define the following:
(a) outgoing traffic by destination country where the
busy hour traffic is expected to exceed 5 erlangs;
(b) the total outgoing traffic for all countries where
the busy hour traffic is less than 5 erlangs.
8.2.3 The Parties shall endeavour to agree for each Traffic Route
immediately following the second anniversary of the Ready for
Service Date of that Traffic Route whether such Traffic Route
is mature. If the Parties fail to agree whether a Traffic
Route is mature then either Party may notify the other in
writing of a Dispute.
8.3 FORECASTING PERIODS
8.3.1 Traffic Forecasts shall be on a rolling basis for a period of
three years.
8.3.2 A Traffic Forecast provided by the Operator to BT at yearly
intervals for each Switch Connection pursuant to paragraph 8.2
shall be made available at least 15 Working Days before the
Technical Review Meeting immediately before the Traffic
Forecast period next following. These Traffic Forecasts shall
(subject as provided below) cover the following three years
broken down for each quarter for the first two years.
8.3.3 For each mature Traffic Route (as defined in paragraph 8.2),
BT shall supply the Operator with the Traffic Forecasts at
yearly intervals, not less than 15 Working Days before the
Technical Review Meeting immediately prior to the period which
is the subject of the Traffic Forecast. These Traffic
Forecasts shall cover the following three years broken down
for each quarter for the first two years.
8.3.4 If either Party's Traffic Forecast for a category of traffic
for any twelve month period at any Switch Connection has
changed 10 per cent. or more since the last Traffic Forecast
or where any additional Switch Connection is proposed by such
Party during the next twelve months, then the changed Traffic
Forecast shall be notified not later than the next Technical
Review Meeting following such change or adoption of such
proposal.
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8.3.5 During the first two years after the first Ready for Service
Date, the Operator may supply Traffic Forecasts covering only
two years. Thereafter, such Traffic Forecasts shall cover a
period of three years.
8.4 TRAFFIC FORECAST INFORMATION
8.4.1 Traffic Forecasts supplied pursuant to paragraph 8.3 shall:
(a) be in terms of day and evening busy hour Erlangs. The
day busy hour shall be within the period 0800 to 1800
hours and the evening busy hour shall be within the
period 1800 to 0800 hours except where agreed
otherwise;
(b) identify the time of the busy hour for a Traffic
Route to be configured pursuant to paragraph 8.1;
(c) be in the form set out in the Provisioning Manual and
may be in an electronic form agreed between the
Parties;
(d) be authorised and signed at an appropriate level by
the originating Party and acknowledged by the
receiving Party.
8.5 FORECASTING EVOLUTION
8.5.1 The Parties may agree to modify the procedures in this
paragraph 8 if and when additional Traffic Routes and/or
Traffic Streams are identified or if presently planned Traffic
Routes are subdivided.
8.5.2 The forecasting procedures shall be reviewed at the Technical
Review Meeting to discuss routing and forecasting matters and
to agree changes and appropriate timings for their
implementation.
9. CAPACITY PROFILES AND ADVANCE CAPACITY ORDERS
9.1 Before placing Capacity Orders, the Operator shall (subject to
paragraph 9.2 below) supply BT with Capacity Profiles in relation to
Capacity Provision and Capacity Re-arrangement at all existing and
proposed Switch Connections. In paragraphs 9 and 10 and subject to
paragraph 11.4, Capacity Rearrangement may only be initiated by the
Purchaser of the Capacity which is being rearranged. Each Capacity
Profile shall encompass all the Operator's requirements for Capacity
and shall be identified for each relevant Switch Connection. The
obligation of the Operator under this paragraph in relation to a
particular Switch Connection shall cease when the information is
provided by BT under paragraph 9.2.
9.2 With effect from the second anniversary of the Ready for Service Date
(or such later date as the Parties may agree pursuant to paragraph
8.2.3) for each
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Switch Connection, BT shall supply the Operator with a Capacity Profile
for Traffic Types for which BT has responsibility pursuant to paragraph
5.1.3. The Capacity Profile shall encompass all Capacity Provision or
Capacity Re-arrangement requirements and be categorised for each
relevant Operator Switch Connection. The Parties acknowledge that each
BT Capacity Profile shall reflect the information contained in the
relevant Traffic Forecast provided under paragraph 8, plus any other
relevant additional information that the Operator has provided to BT
(which shall include any necessary advice on the timing of Capacity
Provision).
9.3 Capacity Profiles for Capacity Provision and Capacity Re-arrangement
shall be provided on separate forms as described in the Provisioning
Manual. The first four months of each Capacity Profile agreed in
accordance with paragraph 9.5 shall form an Advance Capacity Order
pursuant to paragraph 10.
9.4 Each Capacity Profile shall be presented to the other Party at four
month intervals, not less than 15 Working Days before the relevant
Technical Review Meeting.
9.5 Each Capacity Profile shall be reviewed at the relevant Technical
Review Meeting. Where agreed it will be signed within 10 Working Days
by the authorised representatives of each Party to signify their
intention to commit to the Advance Capacity Order.
9.6 If the Parties fail to agree a Capacity Profile (or part thereof), then
either Party may notify the other in writing of a Dispute.
9.7 Those portions of an Advance Capacity Order that have not been agreed
shall be a Dispute. Paragraph 10 shall apply to those parts that have
been agreed (and signed by the Parties).
10. CAPACITY ORDERS AND TESTING
10.1 CAPACITY ORDERING
10.1.1 In an ACO Period the Operator may, in respect of any BT Switch
Connection nominated by the Operator (for traffic handed over
from the Operator System to the BT System), and, during the
period ending two years after the first Ready for Test Date,
in respect of any Operator Switch Connection nominated by BT
(for traffic handed over from the BT System to the Operator
System), place Capacity Orders up to the amount of the
aggregate Capacity Provision (i.e. Capacity to be provided
plus the provide element of Capacity to be rearranged) shown
in the relevant Advance Capacity Orders for each such Switch
Connection plus the greater of (a) 10 per cent. of such
Capacity and (b) 4 x 2Mbit/s units of Capacity. Within these
limits each Party shall
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provide such Capacity that it is to provide within the time
scales laid down in paragraph 11. For the period ending two
years after the first Ready for Test Date, the reference in
(b) to 4 x 2Mbit/s units of Capacity shall be increased to 8 x
2Mbit/s units of Capacity.
10.1.2 In an ACO Period the Operator shall place Capacity Orders for
a minimum of 80 per cent. of the aggregate Capacity specified
in the relevant Advance Capacity Orders for each Switch
Connection, other than Capacity required at any Operator
Switch Connection for incoming traffic from the BT System.
Failure by the Operator to place such Capacity Orders shall
result in pre-payment charges being paid by the Operator in
accordance with paragraph 1 of Appendix C. Pre-payment charges
arising with respect to a specific Switch Connection shall be
accepted as pre-payment for future Capacity Orders in respect
of Capacity for the same Switch Connection placed within 12
months of the end of the relevant ACO Period (thereby being
credited against any charges payable by the Operator in
respect of such Capacity Order(s)).
10.1.3 Capacity Orders placed by the Operator (on behalf of BT) for
Capacity in respect of Traffic Types for which BT has the
responsibility pursuant to paragraph 5.1.3, and any increase
in order quantities above those agreed in the relevant Advance
Capacity Order (subject to the limits set out in paragraph
10.1.1) shall require written agreement from BT prior to the
placing of the relevant Capacity Order. If the Parties fail to
agree an increase in a Capacity Order, either Party may notify
the other in writing of a Dispute.
10.1.4 Within any ACO Period commencing two years after the Ready for
Service Date for a particular Switch Connection, BT may place
Capacity Orders for Capacity required at that Operator Switch
Connection for Traffic Types for which BT has the
responsibility pursuant to paragraph 5.1.3, up to the amount
of the aggregate Capacity Provision (i.e. Capacity to be
provided, plus the provide element of Capacity to be
rearranged) shown in the relevant Advance Capacity Orders for
such Operator Switch Connection plus, for any Operator Switch
Connection, the greater of (a) 10 per cent. of such Capacity
and (b) 4 x 2Mbit/s units of Capacity. The Operator shall
provide such Capacity within the relevant time scales
specified in paragraph 11.
10.1.5 Within any ACO Period commencing two years after the Ready for
Service Date of a Switch Connection, BT shall place Capacity
Orders for a minimum of 80 per cent. of the aggregate Capacity
specified in the relevant Advance Capacity Orders for that
Operator Switch Connection. Failure by BT to place such
Capacity Orders shall result in pre-payment charges being paid
by BT in accordance with the
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provisions set out in paragraph 1 of Appendix C. Pre-payment
charges arising with respect to a specific Operator Switch
Connection will be accepted as pre-payment for future Capacity
Provision Orders in respect of Capacity at the same Switch
Connection placed within 12 months of the end of the relevant
ACO Period (thereby being credited against any charges payable
by BT in respect of such Capacity Order(s)).
10.1.6 If no Advance Capacity Order is provided or Capacity Orders
are placed by the ordering Party in excess of the relevant
limit in paragraph 10.1.1 or 10.1.4:
(1) the Supplier shall not be obliged to meet the time
scales set out in paragraph 11 for that element of
the Capacity Order in excess of the relevant limit;
(2) the time scales shall be agreed in writing for the
provision of excess Capacity and the Ready for Test
Dates shall be not later than 6 months after the date
of receipt of a relevant Capacity Order; and
(3) the Supplier of Capacity in excess of the relevant
limit may raise charges to cover any additional costs
that it may incur arising directly from the provision
of Capacity outside the normal planning process.
Neither Party will incur such additional costs or
provide Capacity outside the Advance Capacity Order
process without the prior written approval of the
other.
10.1.7 Each Capacity Order will be in the form set out in the
Provisioning Manual and shall include all the information
required by that form.
10.1.8 The tributary allocation charts as set out in the Provisioning
Manual, shall be amended by BT, unless agreed otherwise and
included in the Technical Master Plan.
10.2 TESTING TIMETABLES
10.2.1 (1) BT and the Operator shall commence testing Capacity
not later than 25 Working Days after the relevant
scheduled Ready for Test Date. Unless agreed
otherwise, the Purchaser shall provide the Supplier
with a minimum of 15 Working Days notice of the date
on which testing should commence. The Parties shall
co-operate to ensure that testing is reasonably
spread across the 25 Working Days following the date
on which the Capacity is made ready for testing. The
Parties shall use reasonable endeavours to complete
testing in the shortest appropriate time.
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(2) If for any reason the Purchaser fails to proceed
jointly with the Supplier in testing of any Capacity,
the Purchaser shall notify the Supplier in writing as
soon as possible and where such notice is less than 5
Working Days before the scheduled Ready for Test
Date, the provisions set out in paragraph 3 of
Appendix C of this Annex shall apply. Testing shall
then be re-scheduled by agreement and commenced on
such re-scheduled date. In the event of testing
failing the Parties shall use reasonable endeavours
to ensure testing is recommenced and concluded as
quickly as possible.
(3) The Parties shall agree the required test facilities.
The Parties shall make such test facilities available
from the date required by the other Party. If
specified test facilities are missing or incorrect,
Capacity Orders or Data Management Amendments will
not commence until the facilities are made available.
(4) If the Party providing Capacity fails to commence
testing Capacity by a date 25 Working Days after the
relevant periods of time specified in paragraph 11
below, then (without prejudice to the other Party's
rights and remedies under the Agreement) the Party
providing the Capacity shall pay, on demand, to the
other Party liquidated damages for such delay
calculated in accordance with the provisions of
paragraph 2 of Appendix C for up to a maximum of 25
Working Days.
(5) If the Parties fail to agree an acceptable date for
the testing of the Capacity (pursuant to 10.2.1 (2))
either Party may notify the order in writing of a
Dispute.
10.2.2 On the Ready for Test Date the Supplier shall notify the
Purchaser that such Capacity is Ready for Testing. Such notice
shall be in the form set out in the Provisioning Manual.
10.2.3 As soon after the Ready for Service Date as is practical, both
Parties shall certify that the Capacity has been
satisfactorily tested by signing the certificate set out in
the Operations and Maintenance Manual.
10.3 CONGESTION
Where a Traffic Route is used for the conveyance of traffic for both
Parties and either Party detects the grade of service referred to in
paragraph 5.3.2 not being met because of non-transient causes or
identifies a trend that will lead to such grade of service not being
met in the current or next ACO Period, the Operator shall order Route
Augmentation such that the problem or potential problem is alleviated.
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10.4 TESTING AND COMMISSIONING PROCEDURES
The Parties shall jointly test the Capacity and any service specific
items and make any necessary adjustment to ensure that the Capacity
meets the agreed performance standards. Details of the testing
procedures are included in the Testing Manual.
11. CAPACITY ORDER TIMESCALES
11.1 TIMESCALES FOR PROVISION OF CAPACITY
The timescales for the provision of Capacity Ready for Testing are
subject to the provisions set out in Schedules 01 and 130 (as
appropriate) and, paragraph 10.1.6. The time scales are set out in
paragraphs 11.1.3 to 11.1.6 inclusive and are concurrent with those set
out in paragraph 11.1.1 and 11.1.2):
11.1.1 Capacity Provision at a Switch Connection for a Traffic Route
passing through a new Point of Connection on an Interconnect
Link using PDH or SDH:
6 months following the date of receipt of the relevant
Capacity Order.
11.1.2 Capacity Provision or Capacity Re-arrangement at a Switch
Connection requiring a change of technology from PDH to SDH or
SDH to PDH for a new or existing Traffic Route at an existing
Point of Connection:
6 months following the date of receipt of the relevant
Capacity Order.
11.1.3 New Traffic Routes between Switch Connections through an
established Point of Connection using the same technology,
including the provision of additional Customer Sited
Interconnect between the same Switch Connections:
65 Working Days following the date of receipt of the relevant
Capacity Order.
11.1.4 Route Augmentation using the same technology, including the
provision of additional Customer Sited Interconnect between
the same Switch Connections:
25 Working Days following the date of receipt of the relevant
Capacity Order.
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11.1.5 New Traffic Routes over IECs at a Switch Connection using the
same technology:
75 Working Days following the date of receipt of the relevant
Capacity Order.
11.1.6 Route Augmentation using the same technology on Traffic Routes
over established IECs:
35 Working Days following the date of receipt of the relevant
Capacity Order.
11.1.7 Capacity Re-arrangements involving the provision of new
Traffic Routes using the same technology or a new technology
already in service at the relevant Switch Connection:
65 Working Days following the date of receipt of the relevant
Capacity Order.
11.1.8 Capacity Re-arrangements between established Switch Connection
involving Route Augmentation using the same technology or a
new technology already in service at the relevant Switch
Connection:
25 Working Days following the date of receipt of the relevant
Capacity Order.
11.1.9 Capacity Re-arrangements involving the provision of new
Traffic Routes requiring IECs using the same technology or a
new technology already in service at the relevant Switch
Connection:
75 Working Days following the date of receipt of the relevant
Capacity Order.
11.1.10 Path Protection - on a date such as the Parties shall agree.
11.2 REMOVAL OF CAPACITY
11.2.1 Subject to the relevant Schedules if either Party requires the
removal of Capacity it paid for (or for which payment is due
by that Party under this Agreement), an order identifying the
Capacity and the date from which it is no longer required (a
"removal order") may be placed by that Party on the other
Party. The Party receiving the removal order will remove the
Capacity not later than 30 Working Days from the date of
receipt of the removal order.
11.2.2 If either Party requires the removal of Capacity paid for by
the other Party (or for which payment is due by the other
Party under this
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Agreement) or the removal of Capacity used for bothway working
then a written request shall be sent to the other Party
detailing the requirement and giving the reasons for its
removal. If the Party receiving the request agrees to the
removal of the Capacity such Party shall issue a removal order
to the Party requesting the removal. This Capacity will then
be removed by the Supplier within 30 Working Days from the
date of receipt of the removal order. If the Party receiving
the request does not agree then Capacity shall not be removed
until agreement has been reached or a Dispute is resolved.
11.2.3 A removal certificate shall be issued to the Party who paid
(or who is responsible for payment) for the Capacity on
completion of the removal work.
11.2.4 For the avoidance of doubt, if payment for Capacity removed
pursuant to this paragraph 11 has not been made at the time of
such removal such payment shall remain due and payable.
11.2.5 If pursuant to this paragraph 11.2 Capacity is removed, a
proportion of the relevant connection charge shall be repaid
to the Party requesting the removal. The amount to be repaid
shall be that set out in paragraph 4 of Appendix C to this
Annex.
11.3 ORDER AMENDMENT
11.3.1 Capacity Orders may be amended as follows:
(a) Capacity Orders which incorporate agreed amendments
requested by the Supplier or are corrections of
simple typing mistakes which do not affect the Ready
for Test Date nor the implementation by the Supplier
will not incur any charges.
(b) Capacity Orders may be withdrawn free of charge up to
10 Working Days from receipt of the relevant Capacity
Order by the Supplier. Capacity Orders, including any
placed in the last 10 Working Days of an ACO Period
which bring the total orders up to 80% of the
Capacity specified in the ACO, and subsequently
cancelled within 10 Working Days of placing those
orders shall not be included in the amount of
Capacity ordered in the relevant ACO Period.
(c) Capacity Orders may be amended at a charge, details
of which are specified from time to time in the
Carrier Price List, up to 10 Working Days from
receipt of the Capacity Order by the Supplier. The
original date that the Capacity Order was placed
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will apply for the purpose of identifying the Ready for Test
Date.
(d) Capacity Order amendments received after 10 Working Days from
receipt of the original Capacity Order by the Supplier which
do not have a material affect on the order (i.e. editorial
change, data build change only, without change of Supplier's
Exchange or other change which the Parties reasonably agree
does not materially affect the Capacity Provision within the
stated time scales) will be accepted by the Supplier without a
change in the Ready for Test Date at a charge which is set out
in the Carrier Price List.
Where an amendment involves data build changes, the order amendment
must be received by the Supplier not later than 10 Working Days
before the Ready for Test Date
11.3.2 If a Capacity Order is amended other than as set out in (a) (b) (c)
or (d) above, and the amendment is to reduce the Capacity originally
ordered, the Purchaser shall pay the charge set out in paragraph 5
of Appendix C. The Supplier shall accept such an amendment without a
change in the Ready for Test Date.
11.3.3 The Supplier may extend a Ready for Test Date where there have been
two or more order amendments to any matter included in the order
form set out in the Provisioning Manual during the first 10 Working
Days following receipt of a Capacity Order.
11.4 CAPACITY REARRANGEMENT
Capacity Rearrangement may be requested as follows:
(a) The Purchaser may request in writing Capacity Rearrangement,
and the Supplier shall carry out the necessary work in
accordance with the time scales set out in paragraph 11.1.
Capacity Orders, including any placed in the last 10 Working
Days of an ACO Period which bring the total Capacity Orders up
to 80% of the Capacity specified in the ACO, and subsequently
cancelled within 10 Working Days of placing those orders shall
not be included in the amount of Capacity ordered in the
relevant ACO period.
(b) If the Supplier requests Capacity Rearrangement of Capacity
previously provided by the Supplier, the Supplier shall notify
the Purchaser in writing giving reasons for its request. If
the Purchaser accepts the request it shall confirm the same in
writing. The Supplier shall then at its own expense carry out
the Capacity Rearrangement in accordance with the request. The
Purchaser shall not unreasonably withhold or delay consent to
such request provided that arrangements
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are made, in accordance with this Agreement where applicable,
to ensure that no loss is caused to or suffered by the
Purchaser as a result of the Capacity Rearrangement.
(c) The Supplier shall issue a certificate to the Purchaser on
completion of work carried out pursuant to paragraph 11.4 (a)
or (b). The Purchaser may submit requests for Capacity
Rearrangement in writing to the Supplier at any time after the
earlier of Ready For Service Date or one month after Ready For
Test Date.
(d) On completion of a Capacity Rearrangement the original
Capacity is deemed terminated and replaced by the rearranged
Capacity.
11.5 CANCELLATION OF ORDER
At any time prior to the Ready for Test Date a Party may by written
notice to the other cancel a Capacity Order it placed. If a Capacity
Order is cancelled more than 10 Working Days after placement of the
Capacity Order, the cancelling Party shall pay a cancellation charge as
set out in paragraph 6 of Appendix C.
11.6 GENERAL
The Party in receipt of a Capacity Order shall make the relevant
Capacity available and Ready for Testing within the time scale
specified in paragraph 11.1. The receiving Party shall notify the
ordering Party of such receipt within one Working Day of receipt.
12. NUMBERING
12.1 NUMBERING ORDERS
BT shall implement numbering orders for Number Ranges or other changes
to data on BT Exchanges in accordance with Schedule 140.
12.2 NUMBER FLOW
12.2.1 The Parties shall convey to each other telephone numbers in
the national and international number formats from time to
time in force.
12.2.2 For Calls to or from a BT ISC where C 7 (IUP) signalling is
used, all digits including the leading zero, shall be conveyed
across the interface from the sending Party's System to the
other Party's System.
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12.2.3 For Calls to a BT ISC, where C 7 (TUP) signalling is used, the
Operator shall convey all digits except the international
prefix. For Calls from a BT ISC where C 7 (TUP) signalling is
used BT shall convey all digits including the leading zero.
12.3 NUMBER INFORMATION
At appropriate intervals each Party shall inform the other of all
numbering additions and changes to Number Ranges within the BT System
or Operator System that may affect Call routing.
13. TECHNICAL REVIEW MEETINGS
13.1 The first Technical Review Meeting shall occur at either Party's
written request not later than four months from the receipt of the
first Capacity Profile. Subsequent Technical Review Meetings shall
occur at no greater than four monthly intervals thereafter, not less
than 5 Working Days prior to the start of the relevant four month
period next following.
13.2 At Technical Review Meetings the Traffic Forecast referred to in
paragraph 8 shall be discussed and the Capacity Profiles referred to in
paragraph 9 shall be agreed.
14. SWITCH TESTING
14.1 TESTING PRINCIPLES
Each Party shall have the right to require testing of the other Party's
Switch(es) to confirm correct interworking. The testing varies
according to the Switch manufacturer, the software build level and the
method of implementation. The scope of the testing shall follow the
relevant ITU-T guidelines.
14.2 TESTING INFORMATION
14.2.1 Not later than 10 Working Days after a written request by one
Party, the other Party shall provide an initial indication of
the level of testing required, having been given details of
Switch hardware and software build level and services. The
Parties shall agree exact test requirements and timescales.
14.2.2 If, owing to the default of one of the Parties the testing
procedures vary substantially from the test procedures agreed
pursuant to this paragraph, the other Party may levy a
reasonable charge for its direct costs resulting from such
default.
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14.3 Where BT requests testing, the following provisions shall apply:
14.3.1 Reduced Level of Testing
A Switch proposed as an Operator Exchange, of the same type
previously successfully tested for the same type of
interconnect, at the same software build will need the minimum
of testing. A list of such Switches is set out in the
Provisioning Manual. Commissioning and Acceptance Testing
("CAT") of such an Operator Exchange may take approximately
four weeks. For additional Operator Exchanges, Traffic Routes
and Capacity interconnected to the BT System, operational
testing at a suitable level will take place as described in
the Testing Manual.
14.3.2 Intermediate Level of Testing
A Switch proposed as an Operator Exchange of a type previously
successfully tested at a different software build or
implementation, will need additional testing, if such
different build or different implementation could reasonably
be considered likely to adversely affect Call processing. Both
Network Inter-working Tests ("NIT") using BT captive models
and CAT will be required, which may take approximately eight
weeks.
14.3.3 Full Switch Testing
A Switch proposed as an Operator Exchange or major build
change of an existing Operator Exchange not previously
successfully tested for the same type of interconnect shall
require Interface Validation Testing ("IVT") by the Operator,
using a protocol simulator, which may take the Operator about
six weeks. The total testing duration for IVT, NIT and CAT may
be approximately 14 weeks. This period of time (other than for
the testing specified in paragraph 14.3.1) may, subject to the
availability of the necessary BT captive models at the
Operator's written request, be concurrent with the time scale
set out in paragraph 11.1.1 above.
14.4 Where the Operator requests testing it will employ testing no more
onerous than those set out in paragraph 14.3 such testing shall be of
no greater duration.
14.5 In the event that the Parties fail to agree any test procedure and/or
time scale, then either Party may notify the other in writing of a
Dispute.
15. TRANSMISSION AND SIGNALLING
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15.1 TRANSMISSION
Interconnection of the BT System and the Operator System shall
be based on digital technology operating at 2Mbit/s in
accordance with the Generic Transmission Interface
Specification and, if appropriate, the Generic SDH Interface
Specification.
15.2 SYNCHRONISATION
15.2.1 The Parties shall comply with the applicable synchronisation
provisions of the Generic Electrical and Physical Interface
Specification. Where requested, BT shall supply
synchronisation from the highest order available within the
relevant part of the BT System.
15.2.2 Where SDH equipment is used as part of an ISI Interconnect
Link, synchronisation of the relevant SDH equipment shall be
provided in accordance with ITU-T Recommendation G.803.
However the STM-N timing quality should not be assumed to be
referable to a clock of ITU-T Recommendation G.811 standard.
15.3 ECHO CONTROL
15.3.1 If International Calls are conveyed by the Operator to a BT
ISC or handed over to the Operator by BT directly from a BT
ISC, the Parties shall obtain the correct echo control by
conveying signalling information in accordance with the
Generic Transmission Interface Specification and the Generic
C7 Signalling Interface Specification.
15.3.2 Some Calls within the UK require echo control. The Parties
shall obtain the correct echo control by conveying signalling
information in accordance with the Generic Transmission
Interface Specification and the Generic C7 Signalling
Interface Specification.
15.4 SIGNALLING
The Parties shall comply with the applicable signalling provisions of
the Generic C7 Signalling Interface Specification.
15.5 CIRCUIT SELECTION
Where bothway working is employed, the following circuit selection
protocols shall apply:
(1) Circuit Selection Protocols
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(a) BT shall use the forward sequential protocol,
starting from the first traffic circuit and selecting
sequentially until a free circuit is found.
(b) The Operator shall use the backward sequential
protocol, starting from the last traffic circuit and
selecting sequentially until a free circuit is found.
(2) Direction of search
(a) From BT to Operator, direction of traffic circuit 1
to Z.
(b) From Operator to BT, direction of traffic circuit Z
to 1.
15.6 DUAL SEIZURE
BT shall have dual seizure priority.
15.7 NUMBERING OF TRAFFIC CIRCUITS
Circuits shall be identified pursuant to the Generic Signalling
Interface Specification.
15.8 ANSWER SIGNALS
Each Party shall provide the other with details of the timing and
circumstances for the provision of all Answer Signals sent from that
Party's System including those for all types of Calls.
16. PERFORMANCE STANDARDS
16.1 GENERAL
16.1.1 The Parties shall co-operate to maintain the overall quality
of the conveyance of Calls and adopt the general principles on
standards, techniques and methodology for the achievement of
quality in telecommunications networks and services contained
in the relevant ITU-T standards.
16.1.2 The Parties shall agree operational management strategies to
protect service quality and to alleviate short term overloads
due to abnormal conditions and address congestion due to under
provisioning.
16.2 CALL SERVICE PERFORMANCE
16.2.1 The Parties shall agree relevant service parameters and
measurements for the monitoring of service performance. These
will typically
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include sample sizes, frequency, time and performance
threshold criteria. This data includes actual measurements of
exchange or route busy hour traffic (Erlangs), lost
communications (overflows), number of Calls alternatively
routed, Answer Seize Ratio ("ASR") and busy hour call
attempts. This shall be exchanged on a monthly basis.
Exception reports shall be provided where standards have not
been met or if performance thresholds have not been attained.
The Parties shall use their reasonable endeavours to detect
and correct adverse trends before they result in adverse
performance.
16.2.2 If a service performance problem is identified, the Parties
shall exchange information about the problem, including the
information set out in paragraph 16.2.1 above together with
the following information:
(1) critical levels for traffic and unsuccessful Call
attempts;
(2) information on sources of traffic;
(3) information on timing synchronisation and slippage
rates.
16.2.3 Where congestion occurs on a Traffic Route used for the
conveyance of Traffic for both Parties, the Parties shall
agree and apply appropriate network management procedures in
accordance with the provision described in the Operations and
Maintenance Manual. Where such agreement cannot be reached,
either Party may apply appropriate network management
procedures to Traffic originating in its System to alleviate
the problem.
16.2.4 The Parties shall use reasonable endeavours to identify and
resolve the problem and if the Parties fail to resolve the
problem it shall become a Dispute.
16.3 INTERCONNECT LINK SERVICE PERFORMANCE
Transmission performance standards over an Interconnect Link shall be
based on availability, errored seconds and severely errored seconds
over a one month period.
16.4 INFORMATION ON PERFORMANCE STANDARDS
Each Party ("the first Party") shall provide to the other, as the other
Party may reasonably require, information on the performance standards
of the first Party's System from time to time for the purpose of the
other Party verifying the performance by the first Party of its
obligations under this Agreement, including without limitation the
performance standards referred to in this paragraph 16, routine
maintenance time scales and fault repair times as set out in the
Operations and Maintenance Manual.
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17. OPERATIONS
17.1 GENERAL
17.1.1 Each Party shall be responsible for the safety and operation
of its own System.
17.1.2 The Operations and Maintenance Manual details the
responsibilities, methods and procedures for the operation and
maintenance of the interconnection of the Systems. Details of
contacts are given in the Customer Service Plan.
17.2 FAULT IDENTIFICATION AND REPORTING
17.2.1 Each Party will advise its Customers to report all faults to
its fault reporting centre.
17.2.2 If a Party's Customer reports a fault to the fault reporting
centre of the other Party, that Party will inform the Customer
of the correct number to which to report the fault.
17.2.3 If a major fault occurs which affects both Parties' Systems,
initial responsibility for identifying the fault rests with
the Party who first becomes aware of the fault.
17.2.4 If a Party identifies a fault occurring in its System which
may have an adverse effect on the other Party's System, the
first Party shall promptly inform the other Party of the
actions being taken to resolve the problem.
17.2.5 Each Party shall bear the costs of its own fault reporting
centre.
17.3 SPEED OF RESPONSE
The Parties shall develop and record in the Operations and Maintenance
Manual, a series of agreed response times for different fault
conditions, response time being the time from the reporting of the
fault until remedial action begins.
17.4 SERVICE RESTORATION
The service restoration procedures set out in the Operations and
Maintenance Manual are based on the following:
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(1) service restoration shall take priority over the clearance of
faults not affecting service unless it is agreed that a fault
be treated as a lower priority;
(2) the relevant Party shall automatically bring in available
standby Capacity and/or carry out network management actions
to restore service;
(3) the relevant Party shall observe equipment alarms and carry
out testing to identify the nature and location of the fault
in co-operation with the other Party as necessary;
(4) if possible, the relevant Party shall rectify the fault
immediately, if not, the other Party must be notified and kept
informed of progress on a regular basis;
(5) if temporary repairs are made, the other Party must be
informed and given the estimated timescale and service impact
of full repair; and
(6) priority shall be given by the relevant Party to faults with
the highest service loss impact on the number of Customers or
the volume of traffic affected.
17.5 RESTORATION TIMES AND PROCEDURE
Indicative restoration times and procedures are set out in the
Operations and Maintenance Manual.
17.6 PLANNED MAINTENANCE/WORKS
17.6.1 Each Party shall provide not less than 3 Working Days notice
of any planned maintenance which may affect the other's
System. Each Party shall use its reasonable endeavours to
minimise disruption and where possible provide alternative
routing at no charge to the other Party for a reasonable
period of time with respect to the cause of the disruption.
17.6.2 If a Party reasonably considers that the interconnection
arrangements are at risk and maintenance repair activity is
essential, that Party shall give as much advance notice to the
other Party as is reasonably practicable.
18. SERVICES
18.1 INTRODUCTION
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This paragraph 18 sets out the technical requirements relating to the
services provided in accordance with particular Schedules.
18.2 BT OPERATOR SERVICES
The arrangements for routing Calls from the Operator System to the
services listed below are via a BT Switch Connection at a BT Tandem
Exchange. The digits forwarded from the Operator System to the BT
System shall be those below together with the two identification digits
appropriate to the Operator as network address digits. The Operator
shall use the identification digits agreed with BT:
Service Digits
National Operator Assistance Service 100
Emergency Service 999
DQ Service 192
International Operator Assistance Service 155
IDQ Service 153
Blind or Disabled Service 195
each service being as defined in the appropriate Schedules.
18.3 CLI
CLI shall be requested and provided in a manner consistent with the
Generic C7 Signalling Interface Specification. However CLI is not
available for Operator Basic International Incoming Calls or BT Basic
International Outgoing Calls.
18.4 MALICIOUS CALL IDENTIFICATION
Where a Party assists the police in identification of Calling Parties
with malicious intent the Parties shall co-operate and when appropriate
use CLI, such use being subject to paragraphs 11 and 21 of the main
body of this Agreement.
18.5 EMERGENCY CALL ROUTING AND SIGNALLING
The handing over of Emergency Calls to the BT System at agreed BT
Tandem Exchanges is subject to the following conditions:
(1) Trunk reservation, physical separation or other appropriate
method shall ensure the availability of emergency circuits to
carry Emergency Calls in the Interconnect Link;
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(2) The BT Switch Connection at the BT Tandem Exchange shall route
Emergency Calls to the BT Operator. Alternative routing shall
be applied by the BT System when required and where this
alternative routing fails, the BT System shall return a
terminal congestion indication to the Operator;
(3) Where possible, the Operator System shall present the relevant
BT Tandem Exchange with an Initial and Final Addressing
Message ("IFAM") containing the protection bit set.
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APPENDIX A
BT/OPERATOR NETWORK INFORMATION
1. OPERATOR INFORMATION
1.1 Names and Addresses of all Operator Exchanges within the area covered
by the BT System.
1.2 Address of each Operator building within the area covered by the BT
System which is capable of supporting IECs.
2. OPERATOR NUMBERING INFORMATION
2.1 Number Ranges of Operator Exchanges within the area covered by the BT
System and unless the Operator is only providing Land Mobile Radio
Services (as defined in the BT Licence) the interconnectivity of and
functionality provided by Operator Exchanges used for the conveyance of
Calls pursuant to this Agreement.
3. BT INFORMATION
3.1 Names and addresses of BT ISCs.
3.2 Names and addresses of BT Tandem Exchanges
3.3 Names and addresses of BT DLTEs
3.4 Names and addresses of BT DLEs
3.5 Address of each BT building which is capable of supporting IECs.
4. BT NUMBERING INFORMATION
4.1 Number Ranges of BT DLEs, BT DLTEs, BT ALEs and of those exchanges
which are connected by a BT DLE alone to the remainder of the BT
System.
4.2 For each BT DLE, BT DLTE and BT ALE, the names of the BT Tandem
Exchanges which are the Parent BT Exchanges.
4.3 For each BT DLE or BT ALE, where appropriate, the name of the BT DLTE.
5. BT/OPERATOR INFORMATION
5.1 Addresses of relevant ISI locations together with annotated Ordnance
Survey map extracts.
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APPENDIX B
BT/OPERATOR INTERCONNECT INFORMATION
1. OPERATOR INFORMATION
1.1 Details of the Operator Exchange or Exchanges, software build levels
and of relevant Operator Switch Connections nominated by the Operator.
1.2 Details of relevant BT Switch Connections nominated by the Operator.
1.3 Details of the relevant Schedules.
1.4 Number Ranges served by and that may be accessed via the Operator
System.
1.5 A statement of the conformity of the Operator System to the
Specifications.
1.6 Capacity Profile.
1.7 Traffic Forecasts.
1.8 Traffic Routes, by Number Ranges.
1.9 Details of proposed Points of Connection and Interconnect Links
requested by the Operator.
1.10 Where the Operator intends to send Emergency Calls to the BT System,
and the Operator Licensed Area is smaller than the geographic area
covered by the BT System, the Operator shall provide BT with a map
showing the boundary of the area from where Emergency Calls are to be
sent to the BT System to a scale of approximately 1:50,000.
2. BT INFORMATION
2.1 Signalling and Testing requirements.
2.2 Details of relevant Operator Switch Connections and BT Switch
Connections nominated by BT, if any.
2.3 Traffic Routes by Number Ranges if the Operator is using more than one
Operator Switch Connection.
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APPENDIX C
COMMERCIAL
1. PRE-PAYMENT CHARGES
1.1 If either Party (the "Defaulting Party") in any ACO Period, places
Capacity Orders on the other Party for less than the minimum Capacity
specified pursuant to either paragraph 10.1.2 or 10.1.5 of Annex A,
then the Defaulting Party shall pay to the other Party not later than
30 Working Days of the end of such ACO Period the prepayment charges
calculated in accordance with paragraph 1.2 of this Appendix.
1.2 Prepayment charges are calculated in accordance with the following
formula:
A = ((80% x B)-C) x D
Where:
A is the prepayment charge payable;
B is the aggregate Capacity Provision (by number of units
2Mbit/s Capacity) specified for the relevant ACO Period in the
relevant Advance Capacity Order (not including if the
Defaulting Party is the Operator, Capacity required for
traffic handed over from the BT System);
C the Capacity (by number of units of 2Mbit/s Capacity) ordered
during such ACO Period not including cancellations of Capacity
Orders made during or after the relevant ACO Period;
D is half the Intrabuilding Link connection charge applicable
for the ACO Period, as detailed in the Carrier Price List from
time to time.
2. LIQUIDATED DAMAGES IN RESPECT OF TESTING CAPACITY
2.1 The liquidated damages referred to in paragraph 10.2.1(4) of Annex A
shall be 1.5% of Intrabuilding Link connection charge specified from
time to time in the Carrier Price List for each 2Mbit/s unit of
Capacity which is subject of the relevant Capacity Order, multiplied by
the number of Working Days calculated from a date 25 Working Days after
the date on which the Capacity should have been Ready for Testing
pursuant to paragraph 11 of Annex A, except that no liquidated damages
shall be payable if the Purchaser causes a delay to the Ready for
Service date by failing to complete the testing of the Capacity in the
time period set out in paragraph 10.2.1(1) of Annex A.
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3. CANCELLATION CHARGES IN RESPECT OF LATE NOTIFICATION OF TESTING
3.1 If the notice by the Purchaser, pursuant to paragraph 10.2.1(2) of
Annex A is given less than five Working Days before the scheduled Ready
for Test Date, the Purchaser shall pay, on demand, a cancellation
charge of 20% of the relevant connection charge, or charges, specified
from time to time in the Carrier Price List and referred to in Schedule
01 or 130 as appropriate.
4. REMOVAL OF CAPACITY
4.1 If, pursuant to paragraph 11.2 of Annex A, Capacity is removed a
proportion of the relevant connection charge shall be repaid to the
Party requesting the removal. The amount to be repaid shall be:
R = (0.466 x C) - (0.466 x C x Y)
---------------
10
where:
R is the amount to be repaid
C is the relevant connection charge referred to in Schedule 01
or 130 as appropriate and specified from time to time in the
Carrier Price List
Y is the number of years between the Ready for Test Date for the
relevant Capacity and the date of the removal order rounded up
to the next whole year.
5. ORDER AMENDMENT
5.1 The charge payable pursuant to paragraph 11.3.2 of Annex A shall be 50%
of the difference between the connection charges specified from time to
time in the Carrier Price List, for the originally ordered and the
amended Capacity Order.
6. ORDER CANCELLATION
6.1 The charge payable pursuant to paragraph 11.5 of Annex A shall be 50%
of the applicable connection charge specified from time to time in the
Carrier Price List.
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ANNEX B
BILLING AND PAYMENT
INDEX
1 Definitions
2 Recording of Billing Information
3 Exchange of Billing Information
4 Invoices
5 Payment
6 Disputes
7 "TIBS" System Change Notification
1. DEFINITIONS
1.1 In this Annex, a reference to a paragraph, unless stated otherwise, is
to a paragraph of this Annex. Words and expressions have the meaning
given in Annex D.
2. RECORDING OF BILLING INFORMATION
2.1 Subject to paragraph 2.2, each Party shall for those Calls for which it
is the Billing Party collect for each individual Call, record (whether
in bulk or on an itemised Call basis) and process in accordance with
paragraph 2.4 the Billing Information.
2.2 The Parties acknowledge that INCA or other Billing Systems may not be
capable of collecting and/or recording and/or processing all types of
Calls. BT or the Operator (as applicable) shall, as appropriate,
collect (for each individual Call), record (whether in bulk or on an
itemised Call basis) and process (in accordance with paragraph 2.4)
Billing Information for the types of Call for which INCA or other
Billing Systems are not operational and in respect of which the other
Party is the Billing Party.
2.3 The types of Calls for which INCA or other Billing Systems are not
operational are as described from time to time in the Billing Manual.
2.4 There shall be recorded for each Call for which there is an entry in
the Carrier Price List the following:
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2.4.1 Interconnect Link identifier (unless otherwise specified in
the Billing Manual); and
2.4.2 the dialled digits and/or such other information as may be
agreed; and
2.4.3 CLI (if available); and
2.4.4 the date and time when the Answer Signal is received by the
Party providing the Billing Information;
2.4.5 Chargeable Call Duration (whether measured or derived).
2.5 The Billing Party shall provide with the invoice appropriate support
Billing Information as described in the Billing Manual to enable the
non-billing Party to validate the invoice.
3. EXCHANGE OF BILLING INFORMATION
3.1 The Billing Party shall process the information specified in paragraph
2.4 so as to produce such information (including, if applicable, the
call segments listed from time to time in the Carrier Price List) by
the applicable time of day/period in summary form and to complete and
carry out in the following matrix comprising of generic Interconnect
Usage Report as follows:
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<TABLE>
<CAPTION>
TABLE A.1
- ----------------- ---------------------------------------- ---------------------------------------- --------------------------
Call Type Daytime Evening Weekend
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------- ------------- ------------ ------------- ------------ ------------- ------------- ------------ -------------
as per Carrier Call# Duration Revenue Call# Duration Revenue Call# Duration
Price List N(D) M(D) R(D) N(E) M(E) R(E) N(W) M(W)
- ----------------- ------------- ------------ ------------- ------------ ------------- ------------- ------------ -------------
TOTAL (SIGMA)N(D) (SIGMA)M(D) (SIGMA)R(D) (SIGMA)N(E) (SIGMA)M(E) (SIGMA)R(E) (SIGMA)N(W) (SIGMA)M(W)
- ----------------- ------------- ------------ ------------- ------------ ------------- ------------- ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
Call Type Weekend Total
<S> <C> <C> <C> <C>
- ------------------------------ ------------ ------------- ------------
as per Carrier Revenue Call# Duration Revenue
Price List R(W) N M R
- ------------------------------ ------------ ------------- ------------
TOTAL (SIGMA)R(W) (SIGMA)N (SIGMA)M (SIGMA)R
- ------------------------------ ------------ ------------- ------------
</TABLE>
or such other form of Interconnect Usage Report as the Parties may from time to
time reasonably agree.
<TABLE>
<S> <C>
Where: N = the total number of Calls and where R = N x F; or
M = the total Chargeable Call Duration R = M x G; or
F = appropriate rate per Call R = (N x F) + (M x G)
G = appropriate rate per minute as appropriate in accordance with the Carrier Price List being
the amount to be shown on the relevant invoice.
for the relevant entry in the Carrier Price List.
</TABLE>
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3.2 The Operator shall supply BT with Billing Information recorded by it
pursuant to paragraph 2.2 not later than ten Working Days after the end
of each Billing Period. Subject to receipt pursuant to paragraph 3.3.1
of the necessary TIBS Information (if any) from BT, the Operator shall,
not later than ten Working Days after the end of each Billing Period,
supply to BT the latest TIBS Billing Information and Refund Report.
3.3 BT shall supply the Operator with Billing Information as follows:
3.3.1 BT shall use its reasonable endeavours to supply to the
Operator on average four times each week the latest TIBS
Information and such other relevant information as may be
agreed from time to time in writing. Without prejudice to any
dispute resolution provision in this Agreement it is hereby
acknowledged that TIBS Information shall be relied upon by the
Operator to calculate charges payable by Operator Customers
using the Operator System;
3.3.2 BT shall supply to the Operator the Carrier Chargeband
Reference Data together with such other data as the Parties
may agree. Such Carrier Chargeband Reference Data (including
changes thereto) shall be supplied on a quarterly basis at
such times as shall be agreed on public access Internet or by
dial-up modem.
3.4 The Operator shall supply Billing Information in respect of the
Operator System to BT such information, being the Operator's equivalent
of the Billing Information contained in paragraph 3.3.2, to be supplied
at such time and in such form as BT may reasonably require. All Billing
Information provided under paragraphs 3.2 to 3.4 shall be sent by such
means as are described in the Billing Manual.
3.5 The Operator shall process the TIBS Information as soon as practicable.
If the Operator asks questions about the TIBS Information, it shall use
its reasonable endeavours to do so as soon as practicable after receipt
of the tapes or receipt by electronic transfer, as applicable. The
Operator shall return tapes (if any) to BT when the TIBS Information
has been processed.
3.6 The Parties acknowledge that the primary method of exchanging Billing
Information is the completion by the Billing Party of the appropriate
Interconnect Usage Report and the sending of such reports (or a summary
thereof) to the other Party.
3.7 The Billing Party shall store Billing Information in such summary
format and in such amounts as shall be sufficient to recalculate the
amounts due from one Party to the other to take account of changes in
the relevant entries of the Carrier Price List.
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3.8 If the System or the Billing System of either Party malfunctions and
fails to provide all of the Billing Information necessary for the
Billing Party to prepare an invoice, the other Party shall at the
request and reasonable expense of the Billing Party use its reasonable
endeavours to supply the missing Billing Information to the Billing
Party. There shall be no legal liability on the Billing Party for the
preparation of an incorrect invoice resulting from inaccuracies in such
Billing Information provided by the other Party to the Billing Party.
The Parties acknowledge that Billing Information supplied by the other
Party pursuant to this paragraph shall have been supplied via a
verification system (rather than a Billing System) and such other Party
cannot warrant that the information is free of error.
3.9 If the Parties' monitoring of their respective Billing Information
indicates a persistent inconsistency in reconciling Billing Information
provided by the Parties' respective Billing Systems, the Parties shall
use their reasonable endeavours to ascertain the cause of such
inconsistency, including, subject to the Parties agreement, the
reference of the matter for investigation and resolution by such
appropriate independent consultant as the Parties may agree, or in
default of agreement, as may be nominated by the President of the
Institute of Chartered Accountants in England and Wales. Such
independent consultant shall act as an expert and not as arbitrator and
whose decision, in the absence of manifest error, shall be final and
binding. The Parties shall co-operate in such investigation. The
independent consultant's costs for such investigation shall be paid by
the Parties in such proportions as the independent consultant shall
decide.
3.10 The Operator shall provide as part of the Billing Information,
information to identify the origin, type and destination of Calls in
sufficient detail to enable the calculation of BT's Access Deficit. For
each Call handed over to the Operator System by a Third Party
Operator's system, the Operator shall use its reasonable endeavours to
identify the Third Party Operator.
3.11 Save as may be otherwise provided in a Schedule, charges shall not be
payable under this Agreement by either Party to the other for the
conveyance of a Call if the Call is not connected when there is a
"ring" tone with no reply, an "engaged" tone or "number unobtainable"
tone.
3.12 For the avoidance of doubt, if a Chargeable Call Duration extends over
2 or more charge rate periods the Call shall be recorded as a single
Call in the charge rate period applying at the commencement of the Call
and the Chargeable Call Duration shall be apportioned and recorded in
each of the charge rate periods applicable to that Call.
4. INVOICES
4.1 At the end of each Billing Period the Billing Party shall use its
reasonable endeavours to submit to the other Party, within a reasonable
time, invoices
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for charges for Calls (including, without limitation, the Access
Deficit Contribution) and other services for which the Billing Party is
entitled to charge the other Party during such Billing Period.
4.2 Following the end of each Billing Period and provided that the relevant
Billing Information has been supplied in accordance with paragraph 3:
4.2.1 the Operator shall use its reasonable endeavours to submit to
BT invoices for charges for Calls and other services for which
the Operator is entitled to charge BT during such Billing
Period; and
4.2.2 BT shall use its reasonable endeavours to submit to the
Operator invoices for charges for services provided to the
Operator by BT (being services the subject of TIBS Billing
Information and Refund Reports) during such Billing Period and
save for international Transfer Charge Calls (to the extent
not previously invoiced) the two immediately preceding Billing
Periods;
4.2.3 for international Transfer Charge Calls the provisions of
paragraph 4.2.2 shall apply save that subject to the
provisions of 4.2.4 BT shall submit an invoice for an
international Transfer Charge Call not later than 10 months
from the date of such a Call;
4.2.4 BT shall use its reasonable endeavours to notify in writing
the Operator of any notification which BT has received from an
Authorised Overseas System, as a result of which notification,
BT reasonably expects that BT would not be capable of
submitting invoices for international Transfer Charge Calls
within the period specified in paragraph 4.2.3. Any such
notification to be sent to the Operator by BT shall be given
not later than 6 months from the date of the relevant
international Charge Calls. If such notification is given, BT
may submit an invoice after 10 months from the date of the
relevant international Transfer Charge Call.
4.3 All charges payable under this Agreement shall be calculated in
accordance with this Agreement and at the rates specified from time to
time in the Carrier Price List. Invoices for charges shall be invoiced
and paid for in accordance with paragraphs 14 and 15 of the main body
of this Agreement together with the relevant Schedule and the Carrier
Price List, as appropriate. Detailed invoicing procedures are described
in the Billing Manual.
4.4 For the avoidance of doubt, an invoice (including an invoice based on
estimated information) shall be dated as of the date of despatch of
that invoice.
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4.5 For services (other than Calls) the Billing Party shall provide with
the invoice appropriate Billing Information as described in the Billing
Manual to enable the non-billing Party to accurately process the
invoice for such services. Detailed invoicing procedures are described
in the Billing Manual.
4.6 If the Operator fails to supply to BT pursuant to paragraph 2 or
paragraph 3.2 Billing Information necessary for BT to deliver an
invoice under paragraph 4.2.2 (other than due to an act or omission of
BT) the following provisions shall apply:
4.6.1 BT may deliver an invoice ("estimated invoice") for an amount
due to BT for such period, such amount being equal to the
relevant amount contained in BT's invoice for the immediately
preceding Billing Period as increased for decreased by the
Relevant Percentage. For the purpose of this paragraph
"Relevant Percentage" means the percentage increase or
decrease in the aggregate amounts due to BT under this
Agreement over the last two months for which Billing
Information shall have been supplied by the Operator in
accordance with paragraphs 2 or 3.2.
4.6.2 Following the supply by the Operator of the necessary Billing
Information relating to the Billing Period for which an
estimated invoice has been delivered to BT the amounts due to
BT in respect of any subsequent invoice(s) submitted to the
Operator shall be adjusted accordingly by the amount over or
under paid by the Operator in respect of the estimated
invoice, save to the extent already paid or refunded:
4.6.3 Any payment due to BT (or any refund due to the Operator) as
appropriate shall be made pursuant to paragraph 4.6.2 together
with interest on such additional payment or refund, such
interest calculated at the Default Interest Rate as at the
date being 30 calendar days from the date of despatch of the
estimated invoice. Such interest shall be payable (in the case
of an additional payment due) from and including the day after
the Due Date, or (in the case of a refund) the later of the
date of payment of the original amount to be refunded and the
Due Date, in each case ending on the date of payment or, as
the case may be, the date of refund in full. Such interest
shall accrue from day to day and shall not be compounded.
4.7 A calculation of interest at the Oftel Interest Rate shall be
calculated on a daily basis from and including the date of payment of
the original amount to be adjusted up to and including the date on
which the adjusted amount is paid.
5. PAYMENT
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5.1 Subject as stated below, all charges due by one Party to the other
under this Agreement shall be payable by the Due Date.
5.2 If, pursuant to paragraph 6.1, either Party shall have notified the
other of a dispute relating to such invoice and such dispute shall not
have been resolved before the Due Date, and if the amount in dispute
represents:
5.2.1 less than 5 per cent. of the total amount (excluding VAT) of
the relevant invoice, the total amount invoiced; or
5.2.2 5 per cent. or more of the total amount (excluding VAT) of the
relevant invoice, the amount in dispute may be withheld until
the dispute is resolved and the balance;
shall be due and payable on the Due Date.
5.3 Notwithstanding notification of a dispute pursuant to paragraphs 6.1 or
6.5, if a Party fails to pay on the Due Date any amount due under this
Agreement or shall overpay any amount, the payee or, as the case may be
(subject to paragraph 5.5) the over-payer, shall pay or be paid
interest at the Default Interest Rate as at the Due Date or date of the
overpayment in respect of any such amount outstanding.
5.4 Interest at the Default Interest Rate shall be payable (for late
payment) from and including the day after the Due Date or (in the case
of a refund) the later of the date of payment of the original amount to
be refunded and the Due Date, in each case ending on the date of
payment or, as the case may be, refund in full. Such interest at the
Default Interest Rate shall accrue day by day and shall not be
compounded.
5.5 If such overpayment results from information provided by the overpayer
(which is not attributable to information provided by the payee Party),
the payee Party shall be under no obligation to pay any interest at the
Default Interest Rate on the amount overpaid.
5.6 If a recalculation and adjustment is required pursuant to paragraphs 12
or 13 of the main body of this Agreement, the amount of such adjustment
together with interest calculated at the Oftel Interest Rate shall be
calculated and paid accordingly.
5.7 Without prejudice to the provisions of paragraphs 5.1 to 5.5
(inclusive) a Party shall pay pursuant to paragraph 5.6 to the other
the amount of the adjustment together with interest calculated at the
Oftel Interest Rate calculated from the Due Date to the date on which
the adjustment is paid (both dates inclusive).
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5.8 VAT shall be added to all or any part of the charges under this
Agreement and shall be paid by the Party responsible for making such
payment.
6. DISPUTES
6.1 Each Party shall use its reasonable endeavours to resolve disputes with
the other. If either Party ("the disputing Party") disputes the
accuracy of an invoice delivered under this Agreement the disputing
Party shall, as soon as practicable, notify in writing the other
Party's billing liaison contact of the nature and extent of the
problem. If the problem remains unresolved on the last but one Working
Day before the date when the relevant invoice is due for payment, the
disputing Party may invoke the formal billing dispute procedures set
out in paragraph 6.2 by written notification to the other, such
notification to be given not later than five Working Days after the Due
Date of the relevant invoice. The disputing Party shall include with
such notice all details reasonably necessary to substantiate its claim,
which details shall be reasonably capable of being verified by the
other Party.
6.2 Following a notification made under paragraph 6.1 that either Party
wishes to invoke the formal billing dispute procedures, the Parties
shall consult and endeavour to resolve the dispute at level 1 of
consultation and if agreement cannot be reached within 15 Working Days,
shall escalate the disagreement to level 2. If agreement cannot be
reached within 10 Working Days at level 2, the matter shall be
escalated to level 3. Each Party shall inform the other in writing of
the name of its representative at each level of consultation. Subject
to paragraph 6.7, each Party shall use the above dispute resolution
procedure for any dispute under this Annex to the fullest extent to try
to resolve such dispute. The Parties may agree in writing to extend the
above timescales.
6.3 Notwithstanding the provisions of paragraph 6.1, if the Parties fail to
resolve any dispute either, in not less than two months (for a dispute
notified pursuant to paragraph 6.2), or, in not less than three months
(for a dispute notified pursuant to paragraph 6.5) in each case from
the Due Date of the relevant disputed invoice (or such extended period
as the Parties may agree) either Party may (by written notice to the
other to such effect) refer the dispute for investigation and
resolution by such chartered accountants as the Parties may agree, or
in default of agreement, as may be nominated by the President of the
Institute of Chartered Accountants in England and Wales. Such chartered
accountants shall act as an expert and not as arbitrator and whose
decision, in the absence of evidence of manifest error, shall be final
and binding. The Parties shall co-operate in such investigation and, if
any sums are found to be due or overpaid in respect of the disputed
invoice such sum shall be paid or refunded (with interest payable or
paid pursuant to paragraph 5.3), as the case may be, within 10 Working
Days from the date of resolution or earlier settlement between the
Parties.
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6.4 The costs of the chartered accountant agreed or nominated pursuant to
paragraph 6.3 shall be paid by the disputing Party unless the relevant
invoice is established to have been incorrect by more than the lesser
of (a) 5 per cent. of the total amount of the charges (excluding VAT)
specified in the invoice and (b) (pound)5,000 (excluding VAT), when the
Billing Party shall pay such costs.
6.5 Notwithstanding the provisions of paragraph 6.1 a Party may by written
notice raise a dispute regarding any invoice delivered under this
Agreement at any time following five Working Days after the Due Date,
save that no such notice shall be given more than 12 months after the
date of the relevant invoice. If notice under this paragraph 6.5 is
given after the latest date for giving notice specified in paragraph
6.1, the preceding provisions of this paragraph 6 shall apply mutatis
mutandis, save that in paragraph 6.2 in relation to the number of
Working Days "15" and "10" shall be substituted by "30" and "20",
respectively.
6.6 The above procedures are without prejudice to any other rights and
remedies that may be available in respect of any breach of any
provision of this Agreement.
6.7 Though it is the good faith intention of the Parties to use the above
dispute resolution procedures to the fullest extent to try to resolve
such a dispute, nothing in this Annex shall prevent either Party
seeking, obtaining or implementing interlocutory or other immediate
relief in respect of any dispute or referring, in accordance with any
right it may have under the other Party's Licence or its Licence, any
matter relating to this Annex or any dispute arising in relation to
this Annex, to the Director General requesting him to make a
determination or take other appropriate steps for its resolution.
7. "TIBS" SYSTEM CHANGE NOTIFICATION
7.1 BT shall notify the Operator by giving not less than 6 months written
notice if BT is proposing a replacement of, or fundamental change in
TIBS.
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ANNEX D
DEFINITIONS
In this Agreement, words and expressions have the following meanings:
"ACCESS CODE" a three or four digit code or a number
commencing with the digits 0800 followed by
a six or seven digit number which initiates
an Indirect Access Call;
"ACCESS DEFICIT CONTRIBUTION" the contribution to the funding of the BT
Access Deficit payable by the Operator to BT
pursuant to Condition 13.5A.3 and assessed
in accordance with Condition 13.5A.4 both
being Conditions of the BT Licence;
"ACO PERIOD" the period covered by an Advance Capacity
Order;
"ACT" Telecommunications Act 1984;
"ACTUAL CHARGE" the charge (or the means of calculating that
charge) for a Standard Service paid by a
Network Provider to BT in respect of the
whole or part of the Financial Year In
Question which is less than the Interim
Charge (whether as a result of the operation
of Condition 24F or following the consent of
the Director General to that lesser charge
pursuant to Condition 16B.5 being Conditions
of the BT Licence);
"ADDRESS COMPLETE MESSAGE" a signalling message required by the
originating System to indicate that
sufficient address digits have been received
and that a transmission path should be set
up;
"ADVANCE CAPACITY ORDER" that part of the Capacity Profile which sets
out the Capacity ordering intentions of the
relevant Party over the first four months of
the Capacity Profile and has the contractual
consequences outlined in Annex A;
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"AFN" the first three digits immediately after a
Director Area Number;
"AGREEMENT" this agreement, the Carrier Price List, the
Annexes, Schedules, Appendices and
Specifications;
"ANCILLARY SERVICE" (a) a service which does not solely
comprise the conveyance of Calls;
or
(b) a Call, except a Transfer Charge
Call, where the Calling Party is
not required to pay all of the
charges associated with that Call;
or
(c) a Call where the Calling Party is
charged at a rate which includes an
element over and above the charge
for conveyance of that Call;
"ANNEX" annex A, B, C or D attached to this
Agreement;
"ANSWER SIGNAL" the signal required by the originating
network to indicate that the transmission
path is complete;
"APPENDIX" an appendix to a Schedule in Annex C;
"APPROVED AUDITOR" a Party's auditor appointed in accordance
with the Companies Act 1985 or such firm of
chartered accountants which a Party may
(subject to the other Party's written
approval) appoint (such approval not to be
unreasonably withheld or delayed);
"ASR" the Answer Seize Ratio expressed as a
percentage of Calls, which were successfully
switched and which received an answer,
compared to Call attempts, during a
particular measurement period;
"ASSOCIATED COMPANY" in relation to a Party:-
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(a) its Subsidiary or Holding Company
of that Party or another Subsidiary
of such Holding Company; or
(b) an associated company (as defined
in Statement of Standard Accounting
Practice No. 1 issued by the
Institute of Chartered Accountants
in England and Wales) of that
Party's Holding Company;
"AUTHORISED OVERSEAS SYSTEM" has the meaning in schedule 1 part 1 of the
BT Licence as in force at the date of this
Agreement;
"BILLING INFORMATION" such information provided pursuant to Annex
B by one Party to the other including,
without limitation:
(a) such information as is necessary to
ascertain the charges payable by
each Party under this Agreement;
and
(b) Interconnect Usage Reports, TIBS
Billing Information and Refund
Reports, information provided by
INCA, and by the Operator's
equivalent of TIBS and/or INCA;
"BILLING PARTY" the Party to whom charges are payable by the
other Party pursuant to this Agreement;
"BILLING PERIOD" unless otherwise agreed in writing, the
period of a calendar month commencing on the
first day of a month;
"BILLING SYSTEM" a system to collate Billing Information and
prepare invoices relating to charges payable
by each Party under this Agreement;
"BRITISH ISLES" United Kingdom, Channel Islands, Isle of Man
and Republic of Ireland;
"BT" British Telecommunications public limited
company;
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"BT'S ACCESS DEFICIT" has the meaning given to Access Deficit in
Condition 13.5A.3 of the BT Licence as in
force at the date of this Agreement;
"BT ANALOGUE LOCAL EXCHANGE" a TXE 4 or TXE 4A analogue local Switch in
OR "BT ALE" the BT System;
"BT BASIC INTERNATIONAL INCOMING a Call, received by the Operator System from
CALL" an Authorised Overseas System, comprising
the minimum service features necessary to
support a speech path through the BT System,
handed over from the Operator System to the
BT System, destined for a telephone number
of a BT Network Termination Point, being a
Call available for the conveyance of
Messages;
"BT BASIC INTERNATIONAL OUTGOING a Call, destined for an Authorised Overseas
CALL" System, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System if a rate
for such a Call is specified from time to
time in the Carrier Price List, being a Call
available for the conveyance of Messages;
"BT BASIC OPERATOR TO OPERATOR a Call comprising the minimum service
TRANSIT CALL" features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System destined
for the Operator System, if a rate for such
a Call is specified from time to time in the
Carrier Price List being a Call available
for the conveyance of Messages;
"BT BASIC TELEPHONY CALL" a Call, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System, destined
for a telephone number of a BT Network
Termination Point, being a Call available
for the conveyance of Messages;
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"BT BASIC TRANSIT CALL"
a Call comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System destined
for a Third Party Operator's system, being a
Call available for the conveyance of
Messages;
"BT CHARGE GROUP"
a geographical area designated from time to
time by BT, and used for retail charges as
specified in the BT Retail Price List;
BT DIGITAL LOCAL EXCHANGE" OR
"BT DLE"
a digital Switch in the BT System which
Switch connects by that Switch alone Calls
from analogue exchanges, RCUs or Exchange
Lines;
"BT DJSU"
a digital tandem Switch in the London
Director Area (currently known as a Digital
Junction Switching Unit) in the BT System
which provides access to certain BT Digital
Local Exchanges, BT DLTEs, BT ALEs and/or
other BT DJSUs in such Director Area and
adjacent BT Charge Groups;
"BT DLTE"
a digital Switch in the BT System which
Switch connects by that Switch alone Calls
from analogue exchanges, RCUs or Exchange
Lines and which provides access to directly
connected BT Digital Local Exchanges and
directly connected BT ALEs;
"BT DMSU"
a digital tandem Switch (currently known as
a Digital Main Switching Unit) in the BT
System, which provides access to other BT
Exchanges;
"BT EXCHANGE"
a BT Analogue Local Exchange, a BT Digital
Local Exchange, a BT DLTE, a BT Tandem
Exchange or a BT ISC and such other Switch
which the Parties may from time to time
agree is a BT Exchange;
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"BT INTERNATIONAL INCOMING CALL"
either a BT Basic International Incoming
Call or a BT ISDN International Incoming
Call;
"BT INTERNATIONAL OUTGOING CALL"
either a BT Basic International Outgoing
Call or a BT ISDN International Outgoing
Call;
"BT ISC"
a BT Exchange notified to the Operator
pursuant to paragraph 3.1.1 of Annex A which
is used exclusively for switching Calls to,
or received from Authorised Overseas
Systems;
"BT ISDN INTERNATIONAL INCOMING
CALL"
a Call, received by the Operator System from
an Authorised Overseas System, comprising
service features additional to the minimum
features necessary to support a speech path
through the BT System, being service
features described as bearer services,
teleservices or supplementary services in
the ETSI Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for a telephone number
of a BT Network Termination Point, being a
Call available for the conveyance of
Messages;
"BT ISDN INTERNATIONAL OUTGOING
CALL"
a Call, destined for an Authorised Overseas
System, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, if a rate for such a Call is
specified from time to time in the Carrier
Price List, being a Call available for the
conveyance of Messages;
"BT ISDN OPERATOR TO OPERATOR
TRANSIT CALL"
a Call comprising service features
additional to the minimum features
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necessary to support a speech path through
the BT System, being service features
described as bearer services, teleservices
or supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for the Operator System,
if a rate for such a Call is specified from
time to time in the Carrier Price List being
a Call available for the conveyance of
Messages;
"BT ISDN TELEPHONY CALL"
a Call, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for a telephone number
of a BT Network Termination Point, being a
Call available for the conveyance of
Messages;
"BT ISDN TRANSIT CALL"
a Call comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for a Third Party
Operator's system, being a Call available
for the conveyance of Messages;
"BT LICENCE"
the licence granted to BT pursuant to
section 7 of the Act under which BT runs the
BT System;
"BT OPERATOR"
a person who answers Calls for directory or
operator assistance, Emergency Calls and
other similar Calls for BT;
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"BT OPERATOR TO OPERATOR
TRANSIT CALL"
either a BT Basic Operator to Operator
Transit Call or a BT ISDN Operator to
Operator Transit Call;
"BT PAYPHONE ACCESS LEVY"
the charge payable by the Operator for the
use of a BT Public Call Box or a BT
Temporary Call Box (each as defined in
Condition 11 of the BT Licence) to originate
a Call.
"BT PRS CALL"
a Call to a PRS:
(a) for which if such Call originated
on the BT System, the person
responsible for payment would pay a
charge higher than that which would
apply to a directly dialled BT
Telephony Call of equivalent
distance and duration; and
(b) where payment is made by BT to a BT
PRS Service Provider and where
payment takes into account the
number or duration of Calls to that
BT PRS Service Provider;
"BT PRS SERVICE PROVIDER"
a person having a contract with BT for the
delivery of BT PRS Calls;
"BT PRS SUB SERVICE PROVIDER"
a person having an arrangement for the
delivery of BT PRS Calls, whether or not
legally binding, with a BT PRS Service
Provider;
"BT RETAIL PRICE LIST"
the retail price list published by BT from
time to time pursuant to Condition 16 of the
BT Licence;
"BT SWITCH CONNECTION"
a BT Exchange at which Calls handed over:
(a) from the Operator System are
initially switched; or
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(b) to the Operator System are finally
switched;
by BT;
"BT SYSTEM"
the applicable system described in Annex A
of the BT Licence as in force at the date of
this Agreement;
"BT TANDEM EXCHANGE"
a BT DMSU or a BT DJSU;
"BT TELEMESSAGE"
has the meaning given to the term
"Telemessage" in the BT Retail Price List;
"BT TELEPHONY CALL"
either a BT Basic Telephony Call or a BT
ISDN Telephony Call;
"BT TRANSIT CALL"
either a BT Basic Transit Call or a BT ISDN
Transit Call;
"CALL"
a transmission path through
Telecommunication Systems for the sending of
Messages, and a reference to conveyance of a
Call by a Party means the establishment by
that Party of a transmission path through
that Party's System and the conveyance by
that Party in accordance with this Agreement
of a Message (if any) over such transmission
path;
"CALLED PARTY"
a person who receives a Call;
"CALLING PARTY"
a person who initiates a Call;
"CAPACITY"
capacity in units of 2 Mbit/s on
Interconnect Links;
"CAPACITY ORDER"
an order for Capacity placed by one Party on
the other, pursuant to Annex A;
"CAPACITY PROFILE"
a profile of future Capacity ordering
intentions over a 12 month period as
presented by one Party to the other pursuant
to Annex A;
"CAPACITY PROVISION"
the provision of new or additional Capacity;
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"CAPACITY RE-ARRANGEMENT"
the re-use of Capacity previously provided
by one Party to the other, where, in each
case, the Point of Connection and the
buildings containing the Switch Connections
remain the same;
"CARRIER PRICE LIST"
the price list having that name which
contains charges for Standard Services
consistent with the full list of Standard
Services maintained by BT pursuant to
Condition 16B.8 of the BT Licence, charges
for services provided by the Operator and
some other charges and information;
"CARRIER CHARGE BAND REFERENCE DATA"
such reference data (including EBC matrix,
complementary retail file and associated
files) as BT shall from time to time make
available to the Operator, being data for
the preparation and validation of Billing
Information for Calls;
"CHARGEABLE CALL"
a Call for which a charge is made pursuant
to this Agreement;
"CHARGEABLE CALL DURATION"
the duration of a Chargeable Call measured:
(a) for a Call (other than an
International Call), to the nearest
second (or such greater accuracy as
the Parties may agree in writing);
(b) for an International Call to not
less than the nearest second;
commencing with the receipt of an
Answer Signal and ceasing with the
receipt of a Release Signal at the
point of recording by the Party
recording the relevant Billing
Information;
"CLI"
has the meaning given to Calling Line
Identification in the draft "Code of
Practice for Network Operators in relation
to Calling Line Identification Display
Services and other Related Services" Version
6 dated 16
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November 1994 as the same may be amended or
replaced from time to time;
"COMPETITIVE STANDARD SERVICE"
a Standard Service the market for which is
determined by the Director General to be
competitive pursuant to Condition 16B.6 of
the BT Licence;
"CONDITION"
a condition of the BT Licence or the
Operator Licence as the case may be as in
force at the date of this Agreement, unless
otherwise stated;
"CONFIDENTIAL INFORMATION"
any information, in whatever form, which in
the case of written or electronic
information is clearly designated as
confidential and which, in the case of
information disclosed orally, is identified
at the time of disclosure as being
confidential or is by its nature
confidential and including such Confidential
Information already disclosed by either
Party to the other prior to the date of this
Agreement but excluding any information
which:
(a) is in or comes into the public
domain other than by reason of a
breach of this Agreement; or
(b) is previously known on a
non-confidential basis to the
Receiving Party at the time of its
receipt; or
(c) is independently generated,
developed or discovered at any time
by or for the Receiving Party; or
(d) is subsequently received from a
Third Party without any restriction
on disclosure;
"CONVEYANCE STANDARD SERVICE"
a Standard Service the charge for which may
be determined pursuant to Condition 13.5A of
the BT Licence;
"CUSTOMER"
as the context requires:
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(a) a person having a contract with
either or both Parties for the
provision of telecommunication
services by means of that Party's
System; or
(b) a user of telecommunication
apparatus directly connected to the
BT System or the Operator System;
or
(c) a person having a contract with a
reseller of telecommunication
services to be provided by means of
either the BT System or the
Operator System or a user of
telecommunication apparatus
authorised by that person;
"CUSTOMER SITED INTERCONNECT"
an Interconnect Link provided pursuant to
Schedule 130 of Annex C;
"CUSTOMER SERVICE PLAN"
a document containing details of
individuals, addresses and telephone numbers
for ordering or maintenance of the services
provided pursuant to this Agreement;
"D"
the first digit immediately following the
NNG;
"DATA MANAGEMENT AMENDMENT"
such reconfiguration of the BT System or the
Operator System as is necessary for access,
routing and charging of Calls;
"DAYTIME"
the period of time between 0800 and 1800 on
Monday to Friday or such other period of
time as shall be agreed between the Parties;
"DE"
the first two digits immediately following
the NNG;
"DEFAULT INTEREST RATE"
four per cent (4%) above the rate per annum
as displayed on the "LIBP" page (or such
other page whatever its designation on which
London Inter-Bank Offered Rates of major
banks for three months sterling
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deposits are for the time being displayed)
on the Reuters Monitor Money Rates Services
provided that if the offered rates of less
than two banks are so displayed then "LIBOR"
shall be the arithmetic mean as determined
by the Party charging interest of the
offered quotations of two leading clearing
banks in London, selected by such Party for
three months sterling deposits. Such
interest shall be calculated on a daily
basis;
"DIRECTOR AREA"
an area comprising certain major United
Kingdom conurbations which area is delimited
by a Director Area Number;
"DIRECTOR AREA NUMBER"
the code (excluding the leading zero)
comprising 3 digits for telephone numbers in
certain major United Kingdom conurbations;
"DIRECTOR GENERAL"
the Director General of Telecommunications;
"DISCLOSING PARTY"
a Party disclosing information to the other
Party;
"DISPUTE"
a disagreement between the Parties excluding
breaches of this Agreement;
"DUE DATE"
a date which is 30 calendar days after the
date of an invoice;
"E"
the first digit immediately following the D;
"EFFECTIVE DATE"
a date referred to by that name in the
Carrier Price List or in a Schedule being
the date on which a charge or a variation of
a charge referred to in the Carrier Price
List or a Schedule takes effect;
"EMERGENCY CALL"
a 999 or 112 Call handed over from the
Operator System to the BT System;
"EMERGENCY CENTRE"
premises where BT Operators answer Emergency
Calls;
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"EMERGENCY ORGANISATION"
the relevant local public police, fire,
ambulance and coastguard services and other
similar organisation providing assistance to
the public in emergencies;
"ETSI"
the European Telecommunications Standards
Institute;
"EVENING"
periods of time not being either Daytime or
Weekend or such other period of time as
shall be agreed between the Parties;
"EXCHANGE LINE"
has the meaning in schedule 1 part 1 of the
BT Licence as in force at the date of this
Agreement;
"FINAL CHARGE"
in the case of charges payable to BT the
charge (or the means of calculating that
charge) for a Standard Service (other than a
Competitive Standard Service) for each
Financial Year In Question recalculated and
redetermined by the Director General based
on the Financial Statement for the Financial
Year In Question in accordance with
Condition 13.5A.3B or 13.5C.6 of the BT
Licence; and
in the case of charges payable to the
Operator the charge (or the means of
calculating that charge) for a service
provided by the Operator to BT for each
Financial Year In Question agreed between
the Parties in writing or determined by the
Director General based on the audited
figures relating to that service for the
relevant year or, if those figures are not
available, the most recent audited figures
which are available or, if no audited
figures are available the best information
available to the Director General in
accordance with Condition 13.5B.1A of the BT
Licence;
"FINANCIAL STATEMENT"
has the meaning in Condition 20B of the BT
Licence;
"FINANCIAL YEAR"
a period of one year used for accounting
purposes;
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"FINANCIAL YEAR IN QUESTION"
a period of one year ending each 31 March in
respect of which a charge is payable for
services provided during that year;
"FORECAST"
unless otherwise specified, has the meaning
in Condition 13.5A.3A of the BT Licence;
"FRBS STATEMENT"
has the meaning in Condition 13.5A.3C (b) of
the BT Licence;
"FULLY PROVIDED"
Capacity on a Traffic Route which will carry
all the relevant Traffic Streams at the
planned grade of service;
"G703 INTERFACE"
an interface meeting the requirements of
ITU-T Recommendation G703 (Geneva 1991);
"GENERIC ELECTRICAL AND
PHYSICAL INTERFACE SPECIFICATION"
BT's Generic Electrical and Physical
Interface Specification, as amended or
substituted from time to time with the
Parties' agreement including without
limitation changes pursuant to paragraphs
3.2 or 3.3 of Annex A;
"GENERIC SDH INTERFACE
SPECIFICATION"
BT's Generic Synchronous Digital Hierarchy
Interface Specification, as amended or
substituted from time to time with the
Parties' agreement including without
limitation changes pursuant to paragraphs
3.2 and 3.3 of Annex A;
"GENERIC C7 SIGNALLING
INTERFACE SPECIFICATION"
BT's Generic C7 Signalling Interface
Specification, as amended or substituted
from time to time with the Parties'
agreement including without limitation
changes pursuant to paragraphs 3.2 or 3.3 of
Annex A;
"GENERIC TRANSMISSION
INTERFACE SPECIFICATION"
BT's Generic Transmission Interface
Specification, as amended or substituted
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from time to time with the Parties'
agreement including without limitation
changes pursuant to paragraphs 3.2 or 3.3 of
Annex A;
"GSM"
Global System for Mobile Communications;
"HOLDING COMPANY"
has the meaning in sections 736 and 736A of
the Companies Act 1985;
"INCA"
BT's Inter Network Call Accounting System as
the same may be developed from time to time;
"INCOMING CALLS"
Calls handed over at a Point of Connection
by BT to the Operator other than Indirect
Access Calls;
"INDIRECT ACCESS CALL"
a Call where a Calling Party on one Party's
System has chosen to convey that Call to the
other Party's System by prefixing that Call
with an Access Code;
"IN-SPAN INTERCONNECT"
an Interconnect Link provided pursuant to
Schedule 01;
"INTELLECTUAL PROPERTY RIGHTS"
any patent, petty patent, registered design,
registered trade or service mark, copyright,
design right, semi-conductor topography
right, know-how or any similar right
exercisable in any part of the world
including any application therefor;
"INTERCONNECT EXTENSION CIRCUIT" OR
"IEC"
a Link, being part of a 2Mbit/s ISI
Interconnect Link, between the Muliplexor in
a Remote Switch Connection and the
Multiplexor terminating the ISI Interconnect
Link;
"INTERCONNECT LINK"
a Link connecting a BT Switch Connection and
an Operator Switch Connection passing
through a Point of Connection;
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"INTERCONNECT USAGE REPORT"
a report in the same or substantially the
same form as specified in the Billing
Manual;
"INTERIM CHARGE"
in the case charges payable to BT the charge
(or the means of calculating that charge)
for a Standard Service (other than a
Competitive Standard Service) for each
Financial Year In Question determined by the
Director General in accordance with
Condition 13.5A.3A or 13.5C.6 of the BT
Licence; and
in the case of charges payable to the
Operator the charge (or the means of
calculating that charge) for a service
provided by the Operator to BT for each
Financial Year In Question agreed between
the Parties in writing or determined by the
Director General in accordance with
Condition 13.5B.1A of the BT Licence;
"INTERNATIONAL CALL"
a Call received by the BT System from:
(a) an Authorised Overseas System; or
(b) the Operator System destined for an
Authorised Overseas System; or
a Call received by the Operator System from:
(a) an Authorised Overseas System, or
(b) the BT System destined for an
Authorised Overseas System;
"INTRABUILDING LINK"
a connection between a BT or an Operator
Switch Connection and the G703 Interface on
the Multiplexor forming part of an
Interconnect Link;
"INVOICE DATE"
the date on which an invoice is despatched;
"ISI INTERCONNECT LINK"
a portion of an Interconnect Link being that
cable (or fibres within that cable) and
LTE's between an Operator building and a BT
building over which a number of
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2Mbit/s ISI Interconnect Links are provided;
"ITU-T"
the Telecommunications Standards Bureau
(formerly the International Telegraph and
Telephone Consultative Committee) of the
International Telecommunications Union;
"LAND MOBILE RADIO SERVICE"
has the meaning in Condition 18 of the BT
Licence;
"LICENCE"
the BT Licence or, as the context requires,
the Operator Licence;
"LINK"
telecommunication apparatus (which has the
meaning in paragraph 1 (1) of schedule 2 to
the Act as in force at the date of this
Agreement) necessary to establish one or
more transmission paths;
"MANUAL"
manual referred to in this Agreement of
working practices between the Parties;
"MESSAGE"
has the meaning in schedule 1, part 1 of the
BT Licence as in force at the date of this
Agreement;
"MOBILE CALL"
a Call to an Operator Customer using a
mobile handset if the Operator Customer
using mobile terminal apparatus would
receive that Call by means of wireless
telegraphy if the handset was switched on
and within range of a base transceiver
station forming part of the Operator System
unless:
(a) the Operator Customer on a
temporary basis has chosen to
divert that Call to another number;
or
(b) the Operator System when the mobile
handset is turned off or out of
range from a base transceiver
station returns a message to that
effect to the Calling Party;
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"MULTIPLEXOR"
the multiplexing equipment which serves an
Intrabuilding Link and where appropriate an
IEC;
"NETWORK PROVIDER"
in relation to each Standard Service, any
person who has required it, and with whom BT
is obliged to enter into an agreement to
provide that Standard Service under
Condition 13 of the BT Licence;
"NETWORK TERMINATION POINT"
has the meaning in schedule 1 part 1 of the
BT Licence as in force at the date of this
Agreement;
"NEW CHARGE"
a charge for a Standard Service, which is
less than the charge for that Standard
Service as determined by the Director
General pursuant to Condition 13, following
the consent of the Director General pursuant
to Condition 16B.5 both being Conditions of
the BT Licence;
"NICC"
Network Interoperability Consultative
Committee;
"NNG"
a national number group being the code
(excluding the leading zero) comprising for
UK telephone numbers (a) for geographical
numbers (excluding Director Area Number,)
four digits (b) for non-geographic numbers,
three digits;
"NON CONVEYANCE STANDARD SERVICE"
a Standard Service which is not a Conveyance
Standard Service;
"NUMBER RANGE"
Director Area Number, NNG, AFN, D, E, and/or
DE as appropriate;
"NUMBER TRANSLATION SERVICES CALL"
a Call to non-geographic telephone numbers
(other than a Calls destined for a mobile
handset) if the Party receiving the Call
translates the dialled digits and routes the
Call in accordance with such translation,
including without limitation, PRS Calls,
Local Call Fee Access Services Calls,
Freephone Calls, National Call Services
Calls and other specially charged services;
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"OCHC"
an operator Call handling centre which
routes Calls to BT Operators from Customers
seeking assistance with connection to
another telephone number;
"OFTEL INTEREST RATE"
three eighths of one per cent (3/8%) above
the London Inter Bank Offered Rate being the
rate per annum of the offered quotation for
sterling deposits for delivery on the due
date for payment for a period of three
months as displayed on page 3750 on the
Telerate Service (or any other page that may
replace page 3750 on that service) at or
about 11 am London time on the due date of
payment provided that if such a rate is not
so displayed London Inter Bank Offered Rate
shall mean the rate quoted by National
Westminster Bank PLC to leading banks in the
London interbank market at or about 11 am
London time on the due date of payment for
the offering of sterling deposits of a
comparable amount for a period of three
months. Such interest shall be calculated on
a daily basis;
"OPERATOR"
the other Party to this Agreement;
"OPERATOR BASIC BT TO BT TRANSIT
CALL"
a Call comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System destined
for the BT System, if a rate for such a Call
is specified from time to time in the
Carrier Price List, being a Call available
for the conveyance of Messages;
"OPERATOR BASIC INTERNATIONAL
INCOMING CALL"
a Call, received by the BT System from an
Authorised Overseas System, comprising the
minimum service features necessary to
support a speech path through the BT System,
handed over from BT System to the Operator
System destined for a telephone number of an
Operator Network Termination Point, if a
rate for such a Call is specified from time
to time in the Carrier Price List, being a
Call available for the conveyance of
messages;
"OPERATOR BASIC INTERNATIONAL
OUTGOING CALL"
a Call, destined for an Authorised Overseas
System, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System, if a rate
for such a Call is specified from time to
time in the Carrier
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Price List, being a Call
available for the conveyance of Messages;
"OPERATOR BASIC TELEPHONY CALL"
a Call, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System, destined
for a telephone number of an Operator
Network Termination Point, being a Call
available for the conveyance of Messages;
"OPERATOR BASIC TRANSIT CALL"
a Call comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System destined
for a Third Party Operator's system, if a
rate for such a Call is specified from time
to time in the Carrier Price List being a
Call available for the conveyance of
Messages;
"OPERATOR BT TO BT TRANSIT CALL"
either an Operator Basic BT to BT Transit
Call or an Operator ISDN BT to BT Transit
Call;
"OPERATOR EXCHANGE"
an Operator Local Exchange, Operator Mobile
Exchange or Operator Tandem Exchange and
such other Switch which the Parties may from
time to time agree is an Operator Exchange;
"OPERATOR INTERNATIONAL
INCOMING CALL"
either an Operator Basic International
Incoming Call or an Operator ISDN
International Incoming Call;
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"OPERATOR INTERNATIONAL
OUTGOING CALL"
either an Operator Basic International
Outgoing Call or an Operator ISDN
International Outgoing Call;
"OPERATOR ISDN BT TO BT TRANSIT
CALL"
a Call comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for the BT System,
if a rate for such a Call is specified from
time to time in the Carrier Price List being
a Call available for the conveyance of
Messages;
"OPERATOR ISDN INTERNATIONAL
INCOMING CALL"
a Call, received by the BT System from an
Authorised Overseas System, comprising
service features additional to the minimum
features necessary to support a speech path
through the BT System, being service
features described as bearer services,
teleservices or supplementary services in
the ETSI Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for a telephone
number of an Operator Network Termination
Point, if a rate for such a Call is
specified from time to time in the Carrier
Price List, being a Call available for the
conveyance of Messages;
"OPERATOR ISDN INTERNATIONAL
OUTGOING CALL"
a Call, destined for an Authorised Overseas
System, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
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handed over from the BT System to the
Operator System, if a rate for such a Call
is specified from time to time in the
Carrier Price List, being a Call available
for the conveyance of Messages;
"OPERATOR ISDN TELEPHONY CALL"
a Call, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for a telephone
number of an Operator Network Termination
Point, being a Call available for the
conveyance of Messages;
"OPERATOR ISDN TRANSIT CALL"
a Call comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for a Third Party
Operator's system, if a rate for such a Call
is specified from time to time in the
Carrier Price List being a Call available
for the conveyance of Messages;
"OPERATOR LICENCE"
the licence granted to the Operator pursuant
to section 7 of the Act under which the
Operator runs the Operator System;
"OPERATOR LICENSED AREA"
the geographical area in which the Operator
is permitted pursuant to the Operator
Licence to provide telecommunication
services;
"OPERATOR LOCAL EXCHANGE"
a digital Switch, except an Operator Mobile
Exchange, in the Operator System which
Switch connects by that Switch alone Calls
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from Network Termination Points in the
Operator System;
"OPERATOR MOBILE EXCHANGE"
a digital Switch in the Operator's System
which Switch connects by that Switch those
Calls from base stations and/or base station
controllers in the Operator System providing
a Land Mobile Radio Service for handsets;
"OPERATOR'S OPERATOR"
a person who answers Calls for directory or
operator assistance or other similar Calls
for the Operator;
"OPERATOR PRS CALL"
a Call to a PRS:
(a) for which if originated on the
Operator System, the person
responsible for payment would pay
at a rate higher than that which
would apply to a directly dialled
Operator Telephony Call of
equivalent distance and duration;
and
(b) if payment is made by the Operator
to a Operator PRS Service Provider
and if payment takes into account
the number or duration of Calls to
that the Operator PRS Service
Provider;
"OPERATOR PRS SERVICE PROVIDER"
a person having a contract with the Operator
for the delivery of Operator PRS Calls;
"OPERATOR PRS SUB SERVICE PROVIDER"
a person having an arrangement for the
delivery of Operator PRS Calls, whether or
not legally binding, with an Operator PRS
Service Provider, directly or indirectly;
"OPERATOR SYSTEM"
the Telecommunication System run by the
Operator pursuant to the Operator Licence as
in force at the date of this Agreement;
"OPERATOR SWITCH CONNECTION"
an Operator Exchange at which Calls handed
over:
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(a) from the BT System are initially
switched; or
(b) to the BT System are finally
switched;
by the Operator;
"OPERATOR TANDEM EXCHANGE"
a digital tandem Switch in the Operator
System which provides access to Operator
Local Exchanges or Operator Mobile
Exchanges;
"OPERATOR TELEPHONY CALL"
either an Operator Basic Telephony Call or
an Operator ISDN Telephony Call;
"OPERATOR TRANSIT CALL"
either an Operator Basic Transit Call or an
Operator ISDN Transit Call;
"OUTGOING CALL"
a Call handed over at a Point of Connection
by the Operator to BT;
"PARENT BT EXCHANGE"
a BT Tandem Exchange which has a direct
connection to a BT DLE, BT DLTE or BT ALE
for the conveyance of Calls in the ordinary
course of business;
"PARTY"
a party to this Agreement;
"PATH PROTECTION"
resilience improvement of an ISI
Interconnect Link as described in Schedule
01 of Annex C;
"PDH"
plesiochronous digital hierarchy;
"POINT OF CONNECTION"
a physical point where the BT System and the
Operator System are connected for Calls to
be handed over from one System to the other;
"PRE-INTERIM CHARGE"
If the Director General has not determined
the Interim Charge (or the means of
calculating that charge) for the Financial
Year In Question;
in the case of charges payable to BT, for
each Standard Service (other than a
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Competitive Standard Service), the charge
fixed by BT for each such Standard Service;
and
in the case of charges payable to the
Operator, for each service provided by the
Operator to BT, the charge fixed by the
Operator for each such service;
"PRS" OR "PREMIUM RATE SERVICE"
an entertainment or information service:
(a) which is accessed by means of a
Call and consists of, or includes
the sending of, speech, music,
other sounds or signals to the
Calling Party; and
(b) for which payment is made by means
of Call charges;
"PRS FRAUD"
either:
a loss suffered by the Operator because of
the non payment of charges for BT PRS Calls,
in circumstances when the BT PRS Service
Provider or the BT PRS Sub Service Provider
organises or arranges for BT PRS Calls to be
made to his PRS in circumstances when there
is a reasonable expectation that the Calling
Party or the person responsible for payment
does not intend to pay or will seek to avoid
payment for all or part of the Call charges;
or
a loss suffered by BT because of the non
payment of charges for Operator PRS Calls,
in circumstances when the Operator PRS
Service Provider or the Operator PRS Sub
Service Provider organises or arranges for
Operator PRS Calls to be made to his PRS in
circumstances when there is a reasonable
expectation that the Calling Party or the
person responsible for payment does not
intend to pay or will seek to avoid payment
for all or part of the Call charges;
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"PURCHASER"
the Party to whom Capacity is provided by
the Supplier;
"QUALITY SCHEDULE"
has the meaning in Condition 17C of the BT
Licence;
"QUARTER DAYS"
1 January, 1 April, 1 July and 1 October in
each and every year;
"RCU"
a remote concentrator unit supported by a BT
DLTE or a BT DLE;
"READY FOR SERVICE DATE"
the date on which testing of Capacity at a
Switch Connection is satisfactorily
completed and such Capacity is ready for
service (in accordance with this Agreement);
"READY FOR TEST DATE"
the date on which Capacity at a Switch
Connection is Ready for Testing;
"READY FOR TESTING"
when the Supplier has satisfactorily
completed the provisioning of that part of
an Interconnect Link that is under his
direct control;
"RECEIVING PARTY"
a Party receiving information from the
Disclosing Party;
"RELEASE SIGNAL"
a signal which indicates that the
transmission path of a Call has been
disconnected;
"RELEVANT CONNECTABLE SYSTEM"
has the meaning in Condition 13.9 of the BT
Licence;
"REMOTE SWITCH CONNECTION"
a BT Switch Connection or an Operator Switch
Connection which:
(a) is accessed via a BT or Operator
building notified from time to time
pursuant to paragraph 3 of Annex A
as being suitable for supporting
IECs; and
(b) is connected by an BT IEC or an
Operator IEC, as the context
requires;
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"REVIEW DATE"
a date referred to by that name in this
Agreement or in a Schedule which entitles
either Party to serve a review notice
seeking to amend the charges referred to in
the Carrier Price List or in that Schedule;
"ROUTE AUGMENTATION"
additional Capacity on an established
Traffic Route;
"ROUTE TYPE"
the segregation of Capacity within a Traffic
Route for the conveyance of certain Traffic
Types;
"SCHEDULE"
a schedule in Annex C of this Agreement;
"SDH"
synchronous digital hierarchy;
"SIGNALLING LINK"
a 64 Kbit/s digital path within a 2 Mbit/sec
Interconnect Link between two ITU-T 7
signalling nodes which is used for
signalling;
"SIGNALLING LINK SET"
a pair of Signalling Links each within a
separate 2 Mbit/s system on an Interconnect
Link;
"SPECIFICATION"
one of the Generic Electrical and Physical
Interface Specification, the Generic C7
Signalling Interface Specification, the
Generic Transmission Interface Specification
and the Generic SDH Interface Specification;
"STANDARD SERVICE"
a service, including, without limitation, a
Competitive Standard Service, which a
Network Provider has required from BT and
which BT is obliged to provide, or to enter
into an agreement to provide, under
Condition 13 of the BT Licence;
"SUBSIDIARY"
has the meaning in sections 736 and 736A of
the Companies Act 1985;
"SUPPLIER"
the Party providing Capacity to the other
Party;
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"SWITCH"
telecommunication apparatus within a System
which performs the function of switching and
routing Calls;
"SWITCH CONNECTION"
a BT Switch Connection or, as the context
requires, an Operator Switch Connection;
"SYSTEM"
the BT System or, as the context requires,
the Operator System;
"SYSTEM ALTERATION"
a change (other than a Data Management
Amendment) to a Party's System, which
requires a change to be made to the other
Party's System to allow the continuance of
the conveyance of Calls across a Point of
Connection pursuant to this Agreement;
"TARGET PERFORMANCE"
has the meaning in Condition 17C of the BT
Licence;
"TECHNICAL MASTER PLAN"
a document recording details of the Points
of Connection and the plans for development
of further Points of Connection;
"TECHNICAL REVIEW MEETING"
a technical meeting pursuant to paragraph 13
of Annex A;
"TELECOMMUNICATION SYSTEM"
a telecommunication system within the United
Kingdom as defined in section 4 of the Act
or an Authorised Overseas System;
"THIRD PARTY"
a person other than BT or the Operator;
"THIRD PARTY INTERCONNECT"
interconnect using a Third Party ISI
Interconnect Link;
"THIRD PARTY INTERCONNECT
AGREEMENT"
either:
(a) an agreement between BT and a Third
Party Operator pursuant to
Condition 13 as it applies from
time to time of the BT Licence or
the equivalent Condition of the
Third Party Operator licence; or
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(b) an agreement between the Operator
and a Third Party Operator pursuant
to the Condition equivalent to
Condition 13 of the BT Licence
contained in either the Operator or
Third Party Operator licences;
"THIRD PARTY ISI INTERCONNECT LINK"
an Interconnect Link as defined in Schedule
01;
"THIRD PARTY OPERATOR"
a person being neither the Operator nor BT
who is licensed under the Act to run a
Relevant Connectable System;
"TIBS"
BT's Telecommunications Input Billing
System, which records information on certain
Calls which use the services of a BT
Operator or the operator of a Third Party;
"TIBS BILLING INFORMATION
AND REFUND REPORT"
reports in the same or substantially the
same form as in the Billing Manual;
"TIBS INFORMATION"
itemised Call records of the services
provided by BT Operators or the operator of
a Third Party to the Operator which would
have resulted in a charge from BT had the
Calling Parties been BT Customers, together
with reports relating to Transfer Charge
Calls, ineffective calls, and any other
records which will result in charges to be
paid by or to the Operator for such
services;
"TRAFFIC FORECAST"
a forecast of traffic at a BT Switch
Connection or Operator Switch Connection,
such forecast provided by one Party to the
other pursuant to paragraph 8 of Annex A;
"TRAFFIC ROUTE"
discrete and identifiable units of 2 Mbit/s
Capacity within an Interconnect Link;
"TRAFFIC STREAM"
a group of Calls carried from a specific
place in one Party's System to a specific
place in the other Party's System;
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"TRAFFIC TYPE"
a different identifiable type of Call;
"TRANSFER CHARGE CALL"
a Call for which the Called Party is
requested and agrees to pay the cost of a
Call from the Calling Party;
"VAT"
United Kingdom Value Added Tax;
"WEEKEND"
period of time between 2400 on Friday and
2400 on Sunday or such other period of time
as shall be agreed between the Parties;
"WORKING DAY"
any day other than Saturdays, Sundays,
public or bank holidays in the United
Kingdom.
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ANNEX C
INDEX
SCHEDULE
NUMBER TITLE
<TABLE>
<S> <C>
JOINT SERVICES
01 In-span Interconnect (ISI), Third Party ISI & Interconnect
Extension Circuits
04 Number Portability
05 Reciprocal Ring Back When Free Service
BT SERVICES
101 BT Telephony Calls to the BT System
102 BT Transit Calls via the BT System
103 BT Operator to Operator Transit Calls via the BT System
104 BT International Outgoing Calls to Authorised Overseas Systems
via the BT System
110 Freefone(TM) 0800 Calls
111 Lo-Call(TM) 0345 Calls
112 BT Premium Rate Service Calls
116 National Call(TM) 0990 Calls
117 Phone Base(TM) Calls
118 BT Timeline(TM) Service
120 National Operator Assistance Service
121 Directory Enquiry Service
122 International Operator Assistance Service
123 International Directory Enquiry Service
124 Emergency Service
125 Emergency Service (including Post Code allocation for Fixed
Emergency Calls)
126 Radiotelephone Calls
130 Customer Sited Interconnect
140 Data Management Amendments
150 Entries in BT's Number Information System (NIS) and Phone
Books
152 Supply of BT Phone Books
</TABLE>
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<TABLE>
<S> <C>
153 Supply of Customised Telephone Directories
154 Licence to Use the BT's NIS Database
155 Accesss to the BT DAS Database using Operator Services
Customer Access and Security System (OSCASS)
OPERATOR SERVICES
541 Operator Telephony Calls to the Operator System
545 Operator International Incoming Calls from Authorised Overseas
Systems via the BT System handed over to the Operator System
546 Operator BT to BT Transit Calls (Ported) via the Operator System
</TABLE>
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ANNEX C
SCHEDULE 01
IN SPAN INTERCONNECT (ISI), THIRD PARTY ISI
& INTERCONNECT EXTENSION CIRCUITS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
<TABLE>
<S> <C>
"2MBIT/S ISI INTERCONNECT LINK" an Interconnect Link comprising a 2Mbit/s
path (within an ISI Interconnect Link), two
Intrabuilding Links, Multiplexor service and
as appropriate, a Signalling Link and/or one
or two Interconnect Extension Circuits;
"ADDITIONAL LINK" a Link, being part of an Interconnect Link,
between a Third Party Operator building, and
an Operator building, or (as the context
requires), a BT building;
"EXISTING LINK" an ISI Interconnect Link between BT and a
Third Party Operator;
"PATH PROTECTION" the facility of two transmission paths
providing a particular ISI Interconnect Link
whereby the failure of one transmission path
causes the transmission of the ISI
Interconnect Link to switch to the
alternative;
"THIRD PARTY ISI INTERCONNECT LINK" an ISI Interconnect Link comprising an
Additional Link and an Existing Link.
</TABLE>
2. DESCRIPTION OF SERVICE
2.1 This Schedule applies to the joint provision by the Parties of
In span Interconnect and/or Third Party ISI Interconnect
Links, the provision by either Party of an IEC and the
provision by BT of Path Protection.
2.2 In span Interconnect (ISI) is the provision jointly by each
Party of an Interconnect Link by the provision of an ISI
Interconnect Link and 2Mbit/s ISI Interconnect Links, such
Link having its Point of Connection on the
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public highway or, subject to the Parties' agreement, on a
prospectively maintainable public highway, with portion of the
Interconnect Link being provided by each Party on its side of
the Point Of Connection.
2.3 For the purposes of this Schedule, "unidirectional Calls"
shall be those Calls for which a Party has responsibility
pursuant to paragraph 5.1.3 of Annex A.
3. GENERAL
3.1 Upon a Party's (the requesting Party) request, the other Party
shall, in accordance with the provisions of this Schedule and
Annex A, provide the relevant portion of the ISI Interconnect
Links using either SDH or PDH technology (subject to that
other Party supporting the technology).
3.2 The Point of Connection of an ISI Interconnect Link is the
point where a Party's duct is joined to the wall of the other
Party's jointing chamber.
3.3 The Point of Connection of an ISI Interconnect Link or a Third
Party ISI Interconnect Link shall not be located at such
distance from the other Party's Switch Connection that signal
regeneration is required to be carried out by such other
Party.
3.4 Forecasting, technical interfaces and their application,
provisioning leadtimes and test procedures are specified in
Annex A.
4. PROVISION OF IN-SPAN INTERCONNECT ("ISI")
4.1 A Party (the requesting Party) may request an Interconnect
Link to convey Calls (a) from the requesting Party's System;
or (b) both to and from its System.
4.2 The Parties shall agree the number of pairs of fibres to be
equipped within the ISI Interconnect Links to take account of
the forecast requirement for 2Mbit/s ISI Interconnect Link.
The Parties shall co-operate to ensure that the capacity of
the ISI Interconnect Link is augmented from time to time to
meet both Parties' forecast transmission capacity
requirements.
4.3 Procedures for the installation of the Interconnect Link and
of the 2Mbit/s ISI Interconnect Links are described in the
Provisioning Manual and ongoing maintenance arrangements are
described in the Operations and Maintenance Manual.
4.4 2Mbit/s ISI Interconnect Links shall be ordered in accordance
with Annex A. The timescales for the provision of 2Mbit/s ISI
Interconnect Links are detailed in paragraph 11 of Annex A.
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4.5 The requesting Party shall nominate the other Party's Switch
Connection in accordance with the provisions of Annex A.
4.6 The ISI Interconnect Link shall be established by the
requesting Party installing its cable to the other Party's
jointing chamber (at, subject to paragraphs 4.7 and 4.10, a
precise physical location agreed between the Parties) where it
shall be:
4.6.1 jointed to the other Party's cable in the jointing
chamber; or
4.6.2 handed over to the other Party to be drawn by the other
Party into:
(a) that other Party's building, (which shall be the
building housing the Switch Connection, (except if
an IEC is provided under paragraph 7, when the other
Party's building is ascertained pursuant to
paragraph 7.4)); or
(b) another jointing chamber,
if the requesting Party's cable meets the standard specified
in the Operational Provisioning Manual
4.7 If, pursuant to paragraphs 4.10.2 and/or 4.11, the Parties
locate the jointing chamber at a distance which is greater
than 100 Metres from the other Party's curtilage of the
building housing the LTE of the ISI Interconnect Link, the
requesting Party shall pay for:
4.7.1 duct charges (if any); and
ISI Interconnect Link rental charges on the distance which
is more than 100 metres from the other Party's curtilage
aforesaid
subject to the provisions of paragraph 11.4, in accordance
with the relevant charges specified from time to time in the
Carrier Price List.
4.8 Subject to paragraphs 4.7 and 4.10:
the jointing chamber for an ISI Interconnect Link shall be
provided, owned and maintained by the other (i.e. the non
requesting Party) Party at its own expense; and
4.8.2 each Party will provide, own, maintain and be responsible
for all ducting, plant and equipment and will bear its own
costs for the ducting, cabling and maintenance of the ISI
Interconnect Link on its side of the Point of Connection;
and
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4.8.3 if continuous cable is used, the requesting Party hereby
agrees that ownership of that part of the cable on the
other Party's side of the Point of Connection passes to the
other Party.
ISI INTERCONNECT LINKS FOR BOTH PARTIES
4.9 If the requested ISI Interconnect Link is to contain 2Mbit/s ISI
Interconnect Links conveying unidirectional traffic in different
directions the Parties shall, not more than 20 Working Days from
the date of written request, endeavour to agree the location of
the jointing chamber required for the Point of Connection.
4.10 If pursuant to paragraph 4.9 the Parties fail to reach agreement:
4.10.1 a Party may request an ISI Interconnect Link to convey
unidirectional Calls from the requesting Party's System; or
4.10.2 the requesting Party may nominate the location of the
jointing chamber required for the Point of Connection and
if such nomination is agreed, the requesting Party shall
pay the charges specified from time to time in the Carrier
Price List being the charges in respect of (a) an ISI
Interconnect Link, (b) duct, (c) bothway Signalling Link
Set and (d) each 2Mbit/s ISI Interconnect Link
and if not later than 20 Working Days from the date of such
written request no agreement is reached on the location of the
jointing chamber, either Party may notify a Dispute.
ISI INTERCONNECT LINKS FOR ONE PARTY
4.11 Unless otherwise agreed, if the requested ISI Interconnect Link is
to convey unidirectional Calls from the requesting Party's System:
4.11.1 the location of the jointing chamber required for the Point
of Connection for such ISI Interconnect Link shall be on
the public highway immediately outside the curtilage of the
building referred to in paragraph 4.6.2;
4.11.2 the requesting Party shall pay the Charges specified from
time to time in the Carrier Price List being the charges in
respect of (a) an ISI Interconnect Link, (b) duct, (c)
unidirectional Signalling Link Set and (d) each 2 Mbit/s
ISI Interconnect Link.
5. PATH PROTECTION REQUESTED BY THE OPERATOR
5.1 For an ISI Interconnect Link the Operator may request, and BT
shall provide, Path Protection using:
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(a) a single BT jointing chamber with a single cable and two
separate pairs of fibre in that cable; or
(b) a single BT jointing chamber with two separate cables; or
(c) two separate BT jointing chambers with two separate cables
into those BT jointing chambers; and
a suitable transmission switching mechanism, as described in Annex
A, without a change to the cable or cables connected to the Switch
Connection.
5.2 If the Operator requests Path Protection using two jointing
chambers BT shall endeavour to use a suitable existing jointing
chamber (the "protection jointing chamber").
5.3 If a suitable protection jointing chamber cannot be identified or
used, at the Operator's request BT shall provide a written
quotation for the installation by BT of the protection jointing
chamber.
5.4 If the quotation referred to in paragraph 5.3 is accepted, BT
shall install the protection jointing chamber for the second
cable.
5.5 For the avoidance of doubt, the protection jointing chamber shall
be installed, owned and maintained by BT.
6. PROVISION OF THIRD PARTY ISI
6.1 Subject to an Interconnect Link having been provided pursuant to
this Agreement, a Party (the requesting Party) may, pursuant to
the terms of this Schedule, request, and the other Party shall,
subject to the provisions of this Schedule, agree to the
installation of a Third Party ISI Interconnect Link.
6.2 2Mbit/s ISI Interconnect Links provided pursuant to this paragraph
6 shall be ordered in accordance with Annex A. The timescales for
the provision of 2 Mbit/s Interconnect Links are detailed in Annex
A.
6.3 The requesting Party shall obtain agreement of the Third Party
Operator to use an Existing Link as part of the Third Party ISI
Interconnect Link.
6.4 The requesting Party shall provide and/or procure the provision
and maintenance of the Additional Link, whether by the Third Party
Operator or, if the requesting Party is the Operator, and subject
to contract, by BT.
6.5 The other Party shall assume no obligation under this Agreement
for the Existing Link. In particular, but without limitation, the
other Party shall
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have no liability to the requesting Party if the Existing Link be
taken out of operation in accordance with the Third Party
Interconnect Agreement.
6.6 The requesting Party shall:
6.6.1 comply with the provisions of paragraphs 3 and 4 above, as if
the Additional Link was provided by the requesting Party under
paragraph 4; and
6.6.2 ensure that sufficient arrangements are in place between the
requesting Party and the Third Party Operator to enable the
requesting Party so to comply; and
6.6.3 have no obligation to the other Party for the Existing Link
save as expressly provided in this Agreement.
6.7 The Third Party ISI Interconnect Link shall, for the purposes of
the respective rights and obligations of the Parties under this
Agreement be deemed to be an ISI Interconnect Link and that
portion on the Operator's side of the Point of Connection shall be
deemed a part of the requesting Party's System. This provision
shall not be construed to extend the area covered by the
requesting Party's System beyond the boundaries set out in that
Party's Licence.
7. PROVISION OF INTERCONNECT EXTENSION CIRCUITS ("IECS")
7.1 In accordance with this paragraph 7, a Party may request, and the
other Party shall provide, an Interconnect Extension Circuit, from
a building referred to in Appendix A of Annex A to a Remote Switch
Connection.
7.2 IECs shall comply with the Specifications applicable to the
provision of Links. A Party shall provide IECs with, at its
absolute discretion, either PDH or SDH technology.
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7.3 The following table specifies the available connections for BT
IECs from particular ISI termination points:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
ISI link DLE serving Parent BT Dependent Tandem
terminating the Operator Exchange DLE Exchange not
point Licensed (Notes 2 being a Parent
Area (Notes 1 and 3) BT Exchange
and 3)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BT DLE No Yes Not No
Applicable
------------------ ------------------ --------------- --------------- -------------------
BT DLTE Yes Yes Yes No
------------------ ------------------ --------------- --------------- -------------------
BT Tandem Yes Yes Yes No
Exchange
------------------ ------------------ --------------- --------------- -------------------
BT Yes Yes Not Applicable No
transmission
node
------------------ ------------------ --------------- --------------- -------------------
</TABLE>
Note 1: Provided that the BT DLE:
(a) is located in the same or Adjacent BT Charge
Group to the Point of Connection; and
(b) supports BT Customers in the Operator
Licensed Area; and
(c) has an existing direct Traffic Route with
that termination point. (Not applicable where
the ISI Link termination point is a BT
transmission node).
Note 2: The Parent BT Exchange must have a direct
connection to a DLE serving the Operator Licensed
Area and that DLE must be located in the same or
adjacent charge group to the Point of Connection.
Note 3: For the purpose of the provision of IEC's only,
the Operator Licensed Area shall include any areas
notified to BT in writing, which are continuous
geographical areas (or areas that would be
continuous but for separation by a tract of water no
more than 8 Kilometres wide), which are subject to
Third Party Operator Licences and where the Third
Party Operators are Associated Companies of the
Operator.
7.4 Operator IECs shall be available between any building referred to
in Appendix A of Annex A to a Remote Switch Connection.
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7.5 Subject to the provisions of Annex A, if the transmission capacity
at a building is exhausted and additional capacity for an IEC is
requested by a requesting Party, the other Party shall use its
reasonable endeavours to provide the additional capacity as soon
as reasonably practicable and shall notify the requesting Party of
the anticipated date of such provision.
7.6 If a Party notifies the other Party pursuant to paragraph 3 of
Annex A that a building is no longer available for establishing
IECs to Remote Switch Connections, the other Party may continue to
order IECs from that building for the then current ACO Period
under the then current Advance Capacity Order or such longer
further period as the Parties may agree in writing. Thereafter the
first Party shall not be obliged to provide an additional IEC from
that building.
8. SIGNALLING
8.1 When ordering, for the first time, 2Mbit/s ISI Interconnect Links
between a specific BT Switch Connection and a specific Operator
Switch Connection the Requesting Party shall order a Signalling
Link Set and specify the Route Type(s).
8.2 The Requesting Party shall order an additional Signalling Link Set
if the total number of 2Mbit/s ISI Interconnect Links in an ISI
Interconnect Link exceed 40 or multiples of 40.
8.3 An order for a Signalling Link Set shall include an order for two
Intrabuilding Links.
9. ROUTE TYPES
9.1 Each Traffic Route is provided with a Route Type. Where a Party
orders an additional Route Type it shall specify the required
Traffic Type.
10. REARRANGEMENTS
10.1 The requesting Party may request in accordance with Annex A the
rearrangement of Intrabuilding Links on its side of the Point of
Connection or in the building housing the other Party's Switch
Connection.
11. CHARGING
11.1 Subject to the provisions of this paragraph 11 for each provision
by one Party to the other of ISI Interconnect Links, 2Mbit/s ISI
Interconnect Links and associated works (including the Multiplexor
service and IECs), the requesting Party shall pay to the other
Party the appropriate charges specified from time to time in the
Carrier Price List.
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11.2 The connection and rental charges shall be due on the earlier of
the relevant Ready for Service Date and 30 days after the relevant
Ready for Testing date. Subsequent rental charges shall be payable
in accordance with the periodicity specified from time to time in
the Carrier Price List.
11.3 In addition to the charges specified from time to time in the
Carrier Price List, each Party shall, if applicable, make the
additional payments specified in Appendix C of Annex A.
11.4 Rental for an ISI Interconnect Link shall be payable according to
the following table:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
CLASSIFICATION OF ISI RENTAL PAYABLE
INTERCONNECT LINK
----------------------------------------------------------------------------
<S> <C>
Unidirectional Call As set down in the Carrier Price List
Conveyance (Note 1) (Note 2).
(paragraph 4.11.2)
----------------------------------------------------------------------------
Bothway Call Conveyance None payable.
(Agreed Location (Note 1)
(paragraph 4.7)
----------------------------------------------------------------------------
Bothway Call Conveyance R = P x A
(Location not agreed but
nominated) (Note 1)
(paragraph 4.10.2) Where:
"R" is the rental payable, "P" is the
rental price set down in the Carrier Price
List (Note 2), and "A" = B
-
C
Where: "B" is the number
of 2Mbit/s ISI
Interconnect Links
conveying the Calls of
the Party who requested
the ISI Interconnect Link
(Note 1); and "C" is the
total number of 2Mbit/s
ISI Interconnect Links
provided on that ISI
Interconnect Link.
----------------------------------------------------------------------------
</TABLE>
Note 1: For the purpose of this table, Route Types
involving the conveyance of Calls to one Party, when
those Calls are deemed to be that Party's Calls (by
way of example Indirect Access Calls), shall not be
taken into consideration when determining ISI
Interconnect Link classification.
Note 2: In this Schedule references to the charges
specified in the Carrier Price List are those
specified from time to time.
11.5 An Intrabuilding Link charge applies to each order for a 2Mbit/s
ISI Interconnect Link. If an Intrabuilding Link contains a
Signalling Link which
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supports unidirectional traffic the charge for that Intrabuilding
Link is included in the Signalling Link Set charge.
11.6 There are two different Signalling Link Set charges in respect of
an ISI Interconnect Link, namely, a charge for such a Link
conveying unidirectional traffic (including Indirect Access Calls,
notwithstanding such Calls being conveyed in the opposite
direction,) and a charge for such a Link carrying bothway traffic.
11.7 The Signalling Link Set charge includes one single Route Type.
Charges for additional Route Types are payable as specified from
time to time in the Carrier Price List.
11.8 A Multiplexor service charge applies to each order for a 2Mbit/s
ISI Interconnect Link.
11.9 The IEC charge applies to each order for a 2Mbit/s ISI
Interconnect Link, which order includes an IEC. The requesting
Party shall pay the charges for the provision of an IEC.
PATH PROTECTION PROVIDED BY BT
11.10 Subject to the following paragraphs, the Path Protection charges
shall be the sum of the relevant charges specified from time to
time in the Carrier Price List.
11.11 Charges for Path Protection shall be the sum of the following
relevant component charges:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
PATH PROTECTION
--------------------------------------------------------------------------------------
Type of Component Single Cable Two Cables Single Two Cables
Technology Chargeable Single Jointing Jointing Chamber Two Jointing
Chamber Chambers
<S> <C> <C> <C> <C>
----------------- ---------------- ------------------ ------------------- ---------------
PDH A YES YES YES
----------------- ---------------- ------------------ ------------------- ---------------
B n/a n/a YES(1)
----------------- ---------------- ------------------ ------------------- ---------------
C n/a n/a YES
----------------- ---------------- ------------------ ------------------- ---------------
D n/a YES YES
----------------- ---------------- ------------------ ------------------- ---------------
E n/a YES(2) YES(2)
----------------- ---------------- ------------------ ------------------- ---------------
SDH A n/a n/a n/a
----------------- ---------------- ------------------ ------------------- ---------------
B n/a n/a YES
----------------- ---------------- ------------------ ------------------- ---------------
C n/a n/a YES
----------------- ---------------- ------------------ ------------------- ---------------
D n/a YES YES
----------------- ---------------- ------------------ ------------------- ---------------
E n/a YES(2) YES(2)
----------------- ---------------- ------------------ ------------------- ---------------
</TABLE>
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Note 1 Only charged if required under paragraph 5.3
Note 2 Two splices may be required.
Where:
<TABLE>
<CAPTION>
----------------- ------------------------------------------
Component Charge
----------------- ------------------------------------------
<S> <C>
A = transmission switching equipment
B = second (protection) jointing chamber
C = duct
D = cable
E = cable splice
----------------- ------------------------------------------
</TABLE>
11.12 Each cable splice required for the provision of Path Protection
has a separate charge.
11.13 Connection and rental charges shall be payable for each ISI
Interconnect Link used for Path Protection. Rental shall be
payable for a minimum of 12 months. Subject to payment being made
for the then current minimum period of 12 months, rental charges
shall be payable until the Operator requests BT in writing to
cease that Path Protection.
11.14 If the Operator requests Path Protection on a particular ISI
Interconnect Link and:
(a) the ISI Interconnect Link is the sole Interconnect Link
between the specific BT Switch Connection and the specific
Operator Switch Connection; and
(b) there is no other Interconnect Link between that specific
Operator Switch Connection and any other BT Switch
Connection;
no charge for Path Protection on that particular ISI Interconnect
Link shall be payable by the Operator while BT uses that ISI
Interconnect Link as the sole Interconnect Link to convey Calls to
that specific Operator Switch Connection.
11.15 If one or more of the conditions of paragraph 11.14 cease to
apply, the rental charges specified from time to time in the
Carrier Price List for the particular ISI Interconnect Link will
be payable pursuant to paragraph 11.13.
12. REVIEW
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12.1 The Review Date for Operator prices under this Schedule shall be 1
April each year.
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APPENDIX 01.1
IN-SPAN INTERCONNECT AND
INTERCONNECT EXTENSION CIRCUITS
[GRAPHIC OMITTED]
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APPENDIX 01.2
THIRD PARTY INTERCONNECT
[GRAPHIC OMITTED]
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ANNEX C
SCHEDULE 04
NUMBER PORTABILITY
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"CENTREX" a partition of an Exchange used to provide
business features and short code dialling as
required by Customers;
"DDI" direct dialling in;
"DONOR" the Party from whose System the Number is
being ported;
"DONOR SYSTEM" the System from which the Number is being
ported;
"NP AREA" such area as has been agreed in writing by
the Parties in which Number Portability will
be carried out;
"NUMBER" shall have the meaning ascribed thereto in
Condition 34B of the BT Licence and for the
purposes of this Agreement there shall be
excluded Numbers allocated to ISDN exchange
lines, and to Number Groups used for
Centrex, DDI private branch exchange or
other private branch exchange purposes;
"NUMBER GROUP" a range of consecutive Numbers used as a
group by a Party for certain functional or
Customer purposes;
"NUMBER PORTABILITY" an arrangement between the Parties whereby a
Customer ceases to be provided with a
Network Termination Point by the Donor
System and such Customer (at the same
address and at the same set of premises) is
provided with a Network
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Termination Point by the Recipient System,
such Network Termination Point having the
same Number as had the Network Termination
Point ceased on the Donor System;
"PORTED NUMBER NTP" a Network Termination Point on the Recipient
System being a Network Termination Point to
which a Number has been ported;
"RECIPIENT" the Party to whose System the Number is
being ported;
"RECIPIENT SYSTEM" the System to which the Number is being
ported.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, the Parties shall
provide Number Portability in the NP Area in accordance with the
Number Portability End to End Process Manual ("Manual") as agreed
in writing from time to time by the Parties.
2.2 Pursuant to this Schedule and subject to the Parties having
successfully completed planning studies in accordance with the
Manual the Parties shall provide Number Portability in the NP
Area.
2.3 For the avoidance of doubt, the Parties acknowledge that the
provision of Number Portability to Customers pursuant to this
Schedule applies only to those Customers who remain at the same
address and at the same set of premises.
2.4 Neither Party shall be obliged to offer Number Portability to the
other Party's Customers who have an exchange line connected to the
other Party's Exchange which Exchange has not been approved under
the Manual by such other Party for Number Portability.
2.5 If a Customer having a Ported Number NTP changes address or ceases
service with the Recipient System it is agreed that the Ported
Number of the Ported Number NTP shall revert to the Donor for use
in the Donor's System.
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2.6 The Parties agree that the Calls handed over from each other to
Ported Number NTPs shall be conveyed in accordance with one or
more of the Schedules listed in Appendix 04.1.
2.7 Each Party shall correct faults which occur in its System which
affect the conveyance of Calls to Ported Number NTPs in accordance
with such Party's normal engineering practices. For the avoidance
of doubt, neither Party warrants that its System is, or will be,
free from faults.
2.8 Notwithstanding the provisions of paragraph 1.4 of the main body
of this Agreement the Parties agree that for the purposes of the
provision of Number Portability Sections 2, 3 and 5.1 to 5.5
(inclusive) of the Manual Issue 2.0 dated 16/04/96 shall be
legally binding. The other provisions of the Manual shall not be
legally binding.
2.9 For the purposes of the provision of Number Portability, Schedule
140 (Data Management Amendments) shall be deemed to be amended by
the addition of a further entry to paragraph 2.6.1 thereof,
namely: "route Calls to Ported Number NTPs as defined in Schedule
04 (Number Portability)."
3. ROUTING
3.1 The conveyance of Calls to Ported Number NTPs shall be in
accordance with the routing principles specified in Annex A and
the Manual.
4. CHARGING
4.1 The Parties agree, for the conveyance of Calls handed over from
each other to Ported Number NTPs, to pay a charge in accordance
with one or more of the Schedules listed in Appendix 04.1.
4.2 For the avoidance of doubt, all charges pursuant to the Schedules
listed in Appendix 04.1 of this Schedule shall be ascertained and
paid for by the Parties in accordance with such Schedules in
addition to such other charges as may be payable pursuant to this
Schedule.
4.3 The Parties shall pay the charges at the rates for Number
Portability specified from time to time in the Carrier Price List.
5. REVIEW
5.1 The Review Date for charges under paragraph 4.3 of this Schedule
shall be 1 April each year.
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APPENDIX 04.1
The telephony conveyance Schedules referred to in paragraphs 2.6, 4.1 and 4.2 of
this Schedule are:
Schedule Number: Title:
- ---------------- ------
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BT STANDARD INTERCONNECT AGREEMENT
SCHEDULE 05
RECIPROCAL RING BACK WHEN FREE SERVICE
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"RING BACK WHEN FREE SERVICE" a service offered by one Party to
its Customers, whereby a Calling
Party calling from the number of
a Customer of such service and
who in attempting to set up a
Call to a Called Party on the
other Party's System receives
line busy engaged tone, is then
able to initiate the later
automatic set-up by the network
of a subsequent Call to that
Called Party once the Called
Party's exchange line becomes
free;
"RING BACK WHEN FREE SPECIFICATION" Specification PNO-ISC/INFO/004
Section 5 Issue 1 Draft E dated
February 1996 as updated from
time to time.
"VIRTUAL CALL" a Message using the C7IUP
Enveloped Digital Private Network
Signalling System protocol (using
the Nodal End to End Data
Messages) specified in the Ring
Back When Free Specification.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, each Party shall carry
out its obligations under this Schedule in order that the other
Party may provide a Ring Back When Free Service to its Customers.
2.2 Each Party shall convey a Virtual Call in connection with a Ring
Back When Free Service in accordance with Annex A and the Ring
Back When Free Specification.
2.3 Any necessary technical requirement for the Ring Back When Free
Service shall be agreed by the Parties before either Party shall
be obliged to convey any Virtual Call under paragraph 2.2.
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2.4 For the avoidance of doubt, the Parties agree that
2.4.1 any Call attempt under which a Calling Party receives the line
busy engaged tone, and
2.4.2 any successful Call which may be established as a result of the
Ring Back When Free Service
shall be conveyed in accordance with Schedule 101 or the
equivalent Schedule for Operator Telephony Calls to the Operator
System, as appropriate.
2.5 Each Party accepts that the other Party shall not be obliged to
convey a Virtual Call under paragraph 2.2 if the exchange line of
the Called Party is not one in respect of which such other Party
provides or would be able to provide a Ring Back When Free Service
to such Called Party as its Customer.
2.6 Each Party shall undertake the obligations under this Schedule
during those periods of time and at the same standard and quality
of service as such Party undertakes for the Customers of its own
Ring Back When Free Service.
2.7 Each Party shall correct faults which occur in its System which
affect its obligations under this Schedule in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
2.8 Each Party shall include Virtual Calls generated by its Ring Back
When Free Service in its Traffic Forecasts referred to in Annex A.
3. ROUTING
3.1 The conveyance of a Virtual Call between the Parties shall be in
accordance with the routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of a Virtual Call by BT, the Operator shall pay
BT a charge calculated in accordance with the rate for such a Call
specified from time to time in the Carrier Price List.
4.2 For the conveyance of a Virtual Call by the Operator, the BT shall
pay the Operator a charge calculated in accordance with the rate
for such a Call specified from time to time in the Carrier Price
List.
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5. COMMENCEMENT DATE
5.1 Each Party shall commence to undertake its obligations under this
Schedule on a date to be agreed in writing by the Parties.
6. REVIEW
6.1 The Review Dates for the charges payable under this Schedule shall
be 1 April each year.
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ANNEX C
SCHEDULE 101
BT TELEPHONY CALLS TO THE BT SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"ADC CALL CATEGORY" one of Local ADC, National ADC or
International ADC, as appropriate;
"BT DOUBLE PLUS TANDEM a BT Telephony Call handed over from the
SEGMENT CALL" Operator System to the BT System, initially
switched by a BT Tandem Exchange, thereafter
switched by one or more other BT Tandem
Exchanges, and passed to a BT ALE or BT DLE
for delivery to a BT Network Termination
Point;
"BT LOCAL EXCHANGE SEGMENT CALL" a BT Telephony Call handed over from the
Operator System to the BT System at a BT
DLE, for delivery to a BT Network
Termination Point other than via a BT Tandem
Exchange;
"BT SINGLE TANDEM SEGMENT CALL" a BT Telephony Call handed over from the
Operator System to the BT System, initially
switched by a BT Tandem Exchange, and passed
to a BT ALE or BT DLE for delivery to a BT
Network Termination Point;
"INTERNATIONAL ADC" contributions towards BT's Access Deficit
that apply to Calls handed over from the
Operator System ("actual Calls") where, if
Calls (other than Indirect Access Calls)
were conveyed in the opposite direction
(whether or not by the Operator System),
between the same originating and terminating
points as those actual Calls ("reverse
Calls"), such reverse Calls would
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be classified as international calls in the
BT Retail Price List;
"LOCAL ADC" contributions towards BT's Access Deficit
that apply to Calls handed over from the
Operator System ("actual Calls") where, if
Calls (other than Indirect Access Calls)
were conveyed in the opposite direction
wholly within the BT System between the same
originating and terminating points (Calls
made or received on mobile terminal
apparatus for this purpose being treated as
originating or terminating at the relevant
wireless telegraphy station carrying the
Call) as those actual Calls ("reverse
Calls"), such reverse Calls would be
classified as local calls in the BT Retail
Price List;
"NATIONAL ADC" contributions towards BT's Access Deficit
that apply to Calls handed over from the
Operator System ("actual Calls") where, if
Calls (other than Indirect Access Calls)
were conveyed in the opposite direction
wholly within the BT System between the same
originating and terminating points (Calls
made or received on mobile terminal
apparatus for this purpose being treated as
originating or terminating at the relevant
wireless telegraphy station carrying the
Call) as those actual Calls ("reverse
Calls"), such reverse Calls would be
classified as national calls in the BT
Retail Price List.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey BT
Telephony Calls handed over from the Operator System to the
appropriate BT Network Termination Point.
2.2 BT International Incoming Calls, BT Transit Calls, BT Operator to
Operator Transit Calls and Calls to Ancillary Services are not
conveyed pursuant to this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
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2.4 BT's obligation to convey BT ISDN Telephony Calls is subject to
the respective Systems and all relevant Switch Connections of both
Parties being suitable for the conveyance of BT ISDN Telephony
Calls.
2.5 BT shall not be obliged under this Schedule to make its System
suitable for the conveyance of BT ISDN Telephony Calls or to
provide equipment to its Customers enabling BT ISDN Telephony
Calls.
2.6 BT shall convey BT Telephony Calls during those periods of time
and at the same standard and quality of service as BT conveys
similar Calls.
2.7 Each Party shall correct faults which occur in its System which
affect the conveyance of BT Telephony Calls in accordance with
such Party's normal engineering practices. For the avoidance of
doubt, neither Party warrants that its System is, or will be, free
from faults.
3. ROUTING
3.1 The conveyance of BT Telephony Calls shall be in accordance with
the routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of each BT Telephony Call by BT, the Operator
shall pay BT a charge calculated in accordance with the rate for
such a Call specified from time to time in the Carrier Price List.
4.2 For the conveyance of each BT Telephony Call by BT, which is also
a Transfer Charge Call, BT shall pay the Operator a charge
calculated in accordance with the rate for such a Call specified
from time to time in the Carrier Price List, and the Operator
shall pay no charge to BT pursuant to paragraph 4.1.
5. CONTRIBUTIONS TO BT'S ACCESS DEFICIT
5.1 Subject to the provisions of this paragraph 5, the Operator shall
pay for each Call, a contribution to BT's Access Deficit at the
rate specified for the ADC Call Category specified from time to
time in the Carrier Price List. For these purposes, the ADC Call
Category shall be ascertained at the time when the Answer Signal
is generated.
5.2 If, prior to the date of the Agreement, either Party has requested
the Director General pursuant to Condition 13.5A of the BT Licence
to reduce the contribution to be made by the Operator towards BT's
Access Deficit, then payment of the contribution referred to in
such request shall be suspended until the Director General has
dealt with the request.
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5.3 If, following a request referred to in paragraph 5.2, the Director
General determines not to reduce the contribution or determines
that a partial contribution shall be payable by the Operator
towards BT's Access Deficit, such contribution shall be payable
accordingly with effect from the date of this Agreement. The
Operator shall pay any outstanding contribution not later than one
month after the date of such determination.
5.4 If, following a request referred to in paragraph 5.2, the Director
General determines that no contribution shall be payable by the
Operator towards BT's Access Deficit no such contribution shall be
payable under paragraph 5.1.
5.5 If the Director General at any time determines pursuant to
Condition 13.5A of the BT Licence that the contribution payable by
the Operator towards BT's Access Deficit should be varied or a
contribution becomes payable in accordance with Condition 13.5A of
the BT Licence then the Agreement shall be varied accordingly.
5.6 The Operator shall have no liability to pay a contribution to BT's
Access Deficit in respect of Calls which have originated on the
system of another licensed operator and are conveyed over the
Operator System to the BT System, provided that;
5.6.1 subject as provided in paragraph 5.6.4 below the Operator
shall not agree to convey over the Operator System to the BT
System Calls originated on the system of a Third Party
Operator or first conveyed in the UK by the system of a Third
Party Operator unless that operator shows to the Operator's
reasonable satisfaction that it has entered into an agreement
with BT to pay a contribution to BT's Access Deficit for all
Calls originated on the system of that Third Party Operator,
or first conveyed in the UK by the system of that Third Party
Operator, and conveyed to their ultimate destination by means
of the BT System (whether by direct connection between the
system of that Third Party Operator and the BT System or by
transit through any other system);
5.6.2 if the Director General (following notification from BT)
notifies the Operator that a Third Party Operator, having
entered into an agreement as described in paragraph 5.6.1
above, has failed to make a contribution to BT's Access
Deficit as required by that agreement and that all provisions
in that agreement for the resolution of disputes have been
exercised and have failed, then the Operator shall as quickly
as reasonably practicable cease to convey Calls originated on
the system of that Third Party Operator or first conveyed in
the UK by that operator's system to the BT System. The
Director General shall not notify the Operator pursuant to
this paragraph if, having heard representations from the
Third Party Operator concerned, he is satisfied that the
payment demanded by BT from the Third Party
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Operator has not been calculated in accordance with this
proviso, save that it shall be deemed to be conclusive proof
that the payment has been properly calculated if BT obtains
judgement in a court of competent jurisdiction for its
recovery as a debt and any appeal against that judgement has
been finally disposed of;
5.6.3 the Operator shall provide to BT at BT's expense such
information about those Calls described in paragraph 5.6.1 as
the Operator is practicably and rightfully able to provide
and as BT may reasonably require to calculate the amount of
contribution to the Access Deficit so payable. During such
time as the Operator is unable to provide a record of the
Calls described in paragraph 5.6.1, it shall provide
information to BT for the purposes of this paragraph on the
basis of a method of estimation determined by the Director
General after consulting with such other persons as he
considers appropriate;
5.6.4 the obligation of the Operator in paragraph 5.6.1 shall not
apply to Calls which the Director General has determined or
BT has agreed should not give rise to a contribution to BT's
Access Deficit by any such Third Party Operator and this
paragraph shall cease to apply if BT ceases to be entitled by
virtue of Condition 13 of the BT Licence to recover from the
Third Party Operator a contribution to its Access Deficit.
5.7 BT shall indemnify and keep indemnified the Operator against any
liability claim, loss or damage resulting from the Operator's
performance of obligation under paragraph 5.6.1 or 5.6 2 in
circumstances where in case of default or negligence of BT the
Operator would not have been so obliged to prevent or cease
conveyance of a Call emanating from the Third Party Operator.
5.8 The Parties agree that either Party may initiate a review of
paragraphs 5.6 and 5.7 pursuant to paragraph 19.1.3 of the main
body of the Agreement.
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ANNEX C
SCHEDULE 102
BT TRANSIT CALLS VIA THE BT SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT DOUBLE PLUS TANDEM TRANSIT CALL" a BT Transit Call, handed over
from the Operator System to the
BT System, initially switched by
a BT Tandem Exchange, thereafter
switched by one or more other BT
Tandem Exchanges, and handed
over from the BT System to a
Third Party Operator's system;
"BT SINGLE TANDEM TRANSIT CALL" a BT Transit Call, handed over
from the Operator System to the
BT System, initially switched by
a BT Tandem Exchange, with no
further switching by the BT
System, and handed over from the
BT System to a Third Party
Operator's system.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey a BT
Transit Call handed over from the Operator System to the Third
Party Operator's system, to the extent that a similar Call is
available to BT Customers.
2.2 BT Telephony Calls, BT International Outgoing Calls and BT
Operator to Operator Transit Calls are not conveyed pursuant to
this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 BT's obligation to convey BT ISDN Transit Calls is subject to any
Third Party Operator's system and the respective Systems and all
relevant Switch Connections of both Parties being suitable for the
conveyance of BT ISDN Transit Calls.
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2.5 BT shall convey BT Transit Calls during those periods of time and
at the same standard and quality of service as BT conveys similar
Calls.
2.6 Each Party shall correct faults which occur in its System which
affect the conveyance of BT Transit Calls in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
3. ROUTING
3.1 The conveyance of BT Transit Calls shall be in accordance with the
routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of each BT Transit Call by BT, the Operator
shall pay BT a charge calculated in accordance with the rate for
such a Call specified from time to time in the Carrier Price List.
If at the time when a BT Transit Call is conveyed by BT no rate
for such a Call is specified in the Carrier Price List the
Operator agrees to pay for such a Call at the rate which is
subsequently specified in the Carrier Price List.
4.2 For the conveyance of each BT Transit Call by BT, which is also a
Transfer Charge Call, BT shall pay the Operator a charge
calculated in accordance with the rate for such a Call specified
from time to time in the Carrier Price List, provided always that
BT shall not be obliged to pay for such a Call, if BT has not
received payment from a Third Party Operator, and the Operator
shall pay no charge to BT pursuant to paragraph 4.1.
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ANNEX C
SCHEDULE 103
BT OPERATOR TO OPERATOR TRANSIT CALLS VIA THE BT SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT DOUBLE PLUS TANDEM a BT Operator to Operator Transit
OPERATOR TO OPERATOR TRANSIT CALL" Call, handed over from the Operator
System to the BT System, initially
switched by a BT Tandem Exchange,
thereafter switched by one or more
other BT Tandem Exchanges, and handed
over from the BT System to the
Operator System;
"BT SINGLE TANDEM a BT Operator to Operator Transit
OPERATOR TO OPERATOR TRANSIT CALL" Call, handed over from the Operator
System to the BT System, initially
switched by a BT Tandem Exchange,
with no further switching by the BT
System, and handed over from the BT
System to the Operator System.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey a BT
Operator to Operator Transit Call handed over from the Operator
System to the Operator System, if a rate for such a Call is
specified from time to time in the Carrier Price List.
2.2 BT Telephony Calls and BT Transit Calls are not conveyed pursuant
to this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 BT's obligation to convey BT ISDN Operator to Operator Transit
Calls is subject to the respective Systems and all relevant Switch
Connections of
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both Parties being suitable for the conveyance of
BT ISDN Operator to Operator Transit Calls.
2.5 BT shall convey BT Operator to Operator Transit Calls during those
periods of time and at the same standard and quality of service as
BT conveys similar Calls.
2.6 Each Party shall correct faults which occur in its System which
affect the conveyance of BT Operator to Operator Transit Calls in
accordance with such Party's normal engineering practices. For the
avoidance of doubt, neither Party warrants that its System is, or
will be, free from faults.
3. ROUTING
3.1 The conveyance of BT Operator to Operator Transit Calls, shall be
in accordance with the routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of each BT Operator to Operator Transit Call by
BT, the Operator shall pay BT a charge calculated in accordance
with the rate for such a Call specified from time to time in the
Carrier Price List.
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ANNEX C
SCHEDULE 104
BT INTERNATIONAL OUTGOING CALLS TO AUTHORISED OVERSEAS SYSTEMS
VIA THE BT SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey a BT
International Outgoing Call handed over from the Operator System
to an Authorised Overseas System, if a rate for such a Call is
specified from time to time in the Carrier Price List.
2.2 BT Telephony Calls, BT Transit Calls, BT Operator to Operator
Transit Calls and Calls to Ancillary Services are not conveyed
pursuant to this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 BT's obligation to convey BT ISDN International Outgoing Calls is
subject to the Authorised Overseas System and the respective
Systems and all relevant Switch Connections of both Parties being
suitable for the conveyance of BT ISDN International Outgoing
Calls.
2.5 BT shall convey BT International Outgoing Calls during those
periods of time and at the same standard and quality of service as
BT conveys similar Calls.
2.6 BT shall be under no obligation to convey BT International
Outgoing Calls to destinations which are not available to BT
Customers from time to time.
2.7 The Operator shall not hand over to BT and BT shall be under no
obligation under this Schedule, to convey BT International
Outgoing Calls to those countries listed from time to time in the
BT Retail Price List as being available only through the BT
Operator.
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2.8 Each Party shall correct faults which occur in its System which
affect the conveyance of BT International Outgoing Calls in
accordance with such Party's normal engineering practices. For the
avoidance of doubt, neither Party warrants that its System is, or
will be, free from faults.
2.9 The Operator shall not hand over to the BT System, a BT
International Outgoing Call which is also a Transfer Charge Call,
for conveyance to an Authorised Overseas System unless BT has
notified the Operator in writing from time to time that BT has an
agreement for the connection of Transfer Charge Calls to that
Authorised Overseas System.
3. CALL ROUTING
3.1 The conveyance of BT International Outgoing Calls shall be in
accordance with the routing principles specified in Annex A.
4. CHARGING
4.1 Subject to paragraph 4.3, for the conveyance of each BT
International Outgoing Call by BT, the Operator shall pay BT a
charge calculated in accordance with the rate for such a Call
specified from time to time in the Carrier Price List.
4.2 For the conveyance of each BT International Outgoing Call by BT,
which is also a Transfer Charge Call, BT shall pay the Operator a
charge calculated in accordance with the rate for such a Call
specified from time to time in the Carrier Price List, provided
always that BT shall not be obliged to pay for Transfer Charge
Calls where BT has not received payment for such Call from the
Authorised Overseas System, and the Operator shall pay no charge
to BT pursuant to paragraph 4.1.
4.3 If the Operator, pursuant to the Operator Licence, commences
conveying Calls directly to a particular international
destination, the Operator shall notify BT in writing. When the
Operator commences conveying Calls directly to a particular
international destination, the Operator shall pay BT for the
conveyance of BT International Outgoing Calls to such destination
charges calculated in accordance with the rates for such Calls
specified from time to time in the BT Retail Price List.
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ANNEX C
SCHEDULE 110
FREEFONE (TM) 0800 CALLS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT 0800 SERVICE PROVIDER" a person who has contracted with
BT for the delivery of Calls using
telephone numbers commencing with
the digits 0800. The expression
shall also include BT in respect
of such telephone numbers if BT
has published those numbers as
being available to call BT itself
in respect of certain BT services;
"FREEFONE 0800 CALL" a Call made by a Calling Party
dialling 0800 followed by a BT
0800 Service Provider's six digit
number (which sets up the Call to
the BT 0800 Service Provider) and
which if made by a BT Customer on
the BT System would be free of
charge and paid for by the BT 0800
Service Provider;
"FREEFONE 0800 CHARGECARD CALL" a Freefone 0800 Call made by a
Calling Party dialling 0800 144
144 to access the BT
CHARGECARD(TM) service.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey
Freefone 0800 Calls handed over from the Operator System to the
appropriate terminal apparatus nominated by the BT 0800 Service
Provider or by BT if the terminal apparatus is connected to the BT
System, or to the Operator System or a Third Party Operator's
system if the terminal apparatus is connected to that System or
system.
2.2 Freefone 0800 Calls shall be included in the Traffic Forecast in
accordance with Annex A.
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2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 The Operator shall ensure that its promotional material will not
undermine the public perception that Freefone 0800 Calls are free
to BT Customers.
2.5 BT shall convey Freefone 0800 Calls handed over from the Operator
System during those periods of time and at the same standard and
quality of service as BT conveys similar Calls.
2.6 Each Party shall correct faults which occur in its System which
affect the conveyance of Freefone 0800 Calls in accordance with
such Party's normal engineering practices. For the avoidance of
doubt, neither Party warrants that its System is, or will be, free
from faults.
2.7 If there are abnormally high volumes of Freefone 0800 Calls that
the BT System cannot convey, the Operator may apply network
management controls in the Operator System or BT may apply network
management controls in the BT System.
2.8 If Operator Customers by means of a Freefone 0800 Call order a
Call via INMARSAT or order a BT Telemessage and BT provides such a
Call or service, then the Operator shall pay to BT the appropriate
charges specified from time to time in the BT Retail Price List.
2.9 The Operator shall only hand over a Freefone 0800 CHARGECARD(TM)
Call to the BT System if such a Call originates using an exchange
line.
2.10 The Operator shall generate and convey full CLI as requested by
the BT System for each Freefone 0800 CHARGECARD(TM) Call handed
over to the BT System. For the avoidance of doubt, a Freefone 0800
CHARGECARD(TM) Call handed over from the Operator System to the BT
System which is not supported by full CLI, shall not receive an
Answer Signal from the BT System, and no payment shall be due to
the Operator for such a Call.
3. ROUTING
3.1 The conveyance of Freefone 0800 Calls shall be in accordance with
the routing principles specified in Annex A.
3.2 Freefone 0800 Calls handed over to BT by the Operator shall be
handed over at a BT Switch Connection located at a BT DMSU which
is as near as reasonably practicable to the geographical location
from which the Call was initially made or as otherwise may be
agreed in writing by the Parties.
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4. CHARGING
4.1 For the conveyance of each Freefone 0800 Call by the Operator, BT
shall pay the Operator a charge calculated in accordance with the
rate for such a Call specified from time to time in the Carrier
Price List.
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ANNEX C
SCHEDULE 111
LO-CALL(TM) 0345 CALLS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT 0345 SERVICE PROVIDER" a person who has contracted with
BT for the delivery of Calls using
telephone numbers commencing with
the digits 0345. The expression
shall also include BT in respect
of such telephone numbers if BT
has published those numbers as
being available to call BT itself
in respect of certain BT services;
"LO-CALL 0345 CALL" a Call made by a Calling Party
dialling 0345 followed by a BT
0345 Service Provider's six digit
number (which sets up a Call to
the BT 0345 Service Provider) and
which if made by a BT Customer on
the BT System would be charged at
BT's local call charge as
specified from time to time in the
BT Retail Price List and an
additional charge is paid to BT by
the BT 0345 Service Provider.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey
Lo-Call 0345 Calls handed over from the Operator System to the
appropriate terminal apparatus nominated by the BT 0345 Service
Provider or by BT if the terminal apparatus is connected to the BT
System, or to the Operator System or a Third Party Operator's
system if the terminal apparatus is connected to that System or
system.
2.2 Lo-Call 0345 Calls shall be included in the Traffic Forecast in
accordance with Annex A.
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2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and clear down sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 The Operator shall ensure that its promotional material will not
undermine the public perception that Lo-Call 0345 Calls are
charged to BT Customers at BT's local call rates.
2.5 BT shall convey Lo-Call 0345 Calls handed over from the Operator
System during those periods of time and at the same standard and
quality of service as BT conveys similar Calls.
2.6 Each Party shall correct faults which occur in its System which
affect the conveyance of Lo-Call 0345 Calls in accordance with
such Party's normal engineering practices. For the avoidance of
doubt, neither Party warrants that its System is, or will be, free
from faults.
2.7 If there are abnormally high volumes of Lo-Call 0345 Calls that
the BT System cannot convey, the Operator may apply network
management controls in the Operator System or BT may apply network
management controls in the BT System.
3. ROUTING
3.1 The conveyance of Lo-Call 0345 Calls shall be in accordance with
the routing principles specified in Annex A.
3.2 Lo-Call 0345 Calls handed over to BT by the Operator shall be
handed over at a BT Switch Connection located at a BT DMSU which
is as near as reasonably practicable to the geographical location
from which the Call was initially made or as otherwise may be
agreed in writing by the Parties.
4. CHARGING
4.1 For the conveyance of each Lo-Call 0345 Call by BT, the Operator
shall pay BT a charge calculated in accordance with the rate for
such a Call specified from time to time in the Carrier Price List.
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ANNEX C
SCHEDULE 112
BT PREMIUM RATE SERVICE CALLS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"CALLING CENTRE" any location, whether or not authorised, where
Calls may be made;
"ICSTIS" the Independent Committee for the Supervision of
Standards of Telephone Information Services.
2. DESCRIPTION OF SERVICE
2.1 BT shall take all reasonable steps to ensure that a person
applying to be a BT PRS Service Provider is adequately vetted
prior to being accepted to minimise the risk of PRS Fraud and to
ensure compliance with any requirements of ICSTIS.
2.2 BT shall take all reasonable steps to ensure that a person
applying to be a BT PRS Service Provider will offer a PRS in good
faith.
2.3 The Parties shall take reasonable endeavours to agree adequate
safeguards to prevent and detect PRS Fraud and shall record such
agreement in a separate document known as the "PRS Fraud
Management Manual". If a Party reasonably considers that such
safeguards are not adequate then either Party may apply for a
review of this Schedule pursuant to paragraph 19.1.3 of the main
body of this Agreement.
2.4 Subject to the provisions of this Schedule, BT shall convey BT PRS
Calls handed over from the Operator System to the appropriate
terminal apparatus nominated by the BT PRS Service Provider or by
BT if the terminal apparatus is connected to the BT System, or to
the Operator System or a Third Party Operator's system if the
terminal apparatus is connected to that System or system.
2.5 BT shall have no obligation to convey BT PRS Calls handed over
from the Operator System intended for a BT PRS Service Provider if
BT has
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suspended service to that BT PRS Service Provider or terminated
his contract.
2.6 BT PRS Calls shall be included in the Traffic Forecast in
accordance with Annex A.
2.7 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and clear down sequences, for
the conveyance of Calls pursuant to this Schedule.
2.8 BT shall convey BT PRS Calls handed over from the Operator System
during those periods of time and at the same standard and quality
of service as BT conveys similar Calls.
2.9 Each Party shall correct faults which occur in its System which
affect the conveyance of BT PRS Calls in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
2.10 If there are abnormally high volumes of BT PRS Calls that the BT
System cannot convey, the Operator may apply network management
controls in the Operator System or BT may apply network management
controls in the BT System.
2.11 Each Party shall comply with the requirements specified from time
to time in Appendices 112.1 and 112.2.
3. ROUTING
3.1 The conveyance of BT PRS Calls shall be in accordance with the
routing principles specified in Annex A.
3.2 BT PRS Calls handed over to BT by the Operator shall be handed
over at a BT Switch Connection located at a BT DMSU which is as
near as reasonably practicable to the geographical location from
which the Call was initially made or as otherwise may be agreed in
writing by the Parties.
4. CHARGING
4.1 Subject to the provisions of this Schedule, for the conveyance of
each BT PRS Call by BT, the Operator shall pay BT a charge
calculated in accordance with the rate for such a Call specified
from time to time in the Carrier Price List.
5. COMMENCEMENT
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5.1 BT shall convey BT PRS Calls handed over from the Operator System
commencing on a date to be agreed in writing by the Parties.
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APPENDIX 112.1
PRS FRAUD PREVENTION, DETECTION AND ADJUSTMENT
1. NETWORK DEVELOPMENT
1.1 If BT undertakes technical development in relation to BT PRS
Calls, BT shall reasonably enhance the facilities for the
prevention and detection of PRS Fraud.
2. OPERATIONAL LIAISON
2.1 The Parties shall by monitoring BT PRS Calls take all reasonable
steps to prevent and detect PRS Fraud using, without limitation,
the criteria specified in Appendix 112.2.
3. BT DETECTION AND NOTIFICATION
3.1 If BT suspects PRS Fraud taking into account the criteria
specified in Appendix 112.2 it shall immediately pass to the
Operator, for each Calling Centre identified, the following
information:
3.1.1 the identity of the Calling Centre;
3.1.2 the estimated total duration of the relevant BT PRS Calls;
3.1.3 the dates when the relevant BT PRS Calls were made;
3.1.4 the telephone number or numbers of the relevant BT PRS
Service Provider;
3.1.5 the identity of the relevant BT PRS Service Provider;
3.1.6 such other information as BT considers relevant;
3.1.7 such other information reasonably requested by the Operator.
4. OPERATOR DETECTION AND NOTIFICATION
4.1 If the Operator suspects PRS Fraud taking into account the
criteria specified in Appendix 112.2 it shall immediately pass to
BT, for each Calling Centre identified, the following information:
4.1.1 the identity of the Calling Centre;
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4.1.2 the estimated total duration of the relevant BT PRS Calls;
4.1.3 the dates when the relevant BT PRS Calls were made;
4.1.4 the telephone number or numbers of the relevant BT PRS
Service Provider;
4.1.5 the identity of the relevant Operator Customer;
4.1.6 such other information as the Operator considers relevant;
4.1.7 such other information reasonably requested by BT.
5. RESTRICTION ON USE OF INFORMATION
5.1 Any information passed between the Parties in accordance with
paragraphs 3 and 4 shall only be used for the following purposes:
5.1.1 to monitor, prevent or detect PRS Fraud;
5.1.2 to assist the investigation of PRS Fraud and to undertake
criminal prosecutions if PRS Fraud is established;
5.1.3 to undertake civil proceedings to effect recovery of losses
resulting from PRS Fraud.
6. NOMINATED PARTIES
6.1 Any information required to be passed between the Parties in
accordance with paragraphs 3 and 4 shall be collated by the
nominated representative of one Party and sent to the nominated
representative of the other Party in accordance with the PRS Fraud
Management Manual.
7. FINANCIAL ADJUSTMENT
7.1 If a Party has passed information to the other Party in accordance
with paragraphs 3 and 4, then for information so passed which
relates to the current Billing Period and subject to the
information having been passed to BT within 2 weeks of the end of
that Billing Period then the Operator may withhold payment for the
identified BT PRS Calls;
7.1.1 for a period of not more than 6 months commencing with the
date of the first bill following the end of the then current
Billing Period; or
7.1.2 until the Operator receives payment from the Operator
Customer
whichever duration is less.
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7.2 The Operator shall take all reasonable steps to recover any
outstanding charges for BT PRS Calls.
7.3 If after the period of 6 months specified in paragraph 7.1.1 the
Operator has not received payment from the Operator Customer, BT
may:
7.3.1 unconditionally release the Operator from the obligation to
pay; or
7.3.2 continue suspension of the Operator's obligation to pay; or
7.3.3 require the Operator to assign (at no cost) to BT the
indebtedness of the Operator Customer in consideration of BT
releasing the Operator from its obligation to pay such
outstanding charges for such Operator Customer.
7.4 In the event of any dispute relating to the operation of this
paragraph 7 either Party may serve a notice on the other requiring
any matters in dispute to be referred to arbitration in London by
a single arbitrator appointed by agreement between the Parties or
in default of agreement upon the application of either Party by
the President for the time being of the Law Society of England in
accordance with and subject to the Arbitration Acts 1950 - 1979.
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APPENDIX 112.2
The following are indicators of PRS Fraud in relation to any BT
PRS Service Provider and Calling Party:
BT PRS SERVICE PROVIDER
1. For each of the first 3 months after commencement of service the
number of BT PRS Calls delivered to any new BT PRS Service
Provider exceed by 25% (or such other percentage as the Parties
may agree in writing) or more the average number of BT PRS Calls
to similar Premium Rate Services ascertained after the first month
and monthly thereafter.
2. After the first 3 months the number of BT PRS Calls delivered to
any BT PRS Service Provider increases at a rate of 25% or more
from one month to the next.
3. A high proportion of BT PRS Calls delivered to any BT PRS Service
Provider originate at a small number of Calling Centres whether or
not limited in geographical location.
4. The average duration of BT PRS Calls delivered to any BT PRS
Service Provider differs significantly from that of BT PRS Calls
to similar Premium Rate Services or there are repeated Calls of
similar duration.
5. BT PRS Calls delivered to any BT PRS Service Provider appear to
originate without promotion of the Premium Rate Service.
6. A significant proportion of BT PRS Calls delivered to any BT PRS
Service Provider originate at payphones or use payment systems
other than a standard telephone bill
CALLING PARTIES
1. A small number of Calling Centres generate a high proportion of BT
PRS Calls for delivery to any BT PRS Service Provider.
2. A small number of Calling Centres generate a high volume of BT PRS
Calls for delivery to any BT PRS Service Provider.
3. A high proportion of BT PRS Calls delivered to any BT PRS Service
Provider are generated at a small number of Calling Centres
whether or not limited in geographical location.
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4. The average duration of BT PRS Calls delivered to any BT PRS
Service Provider differs significantly from that of BT PRS Calls
to similar Premium Rate Services or there are repeated Calls of
similar duration.
5. BT PRS Calls delivered to any BT PRS Service Provider appear to
originate without promotion of the Premium Rate Service.
6. A significant proportion of BT PRS Calls delivered to any BT PRS
Service Provider originate at payphones or use payment systems
other than a standard telephone bill.
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ANNEX C
SCHEDULE 116
NATIONAL CALL(TM) 0990 CALLS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT 0990 SERVICE PROVIDER" a person who has contracted with
BT for the delivery of Calls using
telephone numbers commencing with
the digits 0990. The expression
shall also include BT in respect
of such telephone numbers where BT
has published those numbers as
being available to call BT itself
in respect of certain BT services.
"0990 CALL" a Call made by a Calling Party
dialling 0990 followed by a BT
0990 Service Provider's six digit
number (which sets up the Call to
the BT 0990 Service Provider) and
which if such a Call were made by
a BT Customer on the BT System
would be charged at BT's 'b' Rate
as specified from time to time in
the BT Retail Price List and an
additional charge is paid by the
BT 0990 Service Provider;
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey 0990
Calls received from the Operator System to the appropriate
terminal apparatus nominated by the BT 0990 Service Provider or by
BT where the terminal apparatus is connected to the BT System, or
to the Operator System or a Third Party Operator's system where
the terminal equipment is connected to that System or system.
2.2 0990 Calls shall be included in the Traffic Forecast in accordance
with Annex A.
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2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 BT shall convey 0990 Calls handed over from the Operator System
during those periods of time and at the same standard and quality
of service as BT conveys similar Calls.
2.5 Each Party shall correct faults which occur in its System which
affect the conveyance of 0990 Calls in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
2.6 If there are abnormally high volumes of 0990 Calls that the BT
System cannot convey, the Operator may apply network management
controls in the Operator System or BT may apply network management
controls in the BT System.
3. ROUTING
3.1 The conveyance of 0990 Calls shall be in accordance with the
routing principles specified in Annex A.
3.2 0990 Calls handed over to BT by the Operator shall be handed over
at a BT Switch Connection located at a BT DMSU which is as near as
reasonably practicable to the geographical location from which the
Call was initially made or as otherwise may be agreed in writing
by the Parties.
4. CHARGING
4.1 For the conveyance of each 0990 Call by BT, the Operator shall pay
BT a charge calculated in accordance with the rate for such a Call
specified from time to time in the Carrier Price List.
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ANNEX C
SCHEDULE 117
PHONE BASE(TM) CALLS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT PHONE BASE SERVICE" a service comprising access to a
computer database containing the
entries from time to time
available for the alphabetical
section of BT Phone Books;
"PHONE BASE CALLS" Calls to the telephone number 0910
210910 to access the BT Phone Base
Service.
2. DESCRIPTION OF PRODUCT
2.1 Subject to the provisions of this Schedule, BT shall convey Phone
Base Calls handed over from the Operator System to the BT Phone
Base Service.
2.2 Phone Base Calls shall be included in the Traffic Forecast in
accordance with Annex A.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 BT shall convey Phone Base Calls handed over from the Operator
System during those periods of time and at the same standard and
quality of service as BT conveys similar Calls.
2.5 Each Party shall correct faults which occur in its System which
affect the conveyance of Phone Base Calls in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
2.6 If there are abnormally high volumes of Phone Base Calls that the
BT System cannot convey, the Operator may apply network management
controls in the Operator System or BT may apply network management
controls in the BT System.
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2.7 Access to the BT Phone Base Service will only be available to
those Operator Customers who have contracted with BT for the
provision of the BT Phone Base Service and to whom appropriate
security codes have been issued to enable use of the BT Phone Base
Service.
3. ROUTING
3.1 The conveyance of Phone Base Calls shall be in accordance with the
routing principles specified in Annex A.
3.2 Phone Base Calls handed over to BT by the Operator shall be handed
over at a BT Switch Connection located at a BT DMSU.
4. DURATION
4.1 Conveyance of Phone Base Calls pursuant to this Schedule shall
cease if BT has given not less than 6 months' written notice to
the Operator of its intention to cease to convey such Calls, and
BT ceases to convey Phone Base Calls from BT Customers.
5. CHARGING
5.1 For the conveyance of each Phone Base Call by BT, the Operator
shall pay a charge calculated in accordance with the rate for such
a Call specified from time to time in the Carrier Price List.
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ANNEX C
SCHEDULE 118
BT TIMELINE(TM) SERVICE
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT TIMELINE CALLS" Calls to the BT Timeline Service
accessed by means of the digits
123 for BT Customers;
"BT TIMELINE SERVICE" BT's speaking clock service which
is available to BT Customers.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, BT shall convey BT
Timeline Calls received from the Operator System to the BT
Timeline Service.
2.2 BT Timeline Calls shall be included in the Traffic Forecast in
accordance with Annex A.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for
the conveyance of Calls pursuant to this Schedule.
2.4 BT shall convey BT Timeline Calls handed over from the Operator
System during those periods of time and at the same standard and
quality of service as BT conveys similar Calls.
2.5 Each Party shall correct faults which occur in its System which
affect the conveyance of BT Timeline Calls in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
2.6 If there are abnormally high volumes of BT Timeline Calls that the
BT System cannot convey, the Operator may apply network management
controls in the Operator System or BT may apply network management
controls in the BT System.
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3. ROUTING
3.1 The conveyance of BT Timeline Calls shall be in accordance with
the routing principles specified in Annex A.
3.2 BT Timeline Calls handed over to BT by the Operator shall be
handed over at a BT Switch Connection located at a BT DMSU.
3.3 If the Operator conveys BT Timeline Calls from the Operator System
to the BT System it shall only hand over the Call using the digits
123.
4. DURATION
4.1 Conveyance of BT Timeline Calls pursuant to this Schedule shall
cease if BT has given not less than 6 months written notice to the
Operator of its intention to cease to convey such Calls, and BT
ceases to convey BT Timeline Calls from BT Customers.
5. CHARGING
5.1 For the conveyance of each BT Timeline Call by BT, the Operator
shall pay BT a charge calculated in accordance with the rate for
such a Call specified from time to time in the Carrier Price List.
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ANNEX C
SCHEDULE 120
NATIONAL OPERATOR ASSISTANCE SERVICE
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D except as
shown:
"ADC CALL CATEGORY" one of Local ADC or National ADC,
as appropriate;
"BT FREEFONE(TM) NAME SERVICE a person who has contracted with
PROVIDER" BT for the delivery of Calls using
a BT Operator by quoting
Freefone(TM) Name. The expression
shall also include BT in respect
of Freefone(TM) Names if BT has
published those as being available
to call BT itself in respect of
certain BT services;
"FREEFONE(TM) NAME" a name beginning with the word
"Freefone(TM)" and which has been
allocated by BT to a BT
Freefone(TM) Name Service Provider
which is used to set up a Call to
the BT Freefone(TM) Name Service
Provider which if made by a BT
Customer on the BT System would be
free of charge and paid for by the
BT Freefone(TM) Name Service
Provider;
"LOCAL ADC" the contributions towards BT's
Access Deficit that apply to Calls
received from the Operator System
("actual Calls") where, if Calls
(other than Indirect Access Calls)
were conveyed in the opposite
direction between the same
originating and terminating points
as those actual Calls ("reverse
Calls"), such reverse Calls would
be classified as local calls in
the BT Retail Price List;
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"NATIONAL ADC" the contributions towards BT's
Access Deficit that apply to Calls
received from the Operator System
("actual Calls") where, if Calls
(other than Indirect Access Calls)
were conveyed in the opposite
direction between the same
originating and terminating points
as those actual Calls ("reverse
Calls"), such reverse Calls would
be classified as national calls in
the BT Retail Price List;
"NOA SERVICE" the Operator Assistance Service
relating to Calls originating and
terminating within the British
Isles as specifically described in
paragraph 2 of this Schedule.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator
of access to the NOA Service from the Operator System.
2.1.1 NOA Service shall only be available to be accessed by
Calling Parties having a telephone number conforming to the
UK national numbering scheme.
2.1.2 Except where expressly stated otherwise all Calls to the
NOA Service shall attract the charge for the NOA Service
specified from time to time in the BT Carrier Price List.
2.1.3 Where the Operator permits Calling Parties to access the
NOA Service from payphones connected to or forming part of
the Operator System, BT shall only be obliged to provide
the services set out in paragraphs 2.3.2 and 2.3.4.
2.2 Subject to paragraph 2.3, Calling Parties will be able to access
the NOA Service in order to obtain assistance in completing Calls
to persons in the British Isles who can be reached via the BT
System.
2.3 The NOA Service shall comprise the following:
2.3.1 ASSISTANCE CALLS
A Calling Party may request the BT Operator to connect the
following types of Call:
(a) A BT Basic Telephony Call;
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(b) A BT Basic Transit Call;
(c) An Operator Basic Telephony Call;
(d) A BT Basic Operator to Operator Transit Call;
(e) An Operator Basic Transit Call;
(f) A Number Translation Services Call;
(g) A BT Basic International Outgoing Call to the
Republic of Ireland;
except that BT PRS Calls, Operator PRS Calls and Calls to
PRS services run by Third Party Operators shall not be
connected.
A Calling Party may request the BT Operator to provide
assistance in connection of such a Call referred to above
where a previous attempt failed (as, for instance, where
there has been a continuous engaged tone, number
unobtainable tone, continuous ringing tone and no reply, no
tone or wrong number), or re-connection of such a Call in
the event of prior unwarranted disconnection by one or more
of the Telecommunication Systems involved in the connection
chain.
The assistance provided under this paragraph 2.3.1 shall
only be in respect of Calls for which BT provides the same
assistance service for its Customers. BT shall offer
refunds of Call charges to the Operator in respect of its
Customers in circumstances where BT would offer refunds to
BT Customers.
2.3.2 TRANSFER CHARGE CALLS
A Calling Party may request the BT Operator to attempt to
set up a Transfer Charge Call to a person having a
telephone number conforming to the UK national numbering
scheme. The charge for the NOA Service specified from time
to time in the Carrier Price List will not be payable for
successful Transfer Charge Calls.
The NOA Service shall not connect Transfer Charge Calls to
the following:
(a) answering machines (unless permitted by the initial
message pre-recorded by the person responsible for
the called number);
(b) payphones;
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(c) the Republic of Ireland;
(d) Number Translation Services Calls;
(e) persons using certain Land Mobile Radio Services;
(f) numbers on paging systems;
2.3.3 ALARM CALLS
A request can be made to the BT Operator for an alarm call
to be made at a specified time. The alarm call will be
attempted at or near the required time, but in any event no
more than five minutes earlier or later than the time
specified. However, alarm calls can only be booked on
ordinary fixed exchange lines within the British Isles
(excepting the Republic of Ireland) and can only be charged
to the Calling Party's number.
Alarm calls will be charged to the Operator at the price
specified from time to time in the Carrier Price List, when
booked. Refunds of the charge shall be given to the
Operator if an alarm call is cancelled, subject to the
cancellation being made prior to midnight on the day
preceding the day for which the alarm call has been booked.
2.3.4 BT FREEFONE(TM) NAME SERVICE
A request can be made to the BT Operator to connect a Call
using the BT Freefone(TM) Name Service. The BT Operator
will connect the Call or if the telephone number is engaged
or unavailable, inform the Calling Party.
The charge for the NOA Service specified from time to time
in the Carrier Price List will not be payable for Calls to
NOA Service where the NOA Service is only used to access
the BT Freefone(TM) Name Service.
The Operator shall ensure that any promotional material
issued by it will not undermine the public perception that
the conveyance of Calls to the BT Freefone(TM) Name Service
is free to BT Customers.
2.4 If BT makes a material change to the NOA Service that BT provides
to its own Customers, it shall give the Operator 6 months' notice
of such change. The notice of such change shall be a review notice
in accordance with paragraph 19.1.3 of the main body of this
Agreement.
3. BT'S OBLIGATIONS
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3.1 BT shall provide the NOA Service to the Operator at all times. In
other aspects it shall provide the same standard and quality of
service as BT provides such service to the generality of BT
Customers calling the NOA Service from that locality.
3.2 Subject to the provisions of this Schedule, BT shall convey Calls
for the NOA Service by means of the BT System to an OCHC. BT shall
be under no obligation to convey any Call to the NOA Service which
is a type of Call that BT does not convey to such service for its
Customers.
3.3 BT shall use its reasonable endeavours to ensure that 90 per cent
of all Calls (except those for which there were no queue places
available in the automatic call distribution system) to the NOA
Service (averaged over a 24 hour period) will be answered within
15 seconds, 7 days per week (with the exception of Christmas Day
when the target percentage shall be 70 per cent). The balance of
all such Calls shall be answered by the BT Operator as soon as
reasonably possible after the 15 second period.
3.4 On written request from the Operator, BT shall provide statistics
of the percentage of Calls actually answered within the time
periods specified in paragraph 3.3 for the OCHC which normally
deals with Calls to the NOA Service for the relevant BT Switch
Connection.
3.5 BT shall, correct faults which occur in the BT System which affect
the provision of the NOA Service, in accordance with BT's normal
engineering practices. For the avoidance of doubt, BT does not
warrant that the BT System is or will be free from faults.
3.6 Procedures for the provision by BT to the Operator of details of
Calls to the NOA Service and refunds handled by BT Operators are
set out in Annex B and the procedures for operational matters and
Customer complaints are set out in the Operator Services Manual.
3.7 BT shall provide training to BT Operators for the purpose of
providing services under this Schedule.
4. THE OPERATOR'S OBLIGATIONS
4.1 Where the Operator conveys Calls to access the NOA Service it
shall deliver the Calls to a BT Switch Connection at a BT DMSU in
accordance with Annex A.
4.2 If Operator Customers, by means of a Call passed to BT to order a
BT Telemessage, and BT provides such a service the Operator shall
pay to BT the appropriate charge specified from time to time in
the BT Retail Price List.
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4.3 The Operator shall, where faults occur in the Operator System
which affect the provision of the NOA Service, correct them in
accordance with the Operator's normal engineering practices. For
the avoidance of doubt, the Operator does not warrant that the
Operator System is or will be free from faults.
4.4 Where the Operator permits access to the NOA Service from
payphones connected to or forming part of the Operator System, the
Operator shall ensure the payphone sends a tone, of a form to be
agreed between the Parties, to indicate to the BT Operator that
the Calling Party is using a payphone.
4.5 Where the Operator wishes BT to inform Calling Parties, in
response to enquiries, of the condition of Operator Customer's
telephone lines (e.g. out of order, terminated etc.) it shall
provide BT with a telephone number for use by the BT Operator for
making such enquiries. This telephone number will be used solely
by the BT Operator and shall not be disclosed.
5. COMMENCEMENT & TERMINATION
5.1 BT shall provide the NOA Service to the Operator as detailed in
this Schedule on the later of the following:
5.1.1 a date 3 months after the date this Schedule was
incorporated into the Agreement; or
5.1.2 the first Ready for Service Date; or
5.1.3 such other date as the Parties may agree in writing.
5.2 The Operator may terminate its access to the NOA Service under
this Schedule by giving 3 months' written notice to BT.
6. CHARGING
6.1 For the services provided by the BT Operator except for those
specifically stated to be free of such charges, the Operator shall
pay BT for each Call the charge for the NOA Service as specified
from time to time in the Carrier Price List. In addition, the
following are payable:
6.1.1 For the onward connection of Calls stated in paragraph
2.3.1 the Operator or BT, as appropriate shall pay, for
each successful Call, the charges in accordance with the
charge as specified from time to time in the Carrier Price
List for the appropriate Call.
6.1.2 For the provision of Transfer Charge Calls by the NOA
Service, and for the BT Freefone(TM) Name Service, BT shall
pay the Operator for
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each successful Call, the appropriate charge specified from time
to time in the Carrier Price List.
7. CONTRIBUTIONS TO BT'S ACCESS DEFICIT
7.1 Where BT provides assistance pursuant to paragraph 2.3.1 which
includes onward connection of a BT Basic Telephony Call and
subject to the provisions of this paragraph 7, the Operator shall
pay a contribution to BT's Access Deficit at the rate specified
from time to time for the ADC Call Category, in the Carrier Price
List. For these purposes, the ADC Call Category shall be
ascertained at the time when the Answer Signal is generated.
7.2 If, prior to the date of the Agreement, either Party has requested
the Director General pursuant to Condition 13.5A of the BT Licence
to reduce the contribution to be made by the Operator towards BT's
Access Deficit, then payment of the contribution referred to in
such request shall be suspended until the Director General has
dealt with the request.
7.3 If, following a request referred to in paragraph 7.2, the Director
General determines not to reduce the contribution or determines
that a partial contribution shall be payable by the Operator
towards BT's Access Deficit, such contribution shall be payable
accordingly with effect from the date that the services set out in
this Schedule commenced. The Operator shall pay any outstanding
contribution not later than one month after the date of such
determination.
7.4 If, following a request referred to in paragraph 7.2, the Director
General determines that no contribution shall be payable by the
Operator towards BT's Access Deficit no such contribution shall be
payable under paragraph 7.1.
7.5 If the Director General at any time determines pursuant to
Condition 13.5A of the BT Licence that the contribution payable by
the Operator towards BT's Access Deficit should be varied or a
contribution becomes payable in accordance with Condition 13.5A of
the BT Licence then the Agreement shall be varied accordingly.
7.6 The Operator shall have no liability to pay a contribution to BT's
Access Deficit in respect of Calls which have originated on the
system of a Third Party Operator and are conveyed over the
Operator System to the BT System, provided that:
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7.6.1 subject as provided in paragraph 7.6.4 below the Operator shall
not agree to convey over the Operator System to the BT System
Calls originated on the system of a Third Party Operator or first
conveyed in the UK by the system of a Third Party Operator unless
that operator shows to the Operator's reasonable satisfaction that
it has entered into an agreement with BT to pay a contribution to
BT's Access Deficit for all Calls originated on the system of that
Third Party Operator, or first conveyed in the UK by the system of
that Third Party Operator, and conveyed to their ultimate
destination by means of the BT System (whether by direct
connection between the system of that Third Party Operator and the
BT system or by transit through any other system);
7.6.2 if the Director General (following notification from BT) notifies
the Operator that a Third Party Operator, having entered into an
agreement as described in paragraph 7.6.1, has failed to make a
contribution to BT's Access Deficit as required by that agreement
and that all provisions in that agreement for the resolution of
disputes have been exercised and have failed, then the Operator
shall as quickly as reasonably practicable cease to convey Calls
originated on the system of that Third Party Operator or first
conveyed in the UK by that operator's system to the BT System. The
Director General shall not notify the Operator pursuant to this
paragraph if, having heard representations from the Third Party
Operator concerned, he is satisfied that the payment demanded by
BT from the Third Party Operator has not been calculated in
accordance with this proviso, save that it shall be deemed to be
conclusive proof that the payment has been properly calculated if
BT obtains judgement in a court of competent jurisdiction for its
recovery as a debt and any appeal against that judgement has been
finally disposed of;
7.6.3 the Operator shall provide BT at BT's expense such information
about those Calls described in paragraph 7.6.1 as the Operator is
practicably and rightfully able to provide and as BT may
reasonably require to calculate the amount of contribution to the
Access Deficit so payable. During such time as the Operator is
unable to provide a record of the Calls described in paragraph
7.6.1, it shall provide information to BT for the purposes of this
paragraph on the basis of a method of estimation determined by the
Director General after consulting with such other persons as he
considers appropriate;
7.6.4 the obligation of the Operator in paragraph 7.6.1 shall not apply
to Calls which the Director General has determined or BT has
agreed should not give rise to a contribution to BT's Access
Deficit by any such Third Party Operator and this paragraph shall
cease to apply if BT ceases to be entitled by virtue of Condition
13 of the BT Licence to recover from the Third Party Operator a
contribution to its Access Deficit.
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7.7 BT shall indemnify and keep indemnified the Operator against any
liability claim, loss or damage resulting from the Operator's
performance of obligation under paragraph 7.6.1 or 7.6.2 in
circumstances where in case of default or negligence of BT the
Operator would not have been so obliged to prevent or cease
conveyance of a Call emanating from the Third Party Operator.
7.8 The Parties agree that either Party may initiate a review of
paragraphs 7.6 and 7.7 pursuant to paragraph 19.1.3 of the main
body of the Agreement.
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ANNEX C
SCHEDULE 121
DIRECTORY ENQUIRY SERVICE
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BLIND OR DISABLED PERSON" a person fulfilling criteria
determined by BT from time to time
and registered with BT permitting
use of the DQ Service by that
person at no charge;
"DQ CENTRE" a BT site where DQ Operators
answer Calls to the DQ Service;
"DQ OPERATOR" a person who answers Calls to the
DQ Service;
"DQ SERVICE" the directory enquiry service
relating to telephone numbers
within the British Isles.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator
of access to the DQ Service. The DQ Service shall only be
available to be accessed by persons having a telephone number
conforming to the UK national numbering scheme.
2.2 A person may request a search for the telephone or telex numbers
of up to two persons listed as telephony or telex customers in the
British Isles provided that sufficient information is given to
enable the DQ Operator to carry out a search. If the search is
successful, the Calling Party will be supplied with the requested
number. However if the number is listed as an ex-directory number
the Calling Party will be so informed, but the number will not be
disclosed.
2.3 Subject to paragraph 2.4 below, refunds of the DQ Service charges
set out from time to time in the Carrier Price List shall be made
by BT where the following circumstances are brought to BT's
attention by the Operator Customer:
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2.3.1 if a DQ Operator provides to the Calling Party information
that is inconsistent with correct information that was
available at the DQ Centre;
2.3.2 if a DQ Operator is unable to trace the telephone number but
the Calling Party is able to obtain the number from a BT Phone
Book or another DQ Operator that same day;
2.3.3 if the Call is misrouted by the BT System to the DQ Service;
2.3.4 if the Call has been cut off by the BT System on a Call to the
DQ Service or bad transmission over the BT System prevents the
Calling Party from hearing the DQ Operator's response;
2.3.5 if, due to BT error in processing any information that BT has
agreed to enter in a BT Phone Book, the number that is
required is missing or incorrect (e.g. numbers transposed) in
such a directory;
2.3.6 if the DQ Operator reasonably feels that the Calling Party has
experienced poor DQ Service or exceptional difficulty;
2.3.7 if during the course of a search by the DQ Operator there is a
computer failure and the DQ Operator is unable to deliver the
number;
2.3.8 if the Calling Party is referred by the DQ Operator to the BT
"Talking Pages" Service;
2.3.9 if the Calling Party asks for the number of a particular BT
department or front office;
2.3.10 if the Calling Party requests Number Range information and the
Call to the DQ Service was caused by a BT code change or bulk
number change.
2.4 Refunds will only be made if the Calling Party identifies to the
DQ Operator dealing with the refund the originating telephone
number used by the Calling Party to make the Call to the DQ
Centre.
2.5 Directory Enquiry Service for the Blind or Disabled
2.5.1 BT shall register as a Blind or Disabled Person those persons
who apply to a BT registration point for consideration by BT
to be registered, subject to the person fulfilling the same
criteria as BT Customers qualifying for registration.
2.5.2 BT shall make no separate charge pursuant to this Schedule for
access to the DQ Service where:
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a) the Call is received at the specialised DQ bureau
dealing with Calls from Blind or Disabled Persons to the DQ
Service; and
b) the Calling Party is a Blind or Disabled Person.
No refunds will be offered to the Operator in respect of
the provision of the DQ Service to Blind or Disabled
Persons.
2.6 If BT makes a material change to the DQ Service that BT provides
to its own Customers, it shall give the Operator 6 months notice
of such change. The notice of such change shall be a review notice
in accordance with paragraph 19.1.3 of the main body of this
Agreement.
3. BT'S OBLIGATIONS
3.1 BT shall provide the DQ Service at all times. In other aspects it
shall provide the same standard and quality of service as BT makes
available to BT Customers making Calls to the DQ Service from that
locality.
3.2 Subject to the provision of this Schedule, BT shall convey Calls
for the DQ Service received from the Operator System to a DQ
Centre. BT shall be under no obligation to convey any Call to the
DQ Service which is a type of Call that BT does not convey to such
service for its Customers.
3.3 BT shall use its reasonable endeavours to ensure that 90 per cent.
of all Calls (except those for which there were no queue places
available in the automatic call distribution system) to the DQ
Service (averaged over a 24 hour period) will be answered within
15 seconds, 7 days per week (with the exception of Christmas Day
when the target percentage shall be 70 per cent.). The balance of
all such Calls shall be answered by the DQ Operator as soon as
reasonably possible after the 15 second period.
3.4 On written request from the Operator, BT shall provide statistics
of the percentage of Calls actually answered within the time
periods specified in paragraph 3.3 for the OCHC which normally
deals with Calls to the DQ Service for the relevant BT Switch
Connection.
3.5 BT shall correct faults which occur in the BT System which affect
the DQ Service in accordance with BT's normal engineering
practices. For the avoidance of doubt, BT does not warrant that
the BT System is, or will be, free from faults.
3.6 Procedures for the provision by BT to the Operator of details of
Calls to the DQ Service handled by DQ Operators shall be as set
out in Annex B whereby BT shall pay refunds to the Operator.
Refund information shall be included in TIBS Billing Information
and Refund Reports.
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4. THE OPERATOR'S OBLIGATIONS
4.1 Where the Operator conveys a Call to the DQ Service to BT, the
Operator shall convey such a Call to a BT Switch Connection at a
BT DMSU in accordance with Annex A.
4.2 The Operator shall pay to BT for each Call to the DQ Service the
appropriate charges specified from time to time in the Carrier
Price List.
4.3 The Operator shall, correct faults which occur in the Operator
System which affect the DQ Service in accordance with the
Operator's normal engineering practices. For the avoidance of
doubt, the Operator does not warrant that the Operator System is,
or will be, free from faults.
5. COMMENCEMENT & TERMINATION
5.1 BT shall provide the DQ Service as detailed in this Schedule on
the later of the following:
5.1.1 a date 3 months after the date this Schedule was
incorporated into the Agreement; or
5.1.2 the first Ready for Service Date; or
5.1.3 such other date as the Parties may agree in writing.
5.2 The Operator may terminate access to the DQ service provided under
this Schedule by giving 3 months written notice to BT.
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ANNEX C
SCHEDULE 122
INTERNATIONAL OPERATOR ASSISTANCE SERVICE
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"IOA SERVICE" the international operator
assistance service relating to
Calls to destinations outside the
British Isles and other services
as specifically described in
paragraph 2 of this Schedule.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator
of access to the IOA Service.
2.1.1 IOA Service shall only be available to be accessed by persons
having a telephone number conforming to the UK national numbering
scheme.
2.1.2 Where the Operator permits Calling Parties to contact the IOA
Service from payphones connected to or forming part of the
Operator System, BT shall only be obliged to provide the services
set out in paragraphs 2.3.3 and 2.3.6.
2.2 Subject to paragraph 2.3, a person will be able to contact the IOA
Service in order to obtain assistance in completing Calls to
Customers of an Authorised Overseas System who can be reached
through the BT System and to obtain time difference advice.
2.3 BT shall provide the IOA Service which shall comprise the
following:
2.3.1 Assistance Calls
The Calling Party can request connection to an
international telephone number, or assistance from overseas
operators, or assistance in connection where a previous
attempt failed or re-connection to a telephone number in
the event of prior unwarranted disconnection by one or more
of the Telecommunication Systems involved in the connection
chain or assistance in sending facsimile messages to
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destinations outside the British Isles. Call charges are
payable in whole minutes with a minimum charge of that for a
three minute Call.
2.3.2 Personal Calls to international numbers
The Calling Party can request the BT Operator to connect them
to a named person or extension outside the British Isles. A
personal call fee is payable for each Call attempt that is
answered whether or not the Call is connected to the named
person or extension. The Call charges specified from time to
time in the Carrier Price List are payable in whole minutes
with a minimum charge of that for a three minute Call.
2.3.3 International Transfer Charge Calls
The Calling Party can request the BT Operator to arrange a
Transfer Charge Call to an overseas destination, except that
international Transfer Charge Calls cannot be made to
payphones, services run by INMARSAT, a ship in port, the
Republic of Ireland or to territories or numbers where there
is no agreement to provide such Calls with the relevant
telecommunications operators.
2.3.4 Calls via INMARSAT
The Calling Party can request the BT Operator to connect a
Call to a ship at sea which possesses suitable satellite
communication equipment.
2.3.5 Advance Booking of International Calls
The Calling Party can request the BT Operator to arrange
connection of an International Call to a specific destination
for a particular date and time.
2.3.6 Time Difference Advice
The Calling Party can request the BT Operator for the local
time in a particular country.
2.4 If BT makes a material change to the IOA Service that BT provides
to BT Customers, it shall give the Operator 6 months notice of
such change. The notice of such change shall be a review notice in
accordance with paragraph 19.1.3 of the main body of this
Agreement.
3. BT'S OBLIGATIONS
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3.1 BT shall provide the IOA Service at all times. In other aspects it
shall provide the same standard and quality of service as BT makes
available to BT Customers calling the IOA Service from that
locality.
3.2 Subject to the provisions of this Schedule, BT shall convey Calls
for the IOA Service by means of the BT System to an IOA Service
centre. BT shall be under no obligation to convey any Call to the
IOA Service which is a type of Call that BT does not convey to
such service for its Customers.
3.3 BT shall use its reasonable endeavours to ensure that 90 per cent.
of all Calls (except those for which there were no queue places
available in the automatic call distribution system) to the IOA
Service (averaged over a 24 hour period) will be answered within
15 seconds, 7 days per week (with the exception of Christmas Day
when the target percentages shall be 70 per cent.). The balance of
all such Calls shall be answered by the BT Operator as soon as
reasonably possible after the 15 second period.
3.4 BT shall correct faults which occur in the BT System which affect
the provision of the IOA Service in accordance with BT's normal
engineering practices. For the avoidance of doubt, BT does not
warrant that the BT System is, or will be, free from faults.
3.5 Procedures for the provision by BT to the Operator of details of
Calls to the IOA Service handled by BT Operators are set out in
Annex B and the procedures for operational matters and Customer
complaints are set out in the Operator Services Manual.
4. THE OPERATOR'S OBLIGATIONS
4.1 Where the Operator conveys Calls to access the IOA Service it
shall hand over Calls to a BT Switch Connection at a BT DMSU in
accordance with Annex A.
4.2 The Operator shall correct faults which occur in the Operator
System which affect the provision of the IOA Service in accordance
with the Operator's normal engineering practices. For the
avoidance of doubt, the Operator does not warrant that the
Operator System is, or will be, free from faults.
4.3 Where the Operator permits access to the IOA Services from
payphones connected to or forming part of the Operator System, the
Operator shall ensure the payphone sends a tone, of a form to be
agreed between the Parties, to indicate to the BT Operator that
the Calling Party is using a payphone.
5. CHARGING
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5.1 For the service provided by way of the IOA Service, except for
international Transfer Charge Calls, the Operator shall pay BT for
each Call the charges specified from time to time the Carrier
Price List.
5.2 For each international Transfer Charge Call set up by the BT
Operator, BT shall pay the Operator for each successful Call the
appropriate rate specified from time to time and the Operator
shall pay no charge to BT pursuant to paragraph 5.1 in the Carrier
Price List.
6. COMMENCEMENT & TERMINATION
6.1 BT shall provide the IOA Service as detailed in this Schedule on
the later of the following:
6.1.1 a date 3 months after the date this Schedule was incorporated
into the Agreement; or
6.1.2 the first Ready for Service Date; or
6.1.3 such other date as the Parties may agree in writing.
6.2 The Operator may terminate access to the IOA service provided
under this Schedule by giving 3 months written notice to BT.
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ANNEX C
SCHEDULE 123
INTERNATIONAL DIRECTORY ENQUIRY SERVICE
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BLIND OR DISABLED PERSON" a person fulfilling criteria
determined by BT from time to time
and registered with BT permitting
use of the IDQ Service by that
person at no charge;
"IDQ CENTRE" a BT site where IDQ Operators
answer Calls to the IDQ Service;
"IDQ OPERATOR" a person who answers Calls to the
IDQ Service;
"IDQ SERVICE" the international directory
enquiry service relating to
telephone numbers outside the
British Isles which is more
specifically described in
paragraph 2 below.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator
of access to the IDQ Service. The IDQ Service shall only be
available to be accessed by persons having a telephone number
conforming to the UK national numbering scheme.
2.2 A person may request a search for the telephone or telex numbers
of up to two persons listed as telephony or telex Customers of
operators of Authorised Overseas Systems, provided that sufficient
information is given to enable the IDQ Operator to carry out a
search. If the search is successful, the Calling Party will be
supplied with the requested number. However if the number is
listed as an ex-directory number the Calling Party will be so
informed, but the number will not be disclosed.
2.3 Subject to paragraph 2.4 below, refunds of the IDQ Service charge
specified from time to time in the Carrier Price List shall be
made to the Operator by
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BT where the following circumstances are brought to BT's
attention by the Operator Customer:
2.3.1 if an IDQ Operator provides to the Calling Party information
that is inconsistent with correct information that was
available at the IDQ Centre;
2.3.2 if the Call is misrouted by the BT System to the IDQ Service;
2.3.3 if the Calling Party has been cut off by the BT System on a
Call to the IDQ Service or bad transmission over the BT System
prevents the Calling Party from hearing the IDQ Operator's
response;
2.3.4 if the IDQ Operator reasonably feels that the Calling Party
has experienced poor service or exceptional difficulty;
2.3.5 if the Calling Party asks for the number of a particular BT
department or front office;
2.3.6 if the Calling Party makes a Call to enquire about the
progress of an earlier request for information where the IDQ
Operator has offered to ring with the information.
2.4 Refunds shall be made only if the Calling Party identifies to the
IDQ Operator dealing with the refund the originating telephone
number used by the Calling Party to make the Call to the IDQ
Centre.
2.5 International Directory Enquiry Service for the Blind or Disabled
2.5.1 BT shall register as a Blind or Disabled Person those persons
who apply to a BT registration point for consideration by BT
to be registered, subject to the person fulfilling the same
criteria as BT Customers qualifying for registration.
2.5.2 BT shall make no separate charge pursuant to this Schedule for
access to the IDQ Service where:
a) the Call is received at the specialised DQ bureau
dealing with Calls from Blind or Disabled Persons to
the IDQ Service; and
b) the Calling Party is a Blind or Disabled Person.
No refunds shall be offered to the Operator in respect of
the provision of the IDQ Service to Blind and Disabled
Persons.
2.6 If BT makes a material change to the IDQ Service that BT provides
to its own Customers, it shall give the Operator 6 months notice
of such change.
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The notice of such change shall be a review notice in accordance
with paragraph 19.1.3 of the main body of this Agreement.
3. BT'S OBLIGATIONS
3.1 BT shall provide the IDQ Service at all times. In other aspects it
shall provide the same standard and quality of service as BT makes
available to BT Customers calling the IDQ Service from that
locality.
3.2 Subject to the provisions of this Schedule, BT shall convey Calls
for the IDQ Service received from the Operator System to an IDQ
Centre. BT shall be under no obligation to convey any Call to the
IDQ Service which is a type of Call that BT does not convey to
such service for its Customers.
3.3 BT shall use its reasonable endeavours to ensure that 90 per cent.
of all Calls (except those for which there were no queue places
available in the automatic call distribution system) to the IDQ
Service (averaged over a 24 hour period) will be answered within
15 seconds, 7 days per week (with the exception of Christmas Day
when the target percentage shall be 70 per cent.). The balance of
all such Calls shall be answered by the Operator as soon as
reasonably possible after the 15 second period.
3.4 BT shall correct faults which occur in the BT System which affect
the provision of the IDQ Service in accordance with BT's normal
engineering practices. For the avoidance of doubt, BT does not
warrant that the BT System is, or will be, free from faults.
3.5 Procedures for the provision by BT to the Operator of details of
Calls to the IDQ Service handled by IDQ Operators shall be as set
out in Annex B whereby BT shall pay refunds to the Operator.
Refund information shall be included in TIBS Billing Information
and Refund Report.
4. THE OPERATOR'S OBLIGATIONS
4.1 Where the Operator conveys a Call to access the IDQ Service it
shall hand over Calls to a BT Switch Connection at a BT DMSU in
accordance with the Annex A.
4.2 The Operator shall pay to BT for each Call to the IDQ Service the
appropriate charge specified from time to time in the Carrier
Price List.
4.3 The Operator shall correct faults which occur in the Operator
System which affect the provision of the IDQ Service in accordance
with the Operator's normal engineering practices. For the
avoidance of doubt, the Operator does not warrant that the
Operator System is, or will be, free from faults.
5. COMMENCEMENT & TERMINATION
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5.1 BT shall provide the IDQ Service as detailed in this Schedule on
the later of the following:
5.1.1 a date 3 months after the date this Schedule was incorporated
into the Agreement; or
5.1.2 the first Ready for Service Date; or
5.1.3 such other date as the Parties may agree in writing.
5.2 The Operator may terminate access to the IDQ Service provided
under this Schedule by giving 3 months written notice to BT.
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ANNEX C
SCHEDULE 125
EMERGENCY SERVICE
(INCLUDING POST CODE ALLOCATION FOR FIXED EMERGENCY CALLS)
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"CONNECT TO NUMBER" the telephone number of an
Emergency Organisation applicable
to a Zone Code supplied by the
Operator to BT for Mobile
Emergency Calls;
"FIXED EMERGENCY CALL" an Emergency Call where the
Calling Party is using an Exchange
Line connected to a fixed Network
Termination Point which has a
telephone number conforming to the
UK national numbering scheme and
which permits BT to ascertain the
location of the Calling Party;
"MOBILE EMERGENCY CALL" an Emergency Call where the
Calling Party is using terminal
apparatus which is mobile and in
respect of which, without a Zone
Code, BT would be unable to
ascertain the approximate location
of the Calling Party;
"ZONE CODE" a code, agreed between the
Parties, for signalling and
display to the BT Operator,
identifying the location of the
radio station conveying a Mobile
Emergency Call from an Operator
Customer.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator
of a service comprising the conveyance of Emergency Calls and the
handing over of such Calls to an Emergency Organisation. This
service shall only be available to be accessed by persons having a
telephone number conforming to the UK national numbering scheme.
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2.2 Where the Operator System does not hand over Mobile Emergency
Calls to the BT System the rights and obligations under this
Schedule in relation to Mobile Emergency Calls shall not apply.
2.3 The Emergency Service shall be provided in order to assist the
Operator to meet the obligation set out in the applicable
Condition of the Operator Licence. However, BT shall be under no
obligation to provide any Public Emergency Call Service (as
defined in Condition 6 of the BT Licence) wider in scope or more
onerous than that which BT is obliged to provide to a BT Customer.
2.4 BT's obligation in respect of an Emergency Call is to convey it
and hand it over to an Emergency Organisation.
2.5 If BT makes a material change to the Emergency Service that BT
provides to its own Customers it shall give the Operator 6 months
notice of such change. The notice of such change shall be a review
notice in accordance with paragraph 19.1.3 of the main body of
this Agreement.
3. EMERGENCY SERVICES PLANNING AND SET UP
3.1 Where the Operator intends to send Fixed Emergency Calls, it
shall;
3.1.1 provide details, for each Network Termination Point,
of the telephone number, Operator Customer name and
installation address, including the post code,
3.1.2 provide such details, in so far as they have not
been provided pursuant to Schedule 150, by
electronic data interchange in an agreed format
which is recorded in the NIS Manual.
3.2 The provisions of paragraph 7.1.1 (10) of Annex A shall not apply.
3.3 The initial Zone Codes and Connect To Numbers advised to BT by the
Operator are set out in Appendix 125.1.
3.4 The Operator shall order and BT shall provide the necessary Data
Management Amendments for Emergency Calls to be delivered the
relevant Emergency Centres pursuant to the provisions set out in
Schedule 140.
4. BT'S OBLIGATIONS
4.1 BT shall, upon receipt of information from the Operator regarding
new or amended Zone Codes or Connect To Numbers, install that
information within the Emergency Centre database and confirm in
writing to the Operator the installation of that information.
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4.2 Subject to the provisions of this Schedule, BT shall where
Emergency Calls are handed over at agreed Points of Connection:
4.2.1 convey Emergency Calls to an OCHC;
4.2.2 provide an onwards connect service to the relevant Emergency
Organisation via a BT Operator by means of two-way voice
telephony; and
4.2.3 liaise and co-operate with the Operator in resolving any
problems that may arise and assist the Emergency Organisations
with requests for call-trace in the event of failure of an
Emergency Call.
4.3 BT shall convey Emergency Calls at all times and at the same
standard and quality of service as BT makes available to BT
Customers making Fixed Emergency Calls from within that locality.
4.4 BT shall, based upon the Zone Code and the Connect To Numbers
related to that Zone Code contained within the Emergency Centre
database, connect a Mobile Emergency Call to the Connect To Number
on that database shown for the Emergency Organisation requested by
the Operator Customer.
4.5 In the event that BT receives a Mobile Emergency Call with a Zone
Code that is not contained in the Emergency Centre database or
that Zone Code does not refer to a required Connect To Number, or
the Mobile Emergency Call does not contain all the required
information, or the information is incorrect or corrupted, BT
shall use reasonable endeavours to convey the Call to a telephone
number for the appropriate Emergency Organisation.
4.6 BT shall correct faults which occur in the BT System which affect
Emergency Calls in accordance with BT's normal engineering
practices. For the avoidance of doubt, BT does not warrant that
the BT System is, or will be, free from faults.
4.7 The Operations and Maintenance Manual contains procedures for
testing the service set out in this Schedule.
4.8 BT shall provide training to BT Operators for the purpose of
providing services under this Schedule.
4.9 Where the Operator has reasonably required BT's assistance in
replying to enquiries and complaints in respect of Emergency
Calls, BT shall investigate and report to the Operator and neither
Party shall make a charge.
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5. THE OPERATOR'S OBLIGATIONS
5.1 The Operator shall agree with Emergency Organisations the
appropriate local Emergency Organisation departments who shall
receive and process Mobile Emergency Calls from Calling Parties
conveyed to them by BT.
5.2 The Operator shall allocate to each radio station within the
Operator System, which could convey a Mobile Emergency Call, a
Zone Code and agree the area covered by each Zone Code with the
relevant Emergency Organisations and provide to BT in the format
set out in Appendix 125.1, for each Zone Code, at least one and
where practicable up to three Connect To Numbers for each
applicable Emergency Organisation.
5.3 The Operator shall advise BT in writing of any variation to an
existing Zone Code or its associated Connect To Numbers, or any
new Zone Code or its Connect To Numbers in the format set out in
Appendix 125.1 or such other format as may be agreed between the
Parties in writing from time to time.
5.4 Where the Operator delivers an Emergency Call to the BT System it
shall do so at an agreed BT Switch Connection at a BT DMSU in
accordance with Annex A and conform with the other requirements
for Emergency Calls set out in Annex A. Where BT requires that
Mobile Emergency Calls be delivered to another or to different BT
Switch Connections, BT shall give the Operator at least 6 months
notice. The notice shall specify the location of the additional or
different BT Switch Connection and the date by which the changes
shall be implemented by the Operator.
5.5 The Operator shall not convey to the BT System Emergency Calls
before the date agreed pursuant to paragraph 6.1.
5.6 The Operator shall convey to BT all Mobile Emergency Calls in the
format 999 II ABCD where:
999 identifies the Call as an Emergency Call; and
II is the Code notified to the Operator by BT which
identifies the Emergency Call as a Call from an
Operator Customer; and
ABCD is the relevant Zone Code notified to BT by the
Operator pursuant to paragraph 5.2.
or such other digits as the Parties may agree in writing from
time to time.
5.7 The Operator shall convey to BT all Fixed Emergency Calls with
full CLI and shall permit BT to use such CLI to ascertain the
appropriate Emergency Organisation.
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5.8 The Operator shall convey Fixed Emergency Calls with the last
clearing party initiated release protocol set.
5.9 The Operator shall correct faults which occur in the Operator
System which affect Emergency Calls in accordance with the
Operator's normal engineering practices. For the avoidance of
doubt, the Operator does not warrant that the Operator System is,
or will be, free from faults.
5.10 The Operator shall handle, process and reply to all enquiries and
complaints about Emergency Calls.
5.11 The Operator shall pay BT for the conveyance of each Emergency
Call the charge specified from time to time in the Carrier Price
List.
5.12 The Operator shall pay to BT for BT Operator Training the sum
specified from time to time in the Carrier Price List for each of
Fixed Emergency Call service or Mobile Emergency Call service
training within 30 calendar days of the date agreed pursuant to
paragraph 6.1 following confirmation by BT of completion of the
work.
6. COMMENCEMENT & TERMINATION
6.1 The Operator may convey Emergency Calls to BT and BT shall convey
those Calls on the later of the following:
6.1.1 a date 6 months after the date this Schedule was incorporated
into the Agreement; or
6.1.2 the first Ready for Service Date; or
6.1.3 such other date as the Parties may agree in writing.
6.2 The Operator may terminate access to the Emergency Service
provided under this Schedule by giving 3 months written notice to
BT.
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APPENDIX 125.1
ZONE CODE AND CONNECT TO NUMBER
INFORMATION PROVISION FORM
1. The Operator shall provide to BT information relating to Zone
Codes and Connect To Numbers in the following format or as
otherwise amended by BT and advised to the Operator in writing
from time to time:
To: BT Mobile 999 Admin. Centre Fax: 01925 235017
From: (Name) ...................the Operator Fax: ..............
Please implement the following changes to your 999 information.
Ref. No. ......................
Date of change..............................Time of change.....................
Reason for change..............................................................
Information received from Emergency Organisation (date/time) ......./..........
Information sent to Admin. Centre (date/time)......................./..........
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Changes Table BT use only
- --------------------------------------------------------------------------------------------------------------
Country or Area Emergency Connect To Numbers in Zones Affected EDB+GIFChange Lists Change
Authority format
(P) (number) (Q)
<S> <C> <C> <C> <C> <C>
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- ----------------- ----------------- -------------------------- ----------------- -------------- --------------
- --------------------------------------------------------------------------------------------------------------
Continued on following sheet (delete if not applicable)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Information received by (name/date/time) ........../.........../............
Information sent to (date/time) ........../........................
Information received by { ]
Information received by (name/date/time) ........../.........../............
EDB, GIF and/or lists amended by [ ] [ ]
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2. The form described in the immediately preceding paragraph shall
include operational guidance notes which shall be as set down
below or as amended by BT and advised to the Operator in writing
from time to time:
REFERENCE NUMBERS These must run consecutively
starting from 1.
DATE AND TIME OF CHANGE These shall be within the period
Monday to Friday, 08.30 - 16.30. 3
Working Days notice of any
required change must be given.
REASON FOR CHANGE Give brief description only e.g.
"New Zone Code".
CHANGES TABLE For every change there must be an
entry in all of the first four
columns.
COUNTY OR AREA Give name of county or area
involved.
EMERGENCY ORGANISATION State whether it is Fire, Police,
Ambulance or Coastguard, with the
official name of the Emergency
Organisation in brackets e.g.
"Police (Northern Constabulary)".
ZONE AFFECTED Provide in the format 3123.
CONNECT TO NUMBERS You must show the number in the
format (P) 01987 654321 (Q). The
prefix letter must be (P), (S),
(A) or (E) for primary, secondary,
alternative or evacuation numbers
respectively. The suffix letter
must be either (Q) for a queuing
system or (N) if there is none. If
it is a Connect To Number change,
only those Connect To Numbers that
have changed shall be included. If
there is a new Zone Code or the
County or Emergency Organisation
for a particular Zone Code is
changing, then all relevant
Connect To Numbers shall be shown.
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ANNEX C
SCHEDULE 126
RADIOTELEPHONE CALLS
1. DEFINITIONS
1.1 In this Schedule a reference to a paragraph or Appendix, unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D except as
shown below:
"BT RADIO OFFICER" a BT radio officer who sets up the
Radiotelephone Service;
"RADIOTELEPHONE CALL" a Call set up by a BT Radio
Officer from the Calling Party to
the relevant ship using the
Radiotelephone Service;
"RADIOTELEPHONE REQUEST CALL" a Call handed over by the Operator
to BT on such BT Freefone 0800
number as BT shall advise from
time to time, whereby the Calling
Party requests the BT Radio
Officer to set up a Radiotelephone
Call;
"RADIOTELEPHONE SERVICE" telephone Calls (including related
services) transmitted by wireless
telegraphy from a BT wireless
telegraphy station to a ship.
2. DESCRIPTION OF SERVICE
2.1 Subject to the provision of this Schedule, BT shall convey
Radiotelephone Request Calls handed over from the Operator System
to a BT Radio Officer.
2.2 Radiotelephone Request Calls shall be included in the Traffic
Forecast in accordance with Annex A.
2.3 On receipt of a Radiotelephone Request Call, the BT Radio Officer
shall request the Calling Party to provide its telephone number
and details of the destination ship.
2.4 The BT Radio Officer shall attempt to contact the relevant ship
and, if successful, shall telephone the Calling Party and set up a
Radiotelephone Call.
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2.5 Radiotelephone Calls shall be available to a Calling Party whose
telephone number conforms to the UK national numbering scheme.
2.6 If BT makes a material change to the Radiotelephone Service that
BT provides to its own Customers, it shall give the Operator 6
months notice of such change. The notice of such change shall be a
review notice in accordance with paragraph 19.1.3 of the main body
of this Agreement.
3. ROUTING
3.1 Where the Operator conveys Radiotelephone Request Calls it shall
deliver the Calls to a BT Switch Connection at a BT DMSU, in
accordance with Annex A, which is as near as reasonably
practicable to the geographical location from which the Call
originated or at such other BT Switch Connection as may be agreed
in writing.
4. SERVICE QUALITY
4.1 BT shall convey Radiotelephone Request Calls handed over from the
Operator System and Radiotelephone Calls at the same standard and
quality of service as Calls made by BT Customers making such Calls
in that locality.
4.2 BT shall correct faults which occur in the BT System which affect
the conveyance of Radiotelephone Request Calls and Radiotelephone
Calls in accordance with BT's normal engineering practices. For
the avoidance of doubt, BT does not warrant that the BT System is,
or will be, free from faults.
4.3 The Operator shall correct faults which occur in the Operator
System which affect the conveyance of Radiotelephone Request Calls
and Radiotelephone Calls in accordance with the Operator's normal
engineering practices. For the avoidance of doubt, the Operator
does not warrant that the Operator System is, or will be, free
from faults.
5. DURATION
5.1 BT may terminate the provision of a Radiotelephone Service to the
Operator if BT ceases to provide Radiotelephone Calls for BT
Customers.
5.2 The Operator may terminate access to the Radiotelephone Services
under this Schedule by giving three months written notice to BT.
6. CHARGING
6.1 The Operator shall pay to BT for each Radiotelephone Call the
appropriate charge specified from time to time in the Carrier
Price List. There is a
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minimum charge equivalent to a three minute Radiotelephone Call.
For Radiotelephone Calls greater than three minutes, the duration
is rounded up to the next whole minute.
6.2 Where the BT Radio Officer telephones the Calling Party pursuant
to paragraph 2.4, the Operator shall release BT from any payment
to the Operator for such Call.
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ANNEX C
SCHEDULE 130
CUSTOMER SITED INTERCONNECT
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"2 MBIT/S CSI INTERCONNECT LINK" a portion of an Interconnect Link
comprising a 2 Mbit/s Path, an
Intrabuilding Link located at the
BT Switch Connection, and, as
appropriate, a Signalling Link;
"2 MBIT/S PATH" the transmission layer (comprising
the Multiplexors, LTE and a Line)
between the 2.048Mbit/s G703
interfaces of the Multiplexor
located at the Operator building
(housing the Point of Connection)
and the Multiplexor located at the
BT Switch Connection;
"LINE" the transmission medium between
the two LTE's forming part of the
2Mbit/s Path.
2. DESCRIPTION OF SERVICE
2.1 This Schedule applies to the provision of Customer Sited
Interconnect ("CSI") by BT, at the Operator's request, by the
Operator ordering CSI in units of single 2Mbit/s CSI Interconnect
Link.
2.2 Each 2Mbit/s CSI Interconnect Link contains not more than 30
traffic circuits and may, if required, contain a Signalling Link.
A 2Mbit/s CSI Interconnect Link is a component of a Traffic Route
and a Traffic Stream.
2.3 Unless otherwise agreed, a 2Mbit/s CSI Interconnect Link may
convey Traffic Types of both Parties.
3. PROVISION OF SERVICE
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3.1 The Operator shall provide at its expense at the Operator building
housing the Point of Connection, suitable accommodation for the BT
equipment at the agreed Point of Connection.
3.2 Subject to the provisions of this Schedule, BT shall provide the
2Mbit/s Path and the Intrabuilding Link which form part of the
Interconnect Link.
3.3 The Operator shall provide BT with access to the BT equipment at
the Point of Connection at reasonable times for provision and or
maintenance of 2Mbit/s CSI Interconnect Links. If consent is
required from a Third Party, the Operator shall procure such
consent. BT undertakes not to damage or destroy equipment forming
part of the Operator System whilst providing or maintaining
2Mbit/s CSI Interconnect Links. If such damage or destruction does
occur then, subject to the provisions of the main body of the
Agreement, BT shall pay the reasonable cost of repair or
replacement of such equipment, fair wear and tear excepted.
3.4 Subject to BT obtaining all necessary consents, BT shall provide
2Mbit/s Paths by optical fibre. If BT is unable to obtain such
consents BT, after notifying the Operator in writing, may:
3.4.1 suspend its obligations under the relevant order until such
time as the necessary consents are obtained; and/or
3.4.2 notify the Operator that, subject to the payment of additional
charges (if any), BT shall provide (as a temporary or
permanent measure) that 2 Mbit/s Path by radio.
3.5 If pursuant to paragraph 3.4.2 the Operator notifies BT that the
Operator does not accept provision by the use of radio, BT's
obligation to provide that CSI 2Mbit/s Interconnect Link shall be
suspended until such time as the necessary consents are obtained.
3.6 If BT notifies the Operator of its intention to suspend its
obligation to provide a CSI 2Mbit/s Interconnect Link in
accordance with this paragraph:-
3.6.1 BT shall, if practicable, inform the Operator of the date when
BT reasonably expects the necessary consents to be available;
and
3.6.2 the Operator may notify BT in writing of the cancellation of
the order for that CSI 2Mbit/s Interconnect Link without the
pre-payment provisions of Annex A being invoked.
3.7 If pursuant to paragraph 3.4.2 the Operator notifies BT that the
Operator accepts provision by the use of radio, BT shall so
provide the 2Mbit/s Path, provided that all necessary consents are
obtained.
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3.8 If a 2Mbit/s Path has been provided by radio, BT at its cost, may,
at its discretion, provide in substitution a 2Mbit/s Path by
optical fibre.
3.9 If the BT equipment at the Point of Connection requires a
continuous mains electricity supply and electricity connection
points, they shall be supplied, where specified by BT, by the
Operator at its expense. Such electricity shall be available at
the same level of supply, protection and continuity as that
available to the Operator equipment.
3.10 Forecasting, provisioning, routing principles and test procedures
are specified in Annex A.
3.11 The Operator shall provide and maintain, at its expense, the
portion of the Interconnect Link from the Point of Connection to
the Operator Switch Connection.
3.12 The Operator shall be solely responsible for any loss, theft or
destruction of, or damage (reasonable wear and tear excepted) to
BT equipment in the accommodation housing the agreed Point of
Connection, howsoever caused (unless caused by BT or its agents),
occurring at any time while such BT equipment is so located.
3.13 BT shall provide and maintain the 2Mbit/s Path to engineering
standards, (including diversity) not less than those used by BT to
provide its BT 2Mbit/s digital wide band service to BT Customers.
4. SIGNALLING
4.1 When ordering, for the first time, a 2Mbit/s CSI Interconnect Link
between a specific BT Switch Connection and a specific Operator
Switch Connection the Operator shall order a Signalling Link Set
and specify the Route Type(s) required. Where the BT Switch
Connection is at a BT ISC and the Operator has an Interconnect
Link to another BT ISC, the Parties may agree to a single
Signalling Link Set being used to support Interconnect Links to
two BT ISCs.
4.2 The Operator shall order an additional Signalling Link Set if the
total number of 2Mbit/s CSI Interconnect Links between the same
Switch Connections exceed 40 or multiples of 40.
4.3 An order for a Signalling Link Set shall include an order for two
2Mbit/s CSI Interconnect Links.
5. ROUTE TYPES
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5.1 Each Traffic Route is provided with a Route Type. Where a Party
orders an additional Route Type it shall specify the required
Traffic Type.
6. REARRANGEMENTS
6.1 The Operator may request, in accordance with Annex A, the
rearrangement of Intrabuilding Links on the Operator's side of the
Point of Connection, or, in the building housing the BT Switch
Connection. A change necessitating a 2Mbit/s Path being moved from
one building to another building is the termination of, and the
provision of a new 2Mbit/s CSI Interconnect Link.
7. CHARGES
7.1 Subject to the provisions of this paragraph 7, for each 2Mbit/s
CSI Interconnect Link, each Signalling Link Set and Route Type
ordered by the Operator, the Operator shall pay to BT the
connection and rental charges specified from time to time, in the
Carrier Price List.
7.2 An Intrabuilding Link charge applies to each order for a 2Mbit/s
CSI Interconnect Link. If an Intrabuilding Link contains a
Signalling Link which supports unidirectional traffic the charge
for that Intrabuilding Link is included in the Signalling Link Set
charge.
7.3 There are two different Signalling Link Set charges in respect of
Customer Sited Interconnect, namely, a charge for such a Link
conveying unidirectional traffic (including, notwithstanding such
Calls being conveyed in the opposite direction, Indirect Access
Calls) and a charge for such a Link carrying bothway traffic.
7.4 The Signalling Link Set charge includes one single Route Type.
Charges for additional Route Types are payable as specified from
time to time in the Carrier Price List.
7.5 Charges for re-arrangements, pursuant to paragraph 6.1, are
payable as specified, from time to time, in the Carrier Price
List.
7.6 BT shall apply its retail terms and conditions for the provision
by BT of ducting required for CSI. The Operator shall pay to BT
duct charges specified from time to time in the BT Retail Price
List for "Megastream Charges" - "Ancillary Charges".
7.7 The Operator shall pay the relevant connection charges specified
from time to time in the Carrier Price List for each provided
2Mbit/s CSI Interconnect Link.
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7.8 Where initial interconnection is provided by means of Customer
Sited Interconnect:
7.8.1 Until the sooner of the next Quarter Day after a period of six
months from the launch of the Operators initial commercial service
utilising Interconnect Links, or nine months after the provision
of the first 2Mbit/s CSI Interconnect Link, the Operator shall,
unless otherwise agreed in writing, pay rental for 2Mbit/s CSI
Interconnect Links in accordance with the following formula:
R(p) = R(t)
----
2
Where:
R(p) is the rental payable
R(t) is the sum of all 2Mbit/s CSI Interconnect Link
rental calculated from the relevant charges
specified from time to time in the Carrier Price
List.
7.8.2 After the period referred to in the preceding paragraph, or such
other date as the Parties may agree in writing, the Operator
shall pay rental for 2Mbit/s CSI Interconnect Links in accordance
with the following formula:
R(p) = R(t) x C(o)
----
C(t)
Where:
R(p) is the rental payable
R(t) is the sum of each and every 2Mbit/s CSI
Interconnect Link rental calculated from the
relevant charges specified from time to time in the
Carrier Price List;
and, taken from the relevant Interconnect Usage Reports of the
first three months of the period of four months preceding the due
rental date:
C(o) is the total Call minutes for Calls conveyed from
the Operator to BT (but including Indirect Access
Calls conveyed to the Operator and such other Call
types as may be agreed)
C(t) is the total Call minutes between the Parties.
7.8.3 Following the submission of the first bill pursuant to paragraph
7.8.2 the calculation pursuant to that paragraph shall be applied
to the preceding period for which the calculation in paragraph
7.8.1 applied, and any over or
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under payment by Operator shall be rectified by adjustment of the
next following invoice for 2Mbit/s CSI Interconnect Links.
7.9 Where interconnection between the Parties exists prior to the
provision of Customer Sited Interconnect, the rental for 2Mbit/s
CSI Interconnect Links shall be calculated in accordance with the
formula set down in paragraph 7.8.2.
7.10 A connection charge payable pursuant to this Schedule shall be
that applicable, from time to time, at the time of placement of
the order.
7.11 A rental charge payable pursuant to this Schedule shall be the
then current rental charge for the relevant rental period or
portion thereof, which shall be the due date referred to in
paragraph 7.12.
7.12 Connection and rental charges shall be due on the later of:
7.12.1 the date for the commencement of service of that 2
Mbit/s CSI Interconnect Link specified by the
Operator in the relevant order, or
7.12.2 the date which is the earlier of the relevant Ready
for Service Date or 30 days after the relevant Ready
for Test Date.
Rental charges shall be payable in accordance with the periodicity
specified in the Carrier Price List.
7.13 In addition to the charges specified from time to time in the
Carrier Price List, each Party shall, if applicable, make the
additional payments specified in Appendix C of Annex A.
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ANNEX C
SCHEDULE 140
DATA MANAGEMENT AMENDMENTS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless
stated otherwise, is to a paragraph or Appendix of this Schedule.
Words and expressions have the meaning given in Annex D, except as
shown below:
"BT ADMINISTRATIVE ZONE" a separate administrative unit
managing a portion of the BT
System;
"BT CHARGE BAND" for each BT Switch, a group of
Call destinations for which the
same BT retail charge (as
specified in the BT Retail Price
List) applies;
"DATA MANAGEMENT AMENDMENT" such reconfiguration of the BT
System as is necessary for access,
routing and charging of Calls.
2. DESCRIPTION OF SERVICE
2.1 This Schedule applies to Data Management Amendments made pursuant
to the Operator's request.
2.2 New Numbering Requirements.
2.2.1 The data changes on a BT Switch necessary for BT, using
current BT Charge Bands, to set up Traffic Streams for
Number Ranges and Access Codes, which changes apply to:
(a) a new AFN;
(b) a new NNG;
(c) discrimination of a single D digit, or DE digit on a
new NNG;
(d) discrimination of more than one D digit or DE digit
on a new NNG;
(e) a new Access Code;
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(f) a new Operator Free Phone NNG.
2.3 Traffic Stream Changes On A BT Switch.
2.3.1 The data changes on a BT Switch necessary for BT to alter
the destination of an existing Traffic Stream, which
changes apply to an:
(a) AFN;
(b) NNG;
(c) NNG with routing discrimination down to one or more
D digit combinations;
(d) NNG with routing discrimination down to one or more
DE digit combinations;
(e) Access Code;
(f) Operator Free Phone 0800 and an Operator Free Phone
NNG.
2.4 Changes To BT Charge Band Allocation.
2.4.1 The data changes on a BT Switch made necessary because of a
change at the Operator's request to the payments payable by
the Parties under a relevant Schedule, for BT to relocate
the Number Ranges from an allocated BT Charge Band to
another current BT Charge Band, which changes apply to:
(a) NNGs;
(b) NNGs with charging discrimination down to one or
more D digit combinations;
(c) NNGs with charging discrimination down to one or
more DE digits combinations.
2.5 Differential D Digit Charging Discrimination.
2.5.1 The data changes on a BT Switch necessary to expand an
existing NNG to an NNG with charging discrimination to a
maximum of two D digits.
2.6 Other Data Management Amendments.
2.6.1 Subject to the provisions of this Agreement, BT shall
install necessary changes (including data changes) for BT
to:
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(a) route Emergency Calls to appropriate Emergency
Centres;
(b) make such changes at BT Public Call Boxes or BT
Temporary Call Boxes (each as defined in Condition
11 of the BT Licence) to enable Operator Free Phone
Calls to be made from such Call Boxes;
(c) route Calls to Ported Number NTPs as defined in
Schedule 04 (Number Portability);
(d) route BT No Ring Calls as defined in Schedule 107
(BT No Ring Calls to the BT System (in connection
with a Telemetry Service)).
3. QUOTATION FOR SERVICE
3.1 The Operator shall submit to BT a written request for a quotation
for Data Management Amendments in relation to services to be
provided under a Schedule of this Agreement and with such request
provide to BT in writing the information reasonably necessary to
enable BT to produce an implementation programme.
3.2 Save for the changes under paragraph 2.6.1(b):
3.2.1 if a quotation is for a type of Data Management Amendment set
out in paragraphs 2.2, 2.4 or 2.5 and is for implementation by
BT over the whole geographic area covered by the BT System, BT
shall provide such quotation not later than 10 Working Days;
or
3.2.2 in all other cases, as soon as reasonably practicable, BT
shall provide a written quotation and implementation programme
both of which shall be provided not later than 20 Working
Days;
from receipt of the Operator's request for a quotation.
3.3 A quotation shall remain valid for six months from the date of
issue of the relevant quotation.
3.4 BT shall compile the quotation on the basis of the minimum cost to
the Operator that is consistent with good engineering practice in
executing work in the BT System.
3.5 For Data Management Amendments:
(a) for changes pursuant to 2.6.1(b) the implementation
programme and price shall be subject to the Parties'
written agreement; and
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(b) associated with Access Codes, BT may advise the Operator,
as soon as reasonably practicable and in any event not
later than the time of the provision of the implementation
programme, that the implementation programme may be in
excess of 40 Working Days;
and if the implementation programme is in excess of 40 Working
Days the implementation programme shall be subject to the Parties'
written agreement.
3.6 If, BT is late in providing a written quotation and implementation
programme pursuant to paragraph 3.2 and the Operator immediately
places an order for such pursuant to paragraph 4, BT shall
complete the implementation programme within the time periods
specified in paragraph 4.3 less the number of days that it was
late in providing the relevant quotation and implementation
programme.
4. ORDER AND IMPLEMENTATION PROCESS
4.1 Not later than six months from the date of a quotation, the
Operator may place on BT a written order accepting the quotation.
Such order shall specify the required date of completion of the
implementation programme, subject to such completion date being:
4.1.1 not less than 40 Working Days from the date of receipt of the
order by BT; and
4.1.2 not more than 40 Working Days after the validity period of the
relevant quotation.
4.2 As soon as practical and not later than two Working Days from the
date of BT's receipt, BT shall give written acknowledgement of
receipt of the order. BT shall proceed with the implementation
programme for the Data Management Amendment provided that:
4.2.1 the Operator and BT have agreed in writing the Schedule(s) for
service(s) or, the service is launched pursuant to paragraph 8
of the main body of the Agreement to which such Data
Management Amendment order relates;
4.2.2 the Operator has given written confirmation to BT that the
Number Ranges have been reserved and allocated to the Operator
by the Director General for use by the Operator or the
Operator provides to BT written authority, from the Third
Party Operator to whom the Number Range has been allocated, to
carry out the requested Data Management Amendment;
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4.2.3 the Operator and BT have agreed such Operator test facilities
as BT may reasonably require and the Operator has provided
such test facilities (including, without limitation, such
number of test lines and appropriate tone/announcement) by the
time of commencement by BT of the implementation programme;.
4.2.4 the order form has been completed by the Operator;
and sufficient Capacity (for testing by BT of the Data
Management Amendment) is ready for service or has been ordered
by the Operator with a Ready For Service Date being prior to
the commencement date of the implementation programme by BT.
4.3 Except for those Data Management Amendments specified in paragraphs
2.6.1(b) and 3.5(b) and subject to paragraphs 4.1, 4.2 and 4.4, BT
shall complete the implementation programme for the Data Management
Amendments not more than 40 Working Days from the date of receipt by BT
of the relevant order, or, if later, the required date for completion
specified in the relevant order.
4.4 Completion by BT of the implementation programme is subject to the
ongoing availability of sufficient Operator test facilities.
4.5 If the provisions of paragraphs 4.2 and 4.4 are not met, BT may suspend
the implementation programme and shall advise the Operator that work
shall not recommence until:
4.5.1 the Operator gives written confirmation to BT that the
provisions of paragraphs 4.2 and/or 4.4 (as the case may be)
have been met; and
4.5.2 the Parties agree any amendments to the implementation
programme and revisions (if any) to the Data Management
Amendment charges, such agreement not to be unreasonably
withheld or delayed;
and if work does not recommence within 60 Working Days, the
Data Management Amendment order (subject to BT giving not less
than 60 Working Days notice) shall be deemed a cancellation by
the Operator and the date of suspension by BT shall be the
date used to calculate the number of Working Days in
calculating the charges payable by the Operator pursuant to
paragraph 5.3.
4.6 A revision to the implementation programme in accordance with paragraph
4.5 may result in the implementation period being extended to such
period as is greater than 40 Working Days plus the period of delay.
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4.7 On completion of the implementation programme, BT shall give written
confirmation to the Operator of full implementation of the Data
Management Amendment order.
4.8 A reference in this Schedule to a matter being agreed between Parties
means such agreement not to be unreasonably withheld or delayed. If
agreement between the Parties is not reached pursuant to paragraphs 3.5
and 4.2 either Party may notify the other in writing of a Dispute.
5. CHARGING
5.1 The quotation for each type of Data Management Amendment requested by
the Operator pursuant to paragraph 2 (excluding those in paragraph
2.6.1(b)) shall be set out and calculated as the sum of the charges for
the following components:
(a) fixed charge; plus
(b) zone charge multiplied by the number of affected BT
Administrative Zones; plus
(c) processor charge for each affected BT Exchange type multiplied
by the number of such affected BT Exchanges.
The above component charges, for each type of Data Management
Amendment, shall be specified from time to time in the Carrier Price
List.
5.2 For implementation by BT of a Data Management Amendment order, the
Operator shall pay the charges quoted by BT and payment shall be due on
the earlier of:
5.2.1 BT giving written confirmation to the Operator of the full
implementation of the Data Management Amendment order; or
5.2.2 if the order has been subject to suspension pursuant to
paragraph 4.5, the original required date for the completion
of the work as specified in the original order.
5.3 If, prior to notification by BT to the Operator pursuant to paragraph
4.7, the Operator (a) requests a material alteration to the
implementation programme, or (b) cancels the order, within the time
periods set out below, the Operator shall pay to BT the charges set out
opposite such time periods, being the charges specified in the relevant
quotation for that order:
NUMBER OF WORKING DAYS PRIOR TO THE
REQUIRED DATE FOR THE COMPLETION OF THE CHARGE
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<TABLE>
<CAPTION>
<S> <C>
IMPLEMENTATION PROGRAMME
--------------------------------------------- ---------------------------------
20 or more fixed charge
--------------------------------------------- ---------------------------------
--------------------------------------------- ---------------------------------
19 - 10 fixed and zone charges
--------------------------------------------- ---------------------------------
--------------------------------------------- ---------------------------------
9 - 0 fixed, zone and processor charges
--------------------------------------------- ---------------------------------
</TABLE>
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ANNEX C
SCHEDULE 150
ENTRIES IN BT'S NUMBER INFORMATION SYSTEM (NIS) AND PHONE BOOKS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless stated
otherwise is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"BT DAS DATABASE" the BT database in machine-readable form of
names, addresses and telephone numbers used
by BT for the purpose of providing, by means
of the BT System, a Directory Information
Service;
"BT NIS DATABASE" the BT database containing information
(including without limitation, names,
address and telephone numbers) relating to
BT Customers and customers of certain Third
Party Operators;
"BT PHONE BASE" the BT database containing entries from time
to time available for the alphabetical
section of BT Phone Books;
"BT PHONE BOOK" an unclassified printed telephone directory,
published by BT, relating to a particular
geographical area and containing, in
alphabetical order, the names, addresses and
telephone numbers of BT Customers and
certain customers of Third Party Operators;
"BT PHONE DISK" a BT compact disc containing entries from
time to time available for the alphabetical
section of BT Phone Books;
"DIRECTORY INFORMATION SERVICE" a service as defined in Section 4(3) of the
Act;
"LORS DATABASE" the BT database used to view, add, amend and
delete names, addresses and telephone
numbers of certain Third Party Operators on
the BT NIS Database;
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"NIS INFORMATION" data, being the relevant part of Operator
Customer Information included in the BT NIS
Database in accordance with Operator
instructions and the practice applicable to
BT Customers;
"OPERATOR CUSTOMER INFORMATION" information provided by the Operator
relating to a person having a telephone
number allocated in accordance with the UK
national numbering scheme. The expression
shall also include information relating to
the Operator in respect of those telephone
numbers which the Operator has allocated
for its own use;
"OPERATOR EX-DIRECTORY INFORMATION" Operator Customer Information in respect of
which the Operator notifies BT in writing
that the telephone number is not to be
disclosed;
"PHONE BOOK INFORMATION" data, being part of Operator Customer
Information for inclusion in a BT Phone
Book, in accordance with the Operators
instructions and with the practice
applicable to BT Customers.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator of
services whereby BT includes NIS Information on the BT NIS Database and
Phone Book Information in BT Phone Books, BT Phone Base and BT Phone
Disk
2.2 If BT wishes to make a material change to the services set out in this
Schedule, it shall give the Operator 6 months' notice of such change.
The notice of such change shall be a review notice in accordance with
paragraph 19.1.3 of the main body of this Agreement.
3. INCLUSION OF OPERATOR CUSTOMER INFORMATION ON BT'S NIS DATABASE
3.1 The Operator shall:
3.1.1 for Operator Customer Information provided by the Operator via the BT
OLO Group (OLG):
3.1.1.1 supply to BT forecasts to enable BT to plan to meet its
obligations under this Schedule. These forecasts shall include
details of the
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number of new and additional entries, and of amendments and
cessations of information previously included on the BT NIS
Database. The forecasts shall initially be supplied before the
date upon which the Operator wishes the service to commence
and be for 2 years broken down quarterly. These forecasts
shall be up-dated at least once a year;
3.1.1.2 where the Operator provides Operator Customer Information in
written form, deliver the Operator Customer Information to BT
in the agreed format recorded in the NIS Manual;
3.1.1.3 where the Operator provides Operator Customer Information on
computer disk or by electronic data interchange, give BT two
weeks' written notice of the date on which delivery shall
commence and deliver the Operator Customer Information in the
agreed format recorded in the NIS Manual;
3.1.1.4 deliver collations of Operator Customer Information to BT on a
daily or weekly basis as agreed between the Parties and shall
use reasonable endeavours to ensure that the Operator Customer
Information is accurate and complete and that Operator
Ex-Directory Information is clearly marked as such;
3.1.2 when accessing the LORS Database:
3.1.2.1 input Operator Customer Information in accordance with the
format recorded in the NIS Manual;
3.1.2.2 access the LORS Database in accordance with the BT LORS Access
Guide Issue 1 dated June 1996 as the same may be updated from
time to time;
3.1.3 before passing Operator Customer Information to BT, obtain any
consents deemed necessary by the Operator or ensure that such
consents have been obtained, including those required under
the Data Protection Act 1984 so that BT may treat that
information in the same way as it treats information regarding
BT Customers held in the BT NIS Database;
3.1.4 nominate members of its staff, and telephone numbers to
contact such staff, in sufficient numbers as BT may reasonably
require as contact points to provide assistance to facilitate
the inclusion of Operator Customer Information onto the BT NIS
Database;
3.1.5 pay the appropriate charges in respect of Operator Customer
Information included on the BT NIS Database as specified from
time to time in the Carrier Price List. The holding charge is
payable per
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year, and payment is due on the next Quarter Day following the
date of entry of the particular Customer Information into the
BT NIS Database and yearly thereafter. For this purpose the
Quarter Days are 1 January, 1 April, 1 July and 1 October.
This charge is payable each year until deletion of the
Customer Information;
3.1.6 The charges for additions and amendments will become due on
the next Quarter Day.
3.2 BT shall use reasonable endeavours to include Operator Customer
Information on the BT NIS Database within 2 Working Days from receipt
of the Operator Customer Information pursuant to paragraph 3.1.1 and
within 1 Working Day from entry of the Operator Customer Information
onto the LORS Database pursuant to paragraph 3.1.2. BT shall then make
the Operator Customer Information available on the BT DAS Database, BT
Phone Base and BT Phone Disk in the same timescale as BT makes similar
information available relating to BT Customers.
3.3 Where any Operator Customer Information cannot be processed because
that information is inaccurate or incomplete, BT will reject that
information and inform the Operator within two Working Days. BT shall
be under no obligation to enter rejected information on the BT NIS
Database.
4. EXCEPTIONAL CIRCUMSTANCES
4.1 Where there is an established base of Operator Customer Information
which is to be included in the BT NIS Database pursuant to paragraph
3.1.1, the Parties will agree a timescale for entry of this Operator
Customer Information. BT will use reasonable endeavours to meet this
timescale and the Operator releases BT from the obligation set out in
paragraph 3.2.
4.2 Where the Operator provides more Operator Customer Information than it
has forecast pursuant to paragraph 3.1.1.1, BT will use reasonable
endeavours to enter this information in BT NIS Database but shall be
released from the obligation set out in paragraph 3.2. In this
circumstance, BT will invite the Operator to re-forecast further
requirements and to indicate the order in which BT should process the
Operator Customer Information.
5. BT PHONE BOOKS
5.1 Except where the Operator has asked BT to delete Operator Customer
Information, BT shall use reasonable endeavours to include in the next
and subsequent editions of the BT Phone Book specified in the Operator
Customer Information, Phone Book Information selected from NIS
Information included on the BT NIS Database in accordance with
paragraph 3.2 (other than that clearly marked by the Operator as
Operator Ex-Directory
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Information or as information that is not to be included in BT Phone
Books).
5.2 Entries in the BT Phone Books, including additional and special
directory entries, will be available in the same styles and formats as
are available to BT Customers.
5.3 BT shall not be obliged to produce any special or additional notice or
edition of any BT Phone Book in order to perform its obligations under
this paragraph 5. Each BT Phone Book will acknowledge, where
applicable, that it contains numbers of customers of Third Party
Operators other than BT. BT shall not be obliged to correct any error
or omission arising in connection with any entry of Operator Customer
Information or any other entry in any BT Phone Book. However BT shall
endeavour to correct errors or omissions notified to BT by the Operator
in subsequent editions of the BT Phone Book.
5.4 The choice of name and format for BT Phone Books shall at all times
remain within BT's sole discretion.
5.5 In addition to any other charges set out in the Schedule, the Operator
shall pay the appropriate charges for entries in BT Phone Books. The
rates to be paid by the Operator for the inclusion of additional
entries, and entries using bold or superbold typefaces, for entries
relating to Operator Customer Information in BT Phone Books shall be an
annual payment per edition of a BT Phone Book in which an entry is to
be included, and this will be four times the quarterly rental as
published from time to time in the BT Retail Price List for similar
entries and will become due on the next Quarter Day and annually
thereafter.
6. USE OF OPERATOR CUSTOMER INFORMATION
6.1 BT shall protect and be entitled to use Operator Customer Information
in all respects in the same manner as BT Customer information contained
in the BT NIS Database.
6.2 At the request of the police only, a BT Operator may ask a person whose
telephone number is classified as Operator Ex-Directory Information if
the person will accept a Call from the police.
6.3 BT shall be entitled to use, copy, modify, merge, re-sell, licence the
use of, transfer or publish all information contained on the BT NIS
Database and Phone Book Information (including entries based upon
Operator Customer Information other than Operator Ex-Directory
Information), which shall include publication by BT of any classified
or unclassified directory provided that BT shall not use Operator
Customer Information separately
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from the generality of information on the BT NIS Database or Phone Book
Information.
6.4 BT shall be entitled to permit Third Party Operators in the United
Kingdom and operators of Authorised Overseas Systems to access the BT
DAS Database or the information contained therein for the purpose of
providing Directory Information Services or telephone number
information, respectively.
7. COMMENCEMENT AND TERMINATION
7.1 BT shall provide service under this Schedule on and from the later of:
7.1.1 a date one month after the date this Schedule was incorporated
into the Agreement; or
7.1.2 such other date as the Parties may agree in writing.
7.2 The Operator may terminate the services provided under this Schedule by
giving 3 months' written notice to BT.
7.3 BT may terminate the services provided under this Schedule by giving 6
months' written notice to the Operator.
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ANNEX C
SCHEDULE 152
SUPPLY OF BT PHONE BOOKS
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless stated
otherwise is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"BT PHONE BOOK" one of BT's unclassified printed telephone
directories relating to a particular
geographical area and containing, in
alphabetical order, the names, addresses and
telephone numbers of BT Customers and
customers of Third Party Operators.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the supply of paperback versions of BT
Phone Books to the Operator. In this Schedule, the London-wide
Residential Phone Book shall count as two BT Phone Books for charging
and delivery purposes.
3. SUPPLY OF BT PHONE BOOKS AT ANY TIME
3.1 BT shall supply BT Phone Books to the Operator following receipt of a
written order in the agreed format recorded in the Phone Books Manual.
The BT Phone Books shall be delivered to a single address within the
United Kingdom specified by the Operator.
3.2 The charge for supply of BT Phone Books as provided for in paragraph
3.1 will be the price specified from time to time in the Carrier Price
List and where applicable, be subject to the discounts set out therein
where the BT Phone Books are delivered together against a single order
to a single address. BT shall invoice the Operator following delivery
of the BT Phone Books.
4. SUPPLY OF BT PHONE BOOKS AT A SCHEDULED PRINT DATE
4.1 BT shall provide to the Operator at approximately quarterly intervals,
a list of the dates on which production of new or reprinted BT Phone
Books will be completed during the subsequent twelve months. Where the
Operator provides to BT a written order for more than 1000 of the same
edition of BT
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Phone Books in the agreed format at least three months before the dates
on which production of new or reprinted BT Phone Books will be
completed, BT shall:
4.1.1 accept the order subject to payment of a order charge
specified from time to time in the Carrier Price List;
4.1.2 give the Operator the option of having the BT Phone Book put
into a coloured wrapper without any of the loose inserts which
BT would have packed with the BT Phone Book;
4.1.3 deliver the BT Phone Books to the Operator at a single address
in the United Kingdom subject to the Operator's agreement to
pay the Delivery Charges specified from time to time in the
Carrier Price List. Where the order is for more than 10,000 BT
Phone Books, BT shall provide a quotation for delivery upon
request;
4.1.4 permit the Operator to collect the ordered BT Phone Books from
BT's printing contractor subject to the Operator collecting
the BT Phone Books on the day following the day when
production is completed. In the event that the Operator fails
to so collect the BT Phone Books, BT shall be entitled to
charge the Operator reasonable sums for the removal and
storage of the BT Phone Books.
4.2 If the Operator does not exercise the options set out in paragraph
4.1.2 to 4.1.4 and orders in excess of 1000 BT Phone Books for
delivery, BT shall, at the Operator's request, arrange for the delivery
of the BT Phone Books to those persons specified by the Operator,
providing that the BT Phone Book concerned is one that BT distributes
automatically to BT Customers in the same geographical area. The
Operator shall:
4.2.1 provide an estimate of the number of addresses for which
delivery is required, at least three months before the
completion of the production of the BT Phone Books;
4.2.2 provide details of the names, full postal addresses, including
postcodes and number of BT Phone Books to be delivered for
each delivery address at least six weeks before completion of
production (except for delivery of the London Business and
Services Phone Book where details shall be provided to BT ten
weeks before the completion of production). The details shall
be supplied in the agreed written format or the agreed format
on computer disk which is recorded in the Phone Books Manual.
4.3 BT shall procure that its delivery contractor provides the same
delivery service to those persons specified by the Operator as it
provides to BT Customers in that locality.
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4.4 Where the Operator has ordered more BT Phone Books than are required
for delivery the Operator will provide an address in the United Kingdom
for delivery of the balance of BT Phone Books. Where this address is in
the delivery area for the BT Phone Books that are to be delivered on
the Operator's behalf, then BT shall arrange for the delivery of the
balance to be free of any additional delivery charge. Where the address
is outside the delivery areas the Operator shall pay BT's reasonable
delivery charge or collect the books from BT's printing contractor the
day following completion of production.
4.5 Where the Operator has ordered less BT Phone Books than are required
for delivery, BT shall make up the balance and will invoice the
Operator for the balance at the price specified from time to time in
the BT Retail Price List.
4.6 Where BT either fails to deliver a BT Phone Book in accordance with the
instructions provided pursuant to paragraph 4.2.2 or delivers it in a
damaged condition, BT shall arrange for that person to receive the BT
Phone Books. However, BT shall only respond to enquiries relating to
failure to deliver, the condition of BT Phone Books or the place where
the BT Phone Book is left by BT's delivery contractor.
4.7 Where BT is to deliver BT Phone Books to addresses supplied by the
Operator, the Operator shall provide a representative sample of 5% of
each the residential addresses and the business addresses. This sample
shall be used only for BT or its agents to check that BT delivery
contractor has satisfactorily completed its tasks. For each address in
the sample the Operator shall provide the name, address and telephone
number in an agreed format which is recorded in the Phone Book Manual.
5. COMMENCEMENT, DURATION AND REVIEW
5.1 The Operator may place orders for BT Phone Books in accordance with the
provisions of this Schedule on and from the date this Schedule was
incorporated into the Agreement. However the notice periods set out in
paragraph 4 above shall apply.
5.2 BT shall only be obliged to deliver the BT Phone Book to persons
nominated by the Operator pursuant to paragraph 4.2 above until 31 May
1997.
5.3 If BT wishes to make a material change to the services set out in this
Schedule or to cease delivery of BT Phone Books in accordance with this
Schedule, it shall give the Operator 6 months written notice. The
notice of such changes shall be a review notice in accordance with
paragraph 19.1.3 of the main body of this Agreement.
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6. CHARGING
6.1 The Operator shall pay BT the sums specified from time to time in the
Carrier Price List for the supply of BT Phone Books.
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ANNEX C
SCHEDULE 153
SUPPLY OF CUSTOMISED TELEPHONE DIRECTORIES
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless stated
otherwise is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"BT PHONE BOOK" one of BT's unclassified printed telephone
directories relating to a particular
geographical area and containing, in
alphabetical order, the names, addresses and
telephone numbers of BT Customers and
customers of Third Party Operators;
"CUSTOMISED TELEPHONE DIRECTORY" a printed telephone directory conforming to
the conditions set out in this Schedule and
containing a Preface and the alphabetical
section of a BT Phone Book listing names,
addresses and telephone numbers;
"PREFACE" the first 32 or 64 page section of a
Customised Telephone Directory which
precedes the alphabetical section;
"PRINT COMPLETION DATE" the date on which BT's printing contractor
plans to complete the printing of an edition
of a BT Phone Book and any Customised
Telephone Directories;
"PRINT PROOF" a print of a page suitable for checking the
accuracy, colour and printing quality;
"COPY" art work suitable for the manufacture of
printing plates, conforming to the
specification set out in Appendix 153.1.
2. DESCRIPTION OF SERVICE
2.1 This Schedule describes the provision by BT of Customised Telephone
Directories to the Operator.
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3. ORDERING
3.1 BT shall provide to the Operator, at approximately quarterly intervals,
a list of the known Print Completion Dates for new or reprinted BT
Phone Books.
3.2 The Operator shall order Customised Telephone Directories by completing
the order form set out in the Phone Books Manual such that it is
received by BT not less than 4 calendar months before the Print
Completion Date for the relevant edition of the BT Phone Book.
3.3 The minimum quantity per order for each edition of a Customised
Telephone Directory is 5000.
3.4 If the Operator requires BT to deliver the Customised Telephone
Directories it shall specify the delivery address in the order placed
pursuant to paragraph 3.2.
4. COMPOSITION OF CUSTOMISED TELEPHONE DIRECTORIES
4.1 The cover and Preface shall conform to the Customised Telephone
Directories Specification at Appendix 153.1.
5. NOTICES AND COPYRIGHT
5.1 The Operator shall include in a Customised Telephone Directory the
notices set out in Appendix 153.2.
5.2 The Operator hereby indemnifies BT against any and all claims for
infringement of any Intellectual Property Right of a Third Party in
respect of material provided by the Operator to BT for inclusion in a
Customised Telephone Directory.
5.3 BT hereby indemnifies the Operator against any and all claims for
infringement of any Intellectual Property Right of a Third Party in
respect of the alphabetical section of the Customised Telephone
Directory except in so far as such information has been provided by the
Operator.
6. PRODUCTION OF CUSTOMISED TELEPHONE DIRECTORIES
6.1 The Operator will supply to BT the Copy for all parts of the Customised
Telephone Directories (except the alphabetical section) not less than
40 Working Days before the relevant Print Completion Date.
6.2 30 Working Days before the relevant Print Completion Date, BT shall
provide to the Operator copies of Print Proofs of the cover of the
Customised Telephone Directories. The Operator shall:
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a) approve the quality and accuracy of the Print Proof and notify
BT in writing; or
b) notify BT in writing of those aspects of the quality or
accuracy of the Print Proof that are not acceptable;
not more than two Working Days from receipt of the Print Proof by the
Operator.
BT will use its reasonable endeavours to correct those aspects of the
Print Proof to which the Operator objects. If practicable BT shall
change the Print Proofs and resubmit Print Proofs for further approval
by the Operator. If the Operator accepts the quality and accuracy of
these resubmitted Print Proofs, the Operator shall indicate its
approval in writing to BT within one Working Day of receipt of such
resubmitted Print Proof. If the Operator rejects the resubmitted Print
Proofs (or fails to notify BT of its acceptance of the Print Proofs
within the periods specified above) the order for such Customised
Telephone Directories will be deemed to be cancelled. Approval shall be
indicated by completion of the relevant form set out in the Phone Book
Manual to BT.
6.3 Customised Telephone Directories shall be placed on pallets which, when
loaded, shall each be wrapped in stretch film.
7. DELIVERY OR COLLECTION OF CUSTOMISED TELEPHONE DIRECTORIES
7.1 Unless the Operator has requested delivery by BT, the Operator shall
collect the Customised Telephone Directories from the address specified
by BT within one Working Day of the Print Completion Date or such later
date as may be specified by BT.
7.2 Subject to an order being placed in accordance with paragraph 3.2, BT
will deliver Customised Telephone Directories to a single address in
the United Kingdom.
8. COMMENCEMENT, DURATION AND REVIEW
8.1 BT shall accept orders for Customised Telephone Directories from the
date this Schedule was incorporated into the Agreement.
8.2 BT shall not be obliged to provide Customised Telephone Directories
pursuant to this Schedule after 30th September 1998.
8.3 Where the Operator has previously ordered and BT intends to cease
provision of Customised Telephone Directories, BT shall send a notice
to the Operator on or before 31 March 1998 stating such intention.
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9. CHARGING
9.1 The Operator will pay to BT the charges specified from time to time in
the Carrier Price List for the supply of Customised Telephone
Directories.
9.2 If an order is cancelled by the Operator or deemed to be cancelled, the
Operator shall pay to BT the cancellation fee specified from time to
time in the Carrier Price List.
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APPENDIX 153.1
SPECIFICATION FOR THE COVERS AND PREFACES OF CUSTOMISED TELEPHONE DIRECTORIES
1. COVER
The cover will be 4 pages only plus spine (outside front - page 1,
inside front - page 2, inside back - page 3, outside back plus spine -
page 4 produced by the Offset Litho process.
Maximum finished size: 210mm wide x 297mm deep
Maximum Image Areas:
a) No Bleed 204mm wide x 291 mm deep
b) With Bleed 216mm wide x 303 mm deep
Maximum screen value for Halftone reproduction:
Cover pages 1 and 4 = 150#
Cover pages 2 and 3 = 120#
The Operator shall supply cover origination material as follows:
Cover pages 1 & 4 - same size film positives, separated for
standard 4 colour process printing (Yellow, Cyan, Magenta and
Black), film must be adjustable for spine wide.
Cover pages 2 & 3 - same size film positives, separated for
standard 4 colour process printing (Yellow, Cyan, Magenta and
Black) for each page.
Film shall be supplied with the image "right" reading (not
reversed) and emulsion side down. All colour separated film shall
be supplied with a full set of colour progressive proofs for
colour matching on BT printer's printing press.
The Preface shall be paginated and printed as follows:
a) 32 page section printed in "Black" ink only
b) 32 page section printed in "2 colours" (black and cyan) as BT
preface
c) 64 page section printed in "Black" ink only
d) 64 page section printed in "2 colours" (black and cyan) as BT
preface
The maximum acceptable image area for each page is:
a) 190mm wide x 282 mm deep (image centred on finished page size)
Maximum screen value for Halftone reproduction: 100#
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Maximum tint value for second colour underlay: 25%
Note: Text pages cannot be bled to the head or tail of the book, for
edge bleed can be accepted, if required, the bleed image area must be
extended to 216mm wide.
6mm is trimmed off the spine as part of the binding process.
The Operator shall supply Customised preface origination material as
follows:
same size film positives, separated for 2 colour printing if required.
Final film shall be supplied with the image "right" reading (not
reversed) with the emulsion side down.
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APPENDIX 153.2
NOTICES
1. The front cover of each Customised Telephone Directory shall be dated
with the month and year of production.
2. The front cover shall have a notice to the effect that the Customised
Telephone Directory contains telephone numbers of BT Customers and
those of certain other licensed telephone operators.
3. The Preface shall contain the following notices:
(a) COMPILATION. British Telecommunication plc compiles the
alphabetical section of this Directory. Every care is taken to
render the section as accurate as possible, but British
Telecommunications plc cannot accept any responsibility for
loss or damage which may arise or result from errors or
omissions. The contents of the alphabetical section relate to
the latest information available to British Telecommunications
plc at the time of going to print which may have altered
before this copy of the Directory is issued or may be altered
subsequently, without amendment to the alphabetical section.
Any information which may assist in maintaining the accuracy
of entries in future editions of this Directory will be
appreciated and should be sent to (Operator Contact point).
In no circumstances will British Telecommunications plc be
liable in respect of any error or omission from the
alphabetical section of this Directory.
(b) COPYRIGHT
Alphabetical section (C) British Telecommunications plc Copyright
reserved
1. No reproduction of the alphabetical section of the Directory,
in whole or in part, is allowed without prior permission in
writing to British Telecommunications plc.
2. The alphabetical section of this Directory, in whole or in
part, may not be stored in a retrieval system of any kind
without prior permission in writing of British
Telecommunications plc.
3. Attention is directed to Section 107 of the Copyright, Designs
and Patents Act 1988 which make it a criminal offence to
perform, without authorisation certain acts in relation to
copyright material.
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4. British Telecommunications plc may take legal action against
any person responsible for the unauthorised reproduction or
storage in a retrieval system of the alphabetical section of
this Directory.
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ANNEX C
SCHEDULE 154
LICENCE TO USE THE BT NIS DATABASE
1. DEFINITION
1.1 In this Schedule, a reference to a paragraph or Appendix, unless stated
otherwise is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"AMENDMENT INFORMATION" information supplied or to be supplied by BT
to the Operator for the Operator to update
the Licensed Database by changing, adding or
deleting Entries;
"BT NIS DATABASE" the BT database of information (including,
names, addresses and telephone numbers) of
BT Customers and customers of certain Third
Party Operators;
"BUSINESS CUSTOMER" a Customer recorded in a business category
on the BT NIS Database;
"DESIGNATED AREA" BT local exchange areas agreed between the
Parties;
"DIRECTORY INFORMATION SERVICE" a service as defined in Section 4 (3) of the
Act;
"DQR" a classification applied to an Entry
indicating that the Entry may not be
published in directories;
"ENTRY" the collection of data fields on the
Licensed Database, including fields for the
name, address and telephone number of a
Business Customer or Residential Customer,
and any privacy classification requested by
the customer;
"EX-DIRECTORY INFORMATION" information on the Licensed Database in
respect of which the telephone number is not
to be disclosed;
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"LICENSED DATABASE" the computerised list (including Amendment
Information), which BT supplies to the
Operator comprising a copy of each Entry
having a recorded address in the Designated
Area;
"RESIDENTIAL CUSTOMERS" a Customer recorded in a residential
category on the BT NIS Database.
2. DESCRIPTION OF SERVICE
2.1 The supply by BT to the Operator of a copy of the Licensed Database
including where applicable Amendment Information together with a
licence granted by BT to the Operator to use the Licensed Database to
publish and distribute the Operator's own printed telephone directories
and to provide Directory Information Services.
3. DELIVERY OF LICENSED DATABASE
3.1 BT shall:
3.1.1 following receipt of the Operator's written request deliver to
the Operator over a period of no more than thirteen weeks a
series of data files for a Designated Area in a format advised
to the Operator by BT. The data fields delivered over the
period shall form a complete copy of the Licensed Database for
the Designated Area.
3.1.2 during the delivery period referred to in paragraph 3.1.1 and
during the remainder of the Agreement, supply to the Operator,
for the Designated Area, Amendment Information at a frequency
agreed between the Parties.
4. LICENCE GRANT
4.1 BT grants to the Operator non-exclusive, non-transferable licences to
use the Licensed Database for the purposes of:
4.1.1 compiling, publishing and distributing printed telephone
directories subject to the printed telephone directories:
(a) not including Entries which are ex-Directory
Information;
(b) having entries ordered alphabetically by name in a
classified or unclassified format;
(c) containing not less than the name, address and
telephone number of persons; and
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(d) containing all Entries applicable to a particular
geographic area.
4.1.2 providing a Directory Information Service;
4.1.3 providing batch list matching telephone directory enquiry
services which shall comprise telephone numbers (including at
the Operator's option the area codes and/or exchange names)
provided always that the enquirer has supplied in list form on
paper, computer disc, or tape, the name and approximate
address of the person whose telephone number is sought.
4.2 The Operator may make not more than three (3) copies of the Licensed
Database and Amendment Information for the purposes of system security,
archive and back-up.
5. OPERATOR UNDERTAKINGS
5.1 The Operator shall:
5.1.1 except where providing the services permitted under this
Schedule treat the Licensed Database and Amendment Information
as Confidential Information;
5.1.2 treat Entries marked as Ex-Directory Information as
Confidential Information;
5.1.3 use Entries marked as DQR only for the purposes of providing
the Directory Information Service;
5.1.4 ensure that all printed telephone directories and the
Directory Information Services are based on up to date and
complete Licensed Database and/or Amendment Information;
5.1.5 mark each printed telephone directory with the date of its
publication.
5.2 The Operator shall not:
5.2.1 use the Licensed Database or any Confidential Information for
any marketing purposes;
5.2.2 use or permit the use of the Licensed Database or any
Confidential Information for the generation of marketing aids
(for example lists of any Customers ordered by address, by
telephone number, or by date of Entry amendment or addition to
the Licensed Database, whether for use in a mailing or
otherwise);
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5.2.3 without prior written consent, alter or change any copyright
or acknowledgement or confidentiality marking incorporated in
or applied to information, or documentation supplied by BT to
the Operator which relates to the Licensed Database or
Amendment Information.
6. ERROR HANDLING
6.1 If the Operator is made aware of any material errors or omissions in
the Licensed Database the Operator shall notify BT without delay of the
errors, at the following address:
The Operator Services Information Systems Manager
BT Operator Services
3rd Floor
Leeds Computer Centre
Dewsbury Road
LEEDS
LS11 5UQ
or to such other address as BT may notify to the Operator.
6.2 If BT receives a complaint which relates to or results from the
Operator's use of the Licensed Database, then, upon BT's request, the
Operator shall assist in BT's investigation of the complaint and take
such steps as are reasonably necessary to remedy the complaint as soon
as reasonably practicable.
7. MARKING
7.1 The Operator shall ensure that printed directories shall be marked with
the following legend:
"Produced under licence from and containing copyright material of
British Telecommunications plc".
8. COMMENCEMENT
8.1 BT shall provide the services set out in this Schedule from the date
this Schedule was incorporated into the Agreement.
9. CHARGING
9.1 The Operator shall pay to BT the charges specified from time to time in
the Carrier Price List for the supply and use of the Licensed Database
and the Amendment Information.
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9.2 If the Operator chooses a Designated Area containing less than all BT's
local exchange areas, the set up charge and annual payment shall be
reduced by the proportion the number of entries has to the total in all
BT local exchange areas subject to the minimum charge of 2-1/2% of the
prices specified from time to time in the Carrier Price List.
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BT STANDARD INTERCONNECT AGREEMENT
SCHEDULE 155
ACCESS TO THE BT DIRECTORY ASSISTANCE SYSTEM DATABASE USING OPERATOR SERVICES
CUSTOMER ACCESS AND SECURITY SYSTEM (OSCASS)
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix, unless stated
otherwise, is to a paragraph or Appendix of this Schedule. Words and
expressions have the meanings given in Annex D, except as shown below:
"APPLICATION PROGRAM" the software used to interpret the Dynamic
Link Library so that information can be
displayed on Computer Terminal Equipment;
"BT DAS" a BT computer system used by BT to access a
BT DAS Database, and sometimes known as the
Directory Access System;
"BT DAS COMPUTER CENTRE" a computer centre containing a BT DAS;
"BT DAS DATABASE" a BT database in machine readable form of
names, addresses and telephone numbers used
by BT for the purpose of providing, by means
of the BT System, a Directory Information
Service;
"BT DAS OPERATOR TRAINING PACKAGE" the training package provided by BT to the
Operator to enable Operator DAS Operators to
access the BT DAS Database and retrieve
appropriate information in accordance with
this Schedule;
"BT OSCASS" a BT platform which permits access to a BT
DAS by Operator DAS Operators;
"COMPUTER TERMINAL EQUIPMENT" computer equipment using a 486 or faster
processor with at least 8Mbyte of RAM used
by Operator DAS Operators on line to the BT
DAS Database as the
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man/machine interface to access information
on the BT DAS Database;
"DIRECTORY INFORMATION SERVICE" a service defined in Section 4 (3) of the
Act;
"DYNAMIC LINK LIBRARY" the functions and syntax of instructions
understood by BT DAS;
"EX-DIRECTORY INFORMATION" information on the BT DAS Database which is
marked to indicate that it is not to be
disclosed;
"OPERATOR CUSTOMER INFORMATION" information provided by the Operator
relating to a person having a telephone
number allocated in accordance with the
United Kingdom national telephone numbering
scheme. The expression shall also include
information relating to the Operator in
respect of those telephone numbers which the
Operator has allocated for its own use;
"OPERATOR DAS OPERATOR" a telephony operator who is directly
employed by or under the control of the
Operator and situated in the United Kingdom
and who is authorised by the Operator to
access a BT DAS Database for the purpose of
providing a Directory Information Service;
"OSCASS PORT" a port on the BT OSCASS which gives access
to a BT DAS by a single Operator DAS
Operator at any one time;
"PUBLIC FRAME RELAY SERVICE" a user-to-network interface for fast packet
switching.
2. DESCRIPTION OF SERVICE
2.1 This Schedule gives details of the provision by BT to the Operator of
access to the BT DAS Database via BT OSCASS accessed by means of the
Public Frame Relay Service or private circuits provided by BT.
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3. BT'S OBLIGATIONS
3.1 BT shall permit Operator DAS Operators, on a non exclusive basis, to
have remote on-line access to the BT DAS Database via BT OSCASS by
means of OSCASS Ports at an agreed level of capacity, Computer Terminal
Equipment and interfaces of the type specified in this Schedule and the
Public Frame Relay Service or private circuits provided by BT, linking
such Computer Terminal Equipment and the agreed BT DAS Computer Centre
for the sole purpose of the Operator providing a Directory Information
Service and for other ancillary purposes expressly permitted by this
Schedule.
3.2 BT shall provide such private circuits or Public Frame Relay Service
connections as are ordered by the Operator to access the BT DAS
Database in accordance with BT's Standard Conditions for Private
Service or BT's Data Network Portfolio Conditions respectively at the
retail tariff published from time to time in the BT Retail Price List.
3.3 BT gives no warranty that the data on the BT DAS Database will be free
from errors or inaccuracies.
3.4 The BT DAS Database provided for access by the Operator in accordance
with this Schedule will be available at all times except for the
periods when the data is being updated.
3.5 If BT wishes to make a material change to the services set out in this
Schedule, it shall give the Operator 6 months' written notice. The
notice of such changes shall be a review notice in accordance with
paragraph 19.1.3 of the main body of this Agreement.
3.6 BT shall provide the Operator with a written specification of the
Dynamic Link Library and any amendments from time to time
4. THE OPERATOR'S OBLIGATIONS.
4.1 The Operator shall be responsible at its own expense for the
acquisition and maintenance of the Computer Terminal Equipment.
4.2 The Operator shall be responsible at its own expense for the
acquisition of any licence or licences required to use the software
associated with access to the BT DAS Database and for the operation of
the Computer Terminal Equipment.
4.3 The Operator shall be responsible at its own expense for the
acquisition and maintenance of any Application Program used to read the
information supplied by the BT DAS Database in a form consistent with
the Dynamic Link Library.
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4.4 The Operator shall conform with the Dynamic Link Library and use
interfaces specified in Appendix 155.1 to this Schedule or such other
interfaces as BT may specify in writing from time to time.
4.5 Before the commencement of service under this Schedule, the Operator
shall agree with BT in writing the number of OSCASS Ports allocated to
the Operator connected to and capable of being used to access the BT
DAS Database. The Operator shall provide not less than 6 months'
written notice of any request to increase or decrease the number of
OSCASS Ports.
4.6 The Operator shall ensure that any Operator DAS Operator only has
access to the BT DAS Database when that Operator DAS Operator is
connected to a Calling Party by means of voice telephony, except where
Computer Terminal Equipment is being used for the purposes of training
of Operator DAS Operators to access the BT DAS Database, inspecting
Operator Customer Information or the Operator DAS Operator is
responding to a series of enquiries and is to provide that information
to the Calling Party at a later time.
4.7 The Operator may access the BT DAS Database to provide a Directory
Information Service, to provide training to Operator DAS Operators, or
for the purpose of inspecting Operator Customer Information held on the
BT DAS Database and for no other purpose.
4.8 The Operator shall access the BT DAS Database in accordance with the BT
DAS Operator Training Package as amended by BT from time to time.
4.9 The Operator shall not disclose to any Third Party information which is
Ex-Directory Information, other than the fact that a number is so
classified, and shall ensure that Ex-Directory Information cannot be
viewed or otherwise retrieved from the BT DAS Database.
4.10 The Operator shall ensure that access to the BT DAS Database is in
read-only format except that the Operator may use any printer which
forms part of the Computer Terminal Equipment, to the extent necessary
for the purpose of notifying BT of errors in the BT DAS Database.
4.11 The Operator shall comply with the fault and error reporting procedures
BT may specify in writing from time to time.
4.12 The Operator shall not, except as provided for under this Schedule,
reproduce or transmit any part of the BT DAS Database in any form, by
any means, whether electronic, mechanical, photocopying, recording or
otherwise, nor store the same in any information retrieval system of
any kind.
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4.13 Whilst having access to the BT DAS Database, the Operator shall not
knowingly do or permit to be done anything which will result in:
4.13.1 damage to a BT DAS Computer Centre; or
4.13.2 modification or damage to the BT DAS Database; or
4.13.3 modification or damage to a BT DAS.
4.14 The Operator shall make only such copies of the BT DAS Operator
Training Package as are necessary for training Operator DAS Operators
and not to disclose the contents to any person not employed by the
Operator.
4.15 The Operator shall use and connect the Computer Terminal Equipment only
in accordance with BT's relevant written instructions provided from
time to time. These written instructions shall be consistent with those
that BT provides to its own staff.
4.16 The Operator shall be responsible for ordering from BT any necessary
access to the Public Frame Relay Service or private circuits required.
4.17 The Operator shall pay the access fee for OSCASS Ports at the rate
specified from time to time in the Carrier Price List.
4.18 The Operator shall agree the Operator DAS Operator system security
policy and practice with BT in writing prior to commencement of service
under this Schedule and shall not change such without the prior
agreement of BT in writing.
5. TESTING
5.1 BT shall have the right to require testing of the Operator's access
system to confirm correct interworking. This may comprise testing of
the Operator's:
5.1.1 access network and
5.1.2 Application Program.
5.2 Not later than 30 working days after receipt of a written request from
the Operator, BT shall provide an initial indication of the level of
testing required, having been given details of the Operator's access
network arrangements and Application Program. BT and the Operator shall
then agree exact test requirements and timescales.
6. COMMENCEMENT AND DURATION.
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6.1 BT shall provide service under this Schedule on and from the later of
the date this Schedule was incorporated into the Agreement, the
contractual delivery date for the private circuit or Public Frame-Relay
Service connection referred to in paragraph 4.16, or such other date as
the Parties may agree in writing.
6.2 BT may terminate the provision of service under this Schedule by giving
12 months' written notice to the Operator.
6.3 The Operator may terminate access to the service provided under this
Schedule by giving 6 months' written notice to BT.
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APPENDIX 155.1
INTERFACES
The interfaces are as follows.
1. Access via the BT Public Frame Relay Service
Protocol: TCP/IP (IP over RFC 1294 Frame relay encapsulation) Committed
Information Rate: Default of 16k bps but will depend on usage.
2. Access via a KiloStream Circuit
Protocol: TCP/IP (IP over Cisco HDLC if Operator uses a Cisco Router or
IP over Point to Point Protocol (PPP) for other makes of router).
Line Speed: 64k bps
Physical Interface: X21
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ANNEX C
SCHEDULE 541
OPERATOR TELEPHONY CALLS TO THE OPERATOR SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless stated
otherwise, is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"ADC CALL CATEGORY (TRANSFER one of Local ADC (Transfer Charge Calls) or
CHARGE CALLS)" National ADC (Transfer Charge Calls), as
appropriate;
"LOCAL ADC (TRANSFER CHARGE CALLS)" the contributions towards BT's Access
Deficit that apply to Transfer Charge Calls
where, if Calls were conveyed wholly within
the BT System between the same originating
and terminating points (Calls made or
received on mobile terminal apparatus shall
for this purpose be treated as originating
or terminating at the relevant wireless
telegraphy station carrying the Call), such
Calls would be classified as local calls in
the BT Retail Price List;
"NATIONAL ADC (TRANSFER the contributions towards BT's Access
CHARGE CALLS)" Deficit that apply to Transfer Charge Calls
where, if Calls were conveyed wholly within
the BT System between the same originating
and terminating points (Calls made or
received on mobile terminal apparatus shall
for this purpose be treated as originating
or terminating at the relevant wireless
telegraphy station carrying the Call), such
Calls would be classified as national calls
in the BT Retail Price List;
"OPERATOR SEGMENT CALL" an Operator Telephony Call handed over from
the BT System to the Operator System,
switched by one or more Operator Exchanges,
to an Operator Network Termination Point.
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2. DESCRIPTION OF SERVICE
2.1 Subject to the provisions of this Schedule, the Operator shall convey
Operator Telephony Calls handed over from the BT System to the
appropriate Operator Network Termination Point.
2.2 Operator International Incoming Calls, Operator Transit Calls, Operator
BT to BT Transit Calls and Calls to Ancillary Services are not conveyed
pursuant to this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for the
conveyance of Calls pursuant to this Schedule.
2.4 The Operator's obligation to convey Operator ISDN Telephony Calls is
subject to the respective Systems and all relevant Switch Connections
of both Parties being suitable for the conveyance of Operator ISDN
Telephony Calls.
2.5 The Operator shall not be obliged under this Schedule to make its
System suitable for the conveyance of Operator ISDN Telephony Calls or
to provide equipment to its Customers enabling Operator ISDN Telephony
Calls.
2.6 The Operator shall convey Operator Telephony Calls during those periods
of time and at the same standard and quality of service as the Operator
conveys similar Calls.
2.7 Each Party shall correct faults which occur in its System which affect
the conveyance of Operator Telephony Calls in accordance with such
Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
3. ROUTING
3.1 The conveyance of Operator Telephony Calls shall be in accordance with
the routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of each Operator Telephony Call by the Operator, BT
shall pay the Operator a charge calculated in accordance with the rate
for such a Call specified from time to time in the Carrier Price List.
4.2 For the conveyance of each Operator Telephony Call by the Operator,
which is also a Transfer Charge Call, the Operator shall pay BT a
charge calculated in accordance with the rate for such a Call specified
from time to time in the
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Carrier Price List, and BT shall pay no charge to the Operator pursuant
to the preceding paragraph 4.1.
4.3 For the conveyance of each Operator Telephony Call by the Operator,
which is also a Transfer Charge Call, made by a Calling Party from a BT
Public Call Box or a BT Temporary Call Box (each as defined in
Condition 11 of the BT Licence), the Operator shall pay BT for each
such Call, in addition to any other charges, the BT Payphone Access
Levy specified from time to time in the Carrier Price List.
5. CONTRIBUTIONS TO BT'S ACCESS DEFICIT
5.1 Subject to the provisions of this paragraph 5, the Operator shall pay
for each Operator Telephony Call which is also a Transfer Charge Call,
a contribution to BT's Access Deficit at the rate specified for the ADC
Call Category (Transfer Charge Calls) specified in the Carrier Price
List from time to time. For these purposes, the ADC Call Category
(Transfer Charge Calls) shall be ascertained at the time when the
Answer Signal is generated.
5.2 If, prior to the date of the Agreement, either Party has requested the
Director General pursuant to Condition 13.5A of the BT Licence to
reduce the contribution to be made by the Operator towards BT's Access
Deficit, then payment of the contribution referred to in such request
shall be suspended until the Director General has dealt with the
request.
5.3 If, following a request referred to in paragraph 5.2, the Director
General determines not to reduce the contribution or determines that a
partial contribution shall be payable by the Operator towards BT's
Access Deficit, such contribution shall be payable accordingly with
effect from the date of this Agreement. The Operator shall pay any
outstanding contribution not later than one month after the date of
such determination.
5.4 If, following a request referred to in paragraph 5.2, the Director
General determines that no contribution shall be payable by the
Operator towards BT's Access Deficit no such contribution shall be
payable under paragraph 5.1.
5.5 If the Director General at any time determines pursuant to Condition
13.5A of the BT Licence that the contribution payable by the Operator
towards BT's Access Deficit should be varied or a contribution becomes
payable in accordance with Condition 13.5A of the BT Licence then the
Agreement shall be varied accordingly.
6. COMMENCEMENT
6.1 The Operator shall convey Operator Telephony Calls handed over from the
BT System commencing on a date to be agreed in writing by the Parties.
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7. REVIEW
7.1 The Review Date for charges for the conveyance of Operator Telephony
Calls shall be 1 April each year.
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ANNEX C
SCHEDULE 545
OPERATOR INTERNATIONAL INCOMING CALLS FROM AUTHORISED OVERSEAS SYSTEMS
VIA THE BT SYSTEM HANDED OVER TO THE OPERATOR SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless stated
otherwise, is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"OPERATOR SEGMENT CALL"
an Operator International Incoming Call
handed over from the BT System to the
Operator System, switched by one or more
other Operator Tandem Exchanges, to an
Operator Network Termination Point.
2. DESCRIPTION OF SERVICES
2.1 Subject to the provisions of this Schedule, the Operator shall convey
Operator International Incoming Calls handed over from the BT System to
the appropriate Operator Network Termination Point.
2.2 Operator Telephony Calls, Operator Transit Calls, Operator BT to BT
Transit Calls and Calls to Ancillary Services are not conveyed pursuant
to this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for the
conveyance of Calls pursuant to this Schedule.
2.4 The Operator's obligation to convey Operator ISDN International
Incoming Calls is subject to the Authorised Overseas System and the
respective Systems and all relevant Switch Connections of both Parties
being suitable for the conveyance of Operator ISDN International
Incoming Calls.
2.5 The Operator shall not be obliged under this Schedule to make its
System suitable for the conveyance of Operator ISDN International
Incoming Calls or to provide equipment to its Customers enabling
Operator ISDN International Incoming Calls.
2.6 The Operator shall convey Operator International Incoming Calls during
those periods of time and at the same standard and quality of service
as the Operator conveys similar Calls.
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2.7 Each Party shall correct faults which occur in its System which affect
the conveyance of Operator International Incoming Calls in accordance
with such Party's normal engineering practices. For the avoidance of
doubt, neither Party warrants that its System is, or will be, free from
faults.
3. ROUTING
3.1 The conveyance of Operator International Incoming Calls shall be in
accordance with the routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of each Operator International Incoming Call by the
Operator, BT shall pay the Operator a charge calculated in accordance
with the rate for such a Call specified from time to time in the
Carrier Price List.
4.2 For the conveyance of each Operator International Incoming Call by the
Operator, which is also a Transfer Charge Call, the Operator shall pay
BT a charge calculated in accordance with the rates for such a Call
specified from time to time in the Carrier Price List, and BT shall pay
no charge to the Operator pursuant to paragraph 4.1.
5. COMMENCEMENT
5.1 The Operator shall convey Operator International Incoming Calls handed
over from the BT System commencing on a date to be agreed in writing by
the Parties.
6. REVIEW
6.1 The Review Date for Operator International Incoming Calls shall be 1
April each year.
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ANNEX C
SCHEDULE 546
OPERATOR BT TO BT TRANSIT CALLS (PORTED) VIA THE OPERATOR SYSTEM
1. DEFINITIONS
1.1 In this Schedule, a reference to a paragraph or Appendix unless stated
otherwise, is to a paragraph or Appendix of this Schedule. Words and
expressions have the meaning given in Annex D, except as shown below:
"CENTREX" a partition of an Exchange used to provide business
features and short code dialling as required by
Customers;
"DDI" direct dialling in;
"DONOR" the Party from whose System the Number is being
ported;
"DONOR SYSTEM" the System from which the Number is being ported;
"OPERATOR SEGMENT an Operator BT to BT Transit Call, handed over from
BT TO BT TRANSIT CALL" the BT System to the Operator System, switched by one
or more Operator Exchanges, and handed over from the
Operator System to the BT System;
"NUMBER" shall have the meaning ascribed thereto in Condition
34B of the BT Licence, and for the purposes of this
Agreement there shall be excluded Numbers allocated
to ISDN exchange lines and to Number Groups used for
Centrex, DDI private branch exchanges or other
private branch exchange purposes;
"NUMBER GROUP" a range of consecutive Numbers used as a group by a
Party for certain functional or Customer purposes;
"NUMBER PORTABILITY" an arrangement between the Parties whereby a Customer
ceases to be provided with a Network Termination
Point by the
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Donor System and such Customer (at the same address
and at the same set of premises) is provided with a
Network Termination Point by the Recipient System,
such Network Termination Point having the same
Number as had the Number Termination Point ceased on
the Donor System;
"RECIPIENT" the Party to whose System the Number is being ported;
"RECIPIENT SYSTEM" the System to which the Number is being ported.
2. DESCRIPTION OF SERVICES
2.1 Subject to the provisions of this Schedule, the Operator shall convey
Operator BT to BT Transit Call handed over from the BT System to the
Operator System, to be handed back by the Operator System (as the Donor
System) to the BT System (as the Recipient System) pursuant to Schedule
04 (Number Portability) for delivery to a BT Network Termination Point.
2.2 Operator Telephony Calls, Operator Transit Calls and Operator BT to BT
Transit Calls (other than for the purposes of Number Portability), are
not conveyed pursuant to this Schedule.
2.3 The Parties shall agree in advance all necessary technical
requirements, including Call set-up and cleardown sequences, for the
conveyance of Calls pursuant to this Schedule.
2.4 The Operator's obligation to convey Operator ISDN BT to BT Transit
Calls is subject to the respective Systems and all relevant Switch
Connections of both Parties being suitable for the conveyance of
Operator ISDN BT to BT Transit Calls.
2.5 The Operator shall convey Operator BT to BT Transit calls during those
periods of time and at the same standard and quality of service as the
Operator conveys similar Calls.
2.6 Each Party shall correct faults which occur in its System which affect
the conveyance of Operator BT to BT Transit Calls in accordance with
such Party's normal engineering practices. For the avoidance of doubt,
neither Party warrants that its System is, or will be, free from
faults.
3. ROUTING
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3.1 The conveyance of Operator BT to BT Transit Calls, shall be in
accordance with the routing principles specified in Annex A.
4. CHARGING
4.1 For the conveyance of each Operator BT to BT Transit Call by the
Operator, BT shall pay the Operator a charge calculated in accordance
with the rate for such a Call specified from time to time in the
Carrier Price List.
5. REVIEW
5.1 The Review Date for Operator BT to BT Transit Calls shall be 1 April
each year.
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SUBJECT TO CONTRACT
This copy of the Revised Standard Interconnect Agreement is provided for
information and represents the status of the Agreement at the time it was
prepared. To enable identification Issue Numbers appear in the footer of each
part.
Because the Revised Standard Interconnect Agreement is subject to ongoing
development and improvement there may be changes. It will therefore be necessary
from time to time to check that this document represents the current state of
the Revised Standard Interconnect Agreement.
This document is not intended to be a formal offer on the part of BT.
At the conclusion of any discussions between an Operator and BT a Revised
Standard Contract will be prepared for signature based upon the latest version
of the Revised Standard Interconnect Agreement.
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ANNEX D
DEFINITIONS
In this Agreement, words and expressions have the following meanings:
"ACCESS CODE" a three or four digit code or a number
commencing with the digits 0800 followed by
a six or seven digit number which initiates
an Indirect Access Call;
"ACCESS DEFICIT CONTRIBUTION" the contribution to the funding of the BT
Access Deficit payable by the Operator to BT
pursuant to Condition 13.5A.3 and assessed
in accordance with Condition 13.5A.4 both
being Conditions of the BT Licence;
"ACO PERIOD" the period covered by an Advance Capacity
Order;
"ACT" Telecommunications Act 1984;
"ACTUAL CHARGE" the charge (or the means of calculating that
charge) for a Standard Service paid by a
Network Provider to BT in respect of the
whole or part of the Financial Year In
Question which is less than the Interim
Charge (whether as a result of the operation
of Condition 24F or following the consent of
the Director General to that lesser charge
pursuant to Condition 16B.5 being Conditions
of the BT Licence);
"ADDRESS COMPLETE MESSAGE" a signalling message required by the
originating System to indicate that
sufficient address digits have been received
and that a transmission path should be set
up;
"ADVANCE CAPACITY ORDER" that part of the Capacity Profile which sets
out the Capacity ordering intentions of the
relevant Party over the first four months of
the Capacity Profile and has the contractual
consequences outlined in Annex A;
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"AFN" the first three digits immediately after a
Director Area Number;
"AGREEMENT" this agreement, the Carrier Price List, the
Annexes, Schedules, Appendices and
Specifications;
"ANCILLARY SERVICE"
(a) a service which does not solely
comprise the conveyance of Calls;
or
(b) a Call, except a Transfer Charge
Call, where the Calling Party is
not required to pay all of the
charges associated with that Call;
or
(c) a Call where the Calling Party is
charged at a rate which includes an
element over and above the charge
for conveyance of that Call;
"ANNEX" annex A, B, C or D attached to this
Agreement;
"ANSWER SIGNAL" the signal required by the originating
network to indicate that the transmission
path is complete;
"APPENDIX" an appendix to a Schedule in Annex C;
"APPROVED AUDITOR" a Party's auditor appointed in accordance
with the Companies Act 1985 or such firm of
chartered accountants which a Party may
(subject to the other Party's written
approval) appoint (such approval not to be
unreasonably withheld or delayed);
"ASR" the Answer Seize Ratio expressed as a
percentage of Calls, which were successfully
switched and which received an answer,
compared to Call attempts, during a
particular measurement period;
"ASSOCIATED COMPANY" in relation to a Party:-
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(a) its Subsidiary or Holding Company
of that Party or another Subsidiary
of such Holding Company; or
(b) an associated company (as defined
in Statement of Standard Accounting
Practice No. 1 issued by the
Institute of Chartered Accountants
in England and Wales) of that
Party's Holding Company;
"AUTHORISED OVERSEAS SYSTEM" has the meaning in schedule 1 part 1 of the
BT Licence as in force at the date of this
Agreement;
"BILLING INFORMATION" such information provided pursuant to Annex
B by one Party to the other including,
without limitation:
(a) such information as is necessary to
ascertain the charges payable by
each Party under this Agreement;
and
(b) Interconnect Usage Reports, TIBS
Billing Information and Refund
Reports, information provided by
INCA, and by the Operator's
equivalent of TIBS and/or INCA;
"BILLING PARTY" the Party to whom charges are payable by the
other Party pursuant to this Agreement;
"BILLING PERIOD" unless otherwise agreed in writing, the
period of a calendar month commencing on the
first day of a month;
"BILLING SYSTEM" a system to collate Billing Information and
prepare invoices relating to charges payable
by each Party under this Agreement;
"BRITISH ISLES" United Kingdom, Channel Islands, Isle of Man
and Republic of Ireland;
"BT" British Telecommunications public limited
company;
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"BT'S ACCESS DEFICIT" has the meaning given to Access Deficit in
Condition 13.5A.3 of the BT Licence as in
force at the date of this Agreement;
"BT ANALOGUE LOCAL EXCHANGE" a TXE 4 or TXE 4A analogue local Switch in
OR "BT ALE" the BT System;
"BT BASIC INTERNATIONAL a Call, received by the Operator System from
INCOMING CALL" an Authorised Overseas System, comprising
the minimum service features necessary to
support a speech path through the BT System,
handed over from the Operator System to the
BT System, destined for a telephone number
of a BT Network Termination Point, being a
Call available for the conveyance of
Messages;
"BT BASIC INTERNATIONAL OUTGOING a Call, destined for an Authorised Overseas
CALL" System, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System if a rate
for such a Call is specified from time to
time in the Carrier Price List, being a Call
available for the conveyance of Messages;
"BT BASIC OPERATOR TO OPERATOR a Call comprising the minimum service
TRANSIT CALL" features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System destined
for the Operator System, if a rate for such
a Call is specified from time to time in the
Carrier Price List being a Call available
for the conveyance of Messages;
"BT BASIC TELEPHONY CALL" a Call, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System, destined
for a telephone number of a BT Network
Termination Point, being a Call available
for the conveyance of Messages;
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"BT BASIC TRANSIT CALL" a Call comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
Operator System to the BT System destined
for a Third Party Operator's system, being a
Call available for the conveyance of
Messages;
"BT CHARGE GROUP" a geographical area designated from time to
time by BT, and used for retail charges as
specified in the BT Retail Price List;
BT DIGITAL LOCAL EXCHANGE" OR a digital Switch in the BT System which
"BT DLE" Switch connects by that Switch alone Calls
from analogue exchanges, RCUs or Exchange
Lines;
"BT DJSU" a digital tandem Switch in the London
Director Area (currently known as a Digital
Junction Switching Unit) in the BT System
which provides access to certain BT Digital
Local Exchanges, BT DLTEs, BT ALEs and/or
other BT DJSUs in such Director Area and
adjacent BT Charge Groups;
"BT DLTE" a digital Switch in the BT System which
Switch connects by that Switch alone Calls
from analogue exchanges, RCUs or Exchange
Lines and which provides access to directly
connected BT Digital Local Exchanges and
directly connected BT ALEs;
"BT DMSU" a digital tandem Switch (currently known as
a Digital Main Switching Unit) in the BT
System, which provides access to other BT
Exchanges;
"BT EXCHANGE" a BT Analogue Local Exchange, a BT Digital
Local Exchange, a BT DLTE, a BT Tandem
Exchange or a BT ISC and such other Switch
which the Parties may from time to time
agree is a BT Exchange;
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"BT INTERNATIONAL INCOMING CALL" either a BT Basic International Incoming
Call or a BT ISDN International Incoming
Call;
"BT INTERNATIONAL OUTGOING CALL" either a BT Basic International Outgoing
Call or a BT ISDN International Outgoing
Call;
"BT ISC" a BT Exchange notified to the Operator
pursuant to paragraph 3.1.1 of Annex A which
is used exclusively for switching Calls to,
or received from Authorised Overseas
Systems;
"BT ISDN INTERNATIONAL INCOMING a Call, received by the Operator System from
CALL" an Authorised Overseas System, comprising
service features additional to the minimum
features necessary to support a speech path
through the BT System, being service
features described as bearer services,
teleservices or supplementary services in
the ETSI Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for a telephone number
of a BT Network Termination Point, being a
Call available for the conveyance of
Messages;
"BT ISDN INTERNATIONAL OUTGOING a Call, destined for an Authorised Overseas
CALL" System, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, if a rate for such a Call is
specified from time to time in the Carrier
Price List, being a Call available for the
conveyance of Messages;
"BT ISDN OPERATOR TO OPERATOR a Call comprising service features
TRANSIT CALL" additional to the minimum features
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necessary to support a speech path through
the BT System, being service features
described as bearer services, teleservices
or supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for the Operator System,
if a rate for such a Call is specified from
time to time in the Carrier Price List being
a Call available for the conveyance of
Messages;
"BT ISDN TELEPHONY CALL" a Call, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for a telephone number
of a BT Network Termination Point, being a
Call available for the conveyance of
Messages;
"BT ISDN TRANSIT CALL" a Call comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the Operator System to the
BT System, destined for a Third Party
Operator's system, being a Call available
for the conveyance of Messages;
"BT LICENCE" the licence granted to BT pursuant to
section 7 of the Act under which BT runs the
BT System;
"BT OPERATOR" a person who answers Calls for directory or
operator assistance, Emergency Calls and
other similar Calls for BT;
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"BT OPERATOR TO OPERATOR either a BT Basic Operator to Operator
TRANSIT CALL" Transit Call or a BT ISDN Operator to
Operator Transit Call;
"BT PAYPHONE ACCESS LEVY" the charge payable by the Operator for the
use of a BT Public Call Box or a BT
Temporary Call Box (each as defined in
Condition 11 of the BT Licence) to originate
a Call.
"BT PRS CALL" a Call to a PRS:
(a) for which if such Call originated
on the BT System, the person
responsible for payment would pay a
charge higher than that which would
apply to a directly dialled BT
Telephony Call of equivalent
distance and duration; and
(b) where payment is made by BT to a BT
PRS Service Provider and where
payment takes into account the
number or duration of Calls to that
BT PRS Service Provider;
"BT PRS SERVICE PROVIDER" a person having a contract with BT for the
delivery of BT PRS Calls;
"BT PRS SUB SERVICE PROVIDER" a person having an arrangement for the
delivery of BT PRS Calls, whether or not
legally binding, with a BT PRS Service
Provider;
"BT RETAIL PRICE LIST" the retail price list published by BT from
time to time pursuant to Condition 16 of the
BT Licence;
"BT SWITCH CONNECTION" a BT Exchange at which Calls handed over:
(a) from the Operator System are
initially switched; or
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(b) to the Operator System are finally
switched;
by BT;
"BT SYSTEM" the applicable system described in Annex A
of the BT Licence as in force at the date of
this Agreement;
"BT TANDEM EXCHANGE" a BT DMSU or a BT DJSU;
"BT TELEMESSAGE" has the meaning given to the term
"Telemessage" in the BT Retail Price List;
"BT TELEPHONY CALL" either a BT Basic Telephony Call or a BT
ISDN Telephony Call;
"BT TRANSIT CALL" either a BT Basic Transit Call or a BT ISDN
Transit Call;
"CALL" a transmission path through
Telecommunication Systems for the sending of
Messages, and a reference to conveyance of a
Call by a Party means the establishment by
that Party of a transmission path through
that Party's System and the conveyance by
that Party in accordance with this Agreement
of a Message (if any) over such transmission
path;
"CALLED PARTY" a person who receives a Call;
"CALLING PARTY" a person who initiates a Call;
"CAPACITY" capacity in units of 2 Mbit/s on
Interconnect Links;
"CAPACITY ORDER" an order for Capacity placed by one Party on
the other, pursuant to Annex A;
"CAPACITY PROFILE" a profile of future Capacity ordering
intentions over a 12 month period as
presented by one Party to the other pursuant
to Annex A;
"CAPACITY PROVISION" the provision of new or additional Capacity;
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"CAPACITY RE-ARRANGEMENT" the re-use of Capacity previously provided
by one Party to the other, where, in each
case, the Point of Connection and the
buildings containing the Switch Connections
remain the same;
"CARRIER PRICE LIST" the price list having that name which
contains charges for Standard Services
consistent with the full list of Standard
Services maintained by BT pursuant to
Condition 16B.8 of the BT Licence, charges
for services provided by the Operator and
some other charges and information;
"CARRIER CHARGE BAND REFERENCE such reference data (including EBC matrix,
DATA" complementary retail file and associated
files) as BT shall from time to time make
available to the Operator, being data for
the preparation and validation of Billing
Information for Calls;
"CHARGEABLE CALL" a Call for which a charge is made pursuant
to this Agreement;
"CHARGEABLE CALL DURATION" the duration of a Chargeable Call measured:
(a) for a Call (other than an
International Call), to the nearest
second (or such greater accuracy as
the Parties may agree in writing);
(b) for an International Call to not
less than the nearest second;
commencing with the receipt of an Answer
Signal and ceasing with the receipt of a
Release Signal at the point of recording by
the Party recording the relevant Billing
Information;
"CLI" has the meaning given to Calling Line
Identification in the draft "Code of
Practice for Network Operators in relation
to Calling Line Identification Display
Services and other Related Services" Version
6 dated 16
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November 1994 as the same may be amended or
replaced from time to time;
"COMPETITIVE STANDARD SERVICE" a Standard Service the market for which is
determined by the Director General to be
competitive pursuant to Condition 16B.6 of
the BT Licence;
"CONDITION" a condition of the BT Licence or the
Operator Licence as the case may be as in
force at the date of this Agreement, unless
otherwise stated;
"CONFIDENTIAL INFORMATION" any information, in whatever form, which in
the case of written or electronic
information is clearly designated as
confidential and which, in the case of
information disclosed orally, is identified
at the time of disclosure as being
confidential or is by its nature
confidential and including such Confidential
Information already disclosed by either
Party to the other prior to the date of this
Agreement but excluding any information
which:
(a) is in or comes into the public
domain other than by reason of a
breach of this Agreement; or
(b) is previously known on a
non-confidential basis to the
Receiving Party at the time of its
receipt; or
(c) is independently generated,
developed or discovered at any time
by or for the Receiving Party; or
(d) is subsequently received from a
Third Party without any restriction
on disclosure;
"CONVEYANCE STANDARD SERVICE" a Standard Service the charge for which may
be determined pursuant to Condition 13.5A of
the BT Licence;
"CUSTOMER" as the context requires:
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(a) a person having a contract with
either or both Parties for the
provision of telecommunication
services by means of that Party's
System; or
(b) a user of telecommunication
apparatus directly connected to the
BT System or the Operator System;
or
(c) a person having a contract with a
reseller of telecommunication
services to be provided by means of
either the BT System or the
Operator System or a user of
telecommunication apparatus
authorised by that person;
"CUSTOMER SITED INTERCONNECT" an Interconnect Link provided pursuant to
Schedule 130 of Annex C;
"CUSTOMER SERVICE PLAN" a document containing details of
individuals, addresses and telephone numbers
for ordering or maintenance of the services
provided pursuant to this Agreement;
"D" the first digit immediately following the
NNG;
"DATA MANAGEMENT AMENDMENT" such reconfiguration of the BT System or the
Operator System as is necessary for access,
routing and charging of Calls;
"DAYTIME" the period of time between 0800 and 1800 on
Monday to Friday or such other period of
time as shall be agreed between the Parties;
"DE" the first two digits immediately following
the NNG;
"DEFAULT INTEREST RATE" four per cent (4%) above the rate per annum
as displayed on the "LIBP" page (or such
other page whatever its designation on which
London Inter-Bank Offered Rates of major
banks for three months sterling
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deposits are for the time being displayed)
on the Reuters Monitor Money Rates Services
provided that if the offered rates of less
than two banks are so displayed then "LIBOR"
shall be the arithmetic mean as determined
by the Party charging interest of the
offered quotations of two leading clearing
banks in London, selected by such Party for
three months sterling deposits. Such
interest shall be calculated on a daily
basis;
"DIRECTOR AREA" an area comprising certain major United
Kingdom conurbations which area is delimited
by a Director Area Number;
"DIRECTOR AREA NUMBER" the code (excluding the leading zero)
comprising 3 digits for telephone numbers in
certain major United Kingdom conurbations;
"DIRECTOR GENERAL" the Director General of Telecommunications;
"DISCLOSING PARTY" a Party disclosing information to the other
Party;
"DISPUTE" a disagreement between the Parties excluding
breaches of this Agreement;
"DUE DATE" a date which is 30 calendar days after the
date of an invoice;
"E" the first digit immediately following the D;
"EFFECTIVE DATE" a date referred to by that name in the
Carrier Price List or in a Schedule being
the date on which a charge or a variation of
a charge referred to in the Carrier Price
List or a Schedule takes effect;
"EMERGENCY CALL" a 999 or 112 Call handed over from the
Operator System to the BT System;
"EMERGENCY CENTRE" premises where BT Operators answer Emergency
Calls;
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"EMERGENCY ORGANISATION" the relevant local public police, fire,
ambulance and coastguard services and other
similar organisation providing assistance to
the public in emergencies;
"ETSI" the European Telecommunications Standards
Institute;
"EVENING" periods of time not being either Daytime or
Weekend or such other period of time as
shall be agreed between the Parties;
"EXCHANGE LINE" has the meaning in schedule 1 part 1 of the
BT Licence as in force at the date of this
Agreement;
"FINAL CHARGE" in the case of charges payable to BT the
charge (or the means of calculating that
charge) for a Standard Service (other than a
Competitive Standard Service) for each
Financial Year In Question recalculated and
redetermined by the Director General based
on the Financial Statement for the Financial
Year In Question in accordance with
Condition 13.5A.3B or 13.5C.6 of the BT
Licence; and
in the case of charges payable to the
Operator the charge (or the means of
calculating that charge) for a service
provided by the Operator to BT for each
Financial Year In Question agreed between
the Parties in writing or determined by the
Director General based on the audited
figures relating to that service for the
relevant year or, if those figures are not
available, the most recent audited figures
which are available or, if no audited
figures are available the best information
available to the Director General in
accordance with Condition 13.5B.1A of the BT
Licence;
"FINANCIAL STATEMENT" has the meaning in Condition 20B of the BT
Licence;
"FINANCIAL YEAR" a period of one year used for accounting
purposes;
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"FINANCIAL YEAR IN QUESTION" a period of one year ending each 31 March in
respect of which a charge is payable for
services provided during that year;
"FORECAST" unless otherwise specified, has the meaning
in Condition 13.5A.3A of the BT Licence;
"FRBS STATEMENT" has the meaning in Condition 13.5A.3C (b) of
the BT Licence;
"FULLY PROVIDED" Capacity on a Traffic Route which will carry
all the relevant Traffic Streams at the
planned grade of service;
"G703 INTERFACE" an interface meeting the requirements of
ITU-T Recommendation G703 (Geneva 1991);
"GENERIC ELECTRICAL AND BT's Generic Electrical and Physical
PHYSICAL INTERFACE SPECIFICATION" Interface Specification, as amended or
substituted from time to time with the
Parties' agreement including without
limitation changes pursuant to paragraphs
3.2 or 3.3 of Annex A;
"GENERIC SDH INTERFACE BT's Generic Synchronous Digital Hierarchy
SPECIFICATION" Interface Specification, as amended or
substituted from time to time with the
Parties' agreement including without
limitation changes pursuant to paragraphs
3.2 and 3.3 of Annex A;
"GENERIC C7 SIGNALLING BT's Generic C7 Signalling Interface
INTERFACE SPECIFICATION" Specification, as amended or substituted
from time to time with the Parties'
agreement including without limitation
changes pursuant to paragraphs 3.2 or 3.3 of
Annex A;
"GENERIC TRANSMISSION BT's Generic Transmission Interface
INTERFACE SPECIFICATION" Specification, as amended or substituted
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from time to time with the Parties'
agreement including without limitation
changes pursuant to paragraphs 3.2 or 3.3 of
Annex A;
"GSM" Global System for Mobile Communications;
"HOLDING COMPANY" has the meaning in sections 736 and 736A of
the Companies Act 1985;
"INCA" BT's Inter Network Call Accounting System as
the same may be developed from time to time;
"INCOMING CALLS" Calls handed over at a Point of Connection
by BT to the Operator other than Indirect
Access Calls;
"INDIRECT ACCESS CALL" a Call where a Calling Party on one Party's
System has chosen to convey that Call to the
other Party's System by prefixing that Call
with an Access Code;
"IN-SPAN INTERCONNECT" an Interconnect Link provided pursuant to
Schedule 01;
"INTELLECTUAL PROPERTY RIGHTS" any patent, petty patent, registered design,
registered trade or service mark, copyright,
design right, semi-conductor topography
right, know-how or any similar right
exercisable in any part of the world
including any application therefor;
"INTERCONNECT EXTENSION CIRCUIT" a Link, being part of a 2Mbit/s ISI
OR "IEC" Interconnect Link, between the Muliplexor in
a Remote Switch Connection and the
Multiplexor terminating the ISI Interconnect
Link;
"INTERCONNECT LINK" a Link connecting a BT Switch Connection and
an Operator Switch Connection passing
through a Point of Connection;
PAGE 16 of 31
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SUBJECT TO CONTRACT
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"INTERCONNECT USAGE REPORT" a report in the same or substantially the
same form as specified in the Billing
Manual;
"INTERIM CHARGE" in the case charges payable to BT the charge
(or the means of calculating that charge)
for a Standard Service (other than a
Competitive Standard Service) for each
Financial Year In Question determined by the
Director General in accordance with
Condition 13.5A.3A or 13.5C.6 of the BT
Licence; and
in the case of charges payable to the
Operator the charge (or the means of
calculating that charge) for a service
provided by the Operator to BT for each
Financial Year In Question agreed between
the Parties in writing or determined by the
Director General in accordance with
Condition 13.5B.1A of the BT Licence;
"INTERNATIONAL CALL" a Call received by the BT System from:
(a) an Authorised Overseas System; or
(b) the Operator System destined for an
Authorised Overseas System; or
a Call received by the Operator System from:
(a) an Authorised Overseas System, or
(b) the BT System destined for an
Authorised Overseas System;
"INTRABUILDING LINK" a connection between a BT or an Operator
Switch Connection and the G703 Interface on
the Multiplexor forming part of an
Interconnect Link;
"INVOICE DATE" the date on which an invoice is despatched;
"ISI INTERCONNECT LINK" a portion of an Interconnect Link being that
cable (or fibres within that cable) and
LTE's between an Operator building and a BT
building over which a number of
PAGE 17 of 31
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SUBJECT TO CONTRACT
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2Mbit/s ISI Interconnect Links are provided;
"ITU-T" the Telecommunications Standards Bureau
(formerly the International Telegraph and
Telephone Consultative Committee) of the
International Telecommunications Union;
"LAND MOBILE RADIO SERVICE" has the meaning in Condition 18 of the BT
Licence;
"LICENCE" the BT Licence or, as the context requires,
the Operator Licence;
"LINK" telecommunication apparatus (which has the
meaning in paragraph 1 (1) of schedule 2 to
the Act as in force at the date of this
Agreement) necessary to establish one or
more transmission paths;
"MANUAL" manual referred to in this Agreement of
working practices between the Parties;
"MESSAGE" has the meaning in schedule 1, part 1 of the
BT Licence as in force at the date of this
Agreement;
"MOBILE CALL" a Call to an Operator Customer using a
mobile handset if the Operator Customer
using mobile terminal apparatus would
receive that Call by means of wireless
telegraphy if the handset was switched on
and within range of a base transceiver
station forming part of the Operator System
unless:
(a) the Operator Customer on a
temporary basis has chosen to
divert that Call to another number;
or
(b) the Operator System when the mobile
handset is turned off or out of
range from a base transceiver
station returns a message to that
effect to the Calling Party;
PAGE 18 of 31
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SUBJECT TO CONTRACT
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"MULTIPLEXOR" the multiplexing equipment which serves an
Intrabuilding Link and where appropriate an
IEC;
"NETWORK PROVIDER" in relation to each Standard Service, any
person who has required it, and with whom BT
is obliged to enter into an agreement to
provide that Standard Service under
Condition 13 of the BT Licence;
"NETWORK TERMINATION POINT" has the meaning in schedule 1 part 1 of the
BT Licence as in force at the date of this
Agreement;
"NEW CHARGE" a charge for a Standard Service, which is
less than the charge for that Standard
Service as determined by the Director
General pursuant to Condition 13, following
the consent of the Director General pursuant
to Condition 16B.5 both being Conditions of
the BT Licence;
"NICC" Network Interoperability Consultative
Committee;
"NNG" a national number group being the code
(excluding the leading zero) comprising for
UK telephone numbers (a) for geographical
numbers (excluding Director Area Number,)
four digits (b) for non-geographic numbers,
three digits;
"NON CONVEYANCE STANDARD SERVICE" a Standard Service which is not a Conveyance
Standard Service;
"NUMBER RANGE" Director Area Number, NNG, AFN, D, E, and/or
DE as appropriate;
"NUMBER TRANSLATION SERVICES CALL" a Call to non-geographic telephone numbers
(other than a Calls destined for a mobile
handset) if the Party receiving the Call
translates the dialled digits and routes the
Call in accordance with such translation,
including without limitation, PRS Calls,
Local Call Fee Access Services Calls,
Freephone Calls, National Call Services
Calls and other specially charged services;
PAGE 19 of 31
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SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
"OCHC" an operator Call handling centre which
routes Calls to BT Operators from Customers
seeking assistance with connection to
another telephone number;
"OFTEL INTEREST RATE" three eighths of one per cent (3/8%) above
the London Inter Bank Offered Rate being the
rate per annum of the offered quotation for
sterling deposits for delivery on the due
date for payment for a period of three
months as displayed on page 3750 on the
Telerate Service (or any other page that may
replace page 3750 on that service) at or
about 11 am London time on the due date of
payment provided that if such a rate is not
so displayed London Inter Bank Offered Rate
shall mean the rate quoted by National
Westminster Bank PLC to leading banks in the
London interbank market at or about 11 am
London time on the due date of payment for
the offering of sterling deposits of a
comparable amount for a period of three
months. Such interest shall be calculated on
a daily basis;
"OPERATOR" the other Party to this Agreement;
"OPERATOR BASIC a Call comprising the minimum service
BT TO BT TRANSIT CALL" features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System destined
for the BT System, if a rate for such a Call
is specified from time to time in the
Carrier Price List, being a Call available
for the conveyance of Messages;
"OPERATOR BASIC INTERNATIONAL a Call, received by the BT System from an
INCOMING CALL" Authorised Overseas System, comprising the
minimum service features necessary to
support a speech path through the BT System,
handed over from BT System to the Operator
System destined for a telephone number of an
Operator Network Termination Point, if a
rate for such a Call is specified from time
to time in the Carrier
PAGE 20 of 31
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SUBJECT TO CONTRACT
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Price List, being a Call available for the
conveyance of messages;
"OPERATOR BASIC INTERNATIONAL a Call, destined for an Authorised Overseas
OUTGOING CALL" System, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System, if a rate
for such a Call is specified from time to
time in the Carrier Price List, being a Call
available for the conveyance of Messages;
"OPERATOR BASIC TELEPHONY CALL" a Call, comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System, destined
for a telephone number of an Operator
Network Termination Point, being a Call
available for the conveyance of Messages;
"OPERATOR BASIC TRANSIT CALL" a Call comprising the minimum service
features necessary to support a speech path
through the BT System, handed over from the
BT System to the Operator System destined
for a Third Party Operator's system, if a
rate for such a Call is specified from time
to time in the Carrier Price List being a
Call available for the conveyance of
Messages;
"OPERATOR BT TO BT TRANSIT CALL" either an Operator Basic BT to BT Transit
Call or an Operator ISDN BT to BT Transit
Call;
"OPERATOR EXCHANGE" an Operator Local Exchange, Operator Mobile
Exchange or Operator Tandem Exchange and
such other Switch which the Parties may from
time to time agree is an Operator Exchange;
"OPERATOR INTERNATIONAL either an Operator Basic International
INCOMING CALL" Incoming Call or an Operator ISDN
International Incoming Call;
PAGE 21 of 31
<PAGE> 302
SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
"OPERATOR INTERNATIONAL either an Operator Basic International
OUTGOING CALL" Outgoing Call or an Operator ISDN
International Outgoing Call;
"OPERATOR ISDN BT TO BT a Call comprising service features
TRANSIT CALL" additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for the BT System,
if a rate for such a Call is specified from
time to time in the Carrier Price List being
a Call available for the conveyance of
Messages;
"OPERATOR ISDN INTERNATIONAL a Call, received by the BT System from an
INCOMING CALL" Authorised Overseas System, comprising
service features additional to the minimum
features necessary to support a speech path
through the BT System, being service
features described as bearer services,
teleservices or supplementary services in
the ETSI Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for a telephone
number of an Operator Network Termination
Point, if a rate for such a Call is
specified from time to time in the Carrier
Price List, being a Call available for the
conveyance of Messages;
"OPERATOR ISDN INTERNATIONAL a Call, destined for an Authorised Overseas
OUTGOING CALL" System, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
PAGE 22 of 31
<PAGE> 303
SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
handed over from the BT System to the
Operator System, if a rate for such a Call
is specified from time to time in the
Carrier Price List, being a Call available
for the conveyance of Messages;
"OPERATOR ISDN TELEPHONY CALL" a Call, comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for a telephone
number of an Operator Network Termination
Point, being a Call available for the
conveyance of Messages;
"OPERATOR ISDN TRANSIT CALL" a Call comprising service features
additional to the minimum features necessary
to support a speech path through the BT
System, being service features described as
bearer services, teleservices or
supplementary services in the ETSI
Memorandum of Understanding on the
Implementation of European ISDN Service,
handed over from the BT System to the
Operator System, destined for a Third Party
Operator's system, if a rate for such a Call
is specified from time to time in the
Carrier Price List being a Call available
for the conveyance of Messages;
"OPERATOR LICENCE" the licence granted to the Operator pursuant
to section 7 of the Act under which the
Operator runs the Operator System;
"OPERATOR LICENSED AREA" the geographical area in which the Operator
is permitted pursuant to the Operator
Licence to provide telecommunication
services;
"OPERATOR LOCAL EXCHANGE" a digital Switch, except an Operator Mobile
Exchange, in the Operator System which
Switch connects by that Switch alone Calls
PAGE 23 of 31
<PAGE> 304
SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
from Network Termination Points in the
Operator System;
"OPERATOR MOBILE EXCHANGE" a digital Switch in the Operator's System
which Switch connects by that Switch those
Calls from base stations and/or base station
controllers in the Operator System providing
a Land Mobile Radio Service for handsets;
"OPERATOR'S OPERATOR" a person who answers Calls for directory or
operator assistance or other similar Calls
for the Operator;
"OPERATOR PRS CALL" a Call to a PRS:
(a) for which if originated on the
Operator System, the person
responsible for payment would pay
at a rate higher than that which
would apply to a directly dialled
Operator Telephony Call of
equivalent distance and duration;
and
(b) if payment is made by the Operator
to a Operator PRS Service Provider
and if payment takes into account
the number or duration of Calls to
that the Operator PRS Service
Provider;
"OPERATOR PRS SERVICE PROVIDER" a person having a contract with the Operator
for the delivery of Operator PRS Calls;
"OPERATOR PRS SUB SERVICE PROVIDER" a person having an arrangement for the
delivery of Operator PRS Calls, whether or
not legally binding, with an Operator PRS
Service Provider, directly or indirectly;
"OPERATOR SYSTEM" the Telecommunication System run by the
Operator pursuant to the Operator Licence as
in force at the date of this Agreement;
"OPERATOR SWITCH CONNECTION" an Operator Exchange at which Calls handed
over:
PAGE 24 of 31
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SUBJECT TO CONTRACT
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(a) from the BT System are initially
switched; or
(b) to the BT System are finally
switched;
by the Operator;
"OPERATOR TANDEM EXCHANGE" a digital tandem Switch in the Operator
System which provides access to Operator
Local Exchanges or Operator Mobile
Exchanges;
"OPERATOR TELEPHONY CALL" either an Operator Basic Telephony Call or
an Operator ISDN Telephony Call;
"OPERATOR TRANSIT CALL" either an Operator Basic Transit Call or an
Operator ISDN Transit Call;
"OUTGOING CALL" a Call handed over at a Point of Connection
by the Operator to BT;
"PARENT BT EXCHANGE" a BT Tandem Exchange which has a direct
connection to a BT DLE, BT DLTE or BT ALE
for the conveyance of Calls in the ordinary
course of business;
"PARTY" a party to this Agreement;
"PATH PROTECTION" resilience improvement of an ISI
Interconnect Link as described in Schedule
01 of Annex C;
"PDH" plesiochronous digital hierarchy;
"POINT OF CONNECTION" a physical point where the BT System and the
Operator System are connected for Calls to
be handed over from one System to the other;
"PRE-INTERIM CHARGE" If the Director General has not determined
the Interim Charge (or the means of
calculating that charge) for the Financial
Year In Question;
in the case of charges payable to BT, for
each Standard Service (other than a
PAGE 25 of 31
<PAGE> 306
SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
Competitive Standard Service), the charge
fixed by BT for each such Standard Service;
and
in the case of charges payable to the
Operator, for each service provided by the
Operator to BT, the charge fixed by the
Operator for each such service;
"PRS" OR "PREMIUM RATE SERVICE" an entertainment or information service:
(a) which is accessed by means of a
Call and consists of, or includes
the sending of, speech, music,
other sounds or signals to the
Calling Party; and
(b) for which payment is made by means
of Call charges;
"PRS FRAUD" either:
a loss suffered by the Operator because of
the non payment of charges for BT PRS Calls,
in circumstances when the BT PRS Service
Provider or the BT PRS Sub Service Provider
organises or arranges for BT PRS Calls to be
made to his PRS in circumstances when there
is a reasonable expectation that the Calling
Party or the person responsible for payment
does not intend to pay or will seek to avoid
payment for all or part of the Call charges;
or
a loss suffered by BT because of the non
payment of charges for Operator PRS Calls,
in circumstances when the Operator PRS
Service Provider or the Operator PRS Sub
Service Provider organises or arranges for
Operator PRS Calls to be made to his PRS in
circumstances when there is a reasonable
expectation that the Calling Party or the
person responsible for payment does not
intend to pay or will seek to avoid payment
for all or part of the Call charges;
PAGE 26 of 31
<PAGE> 307
SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
"PURCHASER" the Party to whom Capacity is provided by
the Supplier;
"QUALITY SCHEDULE" has the meaning in Condition 17C of the BT
Licence;
"QUARTER DAYS" 1 January, 1 April, 1 July and 1 October in
each and every year;
"RCU" a remote concentrator unit supported by a BT
DLTE or a BT DLE;
"READY FOR SERVICE DATE" the date on which testing of Capacity at a
Switch Connection is satisfactorily
completed and such Capacity is ready for
service (in accordance with this Agreement);
"READY FOR TEST DATE" the date on which Capacity at a Switch
Connection is Ready for Testing;
"READY FOR TESTING" when the Supplier has satisfactorily
completed the provisioning of that part of
an Interconnect Link that is under his
direct control;
"RECEIVING PARTY" a Party receiving information from the
Disclosing Party;
"RELEASE SIGNAL" a signal which indicates that the
transmission path of a Call has been
disconnected;
"RELEVANT CONNECTABLE SYSTEM" has the meaning in Condition 13.9 of the BT
Licence;
"REMOTE SWITCH CONNECTION" a BT Switch Connection or an Operator Switch
Connection which:
(a) is accessed via a BT or Operator
building notified from time to time
pursuant to paragraph 3 of Annex A
as being suitable for supporting
IECs; and
(b) is connected by an BT IEC or an
Operator IEC, as the context
requires;
PAGE 27 of 31
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SUBJECT TO CONTRACT
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"REVIEW DATE" a date referred to by that name in this
Agreement or in a Schedule which entitles
either Party to serve a review notice
seeking to amend the charges referred to in
the Carrier Price List or in that Schedule;
"ROUTE AUGMENTATION" additional Capacity on an established
Traffic Route;
"ROUTE TYPE" the segregation of Capacity within a Traffic
Route for the conveyance of certain Traffic
Types;
"SCHEDULE" a schedule in Annex C of this Agreement;
"SDH" synchronous digital hierarchy;
"SIGNALLING LINK" a 64 Kbit/s digital path within a 2 Mbit/sec
Interconnect Link between two ITU-T 7
signalling nodes which is used for
signalling;
"SIGNALLING LINK SET" a pair of Signalling Links each within a
separate 2 Mbit/s system on an Interconnect
Link;
"SPECIFICATION" one of the Generic Electrical and Physical
Interface Specification, the Generic C7
Signalling Interface Specification, the
Generic Transmission Interface Specification
and the Generic SDH Interface Specification;
"STANDARD SERVICE" a service, including, without limitation, a
Competitive Standard Service, which a
Network Provider has required from BT and
which BT is obliged to provide, or to enter
into an agreement to provide, under
Condition 13 of the BT Licence;
"SUBSIDIARY" has the meaning in sections 736 and 736A of
the Companies Act 1985;
"SUPPLIER" the Party providing Capacity to the other
Party;
PAGE 28 of 31
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SUBJECT TO CONTRACT
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"SWITCH" telecommunication apparatus within a System
which performs the function of switching and
routing Calls;
"SWITCH CONNECTION" a BT Switch Connection or, as the context
requires, an Operator Switch Connection;
"SYSTEM" the BT System or, as the context requires,
the Operator System;
"SYSTEM ALTERATION" a change (other than a Data Management
Amendment) to a Party's System, which
requires a change to be made to the other
Party's System to allow the continuance of
the conveyance of Calls across a Point of
Connection pursuant to this Agreement;
"TARGET PERFORMANCE" has the meaning in Condition 17C of the BT
Licence;
"TECHNICAL MASTER PLAN" a document recording details of the Points
of Connection and the plans for development
of further Points of Connection;
"TECHNICAL REVIEW MEETING" a technical meeting pursuant to paragraph 13
of Annex A;
"TELECOMMUNICATION SYSTEM" a telecommunication system within the United
Kingdom as defined in section 4 of the Act
or an Authorised Overseas System;
"THIRD PARTY" a person other than BT or the Operator;
"THIRD PARTY INTERCONNECT" interconnect using a Third Party ISI
Interconnect Link;
"THIRD PARTY INTERCONNECT either:
AGREEMENT"
(a) an agreement between BT and a Third
Party Operator pursuant to
Condition 13 as it applies from
time to time of the BT Licence or
the equivalent Condition of the
Third Party Operator licence; or
PAGE 29 of 31
<PAGE> 310
SUBJECT TO CONTRACT
- --------------------------------------------------------------------------------
(b) an agreement between the Operator
and a Third Party Operator pursuant
to the Condition equivalent to
Condition 13 of the BT Licence
contained in either the Operator or
Third Party Operator licences;
"THIRD PARTY ISI INTERCONNECT an Interconnect Link as defined in Schedule
LINK" 01;
"THIRD PARTY OPERATOR" a person being neither the Operator nor BT
who is licensed under the Act to run a
Relevant Connectable System;
"TIBS" BT's Telecommunications Input Billing
System, which records information on certain
Calls which use the services of a BT
Operator or the operator of a Third Party;
"TIBS BILLING INFORMATION reports in the same or substantially the
AND REFUND REPORT" same form as in the Billing Manual;
"TIBS INFORMATION" itemised Call records of the services
provided by BT Operators or the operator of
a Third Party to the Operator which would
have resulted in a charge from BT had the
Calling Parties been BT Customers, together
with reports relating to Transfer Charge
Calls, ineffective calls, and any other
records which will result in charges to be
paid by or to the Operator for such
services;
"TRAFFIC FORECAST" a forecast of traffic at a BT Switch
Connection or Operator Switch Connection,
such forecast provided by one Party to the
other pursuant to paragraph 8 of Annex A;
"TRAFFIC ROUTE" discrete and identifiable units of 2 Mbit/s
Capacity within an Interconnect Link;
"TRAFFIC STREAM" a group of Calls carried from a specific
place in one Party's System to a specific
place in the other Party's System;
PAGE 30 of 31
<PAGE> 311
SUBJECT TO CONTRACT
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"TRAFFIC TYPE" a different identifiable type of Call;
"TRANSFER CHARGE CALL" a Call for which the Called Party is
requested and agrees to pay the cost of a
Call from the Calling Party;
"VAT" United Kingdom Value Added Tax;
"WEEKEND" period of time between 2400 on Friday and
2400 on Sunday or such other period of time
as shall be agreed between the Parties;
"WORKING DAY" any day other than Saturdays, Sundays,
public or bank holidays in the United
Kingdom.
PAGE 31 of 31
<PAGE> 1
EXHIBIT 10.48
STRICTLY PRIVATE & CONFIDENTIAL
A Michels Esq
Catalina
Abbottswood Drive
St Georges Hill
Weybridge
Surrey KT13 LLT
Dear Alan
I am writing further to our recent meeting in order to set out the Telewest
Communications Group Limited ("The Company") proposals on the termination of
your employment. These are as follows:
(a) You have resigned from your position as a director of Telewest
Communications plc, and from your employment and the secondment by and
through US West Overseas Operations Inc and any entity affiliated with
it ("US West") and any entity affiliated with any of them.
(b) It is agreed that your employment by Telewest Communications Group
Limited and within the Telewest Group accordingly terminated on 31
July 1996 simultaneous with the termination of your employment by and
secondment through US West. You will be paid your salary through the
usual channels to that day, and you will be paid in lieu of your pro
rata entitlement to accrued untaken holiday (if any). You will not
have any entitlement to salary or any other benefits arising after 31
July 1996. Payments made in accordance with this paragraph will be
subject to such deductions as the Company is required to make by law.
(c) You should submit any expenses claim against any company in the
Telewest Group to me by no later than 30 September 1996. The Company
will reimburse you expenses incurred by you in the performance of your
duties in the usual way.
(d) (i) US West will, under the terms of the Secondment Agreement between
the Company and US West arrange for you and your family to be
repatriated to the destination of your choice in the United
States. You will be reimbursed for your reasonable removal and
travel costs incurred in connection with you and your family's
relocation to the United States.
(ii) You will continue to participate in the U S WEST benefits plans
in accordance with their terms and as specifically defined in
attachment A to this Agreement and nothing in this Agreement
shall affect your entitlement to a pension as set out in
attachment A.
<PAGE> 2
(e) With effect from 31 July 1996 you and your family will no longer enjoy
membership of the Company's BUPA medical expenses insurance scheme and
you should make your own arrangements from that date.
(f) The Company will permit you to exercise any options held by you under
(i) the TeleWest 1995 (No. 1) Executive Share Option Scheme ("the No.
1 Scheme") and (ii) the Telewest 1995 (No. 2) Executive Share Option
Scheme ("the No. 2 Scheme") at any time between 1 August 1996 and 5
September 1999 for options granted under the No 1 Scheme and at any
time between 1 August 1996 and 9 May 1999 for options granted on 9
November 1996 under the No. 2 Scheme and at any time between 1 August
1996 and 5 September 1999 for options granted on 6 March 1996 under
the No. 2 Scheme subject always to the Rules of those Schemes.
(g) The Company will pay to you (pound)457,000, in compensation for the
early termination of your employment. This sum will be paid within
fourteen days of the date of this Agreement or by, if later, 7 days
after the expiry of the right referred to in paragraph (p) ("the
alternative date").
(h) The Company will pay to you by way of further compensation for the
termination of your employment any further benefit you would have
received if, when your US tax returns for 1996 and UK tax returns for
1996/7 are settled with the relevant taxing authorities, the US West
tax equalisation policy would have resulted in your receiving a
benefit in excess of (pound)98,646, in which event the Company will
pay the excess over (pound)98,646.
(i) The Company and you believe that of the payments to be made under
paragraph (g) and (h) (if any) above the first(pound)30,000 should be
free of income tax and that only 28% of the balance should be subject
to income tax in the United Kingdom. However, the Company will
withhold 24% of the sums payable under paragraph (g) and (h) above
pending the determination of your liability to account for UK Income
Tax, and will pay to you any part of that sum for which the Company is
not required to account to the Inland Revenue. In the meantime, the
Company will not pay any of the monies withheld to the Inland Revenue
until requested to do so by yourself or the Inland Revenue.
(j) The Company will pay you the sum of (pound)73,353 in consideration of
the covenants contained in Clause 13 of the Service Agreement between
the Company and you dated 21 November 1994 remaining in full force and
effect for a period of 12 months from 31 July 1996. This payment will
be subject to deductions for income tax and social security
contributions before payment to you. This sum will be paid within
fourteen days of the date of this Agreement or by the alternative date
if later.
(k) You agree to return all books, documents, papers (including copies),
material, credit cards, keys or other property of or relating to the
business of the Company or any other Company within the Telewest Group
of Companies, the US West Group of Companies, and any entity
affiliated with any of them (including your company car, keys and
related documentation) and any of its or their customers, clients or
suppliers to the Company's premises as Genesis Park, Woking, Surrey on
or before 31 October 1996.
<PAGE> 3
(l) You agree that you will not at any time in the future disclose or
communicate to any person or use for your own benefit or the benefit
of any other person any confidential information belonging to the
Company or any other company in the Telewest Group, US West and any
entity affiliated with any of the said corporations which may have
come to your knowledge in the course of your employment by the Company
provided that this restriction shall cease to apply to any
confidential information which enters the public domain other than
through your own default.
(m) You agree that you will keep confidential the terms of this Agreement
and the reason for your departure from the Company, save for such
disclosures as have been made or may need to be made to your
professional advisers, tax authorities, or members of your immediately
family and that you will not at any time in the future say or do
anything which might bring the Company into disrepute or damage its
reputation, and for its part the Company agrees that it will not do or
say anything which might bring you into disrepute or damage your
reputation.
(n) You agree that you will not, without the prior written consent of the
Company (which shall not be unreasonably withheld), sell or otherwise
dispose of the shares in the Company which will be transferred to you
under the terms of the Company's Restricted Share Scheme at any time
before 1 February 1997.
(o) These terms are proposed as being in full and final settlement of all
and any claims you may have against the Company or any other company
within the Telewest Group of Companies, US West or Tele-Communications
Inc., and any holding or subsidiary company or affiliated entity of
any of them and any of their officers, directors or employees and
whether arising in the United Kingdom, the United States of America or
in any other jurisdiction relating to your employment by Telewest
Communications Group Limited or the holding of any office within the
Telewest Group, your employment or secondment by or the holding of any
office within US West or any entity affiliated with any of them the
termination of your employment or loss of any office or any other
matter, including, without limiting the generality of the foregoing,
any obligation, demand, cause of action, judgment, controversy or
claim of any kind or nature, whether sounding in contract, statute,
tort, fraud, misrepresentation, discrimination or any other legal
theory, including but not limited to claims under the US WEST
Management Separation Plan, Title VII of the Civil Rights Act of 1964,
as amended, the Civil Rights Act of 1991, the Age Discrimination in
Employment Act of 1967, as amended, 42 U.S.C. 1981, 1981a, 1983, 1985,
or 1988, The Family and Medical Leave Act of 1993, the Americans with
Disabilities Act of 1990, as amended, the Fair Labor Standards Act of
1938, as amended, and the Employee's Retirement Income Security Act of
1974, as amended; or any other applicable federal state or local
employment related statute or ordinance arising under the laws of the
United States or for unfair dismissal under the Employment Protection
(Consolidation) Act 1978 or the Race Relations Act 1976.
(p) By signing this Agreement, you acknowledge that you have been advised
to consult an attorney or lawyer before signing, that you have been
provided with a period of at least 21 days in which to consider the
terms of this Agreement, that you have been informed you have the
right to revoke this Agreement at any time
<PAGE> 4
within 7 days after signing it by providing us with written
notification, that your signature of this letter has not been procured
by any promises or representations from any person or entity other
than those expressly stated herein and that you sign this Agreement of
your own free will without coercion.
(q) The Company will arrange for Arthur Anderson to assist you with the
preparation of tax returns relating to the US tax year ending 31
December 1996 and UK tax year ending 5 April 1997.
(r) The Company hereby waives and releases you from all and any claims it
may have against you relating to your employment, or the performance
of your duties for the Company and any company in the TeleWest Group
whether as officer or employee of which it has knowledge at the date
of this Agreement.
(s) (i) Any claim, controversy or dispute between you and US West, to
which neither the Company nor any company in the Telewest Group
is a party, as defined in paragraph (q) above whenever brought is
to be resolved by arbitration in Denver, Colorado. The only legal
claims between you and US West that are not included for
arbitration within this Agreement are claims for workers'
compensation or unemployment compensation benefits. By signing
this Agreement, you voluntarily, knowingly and intelligently
waive any right you may otherwise have to seek remedies in court
or other forums, including the right to a jury trial. The Federal
Arbitration Act, 9 USC Sections 1-16 ("FAA") shall govern the
arbitrability of all claims, provided that they are enforceable
under the FAA, as it may be amended from time to time. In the
event the FAA does not govern, the Colorado Uniform Arbitration
Act shall apply. This Agreement for arbitration supersedes any
other arbitration agreement between you and US West to the extent
that they are inconsistent.
(ii) A single arbitrator engaged in the practice of law shall conduct
any arbitration under clause (s)(i) above under the applicable
rules and procedures of the American Arbitration Association
("AAA"). The parties shall select a mutually satisfactory
arbitrator. Other than as set forth herein, the arbitrator shall
have no authority to add to, detract from, change, amend or
modify existing law. All arbitration proceedings, including
without limitation, settlements and awards, under this Agreement
will be confidential. The parties shall share equally the fees
and expenses of the arbitrator. The prevailing party in any
arbitration may be entitled to receive reasonable attorney's
fees. The arbitrator's decision and award shall be final and
binding, as to all claims that were, or would have been, raised
in the arbitration, and judgement upon the award rendered by the
arbitrator may be entered to any court having jurisdiction
thereof. If any party hereto files a judicial or administrative
action asserting claims subject to this arbitration provision,
and another party successfully stays such action and/or compels
arbitration of such claims, the party filling said action shall
pay the other party's costs and expenses incurred in seeking such
stay and/or compelling arbitration, including reasonable
attorney's fees.
<PAGE> 5
(iii) Any dispute, difference or question arising out of the terms of
this Agreement to which you, US West and TeleWest are a party
shall be referred to a single arbitrator for resolution, to be a
barrister or solicitor of at least 10 years standing, to be
appointed by agreement between the parties or in default of
agreement by the President for the time being of the Law Society
the arbitrator's decision to be final and binding upon the
parties in the absence of manifest error or error of law, subject
to the provisions of the Arbitration Act 1950 and 1979.
For the avoidance of doubt, I should confirm that the shares allocated to you
under the Company's Restricted Share Scheme will vest on 1 January 1997 and,
subject to clause (n) above, you will be free to dispose of them. The Company
will pay your reasonable legal and accounting costs incurred in connection with
this Agreement subject to a maximum amount in aggregate of (pound)10,000
exclusive of VAT and receipt by the Company of invoice(s) in respect of the same
addressed to you but expressed to be payable by the Company.
No doubt you will wish to consider, and take advice in relation to the terms
proposed. Once you have decided if you wish to accept our proposals, please sign
and return the copy of this letter enclosed for this purpose.
I confirm my agreement to the above.
Signed: /s/ Alan Michels dated: 12/23/96
---------------------------
I look forward to hearing from you.
Yours sincerely
/s/ Cob Stenham
- -------------------
For and on behalf of
TELEWEST COMMUNICATIONS PLC
Signed: /S/ B. M. Maise
-------------------------
For and on behalf of
US WEST OVERSEAS OPERATIONS INC.,
<PAGE> 6
ATTACHMENT A
As provided in your Assignment Letter, and as calculated by our benefits
department, you are entitled to the following pay-outs or other options under
the terms of the U S WEST Benefits Plans in which you have participated:
1. PENSION - You are vested in the U S WEST Pension Plan. The Qualified pension
benefit on a straight life basis, is $14,231/year payable at age 65. You also
are eligible to receive lump sum distributions of your Nonqualified and
Mid-Career pension benefits. The Nonqualified lump sum pension benefit is
estimated to be $61,293. The Mid-Career lump sum pension benefit is estimated to
be $62,770. These lump sum amounts are payable on October 18, 1996 or the next
available date after the effective date of this Agreement but must be paid
before December 31, 1996. The lump sum distributions are taxable upon
distribution and are not eligible to be rolled over into a qualified retirement
plan. The Nonqualified and Mid-Career estimates were based on a termination date
of July 31st and a discount rate of 4.58%.
2. EXECUTIVE LIFE INSURANCE - Your Basic Executive Life Insurance coverage ended
at the end of August, 1996. However, you have several options available
regarding the Executive Supplemental Life Insurance. They are as follows:
a) If you do not wish to purchase the policy for approximately
$28,704, you may return the supplemental policy with no further obligation.
You will receive the difference between the purchase price (approximately
$28,704) and cash value (approximately $29,684).
b) If you wish to purchase the policy under any of the options
described below, you will have to pay approximately $28,704 to U S WEST.
The options available are:
i) maintain the death benefit at $538,000 - This option would
require approximate annual premium contributions by you of $3,123/year
through 2014 based on current interest and mortality assumption, or
ii) decrease the death benefit to $240,000 - This option would
require no further premium contributions by you based on current
interest and mortality assumptions.
YOU MUST NOTIFY U S WEST OF YOUR INTENT UNDER ANY OF THE ABOVE DESCRIBED OPTIONS
WITHIN 60 DAYS OF YOUR TERMINATION DATE. U S WEST WILL WAIVE THIS REQUIREMENT
UPON YOUR REQUEST.
3. HEALTHCARE - You will receive information on your options to maintain health
care coverage under COBRA from COBRAServ. U S WEST will compensate you for
twelve months of COBRA payments or will make these payments directly, at its
choice. You are responsible to elect COBRA coverage directly, in accordance with
the information you will receive from COBRAServ.
4. DISABILITY - Coverage ends on the last day of employment.
5. SAVINGS PLAN - You may either roll your taxable balance over into another
plan or leave your balance intact in the Plan. For balance information, you may
contact Banker's Trust on 800-729-PLAN (in the US) or 615-835-3700
(international). You will need your PIN number in order to access the system.
<PAGE> 7
6. DEFERRED COMPENSATION - You have a balance of $23,005.80 as of 7-15-96. This
amount will continue to accrue interest through the payment date. This account
will be paid in a lump sum by March 15, 1997, pursuant to the terms of the
deferred compensation plan. This amount is not eligible for rollover into a tax
qualified retirement plan.
7. STOCK OPTIONS - You have the opportunity to exercise vested stock options
pursuant to the terms of your Non-Incentive Stock Option Agreements dated August
7, 1992, December 4, 1992, and October 8, 1993. Your options on 4,500 shares of
Media and Communications group stock did not vest before your termination date,
and therefore, are forfeited. Our records indicate that, as of September 10,
1996, you had the opportunity to exercise options on 6,000 shares of vested
grants in Media group stock. Pursuant to the terms of your Agreements, your
options must be exercised within 90 days of your termination date. U S WEST will
waive this requirement.
YOU WILL BE RESPONSIBLE FOR ANY U.S. TAX OBLIGATIONS YOU INCUR AS A RESULT OF
THE ABOVE DESCRIBED BENEFITS.
<PAGE> 1
EXHIBIT 10.51.1
ADDENDUM TO LETTERS OF UNDERSTANDING
This addendum to the letters of understanding regarding International assignment
is made by and between US West Overseas Operations, Inc. and Lynn Rexroth and is
an addendum to that certain Letter of Understanding reached between the parties
and signed by you on December 24, 1992 and the Addendum of January, 1996.
The Letters of Understanding are hereby amended as follows:
EXTENSION OF AGREEMENT
You agree to extend the term of your assignment starting July 1, 1996 to July 1,
1997 understanding that needs of the business may necessitate an additional
extension. Any extension would be by mutual agreement between Gary Ames and
yourself.
You have the right to end or terminate employment at TeleWest, with sixty days
notice to the Company, if either of the following occurs:
- The Chief Operating Officer's job, or a comparable job within U S
West's domestic cable organization, is offered.
- Major illness or health problems occur in the immediate family (self,
spouse, children, children's spouses, grandchildren).
JOB TITLE
Your new job title will be Chief Operating Officer.
COMPENSATION
Your base salary will be increased to 175,000 pounds effective July 1, 1996. A
one time retroactive base pay adjustment will be made in the amount of 30,000
pounds.
HOME VISITS
You and your wife are each entitled to a maximum of four home visits per year
(in accordance with your current vacation days), starting from July 1, 1996.
These home visits, for the employee, are to be scheduled by mutual agreement
with Stephen Davidson and in conjunction with needs of the business.
NO CHANGE
The remaining terms of the Letters of Understanding between parties continue in
full force and effect.
<PAGE> 2
/s/ A. Gary Ames
- ---------------------------------------
A. Gary Ames
Board of Directors - TeleWest Communications
/s/ Beth M. Moise
- ----------------------------------------
Beth M. Moise, Ph.D.
Vice President-International Human Resources
U S West Overseas Operations, Inc. Representative
/s/ Lynn Rexroth
- ----------------------------------------
Lynn Rexroth
Date: August 28, 1996
----------------------------------
<PAGE> 1
Exhibit 10.54
CONFORMED COPY
Telewest Communications Group Ltd Statement of Terms and Conditions
______________________________________________________________________________
TELEWEST
TELEWEST COMMUNICATIONS GROUP LIMITED
STATEMENT OF TERMS AND CONDITIONS
Employer: TELEWEST COMMUNICATIONS GROUP LIMITED
("the Company")
Genesis Business Park, Albert Drive,
Woking, Surrey GU21 5RW
Employee: Mr. Bruce D Langham, North Lodge, Coles Lane, Capel,
Surrey, RH5 5HS
Initial place of
employment will be: Genesis Business Park, Albert Drive, Woking, Surrey,
GU21 5RW
1. Previous Employment
(i) If any terms or conditions of your employment with any previous employer
shall for any reason be held to have transferred and apply to your employment by
the Company, your consent to the change to the terms and conditions set out in
this document which together with the Company Handbook shall govern and regulate
your employment by the Company. Your agreement to any changes will be sought at
least 12 months before the change becomes effective.
(ii) Unless otherwise deemed by law or agreed between you and the Company no
period of employment with a previous employer or the Company shall be treated as
continuous with any period of employment by the Company.
2. Commencement of Employment
Your employment under this contract will commence on 1st April 1996, (and your
period of continuous employment for the purposes of the Employment Protection
(Consolidation Act 1978 commenced on 28th October 1991.
______________________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 2
3. Position
You will be employed as a SVP Operation and additionally you may be
required to undertake such other duties as the Company may from time to time
request you to perform to meet the needs of the business. In this position you
will report to Lynn Rexroth the SVP Group Operation of TeleWest plc.
You are required to comply with all the Company's rules, regulations
and policies. The Company reserves the right to vary any of these rules,
regulations and policies, or to introduce new ones and you will be notified of
any such changes.
4. Hours of Work
You will be required to work a minimum of 37 1/2 hours per week. Your
normal hours of work will be 9:00 am to 5:30 pm Monday to Friday. The Company
reserves the right to alter these hours from time to time to meet the needs of
the business.
At the discretion of the Management you may be required to work outside
these normal working hours to meet the Company's requirements. If this is
necessary payment will not be made for overtime work.
5. Place of Work
As a term of your employment you may be required to work at or from
your initial place of employment or any other of the Company's establishments.
6. Payment
Your salary will be at the rate of L98,000 per annum, or such other sums
as may be notified to you in writing, payable monthly on the 26th day of each
month or the closest preceding working day to the 26th day of each month if the
26th falls on a weekend or a Bank Holiday (26 days in arrears, the remainder of
the month in advance) net of all standard and agreed deductions. Your salary
will be reviewed annually. You agree that during the period of your employment
you will maintain a Bank, Building Society or similar account for the purpose
of receiving the payment of your wages. The Company operates an annual bonus
scheme. Under the terms of the current scheme your bonus opportunity would be
0-25% of salary earned (variable to 50%) payable on performance against
budgeted company objectives.
_______________________________________________________________________________
TeleWest Communications Group Ltd. Statement of Terms and Conditions
<PAGE> 3
The Company reserves the right to deduct from your remuneration, and
you agree that the Company will deduct from your remuneration, any monies due
to the Company and notified to you, at any time that such debt accrues and for
all deductions to be made from the final payment due on the termination of
employment. The Company reserves the right to claim any shortfall from you
should insufficient monies exist in you final salary. This clause will also
apply in cases of overpayment of any remuneration or any other payments
(statutory or discretionary) made by error or through any misrepresentation or
otherwise by the Company, you or any third party. The Company also reserves the
right to withhold payment or deduct from salary a day's pay for each
unauthorised day of absence.
7. Expenses
The Company will reimburse you for any reasonable expenses properly
incurred by you while performing your duties on behalf of the Company, subject
to such expenses being within the relevant rules of the Company (as amended
from time to time) and to your producing receipts in respect of such expenses
when requested to do so by the Company.
8. (a) Holidays
The holiday year runs from 1 January to 31 December. Your basic holiday
entitlement is 22 working days. Upon reaching three years' continuous service
with TeleWest your annual holiday will increase by one day per year of service
thereafter up to a maximum of 25 days. If your employment commenced or
terminates part way through the holiday year, your entitlement to holidays
during that year will be assessed on a pro rata basis. Holidays must be taken
at times convenient to the Company and at least 14 days notice of intention to
take holiday must be given to your immediate manager. No more that 10 working
days holiday may be taken at any one time unless prior permission is given by
your immediate manager. In exceptional circumstances unused holiday entitlement
up to a maximum of 5 days may be carried over to the next year to be taken
during the first three months of the following holiday year provided that prior
written permission of your immediate manager is obtained.
_______________________________________________________________________________
TeleWest Communications Group Ltd. Statement of Terms and Conditions
<PAGE> 4
(b) Holiday Pay
Holiday pay is payable at the basic rate. Any excess of holiday
taken over earned entitlement will be deducted from your entitlement
to final pay on leaving. If this amount is in excess of your final pay,
we may still seek to recover this money from you. Payment for any
unused entitlement on leaving will be added to your final salary,
unless you are dismissed for gross misconduct or leave without
giving proper notice when you will forfeit any right to accrued
holiday pay.
(c) Public Holidays
Public Holidays are in addition to annual holiday and are as
follows:-
Good Friday, Easter Monday, May Day Holiday, Spring Bank
Holiday, August Bank Holiday, Christmas Day, Boxing Day,
New Year's Day and any other day as decreed by Parliament.
9. Sickness, Absences and Sick Pay
The procedure to follow in the event of sickness or injury
preventing you from attending work can be found in the Company
Handbook. Your entitlement to sick pay is under the Statutory
Sick Pay Scheme and the Company's sick pay scheme. Company Sick
Pay is based on standard pay inclusive of any Statutory Sick Pay but
excluding 'On Target Earnings'.
Company Sick Pay
----------------
During Probationary Period No entitlement
End of Probationary period 3 weeks (15 days)
to one year of continuous service
Between 1 and 2 years of continuous 6 weeks (30 days)
service
Over 2 years of continuous service 13 weeks (65 days)
Short-term Disability
---------------------
Provides a maximum of 12 weeks of standard pay for employees
(excluding 'On Target Earnings') with more than one year's service.
This payment is available once Company Sick Pay Entitlement has been
exhausted and is at the discretion of the Vice President Human
Resources.
______________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 5
Permanent Health Insurance
--------------------------
See Appendix D. For further details please refer to the Company
Handbook.
10. Maternity/Paternity Provisions
Female employees are entitled to maternity leave and pay in
accordance with statutory and Company provisions. You are required to
inform the Company, as soon as you are in a position to do so, that your
pregnancy has been confirmed. Male employees are entitled to two days
paid leave, to be taken at the time of your wife or partner having a
baby.
11. Grievances and Discipline
(i) Grievance Procedure -- If you have a grievance regarding your
employment you should, in the first instance, speak to your immediate
manager. If the grievance is then not resolved to your satisfaction,
you should refer to the grievance procedure which is set out in the
Company Handbook.
(ii) The disciplinary rules applicable to you are to be found in the
Company Handbook. If you are dissatisfied with any disciplinary decision taken
in relation to you, you should refer to the disciplinary procedure to be found
in the Company Handbook.
12. Performance Appraisal
In relation to the performance of your duties, you will be required
to participate in an appraisal scheme operated within the Company for
employees at your grade or level, subject to any amendments or modifications
that may be made to the scheme. For this purpose, participation means being
involved in the scheme as an appraisee, or appraiser, or both. Review of
salary from time to time will be affected by the outcome of the annual
appraisal. Further, annual appraisals may result in disciplinary action, in
accordance with normal procedure, where performance is not being achieved.
13. Probationary Period
All employment is subject to successful completion of a three month
probationary period. At the end of this time your performance in the job
will be reviewed. If unsuccessful you will be notified in writing. During your
probation you will be required to give and
______________________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 6
are entitled to receive one month's notice of termination. Thereafter notice
will be in accordance with the details outlined in the paragraph below.
14. Termination of Employment
The Company may terminate your employment by serving notice in writing
as follows:
Length of Service Length of Notice
----------------- ----------------
During probationary period 1 month
Following probationary period 12 months
If you wish to terminate your employment during your probationary
period you must give the company one month's written notice of termination to
your immediate manager or your Human Resources Manager. Following completion
of your probationary period you must give 12 months written notice of
termination to your immediate manager or your Human Resources Manager. The
Company reserves the right to terminate your employment without notice in case
of gross misconduct and after a full investigation has taken place. The Company
may, with reasonable cause, suspend you from your employment on full basic
salary (excluding "On Target Earnings") at any time.
On termination of your employment you are required immediately to
surrender to the Company in accordance with its instructions all books,
documents, papers, reports and copies thereof and all other property belonging
to the Company or associated Company or relating to its business affairs or
dealings which are in your possession or under your control, including any car,
portable computer, and mobile phone or pager provided with your employment.
You may be required, during any period of notice of termination given
either by yourself or the Company, at the request of the Company, to take leave
during which you will be entitled to normal remuneration benefits. You will not
be required to attend at work, nor to carry out any of your duties, but you
will be required to ensure that you are available at all times during that
period at the request of the Company. You will, during this period, not be
entitled to access to the Company's premises without prior permission from your
manager. You will be required to immediately return all Company documentation
and other materials to your possession.
_______________________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 7
15. Collective Agreement
There is no collective agreement in force which directly affects the
terms and conditions of your employment.
16. Employment outside the United Kingdom
There are no particulars to be given to you relating to employment
outside the United Kingdom.
17. Pension Scheme
The Company operates a contributory pension scheme which you will be
eligible to join after you have been with the Company for nine months. For
further details please refer to Appendix D (attached) or the Company Handbook.
18. Other Benefits
You will be entitled to Company benefits as set out in Appendix D.
19. Company Car
As stated in your offer letter you may be provided with a Company
vehicle of a size and make which the Company considers appropriate or a cash
allowance in lieu of the Company vehicle as set out in Appendix E.
20. Fidelity
The contractual relationship between the Company and its employees is
founded on trust. Any breach of this trust by am employee, such as the
unauthorised disclosure to a third party of confidential information about
matters connected with the business, will render an employee liable to
disciplinary action, and/or to civil proceedings to restrain the employee from
disclosing the information to a third party, or from making personal use of it
without authority from a Senior Manager/Director, or for damages if loss to the
company results from an unauthorised disclosure. This restriction shall continue
to apply after the termination of your employment without limitation in time,
but shall cease to apply to any information or knowledge which may subsequently
come into the public domain other than by way of unauthorised disclosure.
_______________________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 8
All records, documents, other papers, and computer data (together with
any copies or extracts thereof), made or acquired by you in the course of your
employment shall be the property of the Company and must be returned on the
termination of your employment. The copyright in all such records, documents
and papers shall be at all times belong to the Company.
21. Exclusivity of Service
You are required to devote your full-time attention and abilities to
your job during working hours, and to act in the best interests of the company
at all times.
You must not, without the written consent of the Company, be in any way
directly or indirectly engaged or concerned with any other business or
undertaking where this is likely to be in conflict with the interests of the
Company. However, this does not preclude your holding no more than 5% of equity
in any company which is quoted on a recognised Stock Exchange.
22. Non-Competition
You agree that you will not:
(a) for a period of six months from the termination of your employment,
however that occurs, solicit business or in any way deal on behalf of yourself
or for any other person or entity, from customers/clients of the Company with
whom you have had any dealings or involvement with for six months prior to the
termination of your employment, however that occurs.
(b) for a period of six months after the termination of your
employment, however that occurs, solicit the Company's employees for their
employment elsewhere.
At any time after the termination of your employment, however that
occurs, represent yourself as being in any way connected with or interest in
the business of the Company, or use, for any purpose whatsoever, the name (or
logo) of the Company.
You agree that if any of these restrictions are considered void,
because they go beyond what is reasonable in all the circumstances for the
protection of the legitimate interests of
_______________________________________________________________________________
TeleWest Communications Group Ltd. Statement of Terms and Conditions
<PAGE> 9
the Company, that such restriction will apply with modification as may be
necessary to make it valid and effective.
23. Waiver of Rights
If this Agreement is terminated by either party and you are offered
re-employment by the Company or employment by an Associated Company on terms not
less favourable in all material respects than the terms of this Agreement, you
shall have no claim against the Company in respect of that termination provided
that such re-employment will not break your continuous period of employment.
24. Definition of Associated Company
In this Agreement an "Associated Company" includes any firm, company,
corporation or other organisation which:
24.1 is directly or indirectly controlled by the Company; or
24.2 directly or indirectly controls the Company; or
24.3 is directly or indirectly controlled by a third party who directly or
indirectly controls the Company.
25. Duty of Report
It is expected that you will act with due diligence and utmost honesty at
all times. The Company sees it as your duty to report any acts of misconduct,
dishonesty, breach of Company rules committed, contemplated, or discussed by
another member of staff or any other third party. A failure to do so on your
part may be regarded as serious and could lead to your dismissal.
26. Changes of Terms and Conditions of Employment
From time to time variations in your Terms and Conditions of employment may
result and any changes will be notified to you in a statement of variation to
your original Statement of Terms and Conditions. Your agreement to any change
will be sought at least 12 months before the change becomes effective. You will
be notified of any such change and it will be considered to have been accepted
by you if you continue to work in accordance with the change in terms for a
period of one month.
______________________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 10
ANY PREVIOUS CONTRACT OF EMPLOYMENT BETWEEN THE COMPANY AND THE EMPLOYEE IS
HEREBY SUPERSEDED.
Signed on behalf of the Company /s/ L Rexroth Date January 30, 1996
(Lynn Rexroth, SVP Group Operations)
I hereby acknowledge that I accept the Terms and Conditions of Employment
as stated above, and that I have received a written statement of them.
Signed by the employee /s/ Bruce Langham Date February 16, 1996
______________________________________________________________________________
TeleWest Communications Group Ltd Statement of Terms and Conditions
<PAGE> 1
Exhibit 10.55
CONFORMED COPY
TELEWEST
COMMUNICATIONS
Stephen Davidson
Chief Executive Officer
30 September 1996
Telewest Communications
Genesis Business Park, Albert Drive, Woking,
Surrey GU2I 5RW
Bruce Langham Tel: (01483) 750900 Fax: (01483) 750901
Telewest Communications
Dear Bruce,
CHANGE OF RESPONSIBILITIES
______________________________________________________________________________
I am delighted that you have accepted the position of Senior Vice President
Digital Services commencing on 16th September 1996. In this position you will
report to me.
Your terms and conditions of employment with Telewest Communications Group
Limited remain unchanged. However, should you decide over the next twelve months
to resign your position, you will be entitled to a termination package
equivalent to that available for redundancy. This termination package would
include:
* 12 months' salary in lieu of notice
* 12 months' short term incentive plan bonus payable at the target
rate, ie 25%
* full entitlement to shares under the Restricted Share Scheme up to
31 December 1997, or if this is not approved by the Trustees a
cash equivalent will be paid to you
* entitlement to exercise executive share options within 12 months'
of leaving Telewest's employment, 42 months after the date of grant
or 42 months after the last date prior to cessation of employment
on which you exercised an option, whichever shall be the latest
* recompense for Company pension contributions, medical insurance,
car and fuel equivalent to one year's benefit
Please sign and return one copy of this letter to me to indicate your
acceptance.
Yours sincerely,
/s/ SJ Davidson
________________________________________________________________________________
I accept the terms and conditions outlined in this letter.
Signed: /s/ Bruce Langham Date: September 30, 1996
(Bruce Langham)
<PAGE> 1
EXHIBIT 10.56
UNIT 1, GENESIS BUSINESS PARK
ALBERT DRIVE
SHEERWATER
WOKING
SURREY GU21 5RW
Date: 1 August 1995
TELEWEST PLC
NON-EXECUTIVE DIRECTORS APPOINTMENT LETTER
Dear Mr Stenham
As you are aware, it is now anticipated that the merger of TeleWest
Communications plc and SBCC Cablecomms (UK) will proceed later this year. As you
know, the merger will be effected through the formation of a new company
TeleWest plc ("the Company"), which will acquire both TeleWest Communications
plc and SBCC CableComms U.K. When that process is completed, we would very much
like you to serve as a Non-Executive Director of the Company. Of course, at that
stage there would be little point in your continuing as a Non-Executive Director
of TeleWest Communications plc. I attach a letter of resignation you could use
for that purpose, I should be grateful if you could sign that letter and return
it to Victoria Hull.
If you are willing to accept the appointment as a Non-Executive Director of the
Company, the terms which would apply to you are set out below. You will see that
they are identical to those which currently apply between you and TeleWest
Communications plc.
For confirmation, you should note that your resignation as a director of
TeleWest Communications plc and appointment as a Non-Executive Director of the
Company will take effect upon the shares of the Company being admitted to the
Official List of The London Stock Exchange.
1. As a Non-Executive Director you will be expected to attend board meetings,
the annual general meeting of the Company and any extra-ordinary general
meetings of the Company which may be called. It is anticipated that board
meetings will be held quarterly, although on occasion it may be necessary
to call board meetings on short
1
<PAGE> 2
notice. You will receive details of board meetings in advance for your
diary, and an agenda will normally be circulated a few days before each
meeting. The audit and remuneration committees will be as presently
constituted, save in respect of the participation of a representative of
SBC and Cox instead of TCI on the Audit Committee. We should be pleased if
you would continue in your currrent capacity on those committees.
2. As you know, your appointment and re-appointment as a Non-Executive
Director has to be ratified each year by the shareholders of the Company,
as required by the Articles of Association. Subject to this, we anticipate
your appointment will expire at the same time as your original appointment
with TeleWest Communications plc, that is November 1997, but which may be
renewed for a further three years if both you and the board agree.
3. Whilst I am sure you do not need me to remind you of your responsibilities
as a Non-Executive Director of the Company, I would wish to make clear that
you will be under an obligation to communicate to the board any conflicts
which may arise during the period when you serve as a Non-Executive
Director. The board will then be able to decide what (if any) action needs
to be taken about that. In addition, it is of great importance that you do
not disclose to anybody outside the Company or any of its subsidiaries any
trade secrets or other confidential information concerning the Company or
any of its subsidiaries which may come to your knowledge by virtue of your
position as a Non-Executive Director. During your appointment as a
Non-Executive Director the board would expect you to refrain from accepting
appointments (whether as agent, employee or consultant) with any company or
firm engaged in a business competing with or similar to that of the Company
or any of its subsidiaries.
4. We are also obliged to require that, upon the Company's shares being
admitted to listing on the London Stock Exchange, you comply with the
"Model Code" issued by the International Stock Exchange of Great Britain
and the Republic or Ireland in relation to dealings in shares by you and
anybody connected with you. We anticipate that the Company will adopt its
own share dealing code in similar terms to the "Model Code" of the London
Stock Exchange shortly.
5. The Rules of the London Stock Exchange also require us to submit to the
Securities and Futures Authority Limited a "declaration of a directors
business activities" in the form set out in Schedule 7 to the Listing Rules
of the London Stock Exchange. By accepting this appointment you undertake
to complete such a declaration and authorise the Company to submit it to
the Securities and Futures Authority Limited. In addition, you agree that
you will notify the Company as soon as practicable of any changes to the
details set out in the declaration.
6. For serving as a Non-Executive Director of the Company, you will be
entitled to receive a fee, presently (pound) 35,000 per annum payable
quarterly in arrears. The level of Non-Executive Directors fees is reviewed
annually. You also receive (pound)1,000 for
2
<PAGE> 3
every board meeting of the Company you attend. In addition, the Company
will of course reimburse you for any expenses you might incur in the
performance of your duties, these can include reasonable travel and other
identical expenses which you might incur. I would wish to make clear that
such expenses may include legal fees if circumstances should arise in which
it is necessary for you to seek separate legal advice about the performance
of your duties. This could, of course, be a little awkward and in that
situation you might find it helpful to discuss the issue either with me or
one of your Non-Executive colleagues in advance should you think it
appropriate.
I hope that you find the above terms are in order. I should be grateful if you
will confirm your agreement to them by signing and returning to me the enclosed
counter part of this letter.
Yours sincerely
/s/ Alan Michels
- -----------------------
ALAN MICHELS
CHIEF EXECUTIVE OFFICER
3
<PAGE> 1
EXHIBIT 10.57
UNIT 1, GENESIS BUSINESS PARK
ALBERT DRIVE
SHEERWATER
WOKING
SURREY GU21 5RW
Date: 1 August 1995
TELEWEST PLC
NON-EXECUTIVE DIRECTORS APPOINTMENT LETTER
Dear Sir Gordon
As you are aware, it is now anticipated that the merger of TeleWest
Communications plc and SBCC Cablecomms (UK) will proceed later this year. As you
know, the merger will be effected through the formation of a new company
TeleWest plc ("the Company"), which will acquire both TeleWest Communications
plc and SBCC CableComms U.K. When that process is completed, we would very much
like you to serve as a Non-Executive Director of the Company. Of course, at that
stage there would be little point in your continuing as a Non-Executive Director
of TeleWest Communications plc. I attach a letter of resignation you could use
for that purpose, I should be grateful if you could sign that letter and return
it to Victoria Hull.
If you are willing to accept the appointment as a Non-Executive Director of the
Company, the terms which would apply to you are set out below. You will see that
they are identical to those which currently apply between you and TeleWest
Communications plc.
For confirmation, you should note that your resignation as a director of
TeleWest Communications plc and appointment as a Non-Executive Director of the
Company will take effect upon the shares of the Company being admitted to the
Official List of The London Stock Exchange.
1. As a Non-Executive Director you will be expected to attend board meetings,
the annual general meeting of the Company and any extra-ordinary general
meetings of
1
<PAGE> 2
the Company which may be called. It is anticipated that board meetings will
be held quarterly, although on occasion it may be necessary to call board
meetings on short notice. You will receive details of board meetings in
advance for your diary, and an agenda will normally be circulated a few
days before each meeting. The audit committee will be as presently
constituted, save in respect of the participation of a representative of
SBC and Cox instead of TCI. We should be pleased if you would continue in
your currrent capacity on this committee.
2. As you know, your appointment and re-appointment as a Non-Executive
Director has to be ratified each year by the shareholders of the Company,
as required by the Articles of Association. Subject to this, we anticipate
your appointment will expire at the same time as your original appointment
with TeleWest Communications plc, that is November 1997, but which may be
renewed for a further three years if both you and the board agree.
3. Whilst I am sure you do not need me to remind you of your responsibilities
as a Non-Executive Director of the Company, I would wish to make clear that
you will be under an obligation to communicate to the board any conflicts
which may arise during the period when you serve as a Non-Executive
Director. The board will then be able to decide what (if any) action needs
to be taken about that. In addition, it is of great importance that you do
not disclose to anybody outside the Company or any of its subsidiaries any
trade secrets or other confidential information concerning the Company or
any of its subsidiaries which may come to your knowledge by virtue of your
position as a Non-Executive Director. During your appointment as a
Non-Executive Director the board would expect you to refrain from accepting
appointments (whether as agent, employee or consultant) with any company or
firm engaged in a business competing with or similar to that of the Company
or any of its subsidiaries.
4. We are also obliged to require that, upon the Company's shares being
admitted to listing on the London Stock Exchange, you comply with the
"Model Code" issued by the International Stock Exchange of Great Britain
and the Republic or Ireland in relation to dealings in shares by you and
anybody connected with you. We anticipate that the Company will adopt its
own share dealing code in similar terms to the "Model Code" of the London
Stock Exchange shortly.
5. The Rules of the London Stock Exchange also require us to submit to the
Securities and Futures Authority Limited a "declaration of a directors
business activities" in the form set out in Schedule 7 to the Listing Rules
of the London Stock Exchange. By accepting this appointment you undertake
to complete such a declaration and authorise the Company to submit it to
the Securities and Futures Authority Limited. In addition, you agree that
you will notify the Company as soon as practicable of any changes to the
details set out in the declaration.
6. For serving as a Non-Executive Director of the Company, you will be
entitled to receive a fee, presently (pound) 20,000 per annum payable
quarterly in arrears. The level of
2
<PAGE> 3
Non-Executive Directors fees is reviewed annually. You also receive (pound)
1,000 for every board meeting of the Company you attend. In addition, the
Company will of course reimburse you for any expenses you might incur in
the performance of your duties, these can include reasonable travel and
other identical expenses which you might incur. I would wish to make clear
that such expenses may include legal fees if circumstances should arise in
which it is necessary for you to seek separate legal advice about the
performance of your duties. This could, of course, be a little awkward and
in that situation you might find it helpful to discuss the issue either
with me or one of your Non-Executive colleagues in advance should you think
it appropriate.
I hope that you find the above terms are in order. I should be grateful if you
will confirm your agreement to them by signing and returning to me the enclosed
counter part of this letter.
Yours sincerely
/s/ Alan Michels
- -----------------------
ALAN MICHELS
CHIEF EXECUTIVE OFFICER
3
<PAGE> 1
EXHIBIT 10.58
UNIT 1, GENESIS BUSINESS PARK
ALBERT DRIVE
SHEERWATER
WOKING
SURREY GU21 5RW
Date: 1 August 1995
TELEWEST PLC
NON-EXECUTIVE DIRECTORS APPOINTMENT LETTER
Dear Lord Griffiths
As you are aware, it is now anticipated that the merger of TeleWest
Communications plc and SBCC Cablecomms (UK) will proceed later this year. As you
know, the merger will be effected through the formation of a new company
TeleWest plc ("the Company"), which will acquire both TeleWest Communications
plc and SBCC CableComms U.K. When that process is completed, we would very much
like you to serve as a Non-Executive Director of the Company. Of course, at that
stage there would be little point in your continuing as a Non-Executive Director
of TeleWest Communications plc. I attach a letter of resignation you could use
for that purpose, I should be grateful if you could sign that letter and return
it to Victoria Hull.
If you are willing to accept the appointment as a Non-Executive Director of the
Company, the terms which would apply to you are set out below. You will see that
they are identical to those which currently apply between you and TeleWest
Communications plc.
For confirmation, you should note that your resignation as a director of
TeleWest Communications plc and appointment as a Non-Executive Director of the
Company will take effect upon the shares of the Company being admitted to the
Official List of The London Stock Exchange.
1. As a Non-Executive Director you will be expected to attend board meetings,
the annual general meeting of the Company and any extra-ordinary general
meetings of
1
<PAGE> 2
the Company which may be called. It is anticipated that board meetings will
be held quarterly, although on occasion it may be necessary to call board
meetings on short notice. You will receive details of board meetings in
advance for your diary, and an agenda will normally be circulated a few
days before each meeting. The audit committee will be as presently
constituted, save in respect of the participation of a representative of
SBC and Cox instead of TCI. We should be pleased if you would continue in
your currrent capacity on this committee.
2. As you know, your appointment and re-appointment as a Non-Executive
Director has to be ratified each year by the shareholders of the Company,
as required by the Articles of Association. Subject to this, we anticipate
your appointment will expire at the same time as your original appointment
with TeleWest Communications plc, that is November 1997, but which may be
renewed for a further three years if both you and the board agree.
3. Whilst I am sure you do not need me to remind you of your responsibilities
as a Non-Executive Director of the Company, I would wish to make clear that
you will be under an obligation to communicate to the board any conflicts
which may arise during the period when you serve as a Non-Executive
Director. The board will then be able to decide what (if any) action needs
to be taken about that. In addition, it is of great importance that you do
not disclose to anybody outside the Company or any of its subsidiaries any
trade secrets or other confidential information concerning the Company or
any of its subsidiaries which may come to your knowledge by virtue of your
position as a Non-Executive Director. During your appointment as a
Non-Executive Director the board would expect you to refrain from accepting
appointments (whether as agent, employee or consultant) with any company or
firm engaged in a business competing with or similar to that of the Company
or any of its subsidiaries.
4. We are also obliged to require that, upon the Company's shares being
admitted to listing on the London Stock Exchange, you comply with the
"Model Code" issued by the International Stock Exchange of Great Britain
and the Republic or Ireland in relation to dealings in shares by you and
anybody connected with you. We anticipate that the Company will adopt its
own share dealing code in similar terms to the "Model Code" of the London
Stock Exchange shortly.
5. The Rules of the London Stock Exchange also require us to submit to the
Securities and Futures Authority Limited a "declaration of a directors
business activities" in the form set out in Schedule 7 to the Listing Rules
of the London Stock Exchange. By accepting this appointment you undertake
to complete such a declaration and authorise the Company to submit it to
the Securities and Futures Authority Limited. In addition, you agree that
you will notify the Company as soon as practicable of any changes to the
details set out in the declaration.
6. For serving as a Non-Executive Director of the Company, you will be
entitled to receive a fee, presently (pound) 20,000 per annum payable
quarterly in arrears. The level of
2
<PAGE> 3
Non-Executive Directors fees is reviewed annually. You also receive (pound)
1,000 for every board meeting of the Company you attend. In addition, the
Company will of course reimburse you for any expenses you might incur in
the performance of your duties, these can include reasonable travel and
other identical expenses which you might incur. I would wish to make clear
that such expenses may include legal fees if circumstances should arise in
which it is necessary for you to seek separate legal advice about the
performance of your duties. This could, of course, be a little awkward and
in that situation you might find it helpful to discuss the issue either
with me or one of your Non-Executive colleagues in advance should you think
it appropriate.
I hope that you find the above terms are in order. I should be grateful if you
will confirm your agreement to them by signing and returning to me the enclosed
counter part of this letter.
Yours sincerely
/s/ Alan Michels
- ----------------------
ALAN MICHELS
CHIEF EXECUTIVE OFFICER
3
<PAGE> 1
EXHIBIT 13
24 o TELEWEST COMMUNICATIONS plc
FINANCIAL REVIEW
[THE FOLLOWING TABLES WERE REPRESENTED BY 2 BAR CHARTS IN THE PRINTED MATERIAL.]
1993 40,338 TOTAL
1994 72,027 REVENUE
1995 144,784 (pound)000
1996 290,266
GROSS PROFIT:
(revenue less
1993 1994 1995 1996 direct costs)
---- ---- ---- ----
54% 58% 57% 58% gross profit ((pound))
21,732 41,813 83,064 167,788 gross margin (%)
(gross profit divided
by revenue)
- --------------------------------------------------------------------------------
To comply with applicable UK and US securities regulations, Telewest
Communications plc prepares financial statements under UK and US generally
accepted accounting principles ("GAAP") both of which are included in this
report. Financial statements prepared under UK GAAP can be found on pages 48 to
66; financial statements prepared under US GAAP can be found on pages 67 to 87.
The acquisition of SBCC on 3 October 1995 has been accounted for in the 1995
consolidated financial statements under the acquisition method of accounting.
Therefore the 1995 consolidated profit and loss account includes the results of
SBCC from 3 October 1995 to 31 December 1995. The 1996 consolidated profit and
loss account includes the results of SBCC for the full year.
In the discussion of the financial results that follows, unless specifically
noted, all references to figures are identical under UK and US GAAP.
SUMMARY OF OPERATIONS YEARS ENDED
31 DECEMBER 1996 AND 1995.
The Group's consolidated revenue increased by (pound)145.5 million or 100% from
(pound)144.8 million in 1995 to (pound)290.3 million in 1996. The increase was
attributable to the inclusion of the results of the former SBCC franchises for a
full year in 1996 and to the larger customer base created by the enlarged
Group's continuing network construction.
Cable television revenue
Cable television revenue increased by 87% from (pound)64.7 million in 1995 to
(pound)121.2 million in 1996. The increase was primarily attributable to a 74%
increase (from 253,049 to 440,212) in the average number of customers in 1996
over 1995. The increase in the average number of customers results from the
inclusion for a full year in 1996 of the results of the former SBCC franchises
(which contributed an average of 165,855 customers in 1996 compared to an
average of 35,192 customers in 1995) and from an increase in the number of homes
passed and marketed in the other
<PAGE> 2
25 o TELEWEST COMMUNICATIONS plc
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
North East 49% HOMES PASSED AND
---------------------------------- PERCENTAGE COMPLETED
South East 37%
---------------------------------- 1996 build
South West 71%
----------------------------------
London South 90%
----------------------------------
Midlands 67%
----------------------------------
Scotland 78%
----------------------------------
North West 68%
----------------------------------
Telewest overall 65%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONSOLIDATED FINANCIAL HIGHLIGHTS
(all amounts in (pound)million)
UK GAAP US GAAP
---------------------------------------------- ---------------------------------------------
Year ended 31 December 1996 1995 1995 1994 1993 1996 1995 1995 1994 1993
Pro forma Predecessor Pro forma
REVENUE Note Businesses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cable television 121.2 64.7 83.7 35.9 20.7 121.2 64.7 83.7 35.9 20.7
Telephony - residential 125.0 57.6 81.2 23.5 11.3 125.0 57.6 81.2 23.5 11.3
Telephony - business 34.6 17.4 20.6 8.8 4.9 34.6 17.4 20.6 8.8 4.9
Other 9.5 5.1 5.7 3.8 3.4 9.5 5.1 5.7 3.8 3.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenue 290.3 144.8 191.2 72.0 40.3 290.3 144.8 191.2 72.0 40.3
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Programming (69.9) (32.2) (42.9) (15.5) (8.4) (69.9) (32.2) (42.9) (15.5) (8.4)
Telephony (52.7) (29.5) (38.7) (14.7) (10.2) (52.7) (29.5) (38.7) (14.7) (10.2)
Selling, general and administrative (167.3) (105.4) (137.8) (60.4) (32.5) (167.3) (105.4) (137.8) (60.4) (32.5)
Depreciation (129.7) (61.5) (82.3) (30.3) (17.6) (129.7) (60.0) (80.8) (30.3) (17.6)
Amortisation 1 - - - - - (26.1) (7.9) (25.3) (1.8) (0.8)
- ------------------------------------------------------------------------------------------------------------------------------------
(419.6) (228.6) (301.7) (120.9) (68.7) (445.7) (235.0) (325.5) (122.7) (69.5)
- ------------------------------------------------------------------------------------------------------------------------------------
Operating loss (129.3) (83.8) (110.5) (48.9) (28.4) (155.4) (90.2) (134.3) (50.7) (29.2)
OTHER INCOME (EXPENSE)
Share of loss of affiliates (15.2) (12.1) (12.1) (8.5) (7.5) (16.0) (12.8) (12.8) (8.5) (7.5)
Financial expenses, net 2 (105.4) (18.8) (25.3) (7.8) (0.7) (90.8) (34.6) (41.1) (6.2) (0.7)
Other (1.0) (0.7) (0.7) - - (0.2) 0.1 0.1 - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss before extraordinary item (250.9) (115.4) (148.6) (65.2) (36.6) (262.4) (137.5) (188.1) (65.4) (37.4)
Extraordinary item 3 - - - - - - - - 7.3 -
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss (250.9) (115.4) (148.6) (65.2) (36.6) (262.4) (137.5) (188.1) (58.1) (37.4)
====================================================================================================================================
</TABLE>
Note 1 Under UK GAAP goodwill related to acquisitions is written off to reserves
at time of purchase. Under US GAAP goodwill is generally amortised over 20
years.
Note 2 The accounting treatment for financial instruments is different under UK
and US GAAP, as explained in the financial statements.
Note 3 Amount represents the unrealised gain embedded in interest rate swaps
which were marked to market for US GAAP purposes but not for UK GAAP purposes.
Pro forma information has been included for 1995 to demonstrate the effect of
including the results of former SBCC franchises for the full year ended 31
December 1995. The pro forma information is not commented upon in the Financial
Review.
For the purposes of comparison, UK GAAP consolidated financial highlights for
1994 and 1993 are shown to reflect the results of certain predecessor businesses
which were acquired by the Group in November 1994. The results of predecessor
businesses do not include the results of former SBCC franchises.
<PAGE> 3
26 o TELEWEST COMMUNICATIONS plc
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
GROSS PROFIT:
RESIDENTIAL TELEVISION
(revenue less program-
1993 1994 1995 1996 ming expense)
---- ---- ---- ----
59% 57% 50% 42% gross profit ((pound))
12,326 20,375 32,546 51,318 gross margin (%)
(gross profit divided
by revenue)
- --------------------------------------------------------------------------------
franchises (from 1,142,860 at 31 December 1995 to 1,460,463 at 31 December
1996).
Average monthly revenue per cable television customer increased 8% from
(pound)21.32 in 1995 to (pound)22.95 in 1996. This was a result of an increase
in the basic channel charge implemented in December 1995 and the additional
revenue generated from pay-per-view programming. This was, however, partially
offset by a decrease in the average number of premium channels purchased per
customer due to the inclusion for a full year in 1996 of the results of the
former SBCC franchises which historically have had a lower average number of
premium channels purchased per customer.
Telephony revenue
Telephony revenue increased by 113% from (pound)75.0 million in 1995 to
(pound)159.6 million in 1996.
Residential telephony revenue increased by 117% from (pound)57.6 million in
1995 to (pound)125.0 million in 1996. Business telephony revenue increased by
98% from (pound)17.4 million in 1995 to (pound)34.6 million in 1996.
The increase in residential telephony in 1996 over 1995 was primarily due
to a 119% increase (from 234,400 to 514,156) in the average number of
residential lines. This increase resulted from the inclusion for a full year in
1996 of the results of the former SBCC franchises (which contributed an average
of 229,751 lines in 1996 compared to an average of 45,117 lines in 1995), and
from an increase in the number of homes passed and marketed in the other
franchises (from 968,863 at 31 December 1995 to 1,380,484 at 31 December 1996).
The revenue increase from the growth in the average number of residential lines
was slightly offset by a 1% decrease in the average monthly revenue per
residential line, from (pound)20.48 in 1995 to (pound)20.26 in 1996. This
decrease was mainly attributable to price reductions in per minute call charges
in response to price cutting by BT, the Group's main competitor in residential
telephony, which were offset by increases in line rental rates. The Group
intends to continue to reduce per minute call tariffs as necessary to compete
effectively and to seek to mitigate the revenue impact of these reductions
through higher line rentals and increased call volumes resulting from increased
marketing.
The increase in business telephony revenue in 1996 over 1995 was primarily
attributable to a 114% increase (from 24,681 to 52,849) in the average number of
business telephony lines in 1996, which was partially offset by an 8% decrease
in the average monthly revenue per business line, from (pound)58.92 in 1995 to
(pound)54.50 in 1996. This decrease was attributable to price reductions in per
minute call charges in response to competition and increased sales of Centrex, a
new business telecommunications product which provides more lines to customers
but has a lower average monthly revenue per line.
Other revenue increased by 89% from (pound)5.0 million in 1995 to
(pound)9.5 million in 1996. Other revenue is derived primarily from management
services provided to Affiliated Companies, cable publications and network
management services provided to other operators, and advertising sales.
Operating costs and expenses
The Group's consolidated operating costs and expenses (which include direct
costs of programming and interconnection; selling, general and administrative
expenses; depreciation expense and amortisation expense) increased by 84% from
(pound)228.6 million in 1995 to (pound)419.6 million in 1996. (90% under US GAAP
from (pound)235.0 million in 1995 to (pound)445.7 million in 1996.)
Programming fees are the largest component of the Group's operating costs in
providing cable television services. The Group obtains most of its programming
under contracts which provide for payments based upon the number of customers.
<PAGE> 4
27 o TELEWEST COMMUNICATIONS plc
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
GROSS PROFIT:
COMBINED TELEPHONY
(revenue less
1993 1994 1995 1996 telephony expenses)
---- ---- ---- ----
37% 54% 61% 67% gross profit ((pound))
5,966 17,5569 45,520 107,003 gross margin (%)
(gross profit divided
by revenue)
- --------------------------------------------------------------------------------
As a percentage of cable television revenues, programming costs increased from
50% in 1995 to 58% in 1996 as a result of programming fee increases, providing
more channels in the basic cable television package with no price increase and
the inclusion for a full year in 1996 of the results of the former SBCC
franchises which have higher per channel programming costs.
Interconnection charges are the largest component of the Group's telephony
operating costs in providing telephony services. As a percentage of telephony
revenue, telephony operating costs decreased from 39% in 1995 to 33% in 1996 as
line rental income, which incurs no third party cost, represented a larger
proportion of total average revenue per line in 1996 than in 1995.
Interconnection charges in 1996 also were reduced by credits relating to
interconnection charges from earlier periods which have been calculated based on
revised estimates of prevailing interconnection charges in the UK.
Selling, general and administrative expenses, which include, among other
items, salary and marketing costs, decreased as a percentage of revenue from 73%
in 1995 to 58% in 1996. The majority of this improvement is due to the rapid
growth in revenues and continued reduction in support costs per customer, with
the balance - accounting for 5 percentage points of the year-on-year reduction -
due to revised estimates used in determining the proportion of labour and
overhead costs which are capitalised as network assets. The Group expects that
selling, general and administrative expenses will continue to decline as a
percentage of revenue as revenues increase and the efficiency gains of its fixed
cost base are increasingly exploited. Total labour and overhead costs
capitalised in 1996 were (pound)54.0 million, compared to (pound)26.6 million in
1995.
Depreciation expense increased 111% from (pound)61.5 million in 1995 to
(pound)129.7 million in 1996 under UK GAAP and increased 116% from (pound)60
million under US GAAP. This increase was principally attributable to capital
expenditure associated with the Group's continuing construction activities, a
full year of depreciation expense recorded in the former SBCC franchises, and a
reduction in the estimated useful lives of certain network assets in 1996 as set
out in Note 1 to the UK GAAP financial statements and Note 3 to the US GAAP
financial statements. Under US GAAP, amortisation expense increased from
(pound)7.9 million in 1995 to (pound)26.1 million in 1996 primarily due to a
full year of amortisation of the goodwill arising on the acquisition of SBCC in
October 1995. Under UK GAAP, all goodwill arising on acquisitions is directly
written off to reserves.
Other income (expense)
The Group's share of the net losses of its Affiliated Companies accounted for
under the equity method, principally Birmingham Cable Corporation Limited and
Cable London plc, was (pound)15.2 million and (pound)12.1 million in 1996 and
1995, respectively, under UK GAAP. ((pound)16.0 million and (pound)12.8 million
in 1996 and 1995, respectively, under US GAAP due to a difference in the
classification of tax expense.)
Financial expenses, net, under UK GAAP consist primarily of interest
expense of (pound)96.8 million in 1996 ((pound)23.8 million in 1995), and
foreign exchange losses of (pound)25.9 million in 1996 ((pound)4.7 million in
1995) offset in part by interest income earned on short-term investments and
loans to Affiliated Companies of (pound)17.2 million in 1996 ((pound)15.6
million in 1995). Under US GAAP, financial expenses consist primarily of
interest expense of (pound)105.2 million in 1996 ((pound)26.6 million in 1995),
and foreign exchange losses of (pound)2.8 million in 1996 ((pound)14.6 million
in 1995) offset in part by interest income earned on short-term investments and
loans to Affiliated Companies of (pound)16.7 million in 1996 ((pound)15.6
million in 1995). In 1995, financial expenses under UK GAAP also included
<PAGE> 5
28 o TELEWEST COMMUNICATIONS plc
- --------------------------------------------------------------------------------
an accounting loss on the sale of interest rate swaps of (pound)5.5 million
((pound)8.6 million under US GAAP).
Interest expense increased by (pound)73.0 million in 1996 ((pound)78.6
million under US GAAP) primarily as a result of the interest payments and
accrued interest expense on the Senior Debentures and the Senior Discount
Debentures, issued by the Group in October 1995; the debentures are more fully
described in the following discussion on Liquidity and Capital Resources. The
foreign exchange losses under UK GAAP in 1996 primarily relate to the
amortisation of the foreign currency option premium which hedges the Senior
Discount Debentures and the amortisation of exchange losses arising on the
translation of the debentures to Sterling using the contracted exchange rate of
the option. It is the Group's policy to hedge non-Sterling denominated
borrowings to reduce or eliminate exchange rate exposure. The foreign exchange
losses under US GAAP in 1996 arose principally from the re-translation of the US
Dollar denominated debentures to Pounds Sterling using the 31 December 1996
exchange rate and marking the associated hedging instruments to their market
value at 31 December 1996.
SUMMARY OF OPERATIONS
YEARS ENDED 31 DECEMBER 1994 AND 1995
The Group's consolidated revenue increased from (pound)72.0 million in 1994 to
(pound)144.8 million in 1995 as a result of the larger customer base created
through both the Group's continuing network construction and the inclusion of
the results of the former SBCC franchises from their acquisition date on 3
October 1995.
Revenue
Cable television revenue increased by 80% from (pound)35.9 million in 1994 to
(pound)64.7 million in 1995. This increase was attributable to an 82% increase
in the average number of customers (from 139,371 to 253,049) resulting from the
inclusion, for the post-acquisition period only, of the former SBCC franchises
which contributed 148,987 customers at the year end and an increase in the
number of homes passed and marketed in other franchises (from 805,475 to
1,142,860). Average monthly revenue was flat at (pound)21.33 in 1994 and
(pound)21.32 in 1995 with the impact of lower SBCC pricing offsetting the
increase of 3.4% in the price of the Group's service packages in December 1994
and an increase in the premium channels per customer. Rates charged in the
former SBCC franchises were increased in December 1995 to be more consistent
with the rates in other franchises.
Telephony revenue more than doubled from (pound)32.3 million in 1994 to
(pound)75.0 million in 1995.
Residential telephony increased by 145% (from (pound)23.5 million to
(pound)57.6 million) primarily due to a 190% increase in the average number of
residential lines during the year (from 80,933 to 234,400) resulting from the
inclusion, for the post-acquisition period only, of the former SBCC franchises
which contributed 194,217 lines at the year end and an increase in the number of
homes passed and marketed in other franchises (from 580,708 to 968,863). This
increase was partially offset by a 15% decrease in the average monthly revenue
per line (from (pound)24.16 to (pound)20.48). This decrease was mainly
attributable to the inclusion of the former SBCC franchises which had a lower
average monthly revenue per line and price reductions in per minute call charges
in response to price cutting from BT. In December 1995 line rental rates in the
former SBCC franchises were increased to be more consistent with the rates in
other franchises.
Business telephony revenue increased by 98% (from (pound)8.8 million to
(pound)17.4 million) primarily due to a 127% increase in the average number of
business telephony lines during the year (from 10,852 to 24,681), which was
partially offset by a 13% decrease in the average monthly revenue per business
<PAGE> 6
29 o TELEWEST COMMUNICATIONS plc
- --------------------------------------------------------------------------------
line (from (pound)67.66 to (pound)58.92). This decrease was attributable to the
inclusion of the former SBCC franchises, which have historically marketed their
services to smaller businesses which had a lower average monthly revenue per
line, and price reductions in per minute call charges in response to
competition.
Other revenue increased 29% during 1995 and is derived primarily from
management fees for services provided to Affiliated Companies, cable
publications and network management services provided to other operators and
advertising sales.
Operating costs and expenses
Programming costs as a percentage of cable television revenue increased from 43%
in 1994 to 50% in 1995 as a result of more channels being provided to customers
and a higher premium to basic channel ratio. These costs are generally higher
for premium channels than for basic channels. As a percentage of telephony
revenue, interconnection charges declined from 46% in 1994 to 39% in 1995 as
line rental income, which incurs no third party cost, represented a larger
proportion of total average revenue per line in 1995 than in 1994.
Selling, general and administrative expenses decreased as a percentage of
revenue from 84% in 1994 to 73% in 1995. A portion of labour and overhead costs
are capitalised as they relate to the construction of the network. Total labour
and overhead costs capitalised in 1995 amounted to (pound)26.6 million, compared
to (pound)22.8 million in 1994. The increase in depreciation expense of 103% in
1995 under UK GAAP (98% under US GAAP) was the result of capital expenditure
associated with the Group's construction activities. Under US GAAP, amortisation
expense increased from (pound)1.8 million in 1994 to (pound)7.9 million in 1995
primarily due to the amortisation of the goodwill arising on the acquisition of
SBCC. Under UK GAAP, this goodwill has been written off to reserves.
Other income (expense)
The Group's share of the net losses of the Affiliated Companies was (pound)8.5
million and (pound)12.8 million for 1994 and 1995, respectively.
Financial expenses, net, under UK GAAP, consisted principally of interest
expense of (pound)23.8 million ((pound)10.1 million in 1994), an accounting loss
on the sale of interest rate swaps of (pound)5.5 million ((pound)nil in 1994),
exchange losses on foreign currency translation of (pound)4.7 million
((pound)nil in 1994) offset by interest income earned on short-term investments
and loans to Affiliated Companies of (pound)15.6 million ((pound)2.3 million in
1994). Under US GAAP, financial expenses consisted of interest expense of
(pound)26.6 million ((pound)10.1 million in 1994), loss on the sale of interest
rate swaps of (pound)8.6 million ((pound)nil in 1994), and exchange losses on
foreign currency translation of (pound)14.6 million ((pound)nil in 1994).
Interest expense and exchange losses on foreign currency translation increased
primarily as a result of the finance costs payable on the Senior Debentures and
the Senior Discount Debentures.
LIQUIDITY AND CAPITAL RESOURCES
During the year, the Group entered into a (pound)1.2 billion senior secured
credit facility with a syndicate of banks (the "Senior Secured Facility"). The
Senior Secured Facility will be used to finance the capital expenditure, working
capital requirements and other permitted related activities for the construction
and operation of the wholly owned telephony and television franchises of the
Group; to fund the payment of cash interest on the Senior Debentures and Senior
Discount Debentures (as described below); to fund the repayment of existing
secured borrowings of the Group in respect of the London South and South West
Regional Franchise Areas; to fund loans to or investments in Affiliated
Companies; to fund the acquisition and subsequent construction of local delivery
operators/ franchises; and to refinance advances and the payment of
<PAGE> 7
30 o TELEWEST COMMUNICATIONS plc
- --------------------------------------------------------------------------------
interest, fees and expenses in respect of the Senior Secured Facility.
The Senior Secured Facility is divided into two tranches, the first,
(tranche A), is available on a revolving basis for up to (pound)300 million,
reducing to (pound)100 million by 30 June 1998, with full repayment by 31
December 1998. The second tranche, (tranche B), is available on a revolving
basis concurrently with the first tranche for an amount up to 6.5 times the
trailing, rolling six month annualised consolidated net operating cash flow,
gradually reducing throughout the period of the facility to 4 times by 1 January
2000. Thereafter, the amount outstanding under the facility converts to a term
loan amortising over 5 years. The aggregate drawing at any time under both
tranches cannot exceed (pound)1.2 billion. Borrowings under the Senior Secured
Facility are secured by assets, including the partnership interests and shares
of subsidiaries of the Group, and bear interest at 2.25% above LIBOR for tranche
A and between 0.5% and 1.875% above LIBOR (depending on the ratio of borrowings
to the trailing, rolling six month annualised consolidated net operating cash
flow) for tranche B. The Group's ability to borrow under the Senior Secured
Facility is subject to, among other things, its compliance with the financial
and other covenants and borrowing conditions contained therein, and the failure
to comply with such covenants could result in all such amounts outstanding under
the facility becoming due and payable. In October 1996, the first drawdown in
the amount of (pound)100 million was made under tranche A of the Senior Secured
Facility. Further drawdowns of (pound)50 million under tranche A and (pound)50
million under tranche B were made early in 1997.
The Group has entered into certain delayed-starting interest rate swap
agreements in order to manage interest rate risk on the Senior Secured Facility.
The interest rate swaps convert floating rate interest payable on drawdowns
under the facility to fixed interest rate payments in the range of 7.835% -
7.975%. The swap agreements, which commence in early 1997, have a five-year
maturity and a notional principal amount which adjusts upwards on a semi-annual
basis to a maximum of (pound)750 million.
On 3 October 1995, the Group raised (pound)734 million through the issue of
$300 million principal amount of 95/8% Senior Debentures due 2006 (the "Senior
Debentures") and $1,536 million principal amount at maturity of 11% Senior
Discount Debentures due 2007 (the "Senior Discount Debentures"). Interest on the
Senior Debentures is payable semi-annually and commenced on 1 April 1996;
interest on the Senior Discount Debentures will be payable semi-annually
commencing on 1 April 2001. The proceeds of the issue were used by the Group to
fund general working capital, capital expenditures and additional investments in
Affiliated Companies, to repay a credit facility entered into by a Group company
and to purchase the currency hedge arrangements as described below.
The Group's principal hedge instruments are a combined foreign currency and
interest rate swap ("Foreign Currency Swap") and a foreign currency option. The
Foreign Currency Swap fully hedges against adverse exchange rate fluctuations on
the principal amount of the Senior Debentures and the associated interest
payments. The foreign currency option provides protection against exchange rate
fluctuations on the Senior Discount Debentures below a rate of $1.452: (pound)1,
and allows the Group to benefit from positive exchange rate movements. Both
hedging instruments provide protection up to 1 October 2000, the early
redemption date of the Senior Debentures and the Senior Discount Debentures.
The Group's results may be materially influenced by future exchange rate
movements, particularly in the US GAAP financial statements, due to the
requirement that the hedge instruments and the debentures are marked to their
market value at the end of the financial period.
<PAGE> 8
31 o TELEWEST COMMUNICATIONS plc
- --------------------------------------------------------------------------------
The Group generated a net cash inflow/(outflow) from operating activities
of (pound)28.5 million, ((pound)10.2) million, and ((pound)1.9) million in 1996,
1995 and 1994, respectively, under UK GAAP. On a US GAAP basis, net cash
provided by/(used in) operating activities was (pound)18.1 million, ((pound)6.6)
million and ((pound)9.2) million in 1996, 1995 and 1994, respectively. The
difference between UK and US GAAP is principally due to a difference in the
classification of interest on the cash flow statement.
The Group incurred net cash outflow from investing activities of
(pound)483.2 million, (pound)265.8 million and (pound)231.9 million in 1996,
1995 and 1994, respectively. The Group's principal investing activities continue
to be the construction of the network, the provision of funding to the
Affiliated Companies, and, in the year ended 31 December 1996, the acquisition
of a franchise covering the Worcester area from Bell Cablemedia plc for
(pound)9.8 million. Total expenditure on fixed assets was (pound)515.6 million,
(pound)269.1 million and (pound)215.5 million in 1996, 1995 and 1994,
respectively. The increase in expenditure was largely a result of the inclusion
for a full year in 1996 of the expenditure relating to the construction of the
network in the former SBCC franchises. The Group expects to continue to have
significant funding requirements for the foreseeable future to construct its
network.
Cash inflow from financing activities was (pound)79.0 million, (pound)480.8
million and (pound)482.5 million in 1996, 1995 and 1994, respectively.
In 1996, the cash inflow from financing activities was principally
generated through the (pound)100.0 million drawdown under the Senior Secured
Facility which was partially offset by costs of (pound)18.4 million incurred to
arrange the facility; in 1995, the cash inflow was generated by net proceeds of
(pound)734.2 million arising from the issue of the debentures which were
partially used to purchase the associated currency hedges and to repay a credit
facility entered into by a Group company; in 1994, the cash inflow was generated
by drawdowns under a former revolving credit facility, cash contributions made
by the former joint venturers to the Company, and proceeds arising from the
initial public offering of the Company in November 1994, the latter of which was
used in part to repay earlier drawdowns under the former revolving credit
facility.
Cash balances at 31 December 1996 were (pound)79.1 million.
The Group currently expects that the anticipated funding requirements
(after taking into account current cash and deposit balances and anticipated
revenues) required to substantially complete the construction of the owned and
operated network (including the recently acquired franchises of Worcester and
Southport), to fund the Group's operations, to upgrade older portions of the
network, and to pay interest on the Group's debt will be provided by the Senior
Secured Facility. There can be no assurance that the Group will not elect to use
alternative funding sources or that the Group's current anticipated funding
requirements will be in line with expectations. The Group is continually
evaluating investment opportunities as the market for cable services in the UK
develops and such opportunities may require additional funding. The Group has
announced its intention to develop an interfranchise network and to launch
digital services and in this context is evaluating the funding requirements and
considering debt financing opportunities.
- -
<PAGE> 9
- --------------------------------------------------------------------------------
TELWEST COMMUNICATIONS plc UK GAAP o 47
- --------------------------------------------------------------------------------
AUDITORS' REPORT
to the members of Telewest Communications plc
We have audited the financial statements on pages 48 to 66. We have also
examined the amounts disclosed relating to emoluments and share options which
form part of the Report of the Directors on page 38 and the Report of the
Remuneration Committee on pages 42 and 43.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 46 the Company's Directors are responsible for the
preparation of financial statements. It is our responsibility to form an
independent opinion, based on our audit, on those statements and to report our
opinion to you.
BASIS OF OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board in the United Kingdom. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the
financial statements. It also includes an assessment of the significant
estimates and judgements made by the Directors in the preparation of the
financial statements, and of whether the counting policies are appropriate to
the Group's circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state
of affairs of the Company and of the Group as at 31 December 1996 and of the
loss of the Group for the year then ended and have been properly prepared in
accordance with the United Kingdom Companies Act 1985.
KPMG AUDIT PLC
Chartered Accountants
Registered Auditors
11 March 1997
London
<PAGE> 10
- --------------------------------------------------------------------------------
48 o UK GAAP TELEWEST COMMUNICATIONS plc
- --------------------------------------------------------------------------------
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 31 December 1996
<TABLE>
<CAPTION>
1996 1995
Note BP'000 BP'000
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
TURNOVER 2 290,266 144,784
Operating costs 3 (419,517) (228,556)
- --------------------------------------------------------------------------------
OPERATING LOSS (129,251) (83,772)
Share of results of associated undertakings 13 (15,203) (12,103)
Other interest receivable and similar income 8 17,222 15,645
Interest payable and similar charges 9 (122,671) (34,435)
- --------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION 5 (249,903) (114,665)
Tax on loss on ordinary activities 10 (820) (690)
- --------------------------------------------------------------------------------
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (250,723) (115,355)
Minority interests 19 (180) (16)
- --------------------------------------------------------------------------------
LOSS FOR THE FINANCIAL YEAR 21 (250,903) (115,371)
================================================================================
LOSS PER EQUITY SHARE (PENCE) 11 (17.7) (10.5)
================================================================================
</TABLE>
The Group has no recognised gains or losses other than those reflected in the
profit and loss account.
The above results are in respect of continuing operations of the Group.
<PAGE> 11
CONSOLIDATED BALANCE SHEET
as at 31 December 1996
<TABLE>
<CAPTION>
1996 1995
NOTE (POUND STERLING) (POUND STERLING)
'000 '000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED ASSETS
Tangible assets 12 1,447,194 1,063,808
Investments 13 117,410 191,028
- --------------------------------------------------------------------------------------------------------------
1,564,604 1,254,836
- --------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Stocks 14 53 40
Debtors 15 66,929 54,980
Cash at bank and in hand 79,116 464,818
- --------------------------------------------------------------------------------------------------------------
146,098 519,838
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 16 (212,434) (137,744)
- --------------------------------------------------------------------------------------------------------------
NET CURRENT (LIABILITIES)/ASSETS (66,336) 382,094
- --------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,498,268 1,636,930
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 17 (918,008) (795,066)
MINORITY INTERESTS 19 (347) (167)
- --------------------------------------------------------------------------------------------------------------
NET ASSETS 579,913 841,697
==============================================================================================================
CAPITAL AND RESERVES
Called up share capital 20 142,363 141,603
Share premium 21 9,187 --
Merger reserve 21 535,267 556,095
Other reserves 21 270,237 270,237
Profit and loss account 21 (377,141) (126,238)
- --------------------------------------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' FUNDS 579,913 841,697
==============================================================================================================
</TABLE>
The financial statements were approved by the Board of Directors on 11 March
1997 and signed on its behalf by:
SJ Davidson
Director
CJ Burdick
Director
<PAGE> 12
COMPANY BALANCE SHEET
as at 31 December 1996
<TABLE>
<CAPTION>
1996 1995
NOTE (POUNDS STERLING) (POUNDS STERLING)
'000 '000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FIXED ASSETS
Investments 13 233,289 242,916
- ----------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Debtors: due within one year 15 71 225,807
Debtors: due after more than one year 15 1,053,279 --
Cash at bank and in hand 48,481 428,067
- ----------------------------------------------------------------------------------------------------------------
1,101,831 653,874
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 16 (8,273) (14,358)
- ----------------------------------------------------------------------------------------------------------------
NET CURRENT ASSETS 1,093,558 639,516
- ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,326,847 882,432
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 17 (1,230,153) (757,482)
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS 96,694 124,950
================================================================================================================
CAPITAL AND RESERVES
Called up share capital 20 142,363 141,603
Share premium 21 9,187 --
Profit and loss account 21 (54,856) (16,653)
- ----------------------------------------------------------------------------------------------------------------
EQUITY SHAREHOLDERS' FUNDS 96,694 124,950
================================================================================================================
</TABLE>
The financial statements were approved by the Board of Directors on 11 March
1997 and signed on its behalf by:
SJ Davidson
Director
CJ Burdick
Director
<PAGE> 13
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1996
<TABLE>
<CAPTION>
1996 1995
NOTE (POUNDS STERLING) (POUNDS STERLING)
'000 '000
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES 23 28,479 (10,205)
- -----------------------------------------------------------------------------------------------------------------------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 18,206 11,568
Interest paid (25,795) (6,041)
Interest element of finance lease payments (2,754) (1,930)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH (OUTFLOW)/INFLOW FROM RETURNS ON INVESTMENTS
AND SERVICING OF FINANCE (10,343) 3,597
- -----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of tangible fixed assets (464,367) (254,453)
Sale of tangible fixed assets 3,059 688
Purchase of subsidiary undertakings 26 (14,167) (3,232)
Investment in associated undertakings and other participating interests (7,728) (9,143)
Other investing activities -- 335
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (483,203) (265,805)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH OUTFLOW BEFORE FINANCING (465,067) (272,413)
- -----------------------------------------------------------------------------------------------------------------------------
FINANCING
Cash paid for credit facility arrangement costs (18,400) --
Proceeds from debenture issue -- 754,812
Cash paid for foreign currency option -- (88,070)
Cash paid for debenture issue costs (829) (20,574)
Payment of share issue costs -- (6,141)
Proceeds from borrowings 100,400 --
Repayment of borrowings (937) (157,930)
Capital element of finance lease payments (1,231) (1,291)
- ----------------------------------------------------------------------------------------------------------------------------
NET CASH INFLOW FROM FINANCING 79,003 480,806
- ----------------------------------------------------------------------------------------------------------------------------
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS 27 (386,064) 208,393
============================================================================================================================
</TABLE>
<PAGE> 14
RECONCILIATION OF MOVEMENTS IN EQUITY
SHAREHOLDERS' FUNDS
for the year ended 31 December 1996
<TABLE>
<CAPTION>
GROUP COMPANY GROUP COMPANY
1996 1996 1995 1995
NOTE (POUNDS (POUNDS (POUNDS (POUNDS
STERLING) STERLING) STERLING) STERLING)
'000 '000 '000 '000
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Opening equity shareholders' funds 841,697 124,950 743,716 -
Loss for the financial year (250,903) (38,203) (115,371) (16,653)
Issue of shares 10,676 9,947 678,174 141,603
Goodwill written off 4 (21,557) - (464,872) -
Movement arising from Group reconstruction - - 50 -
- ------------------------------------------------------------------------------------------------------------------------
CLOSING EQUITY SHAREHOLDERS' FUNDS 579,913 96,694 841,697 124,950
========================================================================================================================
</TABLE>
<PAGE> 15
NOTES
forming part of the financial statements
1 ACCOUNTING POLICIES
The principal accounting policies which have been applied consistently
throughout the year in the preparation of the financial statements are as
follows:
BASIS OF PREPARATION
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost accounting rules.
The Group financial statements consolidate the financial statements of the
Company and its subsidiary undertakings together with associated undertakings to
the extent of the Group's interest in those undertakings. The results of
subsidiary undertakings acquired during the year are included in the
consolidated profit and loss account from the date of acquisition.
The Company has taken advantage of Section 230 of the Companies Act 1985 and has
not presented a profit and loss account. The loss of the Company for the
financial year is disclosed in Note 21 to these financial statements.
The Directors have included unaudited pro forma Group turnover and operating
cost information for the year ended 31 December 1995 in Notes 2 and 3 to these
financial statements which consolidate the turnover and operating costs of
Telewest Communications (Midlands & North West) Limited ("TCMN"), formerly SBCC,
a subsidiary undertaking acquired on 3 October 1995, as if this subsidiary
undertaking had been owned for the entire year. This pro forma information has
been included to facilitate the analysis of results given the significance of
this acquisition to the Group.
INVESTMENTS
Investments in subsidiary undertakings are stated in the Company balance sheet
at cost. The consolidated profit and loss account includes the Group's share of
the losses of associated undertakings and the consolidated balance sheet
includes the investment in these companies at the Group's share of their net
assets.
GOODWILL
Purchased goodwill on acquisition of subsidiary undertakings, representing the
excess of the fair value of the consideration given over the fair value of the
separable net assets acquired, is set off directly against reserves.
CAPITALISATION OF OVERHEADS
Subsidiary undertakings capitalise that proportion of overheads which relates to
the construction of the cable network.
DEPRECIATION
Depreciation is provided to write off the cost, less estimated residual value,
of tangible fixed assets by equal instalments over their estimated useful
economic lives as follows:
Freehold and long leasehold buildings 50 years
Cable and ducting 20 years
Electronic equipment
- System electronics 8 years
- Switching equipment 8 years
- Subscriber electronics 5 years
- Headend, studio and playback facilities 5 years
Other equipment
- Office furniture and fittings 5 years
- Motor vehicles 4 years
Depreciation of cable and ducting and systems electronics is charged monthly on
their estimated cost at the end of the prematurity period, scaled down by a
ratio of average customers in the current period to the estimated customer base
at the end of the prematurity period.
Preconstruction costs are amortised over the life of the franchise from the date
of the first customer.
The estimated useful lives of cable and ducting and system electronics assets
were reassessed with effect from 1 January 1996 and changed from 25-30 years and
10 years to 20 years and 8 years, respectively. The net book value of these
assets is being written-off over their revised estimated remaining lives.
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies, to the extent that they are not hedged by
financial instruments, are translated using the rate of exchange ruling at the
balance sheet date and the gains or losses on translation are included in the
profit and loss account.
LEASES
Where the Group enters into a lease which entails taking substantially all the
risks and rewards of ownership of an asset, the lease is treated as a finance
lease. The asset is recorded in the balance sheet as a tangible fixed asset and
is depreciated over its estimated useful life or the term of the lease,
whichever is shorter. Future instalments under such leases, net of finance
charges, are included within creditors. Rentals payable are apportioned between
the finance element, which is charged to the profit and loss account, and the
capital element which reduces the outstanding obligation for future instalments.
<PAGE> 16
NOTES
TURNOVER
Turnover represents the invoiced value (excluding value added tax) of services
supplied by the Group.
STOCKS
Stocks are stated at the lower of cost and net realisable value.
FRANCHISE COSTS
Expenditure incurred on successful applications for franchise licences is
included in tangible fixed assets and is amortised over the life of the original
franchise term. Costs relating to unsuccessful applications are written off to
the profit and loss account.
TAXATION
The charge for taxation is based on the loss for the year and takes into account
taxation deferred because of timing differences between the treatment of certain
items for taxation and accounting purposes. Provision is made for deferred tax
only to the extent that it is probable that an actual asset or liability will
crystallise.
PENSION COSTS
The Group operates a defined contribution pension scheme or contributes to a
third-party scheme of the employee's choice. The amount charged against the
profit and loss account represents the contributions payable to the selected
schemes in respect of the accounting period.
RESTRICTED SHARE SCHEME
The value of awards over ordinary shares granted to eligible employees under the
Telewest Restricted Share Scheme is charged to the profit and loss account to
the extent that the awards have been earned by employees in the current period.
INTERCONNECTION WITH OTHER OPERATORS
When telephony traffic is carried by other operators the Group incurs
interconnect costs. Interconnect costs are subject to regulation in the form of
a determination by the Office of Telecommunications. A determination may give
rise to amendments, most often in the form of reductions, to interconnect costs
relating to prior periods.
The Group reviews its interconnect costs on a regular basis and adjusts the rate
at which these costs are charged in the profit and loss account in accordance
with the estimated interconnect costs for the current period. Amendments to
costs relating to prior periods are made in the current period, but only when
recovery or payment of these amounts is reasonably certain.
FINANCIAL INSTRUMENTS
The Group uses foreign currency options which permit, but do not require, the
Group to exchange foreign currencies at a future date with another party at a
contracted exchange rate (the "Forward Rate"). Such contracts are used to hedge
against adverse changes in foreign currency exchange rates associated with
certain obligations denominated in foreign currency. The premium paid to enter
into these options is included on the balance sheet as a fixed asset investment
and is amortised to the profit and loss account over the life of the option at a
constant rate of the carrying value of the obligation it hedges. The difference
between the contracted amount to be exchanged under the option translated at the
Forward Rate and the contracted amount translated at the spot rate at the
inception of the contract is also amortised to the profit and loss account over
the life of the option at a constant rate of the carrying value of the
obligation. The carrying value of the obligation is increased for the amortised
portion of the difference.
To the extent that the Sterling values of the Group's foreign currency
obligations, translated at the year-end exchange rate, are less than their
carrying values as determined above, the carrying values of the obligation are
reduced. The carrying value of the foreign currency option used to hedge the
obligations is reduced by an equivalent amount.
The Group also enters into combined foreign currency and interest rate swap
contracts ("Foreign Currency Swaps") to hedge against adverse changes in foreign
currency exchange rates associated with obligations denominated in foreign
currency. The principal element of Foreign Currency Swaps is translated at the
spot rate at the reporting date with any gain or loss on translation recognised
in the profit and loss account. Such gains and losses are offset against gains
and losses arising on the translation of the obligations which have been hedged.
The interest element of Foreign Currency Swaps is accounted for on an accruals
basis with the net interest income or expense recognised in the profit and loss
account as it is earned and payable.
Interest rate swap agreements which are used to manage interest rate risk on the
Group's borrowings are accounted for using the accruals method. Net income or
expense resulting from the differential between exchanging floating and fixed
rate interest payments is recorded on an accruals basis. To the extent that the
interest rate swap agreements are delayed starting, net income or expense is not
recognised until the effective date of the agreement.
FINANCE COSTS
Costs incurred in raising funds are deducted from the amount raised and
amortised over the life of the debt facility on a constant-yield basis. Where
the period and utilisation of the debt facility is uncertain, the amortisation
rate is determined by reference to the Group's estimated future financing
requirements.
<PAGE> 17
2 SEGMENTAL INFORMATION
Turnover is attributable principally to the provision of cable television and
telephony services in the United Kingdom which the Directors consider to be the
same class of business and, accordingly, no segmental analysis of operating loss
or net assets is shown. Turnover comprised the following:
<TABLE>
<CAPTION>
PRO FORMA
1995
1996 1995 (POUND
(POUND (POUND STERLING)'000
STERLING)'000 STERLING)'000 (NOTE 1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cable television 121,224 64,740 83,735
Telephony - residential 125,013 57,597 81,222
Telephony - business 34,562 17,449 20,571
Other 9,467 4,998 5,667
- --------------------------------------------------------------------------------
290,266 144,784 191,195
================================================================================
</TABLE>
3 OPERATING COSTS
<TABLE>
<CAPTION>
PRO FORMA
1995
1996 1995 (POUND
(POUND (POUND STERLING)'000
STERLING)'000 STERLING)'000 (NOTE 1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Programming expenses 69,906 32,194 42,859
Telephony expenses 52,572 29,526 38,741
Selling, general and
administrative expenses 167,323 105,311 137,680
Depreciation and
amortisation 129,716 61,525 82,344
- --------------------------------------------------------------------------------
419,517 228,556 301,624
================================================================================
</TABLE>
Having regard to the special nature of the Group's business, the analysis of
operating costs as prescribed by the Companies Act 1985 is not meaningful. In
the circumstances, therefore, as required by paragraph 3(3) of Schedule 4 of the
Companies Act 1985, the Directors have adapted the prescribed format to the
requirements of the Group's business.
4 ACQUISITIONS IN THE YEAR
On 10 January 1996, the Company acquired the entire issued share capital of
Telewest Communications (Worcester) Limited, then known as Bell Cablemedia
(Worcester) Limited and the owner of the Worcester cable franchise, for cash
consideration of (sterling pound)9,849,000. Telewest Communications (Worcester)
Limited was otherwise a dormant company with net assets of (pound sterling)2
representing its called up share capital. This acquisition has been accounted
for under the acquisition method of accounting. The goodwill arising on
acquisition, in the amount of (pound sterling)9,848,998, has been set off
against the merger reserve.
During the year, the Company made various other minor acquisitions, largely for
share consideration. Details of these acquisitions are set out in Note 20 to the
financial statements. The goodwill arising on these acquisitions, in the amount
of (pound sterling)11,708,000, has also been set-off against the merger reserve.
The cumulative goodwill written off against reserves at 31 December 1996 was
(pound sterling)486,429,000 (1995: (pound sterling)464,872,000).
5 LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION
Loss on ordinary activities before taxation is stated after charging:
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Auditors' remuneration:
Audit 290 250
Other services 168 219
Depreciation and other amounts
written off tangible fixed assets:
Owned 122,610 56,825
Leased 7,106 3,194
Exchange losses 25,852 4,732
Hire of plant and machinery - rentals
payable under operating leases 129 116
Hire of other assets - operating leases 2,936 2,160
================================================================================
</TABLE>
The auditors' remuneration for audit services to the Company was (pound
sterling)20,000 (1995: (pound sterling)20,000).
In addition to the amounts stated above for auditors' remuneration, the Group
paid (pound sterling)820,000 in 1995 to the auditors for services provided in
connection with the acquisition of TCMN. This amount has been included in the
costs of acquisition in the consolidated financial statements.
6 REMUNERATION OF DIRECTORS
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Fees to non-executive Directors 114 122
Remuneration as executives:
Basic salary, allowances and
taxable benefits 416 1,071
Performance-related bonuses 25 79
Other bonuses -- 140
Pension contributions 18 24
Compensation for loss of office
(payable by the Company) 539 487
- --------------------------------------------------------------------------------
Total emoluments in respect of the year 1,112 1,923
================================================================================
</TABLE>
Of the above remuneration, (pound sterling)93,000 and (pound sterling)426,000,
was reimbursed to TCI and US WEST for the years ended 31 December 1996, and
1995, respectively, for making available to the Company the services of certain
Directors.
The Chairman did not receive any remuneration during the year (1995: (pound
sterling)nil). The remuneration of the highest paid Director was as follows:
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 (STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Basic salary, allowances and
taxable benefits 248 427
Performance-related bonuses 25 51
Other bonuses -- 70
Pension contributions 13 5
- --------------------------------------------------------------------------------
Total emoluments in respect
of the year 286 553
================================================================================
</TABLE>
<PAGE> 18
NOTES
6 REMUNERATION OF DIRECTORS (CONTINUED)
The emoluments, excluding pension contributions, of Directors who perform their
duties wholly or mainly within the United Kingdom fell within the following
ranges:
<TABLE>
<CAPTION>
1996 1995
DIRECTORS DIRECTORS
- --------------------------------------------------------------------------------
<S> <C> <C>
(pound sterling)0 -(pound sterling)5,000 1 2
(pound sterling)25,001 -(pound sterling)30,000 1 -
(pound sterling)30,001 -(pound sterling)35,000 1 1
(pound sterling)35,001 -(pound sterling)40,000 - 1
(pound sterling)45,001 -(pound sterling)50,000 1 -
(pound sterling)50,001 -(pound sterling)55,000 - 1
(pound sterling)165,001 -(pound sterling)170,000 1 -
(pound sterling)250,001 -(pound sterling)255,000 - 1
(pound sterling)270,001 -(pound sterling)275,000 1 -
(pound sterling)485,001 -(pound sterling)490,000 - 1
(pound sterling)545,001 -(pound sterling)550,000 - 1
================================================================================
</TABLE>
A detailed analysis of Directors' remuneration, including salaries and benefits,
performance-related bonuses and other bonuses is set out in the Report of the
Remuneration Committee on pages 42 and 43. Details of Directors' interests in
the share capital of the Company are set out in the Report of the Directors on
page 38.
7 STAFF NUMBERS AND COSTS
The average number of persons employed by the Group (including Directors and
those seconded from shareholders) during the year, analysed by category, was as
follows:
<TABLE>
<CAPTION>
1996 1995
NUMBER NUMBER
- --------------------------------------------------------------------------------
<S> <C> <C>
Sales and customer services 2,114 1,309
Construction and operations 1,827 889
Administration 715 578
- --------------------------------------------------------------------------------
4,656 2,776
================================================================================
</TABLE>
The aggregate payroll costs of these persons, including amounts which have been
capitalised in tangible fixed assets, were as follows:
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Wages and salaries 90,559 57,035
Social security costs 8,977 5,491
Other pension costs 2,580 1,538
- --------------------------------------------------------------------------------
102,116 64,064
================================================================================
</TABLE>
8 OTHER INTEREST RECEIVABLE AND SIMILAR INCOME
<TABLE>
<CAPTION>
1996 199
(POUND (POUND
STERLING)'000 STERLING)'00
- --------------------------------------------------------------------------------
<S> <C> <C>
On bank deposits and
short-term investments 14,928 14,014
On loans made to associated
undertakings 1,723 1,631
Other 571 --
- --------------------------------------------------------------------------------
17,222 15,645
================================================================================
</TABLE>
9 INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
On bank loans and overdrafts and other loans:
Wholly repayable within five years 3,816 2,583
Wholly or partly repayable in more
than five years 1,924 --
Finance costs of Senior
Discount Debentures 60,696 13,663
Finance costs of Senior Debentures 22,471 5,643
Finance charges payable in
respect of finance leases
and hire purchase contracts 3,442 1,928
Exchange losses on foreign
currency translation, net 25,852 4,732
Loss on sale of interest rate swap -- 5,467
Other 4,470 419
- --------------------------------------------------------------------------------
122,671 34,435
================================================================================
</TABLE>
The exchange gain for the year on the translation of the US Dollar denominated
Senior Discount Debentures amounted to (pound sterling)53,025,000. This amount
has been offset by an adjustment of an equal amount to the unamortised value of
the premium paid for the foreign currency option which hedges the Senior
Discount Debentures.
10 TAX ON LOSS ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Corporation tax on taxable profit at 33% 50 16
Share of associated undertaking's tax 770 674
- --------------------------------------------------------------------------------
820 690
================================================================================
</TABLE>
The corporation tax charge for the year arises on the taxable profits of a
subsidiary undertaking which cannot be fully relieved by the tax losses within
the Group.
11 LOSS PER SHARE
The calculation of loss per equity share is based on the loss on ordinary
activities after taxation and minority interests for the year, divided by the
weighted average number of equity shares of the Company in issue during the year
of 1,421,492,181 (1995: 1,102,384,337).
<PAGE> 19
12 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
GROUP FREEHOLD AND
FREEHOLD LONG LEASEHOLD CABLE AND ELECTRONIC OTHER
LAND BUILDINGS DUCTING EQUIPMENT EQUIPMENT TOTAL
(POUND (POUND (POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COST
At 1 January 1996 4,223 36,005 766,866 359,617 79,239 1,245,950
Additions -- 9,951 335,844 130,783 39,012 515,590
Disposals -- -- (749) (565) (4,792) (6,106)
- ------------------------------------------------------------------------------------------------------------------------------------
At 31 December 1996 4,223 45,956 1,101,961 489,835 113,459 1,755,434
- ------------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
At 1 January 1996 -- 4,920 74,532 70,810 31,880 182,142
Charge for the year -- 2,458 47,374 60,220 19,664 129,716
On disposals -- -- (725) (547) (2,346) (3,618)
- ------------------------------------------------------------------------------------------------------------------------------------
At 31 December 1996 -- 7,378 121,181 130,483 49,198 308,240
- ------------------------------------------------------------------------------------------------------------------------------------
NET BOOK VALUE
AT 31 DECEMBER 1996 4,223 38,578 980,780 359,352 64,261 1,447,194
====================================================================================================================================
At 31 December 1995 4,223 31,085 692,334 288,807 47,359 1,063,808
====================================================================================================================================
</TABLE>
Included in the net book value of electronic equipment and other equipment is
(pound sterling)38,258,000 and (pound sterling)6,880,000, respectively, (1995:
(pound sterling)23,796,000 and (pound sterling)1,080,000, respectively) in
respect of assets held under finance leases and similar hire purchase contracts.
Depreciation charged on these assets was (pound sterling)7,106,000.
13 FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
GROUP
ASSOCIATED UNDERTAKINGS
---------------------------- FOREIGN
SHARE OTHER OWN CURRENCY
OF NET PARTICIPATING SHARES OPTION
ASSETS LOANS INTERESTS HELD PREMIUM TOTAL
(POUND (POUND (POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COST
At 1 January 1996 69,997 24,593 20,666 7,280 88,070 210,606
Additions 194 4,496 5,000 -- -- 9,690
Released during the year -- -- -- (115) -- (115)
- ------------------------------------------------------------------------------------------------------------------------------------
At 31 December 1996 70,191 29,089 25,666 7,165 88,070 220,181
- ------------------------------------------------------------------------------------------------------------------------------------
SHARE OF POST-ACQUISITION LOSSES
At 1 January 1996 (13,887) -- -- -- -- (13,887)
Share of loss on ordinary activities
before taxation (15,203) -- -- -- -- (15,203)
Share of tax on loss on
ordinary activities (770) -- -- -- -- (770)
PROVISION
At 1 January 1996 -- -- -- (2,806) -- (2,806)
Charge for the year -- -- -- (1,380) -- (1,380)
AMORTISATION OF FOREIGN
CURRENCY OPTION PREMIUM
At 1 January 1996 -- -- -- -- (2,885) (2,885)
Charge for the year -- -- -- -- (12,815) (12,815)
Valuation adjustment to option premium -- -- -- -- (53,025) (53,025)
- ------------------------------------------------------------------------------------------------------------------------------------
At 31 December 1996 (29,860) -- -- (4,186) (68,725) (102,771)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENTS
AT 31 DECEMBER 1996 40,331 29,089 25,666 2,979 19,345 117,410
====================================================================================================================================
At 31 December 1995 56,110 24,593 20,666 4,474 85,185 191,028
====================================================================================================================================
</TABLE>
<PAGE> 20
NOTES
13 FIXED ASSET INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
COMPANY FOREIGN
LOANS OWN CURRENCY
SUBSIDIARY PARTICIPATING TO GROUP SHARES OPTION
UNDERTAKINGS INTERESTS UNDERTAKINGS HELD PREMIUM TOTAL
(POUND (POUND (POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COST
At 1 January 1996 153,257 -- -- 7,280 88,070 248,607
Additions 18,993 2,033 5,000 -- -- 26,026
Transfer from group undertaking -- 31,682 -- -- -- 31,682
Released during the year -- -- -- (115) -- (115)
- ------------------------------------------------------------------------------------------------------------------------------------
At 31 December 1996 172,250 33,715 5,000 7,165 88,070 306,200
- ------------------------------------------------------------------------------------------------------------------------------------
PROVISION
At 1 January 1996 -- -- -- (2,806) -- (2,806)
Charge for the year -- -- -- (1,380) -- (1,380)
AMORTISATION OF FOREIGN
CURRENCY OPTION PREMIUM
At 1 January 1996 -- -- -- -- (2,885) (2,885)
Charge for the year -- -- -- -- (12,815) (12,815)
Valuation adjustment to option premium -- -- -- -- (53,025) (53,025)
- ------------------------------------------------------------------------------------------------------------------------------------
At 31 December 1996 -- -- -- (4,186) (68,725) (72,911)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENTS
AT 31 DECEMBER 1996 172,250 33,715 5,000 2,979 19,345 233,289
====================================================================================================================================
At 31 December 1995 153,257 -- -- 4,474 85,185 242,916
====================================================================================================================================
</TABLE>
Details of principal subsidiary undertakings, associated undertakings, and other
participating interests of the Group are set out on pages 65 and 66.
OWN SHARES HELD
At 31 December 1996, own shares held comprised 3,937,000 ordinary shares of 10
pence held by the Telewest Employee Share Ownership Plan Trust (the "Telewest
ESOP") for awards under the Telewest Restricted Share Scheme, a scheme designed
to provide incentives to executives of the Company. Further details on the
Telewest Restricted Share Scheme are set out on page 41 of the Report of the
Remuneration Committee.
The market value at 31 December 1996 of the shares held was 124 pence per share;
the carrying value of the shares held is 182 pence per share, being the cost of
the shares at the date they were acquired by the Telewest ESOP.
At 31 December 1996, 2,648,000 ordinary shares had been awarded to executives of
the Group, leaving the remaining 1,289,000 shares available for future awards to
eligible executives. The provision made against own shares held represents
awards earned by executives in respect of services to the Group.
The Telewest ESOP received an interest-free loan of (pound sterling)7,280,000
from the Group to subscribe for the ordinary shares to establish the Telewest
ESOP. The loan is to be repaid by way of cash contributions made to the ESOP
Trustees by subsidiary undertakings of the Group. At 31 December 1996, the
Telewest ESOP owed (pound sterling)4,474,000 to the Group.
<PAGE> 21
14 STOCKS
All stock is in the form of raw materials and consumables.
15 DEBTORS
<TABLE>
<CAPTION>
GROUP COMPANY GROUP COMPANY
1996 1996 1995 1995
(POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DUE WITHIN
ONE YEAR
Trade debtors 29,305 -- 23,123 --
Amounts owed
by subsidiary
undertakings -- -- -- 222,195
Other debtors 27,925 8 22,243 3,612
Prepayments and
accrued income 9,524 63 9,444 --
- --------------------------------------------------------------------------------
66,754 71 54,810 225,807
- --------------------------------------------------------------------------------
DUE AFTER MORE
THAN ONE YEAR
Amounts owed
by subsidiary
undertakings -- 1,053,279 -- --
Other debtors 175 -- 170 --
- --------------------------------------------------------------------------------
175 1,053,279 170 --
- --------------------------------------------------------------------------------
66,929 1,053,350 54,980 225,807
================================================================================
</TABLE>
16 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY GROUP COMPANY
1996 1996 1995 1995
(POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank loans and
overdrafts 2,949 -- 937 --
Obligations under
finance leases
and hire
purchase
contracts
(Note 22) 2,716 145 929 --
Trade creditors 46,855 -- 40,402 1,390
Amounts owed
to group
undertakings -- 91 -- 3,372
Taxation and
social security 4,068 -- 2,548 --
Other creditors 24,417 1,784 12,998 4,647
Accruals and
deferred
income 131,429 6,253 79,930 4,949
- --------------------------------------------------------------------------------
212,434 8,273 137,744 14,358
================================================================================
</TABLE>
The bank loans are property loans secured on freehold land and buildings held by
the Group.
17 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
GROUP COMPANY GROUP COMPANY
1996 1996 1995 1995
(POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior
Debentures
due 2006 171,499 171,499 188,540 188,540
Senior Discount
Debentures
due 2007 586,993 586,993 565,976 565,976
Senior Secured
Facility 81,814 -- -- --
Other bank
loans and
overdrafts 400 -- 2,949 --
Obligations
under finance
leases and hire
purchase
contracts
(Note 22) 51,674 19,965 29,385 --
Foreign Currency
Swap 20,875 20,875 2,966 2,966
Amounts owed
to group
undertakings -- 430,821 -- --
Other creditors 4,753 -- 5,250 --
- --------------------------------------------------------------------------------
918,008 1,230,153 795,066 757,482
================================================================================
</TABLE>
The bank loan is a property loan secured on freehold land and buildings held by
the Group.
Bank loans and overdrafts are secured on Group property, carry interest at
between 1.00% and 1.75% over LIBOR, and are repayable as follows:
<TABLE>
<CAPTION>
GROUP GROUP
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Between one and two years -- 2,949
Between two and five years 400 --
- --------------------------------------------------------------------------------
400 2,949
================================================================================
</TABLE>
SENIOR DEBENTURES DUE 2006
The Group has issued US$300,000,000 principal amount of Senior Debentures (the
"Senior Debentures") with a yield to maturity of 9.625%. The Senior Debentures
mature on 1 October 2006. Interest on the Senior Debentures accrues
semi-annually and is payable in arrears. The Senior Debentures are redeemable,
in whole or in part, at the option of the Group at any time on or after 1
October 2000.
The Group has entered into a Foreign Currency Swap which expires on 1 October
2000 to hedge its exposure to adverse fluctuations in exchange rates on the
principal amount of the Senior Debentures. The terms of the Foreign Currency
Swap
<PAGE> 22
NOTES
17 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (CONTINUED)
provided for the Group to make an initial exchange of principal of
US$300,000,000 in exchange for (pound sterling)196,078,000. During the term of
the Foreign Currency Swap, the Group is to make Sterling fixed-rate interest
payments and is to receive US Dollar fixed-rate interest payments on the initial
exchange amounts. On expiration, the initial principal amounts will be
re-exchanged.
The Senior Debentures are unsecured liabilities of the Group.
SENIOR DISCOUNT DEBENTURES DUE 2007
The Group has issued US$1,536,413,000 principal amount at maturity of Senior
Discount Debentures (the "Senior Discount Debentures") with a yield to
maturity of 11%. At 31 December 1996, the unamortised portion of the discount
on issue is (pound sterling)328,946,000 (1995: (pound sterling)387,197,000).
The Senior Discount Debentures mature on 1 October 2007. Interest on the Senior
Discount Debentures accrues semi-annually. Cash interest will not accrue on
the Senior Discount Debentures prior to 1 October 2000 and is thereafter
payable in arrears on 1 April and 1 October of each year at a rate of 11% per
annum. The Senior Discount Debentures are redeemable, in whole or in part,
at the option of the Group at any time on or after 1 October 2000.
The Group has purchased a five-year Sterling put option to purchase
US$1,537,000,000 to hedge its exposure to adverse fluctuations in exchange rates
on the principal amount at the early redemption date of the Senior Discount
Debentures. The put option has a strike price at expiration on 28 September 2000
of (pound sterling)1 = US$1.4520 ("the Forward Rate").
The option premium paid of (pound sterling)88,070,000 has been included on the
balance sheet within fixed asset investments and is being amortised to the
profit and loss account over the five-year term of the option at a constant rate
of the carrying amount of the Senior Discount Debentures. The difference between
the contracted amount translated at the Forward Rate and at the spot rate at the
inception of the contract in the amount of (pound sterling)91,717,000 is also
being amortised on the same basis to the profit and loss account.
At 31 December 1996, the unamortised value of the option premium has been
reduced by (pound sterling)53,025,000, representing the hedging of an equivalent
foreign exchange gain on the Senior Discount Debentures during the year.
The Senior Discount Debentures are unsecured liabilities of the Group.
SENIOR SECURED FACILITY
On 22 May 1996, the Group entered into a senior secured
credit facility (the "Senior Secured Facility") with a syndicate of banks. The
facility is divided into two tranches: the first portion (Tranche A) is
available on a revolving basis for up to (pound sterling)300 million, reducing
to (pound sterling)100 million by 30 June 1998 with full repayment by 31
December 1998; the second portion (Tranche B) is available on a revolving basis
concurrently with Tranche A for an amount up to 6.5 times the trailing, rolling
six month annualised consolidated net operating cash flow, gradually reducing
throughout the period of the facility to 4 times by 1 January 2000. Thereafter,
the amount outstanding under the Tranche B facility converts to a term loan
amortising over 5 years. The aggregate drawing at any time under both tranches
cannot exceed (pound sterling)1.2 billion.
Borrowings under the facility are secured by the assets of the Group, including
the partnership interests and shares of subsidiaries, and bear interest at 2.25%
above LIBOR for Tranche A and between 0.5% and 1.875% above LIBOR (depending on
the ratio of borrowings to the trailing, rolling six month annualised
consolidated net operating cash flow) for Tranche B.
The Group's ability to borrow under the facility is subject to, among other
things, its compliance with the financial and other covenants and borrowing
conditions contained therein.
In September 1996, the Group entered into certain delayed-starting interest rate
swap agreements in order to manage interest rate risk on the Senior Secured
Facility. The effective dates of the interest rate swap agreements are 2 January
1997 and 31 March 1997, and the agreements mature on 31 December 2001 and 28
March 2002 respectively. The aggregate notional principal amount of the swaps
adjusts upwards on a semi-annual basis to a maximum of (pound sterling)750
million. In accordance with the swap agreements, the Group receives interest at
the six-month LIBOR rate and pays a fixed interest rate in the range of 7.835 -
7.975%.
18 DEFERRED TAXATION
The amount provided, and the full potential liability, in respect of deferred
taxation is as follows:
<TABLE>
<CAPTION>
GROUP GROUP
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Tax effect of timing differences due to:
Excess capital allowances over
depreciation 110,600 --
Other 27,900 12,100
Trading losses (138,500) (12,100)
- --------------------------------------------------------------------------------
-- --
================================================================================
</TABLE>
As at 31 December 1996, the Group estimates that it has, subject to Inland
Revenue agreement, (pound sterling)940,000,000 (1995: (pound
sterling)294,000,000) of tax losses, including losses arising prior to 1995 from
the Group's predecessor businesses, available to relieve future profits.
Accumulated tax losses at 31 December 1995 exclude capital allowances on assets
which were available to the Group, but had not been claimed. At 31 December
1996, accumulated tax losses include a claim for all available capital
allowances. No deferred tax asset has been recognised in respect of any
unutilised tax losses.
<PAGE> 23
19 MINORITY INTERESTS
At 31 December 1996, the minority interests comprised 30,000 ordinary shares of
(pound sterling)1 each and 20,000 cumulative convertible preference shares of
(pound sterling)1 each in Cable Guide Limited, and 5,000 ordinary shares of 10
pence each in Telewest Communications (London South) Limited, together with the
relevant minority share of the profits or losses of each entity. All minority
interests are equity interests.
20 CALLED UP SHARE CAPITAL
<TABLE>
<CAPTION>
NUMBER (POUND STERLING)000s
- --------------------------------------------------------------------------- ------------------------------------------------------
CONVERTIBLE CONVERTIBLE
ORDINARY PREFERENCE ORDINARY PREFERENCE
SHARES OF SHARES OF SHARES OF SHARES OF
10p EACH 10p EACH 10p EACH 10p EACH TOTAL
- ---------------------------------------------------------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
AUTHORIZED
At 1 January and
31 December 1996 2,010,000,000 661,000,000 201,000 66,100 267,100
============================================================================ =====================================================
ALLOTTED, CALLED UP
AND FULLY PAID
At 1 January 1996 919,963,400 496,066,708 91,996 49,607 141,603
Issued during the year 7,604,200 -- 760 -- 760
- ----------------------------------------------------------------------------- ----------------------------------------------------
AT 31 DECEMBER 1996 927,567,600 496,066,708 92,756 49,607 142,363
============================================================================ =====================================================
</TABLE>
The consideration received in respect of the issue of shares during the year was
as follows :
<TABLE>
<CAPTION>
CONSIDERATION RECEIVED NUMBER OF SHARES ISSUED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Surrender by Trans-Global (UK) Limited of its option to acquire 9.9% of equity in the
South East Regional Franchise Area 6,486,433
Additional 20% of share capital of Telewest Communications (Cotswolds) Limited 561,050
Additional 0.25% of share capital of Cable London plc 556,717
- ------------------------------------------------------------------------------------------------------------------------------------
7,604,200
====================================================================================================================================
</TABLE>
CONVERTIBLE PREFERENCE SHARES
The convertible preference shares are convertible into fully paid ordinary
shares at any time on the basis of one ordinary share for every convertible
preference share provided that, immediately following the conversion, the
percentage of the issued ordinary share capital of the Company held by members
of the public, as defined by the listing rules of the London Stock Exchange,
does not fall below 25%. The ordinary shares arising on conversion will rank
pari passu in all respects with the ordinary shares then in issue.
The holders of the convertible preference shares are entitled to receive a
dividend of such amount as is declared and paid in relation to each ordinary
share, subject to the dividend to be paid not exceeding 20 pence per share net
of any associated tax credit.
In the event of a winding-up of the Company or other return of capital, the
assets of the Company available for distribution will be paid first to the
holders of the convertible preference shares up to the sum of capital paid-up or
credited as paid-up unless the right of election upon a winding-up of the
Company has been exercised in respect of the convertible preference shares (the
"Elected Shares"). If the election has been exercised, the holders of the
ordinary shares and the Elected Shares will receive any surplus in accordance
with the amount paid-up or credited as paid-up on the shares held.
The holders of the convertible shares are not entitled to vote at any general
meeting of the Company unless the meeting includes the consideration of a
resolution for winding up the Company or a resolution modifying the rights or
privileges attaching to the convertible preference shares.
EMPLOYEE SHARE SCHEMES
Details of the employee share schemes operated by the Company are set out on
pages 40 and 41 of the Report of the Remuneration Committee.
During the year, options and awards were granted over ordinary shares of the
Company in accordance with the rules of the various employee share schemes. At
31 December 1996, taking into account options and awards exercised, cancelled,
and lapsed, during the year, the following options to subscribe for the ordinary
shares and awards over ordinary shares were outstanding.
<PAGE> 24
NOTES
20 CALLED UP SHARE CAPITAL (CONTINUED)
TELEWEST EXECUTIVE SHARE OPTION SCHEMES
<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF SHARES
DATE OF GRANT PER SHARE EXERCISE PERIOD UNDER OPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9 November 1995 154.5p 13/5/98-11/5/2002 5,029,062
9 November 1995 155.5p 13/5/98-11/5/2002 246,474
9 November 1995 171.5p 17/6/98-15/6/2002 1,136,059
9 November 1995 173.5p 17/6/98-8/11/2005 881,445
11 March 1996 141.0p 12/3/99-10/3/2006 3,803,186
11 March 1996 138.0p 12/3/99-10/3/2006 142,626
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS OUTSTANDING AT 31 DECEMBER 1996 11,238,852
====================================================================================================================================
</TABLE>
TELEWEST SHARESAVE OPTION SCHEMES
<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF SHARES
DATE OF GRANT PER SHARE EXERCISE PERIOD UNDER OPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12 December 1994 150.0p 1/2/2000-31/7/2000 653,522
12 December 1995 134.0p 1/2/2001-31/7/2001 1,258,104
12 December 1996 102.5p 1/2/2000-31/7/2000 2,165,009
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS OUTSTANDING AT 31 DECEMBER 1996 4,076,635
====================================================================================================================================
</TABLE>
The savings contracts associated with the options granted on 12 December 1996
became effective from 1 February 1997.
TELEWEST RESTRICTED SHARE SCHEME
At 31 December 1996, awards over 2,648,000 Ordinary shares were outstanding. The
exercise period of these awards is from 13 January 1998 to 24 July 2006.
Of the total shares under award at 31 December 1996, executives had earned
2,300,000 Ordinary shares in respect of services provided to the Group, leaving
348,000 Ordinary shares to be earned through future services.
21 RESERVES
<TABLE>
<CAPTION>
GROUP COMPANY
---------------------------------------------------------- ---------------------------
SHARE MERGER OTHER PROFIT SHARE PROFIT
PREMIUM RESERVE RESERVES AND LOSS PREMIUM AND LOSS
(POUND (POUND (POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
At 1 January 1996 -- 556,095 270,237 (126,238) -- (16,653)
Issue of shares 9,187 729 -- -- 9,187 --
Goodwill written off -- (21,557) -- -- -- --
Loss for the financial year -- -- -- (250,903) -- (38,203)
- ------------------------------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1996 9,187 535,267 270,237 (377,141) 9,187 (54,856)
====================================================================================================================================
</TABLE>
<PAGE> 25
22 COMMITMENTS AND CONTINGENCIES
(i) CAPITAL COMMITMENTS
The amount of capital expenditure authorised by the Group for which no provision
has been made in the financial statements is as follows:
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Contracted 13,539 5,616
Authorised but not contracted 526,051 507,380
================================================================================
</TABLE>
The Company has no capital commitments.
(ii) LEASING COMMITMENTS
Obligations of the Group in respect of finance leases, net of interest, are
payable over the following periods.
<TABLE>
<CAPTION>
GROUP COMPANY GROUP
1996 1996 1995
(POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Within one year 2,716 145 929
In the second to fifth
years inclusive 22,812 3,933 15,498
Over five years 28,862 16,032 13,887
- --------------------------------------------------------------------------------
54,390 20,110 30,314
================================================================================
</TABLE>
The Company had no obligations in respect of finance leases in 1995.
Annual commitments of the Group under operating leases are set out below:
<TABLE>
<CAPTION>
1996 1996 1995 1995
LAND AND LAND AND
BUILDINGS OTHER ASSETS BUILDINGS OTHER ASSETS
(POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Within
one year 162 709 78 166
In the second
to fifth years
inclusive 675 1,167 386 1,177
Over five
years 3,092 -- 1,690 28
- --------------------------------------------------------------------------------
3,929 1,876 2,154 1,371
================================================================================
</TABLE>
The Company has no operating leasing commitments.
23 RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW/(OUTFLOW) FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating loss (129,251) (83,772)
Depreciation and
amortisation 129,716 61,525
Increase in stocks (13) (15)
Increase in debtors (16,493) (6,080)
Increase in creditors 44,520 18,137
- --------------------------------------------------------------------------------
NET CASH INFLOW/(OUTFLOW)
FROM OPERATING ACTIVITIES 28,479 (10,205)
================================================================================
</TABLE>
24 ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR
<TABLE>
<CAPTION>
DEBENTURES, FOREIGN
SHARE CAPITAL LOANS AND CURRENCY
(INCLUDING FINANCE LEASE OPTION
PREMIUM) OBLIGATIONS PREMIUM
(POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at
1 January 1996 141,603 788,716 (85,185)
Cash inflows from
financing -- 79,003 --
Shares issued for
non-cash consideration 9,947 -- --
Amortisation of finance
costs -- 61,779 12,815
Valuation adjustment to
foreign currency
option premium -- -- 53,025
Foreign exchange gain
on debentures -- (57,589) --
Debenture issue costs
relating to prior year
paid during the year -- 829 --
Inception of finance lease
contracts -- 25,307 --
- --------------------------------------------------------------------------------
BALANCE AT
31 DECEMBER 1996 151,550 898,045 (19,345)
================================================================================
</TABLE>
25 PURCHASE OF SUBSIDIARY UNDERTAKINGS
<TABLE>
<CAPTION>
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
Tangible fixed assets -- 400,978
Fixed asset investments -- 314
Debtors -- 22,629
Cash at bank and in hand -- 4,159
Creditors -- (45,012)
Loans and finance leases -- (158,062)
- --------------------------------------------------------------------------------
-- 225,006
Goodwill 19,723 464,872
- --------------------------------------------------------------------------------
19,723 689,878
================================================================================
Satisfied by:
Issue of shares 9,869 678,174
Cash 9,854 7,391
Accruals for costs incurred -- 4,313
- --------------------------------------------------------------------------------
19,723 689,878
================================================================================
</TABLE>
<PAGE> 26
NOTES
26 ANALYSIS OF THE NET OUTFLOW OF CASH EQUIVALENTS IN RESPECT OF THE PURCHASE OF
SUBSIDIARY UNDERTAKINGS
<TABLE>
<CAPTION>
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Cash consideration (9,854) (7,391)
Payment of prior year accrual for
acquisition costs (4,313) _
Cash at bank and in hand
acquired -- 4,159
- --------------------------------------------------------------------------------------------
Net outflow of cash and
cash equivalents (14,167) (3,232)
============================================================================================
</TABLE>
27 ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at 1 January 464,818 248,002
Net cash (outflow)/inflow before
foreign exchange (386,064) 208,393
Foreign exchange movement on cash 362 8,423
- --------------------------------------------------------------------------------------------
BALANCE AT 31 DECEMBER 79,116 464,818
============================================================================================
</TABLE>
28 RELATED PARTY TRANSACTIONS
IDENTITY OF RELEVANT RELATED PARTIES
Tele-Communications International, Inc. ("TCI(2)") and US WEST Inc. ("US WEST")
are related parties of the Group, in that they own more than 20% of the voting
rights of the Group. Cox Communications, Inc. ("COX") and SBC Communications,
Inc. ("SBC") are also considered to be related parties of the Group, in that
they control substantial portions of the voting rights of the Group and hence
are able to exercise influence over its financial and operating policies.
Birmingham Cable Corporation Limited and Cable London plc (together "the
Associates") are related parties of the Group by virtue of their status as
associated companies.
NATURE OF TRANSACTIONS
Transactions with related parties, other than those described in other notes to
the financial statements, were as follows:
The Group, in the normal course of providing cable television services,
purchases certain of its programming from subsidiaries of TCI(2). Such
programming is purchased on commercially-available terms. Total purchases in the
year amounted to (pound sterling)6,951,000. The amount due to the subsidiaries
of TCI(2) at 31 December 1996 is (pound sterling)1,470,000.
The Group has management agreements with TCI(2), US WEST, COX, and SBC under
which amounts are paid for employees who have been seconded to the Group. The
amounts charged under these agreements during the year and total amounts due to
TCI(2), US WEST, COX, and SBC at 31 December 1996 are set out below.
<TABLE>
<CAPTION>
RELATED PARTY AMOUNTS CHARGED UNDER TOTAL AMOUNTS DUE AT
MANAGEMENT AGREEMENTS 31 DECEMBER 1996
(POUND STERLING)'000 (POUND STERLING)'000
- --------------------------------------------------------------------------------
<S> <C> <C>
TCI(2) 375 810
US WEST 1,810 365
COX 281 600
SBC 93 --
- --------------------------------------------------------------------------------
</TABLE>
The Group has entered into consulting agreements with the Associates to provide
consulting services relating to telephony operations. Under the agreements, the
Group receives an annual fee based upon the revenue of the Associates. The Group
also receives a fee for providing switching services to the Associates
comprising a fixed element based on a number of switches and a variable element
based on a number of lines. Fees received during the year in respect of these
services amount to (pound sterling)1,383,000. The amounts due at 31 December
1996 from the Associates in respect of these services were (pound
sterling)2,524,000.
<PAGE> 27
PRINCIPAL SUBSIDIARY UNDERTAKINGS
Except where otherwise stated, the Company owns indirectly 100% of the ordinary
share capital of the following principal subsidiary companies and holds
indirectly a 100% interest in the following partnerships and joint ventures. The
Company also indirectly owns preference shares in the subsidiary companies which
are separately disclosed. The subsidiary companies are incorporated in Great
Britain and registered in England and Wales except for the Scottish companies,
being those companies indicated by *, which are registered in Scotland. The
proportion of the ordinary shares held by the Group also represent the
proportion of voting rights held by the Group with the exception of Cable Guide
Limited in which the Group holds 66.67% of the voting rights.
The principal activities of these entities, unless otherwise indicated, are the
building and operation of cable television and telephony networks in the United
Kingdom.
All subsidiary undertakings have been included in the consolidated financial
statements.
Companies:
Cable Adnet Limited
Cable Guide Limited (Publisher)
(The Company owns indirectly 70% of the ordinary shares
and 60% of the cumulative convertible preference shares)
Cable Internet Limited
Telewest Communications (Central Lancashire) Limited
Telewest Communications (Cotswolds) Limited
Telewest Communications (Cumbernauld) Limited*
Telewest Communications (Dumbarton) Limited*
Telewest Communications (Dundee & Perth) Limited*
Telewest Communications (East Lothian) Limited*
Telewest Communications (Falkirk) Limited*
Telewest Communications (Fylde & Wyre) Limited
Telewest Communications (Glenrothes) Limited*
Telewest Communications Group Limited (Management
Company)
Telewest Communications (Liverpool) Limited
Telewest Communications (London South) Limited
(The Company owns indirectly 99.75% of the
ordinary shares)
Telewest Communications (Midlands) Limited
Telewest Communications (Midlands & North West) Limited
Telewest Communications (Motherwell) Limited*
Telewest Communications Networks Limited (Management
Company)
(The Company owns directly 100% of the ordinary shares)
Telewest Communications (North East) Limited
Telewest Communications (North West) Limited
Telewest Communications Scotland Holdings Limited*
(Holding Company)
Telewest Communications (Scotland) Limited*
Telewest Communications (South East) Limited
Telewest Communications (South Thames Estuary) Limited
Telewest Communications (South West) Limited
Telewest Communications (Southport) Limited
Telewest Communications (St. Helens & Knowsley) Limited
Telewest Communications (Telford) Limited
Telewest Communications (Wigan) Limited
Telewest Communications (Worcester) Limited
<TABLE>
<CAPTION>
PRINCIPAL PLACE
PARTNERSHIPS: OF BUSINESS
<S> <C>
Avon Cable Limited Partnership Bristol
Cotswolds Cable Limited Partnership Cheltenham
Edinburgh Cable Limited Partnership Edinburgh
Estuaries Cable Limited Partnership Basildon
London South Cable Partnership Croydon
Telewest Communications (North East) Partnership Newcastle
Telewest Communications (South East) Partnership Basildon
Tyneside Cable Limited Partnership Newcastle
United Cable (London South) Limited Partnership Croydon
JOINT VENTURES:
Avon Cable Limited Partnership and Telewest Communications
(South West) Limited Joint Venture Bristol
London South Cable Partnership and Telewest Communications
(London South) Limited Joint Venture Croydon
Telewest Communications (Cotswolds) Venture Cheltenham
Telewest Communications (Scotland) Venture Edinburgh
</TABLE>
<PAGE> 28
PRINCIPAL ASSOCIATED UNDERTAKINGS AND OTHER PARTICIPATING INTERESTS
<TABLE>
<CAPTION>
ASSOCIATED UNDERTAKINGS
ISSUED AND FULLY PAID UP PERCENTAGE
SHARE CAPITAL SHAREHOLDING
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Birmingham Cable Corporation Limited 51,073,486 ordinary shares
of(pound sterling)1 each 27.47
Cable London plc 55,125,690 ordinary shares
of 10p each 50.00**
London Interconnect Limited 120 ordinary shares of (pound sterling)1 each
(equally divided between ordinary A,
B, C, D, E and F shares) 16.67
Central Cable Sales Limited 2 ordinary shares of(pound sterling)1 each 50.00
</TABLE>
Cable London plc has also issued (pound sterling)45,000,000 of convertible loan
stock which is convertible into ordinary shares. The Group held (pound
sterling)22,500,000 of the issued loan stock at 31 December 1996.
The Group's interest in London Interconnect Limited is included in the
consolidated financial statements as an associated undertaking because the Group
is in a position to exercise a significant influence over the company.
All associated shareholdings operate in the United Kingdom and are incorporated
in Great Britain and are registered in England and Wales.
The principal activities of Birmingham Cable Corporation Limited and Cable
London plc are the building and operation of cable television and telephony
networks. The principal activity of London Interconnect Limited is the provision
of telephony services. The principal activity of Central Cable Sales Limited is
the sale of advertising space on cable television networks.
PARTICIPATING INTERESTS
<TABLE>
<CAPTION>
ISSUED AND FULLY PAID UP PERCENTAGE
SHARE CAPITAL SHAREHOLDING
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Cable Corporation Limited 18,225,389 ordinary shares
of 25p each 17.45%
1,000,000 ordinary "B" shares
of(pound sterling)6.50 each -
2 special shares of 25p each -
- ----------------------------------------------------------------------------------------------------------------------
PERCENTAGE SHAREHOLDING OF TOTAL ORDINARY SHARES 16.50%
======================================================================================================================
</TABLE>
The principal activities of The Cable Corporation Limited are the building and
operation of cable television and telephony networks in the United Kingdom. The
Cable Corporation is incorporated in Great Britain and is registered in England
and Wales.
** The investment is held directly by Telewest Communications plc.
<PAGE> 29
FINANCIAL STATEMENTS UNDER US GAAP
Contents
68 Independent auditors' report
69 Consolidated statements of operations for each of the
years in the three-year period ended December 31, 1996
70 Consolidated balance sheets at December 31, 1996 and 1995
71 Consolidated statements of cash flows for each of the
years in the three-year period ended December 31, 1996
72 Consolidated statement of shareholders' equity for each of the years
in the three-year period ended December 31, 1996
73 Notes to the consolidated financial statements
87 Supplementary financial information - five year summary
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Telewest Communications plc
We have audited the accompanying consolidated balance sheet of Telewest
Communications plc and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations and cash flows for each of the
years in the three year period ended December 31, 1996. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements on pages 69 to 86 present
fairly, in all material respects, the financial position of Telewest
Communications plc and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the years in the
three year period ended December 31, 1996 in conformity with generally accepted
accounting principles in the United States of America.
KPMG Audit Plc
Chartered Accountants
Registered Auditors
London, England
March 11, 1997
<PAGE> 31
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1996 1995 1994
$'000 (POUNDS STERLING) (POUNDS STERLING) (POUNDS STERLING)
(NOTE 2) '000 '000 '000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Cable television 207,572 121,224 64,740 35,875
Telephony - residential 214,060 125,013 57,597 23,471
Telephony - business 59,181 34,562 17,449 8,812
Other (pounds sterling)1,600,(pounds sterling)1,451 and (pounds
sterling)1,481 in 1996, 1995 and 1994, respectively, from
related parties) 16,210 9,467 4,998 3,869
- ------------------------------------------------------------------------------------------------------------------------------------
497,023 290,266 144,784 72,027
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Programming (119,700) (69,906) (32,194) (15,500)
Telephony (90,019) (52,572) (29,526) (14,714)
Selling, general and administrative (including (pounds
sterling)2,560, (pounds sterling)3,257 and (pounds
sterling)2,128 in 1996, 1995 and 1994, respectively,
to related parties) (286,507) (167,323) (105,388) (60,414)
Depreciation (222,113) (129,716) (60,019) (30,320)
Amortization of goodwill (44,775) (26,149) (7,854) (1,827)
- ------------------------------------------------------------------------------------------------------------------------------------
(763,114) (445,666) (234,981) (122,775)
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING LOSS (266,091) (155,400) (90,197) (50,748)
OTHER INCOME/(EXPENSE)
Interest income (including (pounds sterling)1,723,
(pounds sterling)1,583 and (pounds sterling)465
in 1996, 1995 and 1994, respectively,
from related parties) 28,512 16,651 15,645 2,291
Interest expense ((pounds sterling)1,083 in 1994 to related parties) (180,086) (105,172) (26,649) (10,069)
Loss on disposal of interest rate swaps - - (8,609) -
Unrealized gain on interest rate swaps - - - 1,636
Foreign exchange losses, net (4,860) (2,838) (14,575) (21)
Share of net losses of affiliates (27,351) (15,973) (12,777) (8,466)
Gain/(loss) on disposal of assets 978 571 (419) 26
Minority interests in (profits)/losses of consolidated
subsidiaries, net (308) (180) (16) 39
Other, net - - 82 (25)
- ------------------------------------------------------------------------------------------------------------------------------------
LOSS BEFORE INCOME TAXES (449,206) (262,341) (137,515) (65,337)
Income tax expense (note 14) (86) (50) (16) -
- ------------------------------------------------------------------------------------------------------------------------------------
LOSS BEFORE EXTRAORDINARY GAIN (449,292) (262,391) (137,531) (65,337)
Extraordinary gain (note 15) - - - 7,287
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOSS (449,292) (262,391) (137,531) (58,050)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
PRO FORMA
1996 1996 1995 1994
$* (POUNDS STERLING)* (POUNDS STERLING)* (POUNDS STERLING)*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LOSS PER ORDINARY SHARE
Weighted average number of ordinary shares
outstanding 925,425,473 925,425,473 861,424,848 630,756,392
Loss per ordinary share before extraordinary gain (0.49) (0.28) (0.16) (0.10)
Extraordinary gain - - - 0.01
- -----------------------------------------------------------------------------------------------------------------------------------
LOSS PER ORDINARY SHARE (0.49) (0.28) (0.16) (0.09)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
* Except number of shares
<PAGE> 32
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
1996 1996 1995
$'000 (POUNDS STERLING) (POUNDS STERLING)
(NOTE 2) '000 '000
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents 135,470 79,116 464,818
Trade receivables (net of allowance for doubtful accounts
of (pounds sterling)5,405 and(pounds sterling)4,695) 50,179 29,305 23,123
Other receivables (note 7) 55,468 32,394 25,657
Prepaid expenses 8,849 5,168 6,133
Investments in affiliates, accounted for under the equity method,
and related receivables (note 8) 118,868 69,420 80,703
Other investments, at cost 43,948 25,666 20,666
Property and equipment (less accumulated depreciation
of (pounds sterling)308,240 and(pounds sterling)182,142) (note 9) 2,478,030 1,447,194 1,063,808
Goodwill (less accumulated amortization of(pounds sterling)37,907
and(pounds sterling)11,758) 841,236 491,290 495,881
Other assets (less accumulated amortization of (pounds sterling)4,162
and (pounds sterling)742) (note 11) 106,825 62,387 108,931
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 3,838,873 2,241,940 2,289,720
========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable 80,230 46,855 40,402
Other liabilities (note 12) 325,679 190,200 103,824
Debt (note 13) 1,505,713 879,351 792,265
Capital lease obligations 93,132 54,390 30,314
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,004,754 1,170,796 966,805
- ------------------------------------------------------------------------------------------------------------------------
MINORITY INTERESTS 594 347 167
- ------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (NOTE 16)
Convertible preference shares, 10p par value; 661,000,000
shares authorized and 496,066,708 shares issued and outstanding 84,942 49,607 49,607
Ordinary shares, 10p par value; 2,010,000,000 shares authorized;
927,567,600 and 919,963,400 issued and outstanding in 1996
and 1995, respectively 158,828 92,757 91,996
Additional paid-in capital 2,282,302 1,332,887 1,322,971
Accumulated deficit (688,530) (402,108) (139,717)
- ------------------------------------------------------------------------------------------------------------------------
1,837,542 1,073,143 1,324,857
Ordinary shares held in trust for The Telewest Restricted Share
Scheme (note 17) (4,017) (2,346) (2,109)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 1,833,525 1,070,797 1,322,748
- ------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (NOTE 18)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,838,873 2,241,940 2,289,720
========================================================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 33
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1996 1995 1994
$'000 (POUNDS (POUNDS (POUNDS
(NOTE 2) STERLING) STERLING) STERLING)
'000 '000 '000
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss before extraordinary gain (449,292) (262,391) (137,531) (65,337)
Adjustments to reconcile loss before extraordinary gain
to net cash provided by/(used in) operating activities:
Depreciation 222,113 129,716 60,019 30,320
Amortization of goodwill 44,775 26,149 7,854 1,827
Amortization of deferred financing costs and issue
discount on senior discount debentures 126,888 74,104 16,605 -
Accrued interest on senior debentures - - 5,451 -
Unrealized loss on foreign currency translation 4,860 2,838 14,575 -
Loss on disposal of interest rate swaps - - 8,609 -
Unrealized gain on interest rate swaps - - - (1,636)
Share of losses of affiliates 27,351 15,973 12,777 8,466
(Gain)/loss on disposals of assets (978) (571) 419 (26)
Minority interests in profit/(loss) 308 180 16 (39)
Changes in operating assets and liabilities, net of
effect of acquisition of subsidiaries:
Change in receivables (27,239) (15,908) (5,282) (8,102)
Change in prepaid expenses 1,632 953 (3,367) 1,004
Change in accounts payable (7,834) (4,575) (5,603) 15,293
Change in other liabilities 88,471 51,668 19,206 9,067
Other - - (356) -
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES 31,055 18,136 (6,608) (9,163)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property and equipment (795,136) (464,367) (254,453) (202,683)
Cash paid for acquisition of subsidiaries (24,258) (14,167) (3,232) (236)
Additional investments in and loans to affiliates (4,671) (2,728) (9,143) (23,761)
Additions to other investments (8,562) (5,000) - -
Proceeds from disposals of assets 5,238 3,059 688 294
Other investing activities - - 335 (5,505)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (827,389) (483,203) (265,805) (231,891)
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash paid for credit facility arrangement costs (31,506) (18,400) - -
Proceeds from debenture issue - - 754,812 -
Cash paid for foreign currency option - - (88,070) -
Repayment of borrowings (1,604) (937) (157,930) (219,700)
Cash paid for debenture issue costs (1,420) (829) (20,574) -
Cash paid for share issue costs - - (6,141) (28,543)
Proceeds from share issues - - - 511,800
Proceeds from borrowings 171,915 100,400 - 174,200
Capital element of finance lease repayments (2,108) (1,231) (1,291) (210)
Net contributions from Joint Venturers and minorities - - - 44,995
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 135,277 79,003 480,806 482,542
- ----------------------------------------------------------------------------------------------------------------------
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (661,057) (386,064) 208,393 241,488
Effect of exchange rate changes on cash and
cash equivalents 620 362 8,423 -
Cash and cash equivalents at beginning of year 795,907 464,818 248,002 6,514
- ----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR 135,470 79,116 464,818 248,002
======================================================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 34
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET ASSETS OF
THE JOINT VENTURE
(POUNDS STERLING)'000
(SEE NOTE 1)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
JOINT VENTURE:
Period from January 1 to November 22, 1994
Balance at January 1, 1994 311,695
Capital contribution 121,873
Repayment of the Joint Venturers' capital accounts (75,700)
Net loss (55,864)
- ----------------------------------------------------------------------------------------------------------------------
Balance at November 22, 1994 302,004
======================================================================================================================
</TABLE>
On November 22, 1994 the net assets of Joint Venture were contributed to the
Company, as described in Note 1 to the consolidated financial statements. The
contribution appears as an increase in additional paid-in capital in the
following table.
<TABLE>
<CAPTION>
CONVERTIBLE ADDITIONAL
PREFERENCE ORDINARY SHARES HELD PAID-IN ACCUMULATED
SHARES SHARES IN TRUST CAPITAL DEFICIT TOTAL
(POUNDS (POUNDS (POUNDS (POUNDS (POUNDS (POUNDS
(STERLING) STERLING) STERLING) STERLING) (STERLING) (STERLING)
'000 '000 '000 '000 '000 '000
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY:
Shares issued during the year 15,300 84,824 - 384,272 - 484,396
Ordinary shares held in trust
for the Telewest Restricted
Share Scheme - - (7,280) - - (7,280)
Contribution of the Joint
Venture to the Company
on November 22, 1994 - - - 302,004 - 302,004
Net loss - - - - (2,186) (2,186)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31, 1994 15,300 84,824 (7,280) 686,276 (2,186) 776,934
Conversion of ordinary
shares into convertible
preference shares 11,227 (11,227) - - - -
Shares issued in connection
with the acquisition
of TCMN (see note 5) 23,080 18,399 - 636,695 - 678,174
Accrued employee
compensation relating
to the Telewest Restricted
Share Scheme - - 5,171 - - 5,171
Net loss - - - - (137,531) (137,531)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31, 1995 49,607 91,996 (2,109) 1,322,971 (139,717) 1,322,748
Ordinary shares issued _ 761 - 9,916 - 10,677
Accrued employee compensation
relating to the Telewest
Restricted Share Scheme - - (237) - - (237)
Net loss - - - - (262,391) (262,391)
- ----------------------------------------------------------------------------------------------------------------------
BALANCE AT
DECEMBER 31, 1996 49,607 92,757 (2,346) 1,332,887 (402,108) 1,070,797
======================================================================================================================
</TABLE>
See accompanying notes to the consolidated financial statements.
<PAGE> 35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
years ended December 31, 1996 and 1995
1 ORGANIZATION AND HISTORY
Telewest Communications plc ("the Company") is a cable television and telephony
operator which offers these services to business and residential customers in
the United Kingdom ("UK"). The Company derives its cable television revenues
from installation fees, monthly basic and premium service fees and advertising
charges. The Company derives its telephony revenues from connection charges,
monthly line rentals, call charges, special residential service charges and
interconnection fees payable by other operators. The cable television and
telephony services account for approximately 42% and 55%, respectively, of the
Company's revenue. This revenue is predominantly derived from residential,
rather than business, customers.
The Company was incorporated on October 20, 1994 under the laws of England and
Wales in preparation for the October 2, 1995 internal reorganization of Telewest
Communications Cable Limited ("TCCL"), then called TeleWest Communications plc,
and its subsidiaries whereby the entire issued share capital of TCCL was
transferred to the Company in exchange for fully paid up shares of the Company.
TCCL had traded since November 22, 1994 when affiliates of Tele-Communications,
Inc. (the "TCI Affiliates") and affiliates of US WEST, Inc. (the "US WEST
Affiliates") contributed their UK cable interests to TCCL (the "Contribution").
These interests were previously held by the TCI Affiliates and US WEST
Affiliates through TCI/US West Cable Communications Group, a general
partnership. TCI/US WEST Cable Communications Group and its subsidiaries
collectively are referred to herein as the "Joint Venture" and the TCI
Affiliates and US WEST Affiliates collectively are referred to herein as the
"Joint Venturers".
2 BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America ("US
GAAP"). The preparation of financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The Company's historical
shareholders' equity for the periods prior to November 22, 1994, is the excess
of the Joint Venture's assets over the Joint Venture's liabilities and
represents the historical cost of the capital contributions made by the Joint
Venturers less the accumulated deficit arising from the Joint Venture's
operations.
The economic environment and currency in which the Company operates is the UK
and hence its reporting currency is Pounds Sterling (pounds sterling). Certain
financial information for the year ended December 31, 1996 has been translated
into US Dollars, with such US Dollar amounts being unaudited and presented
solely for the convenience of the reader, at the rate of $1.7123 = (pounds
sterling)1.00, the Noon Buying Rate of the Federal Reserve Bank of New York on
December 31, 1996. The presentation of the US Dollar amounts should not be
construed as a representation that the Pounds Sterling amounts could be so
converted into US Dollars at the rate indicated or at any other rate.
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
those of all majority-owned subsidiaries. All significant intercompany accounts
and transactions have been eliminated upon consolidation.
All acquisitions have been accounted for under the purchase method of
accounting. Under this method, the results of subsidiaries and affiliates
acquired in the year are included in the consolidated statement of operations
from the date of acquisition.
Goodwill arising on consolidation (representing the excess of the fair value of
the consideration given over the fair value of the identifiable net assets
acquired) is amortized over the acquisition's useful life or over a maximum
period of 40 years. The Company assesses the recoverability of this intangible
asset by determining whether the amortization of the goodwill balance over its
remaining life can be recovered through projected undiscounted future operating
cash flows of the acquired operations. The assessment of the recoverability of
goodwill will be impacted if projected future operating cash flows are not
achieved. The amount of goodwill impairment, if any, is measured based on the
projected discounted future operating cash flows using a discount rate
reflecting the Company's cost of funds.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly-liquid investments with original
maturities of three months or less that are readily convertible into cash.
FINANCIAL INSTRUMENTS
The Company uses foreign currency option contracts which permit, but do not
require, the Company to exchange foreign currencies at a future date with
another party at a contracted exchange rate. The Company also enters into
combined foreign currency and interest rate swap contracts ("Foreign Currency
Swaps"). Such contracts are used to hedge against adverse changes in foreign
currency exchange rates associated with obligations denominated in foreign
currency.
<PAGE> 36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The foreign currency option and Foreign Currency Swaps are recorded on the
balance sheet in other assets or other liabilities at their fair value at the
reporting period with changes in their fair value during the reporting period
being reported as part of the foreign exchange gain or loss in the statement of
operations. Such gains and losses are offset against foreign exchange gains and
losses on the obligations denominated in foreign currencies which have been
hedged.
Interest rate swap agreements which are used to manage interest rate risk on the
Company's borrowings are accounted for using the accruals method. Net income or
expense resulting from the differential between exchanging floating and fixed
rate interest payments is recorded on an accruals basis. To the extent that the
interest rate swap agreements are delayed starting, net income or expense is not
recognized until the effective date of the agreement.
Other interest rate swaps which are held as trading assets are recorded on the
balance sheet at their fair value at the end of each reporting period with
changes in their fair value being recorded as gains and losses in the statement
of operations.
INVESTMENTS
Investments in partnerships, joint ventures and subsidiaries in which the
Company's voting interest is 20% to 50%, and others where the Company has
significant influence, are accounted for using the equity method. Investments
which do not have a readily determinable fair value, in which the Company's
voting interest is less than 20%, and in which the Company does not have
significant influence, are carried at cost and written down to the extent that
there has been an other-than-temporary diminution in value.
ADVERTISING COSTS
Advertising costs are expensed as incurred. The amount of advertising costs
expensed was (pound sterling)24,846,000, (pound sterling)10,246,000, and (pound
sterling)4,313,000 for the years ended December 31, 1996, 1995, and 1994,
respectively.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, including the historical carryover
basis cost from the Contribution. Except during the prematurity period as
described below, depreciation is provided to write off the cost, less estimated
residual value, of property and equipment by equal instalments over their
estimated useful economic lives as follows:
<TABLE>
<S> <C>
Freehold and long leasehold buildings 50 years
Cable and ducting 20 years
Electronic equipment
- System electronics 8 years
- Switching equipment 8 years
- Subscriber electronics 5 years
- Headend, studio and playback facilities 5 years
Other equipment
- Office furniture and fittings 5 years
- Motor vehicles 4 years
</TABLE>
During the prematurity period, depreciation of cable and ducting and system
electronics is charged monthly to write off the estimated cost at the end of the
prematurity phase over a useful life of 20 and 8 years, respectively. In
accordance with Statement of Financial Accounting Standard ("SFAS") No 51,
"Financial Reporting by Cable Television Companies", the monthly charge is
scaled down by a ratio of average customers in the current period to the
estimated customer base at the end of the prematurity period. The prematurity
period covers the period between connecting the first customer and substantial
completion of the network.
Preconstruction costs which are included within cable and ducting are amortized
over the life of the franchise from the date of the first customer.
The Company accounts for costs, expenses and revenues applicable to the
construction and operation of its cable systems under SFAS No 51.
The estimated useful lives of cable and ducting and systems electronics were
reassessed with effect from January 1, 1996, and were changed from 25-30 years
and 10 years to 20 years and 8 years, respectively. The net book value of these
assets are being written-off over their revised estimated remaining lives.
FRANCHISE COSTS
Expenditure incurred on successful applications for franchise licenses is
included in property and equipment and is amortized over the remaining life of
the original franchise term. Costs relating to unsuccessful applications are
charged to the statement of operations.
DEFERRED FINANCING COSTS
Costs incurred in raising debt are deferred and recorded
on the balance sheet in other assets. The costs are amortized to the
consolidated statement of operations at a constant rate to the carrying value of
the debt over the life of the obligation.
MINORITY INTERESTS
Recognition of the minority interests' share of losses of consolidated
subsidiaries is limited to the amount of such minority interests' allocable
portion of the equity of those consolidated subsidiaries.
FOREIGN CURRENCIES
Transactions in foreign currencies are recorded using the rate of exchange in
effect at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange
ruling at the balance sheet date and the gains or losses on translation are
included in the statement of operations.
REVENUE RECOGNITION
Revenue is recognized as services are delivered. Other revenues include
connection fees which are recognized in the period of connection to the extent
that the fee is offset by direct selling costs. The remainder is recognized over
the estimated average period that customers are expected to remain connected to
the system.
<PAGE> 37
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PENSION COSTS
The Company does not have a defined-benefit pension plan but operates a
defined-contribution scheme or contributes up to specified limits to the
third-party scheme of the employee's choice. The amount included in losses in
1996, 1995 and 1994 of (pound sterling)2,580,000, (pound sterling)1,538,000,
and (pound sterling)839,000, respectively, represents the contributions payable
to the selected schemes in respect of the relevant accounting periods.
INCOME TAXES
Prior to November 22, 1994 no provision had been made for income tax expense or
benefit in the accompanying financial statements as the earnings or losses of
the Joint Venture were reported in the respective income tax returns of the
individual Joint Venturers. Following the reorganization effective on November
22, 1994, the Company became subject to UK taxation and adopted SFAS No 109,
"Accounting for Income Taxes". The adoption of SFAS No 109 does not give rise to
any cumulative adjustment to be made in the 1994 consolidated statement of
operations. Under the asset and liability method of SFAS No 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered.
SHARE-BASED COMPENSATION
SFAS No. 123, "Accounting for Stock-Based Compensation", encourages, but does
not require, companies to record compensation cost for share-based employee
compensation plans at fair value. The Company has chosen to continue to account
for share-based compensation using the intrinsic value method prescribed in
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations. Accordingly, compensation cost for share
options is measured as the excess, if any, of the quoted market price of the
Company's shares at the date of the grant over the amount an employee must pay
to acquire the shares.
Shares purchased by trustees in connection with the Telewest Restricted Share
Scheme, are valued at the market price on the date on which they are purchased
and are reflected as a reduction of shareholders' equity in the balance sheet.
This equity account is reduced when the shares are awarded to employees based on
the original cost of the shares to the trustees. The value of awards of ordinary
shares to be made to employees in future years is charged to the statement of
operations to the extent that the awards have been awarded to and earned by
employees in the current accounting period. The value of shares which have been
awarded to, but have not been earned by employees, is included as deferred
compensation expense within other assets.
LOSS PER ORDINARY SHARE
Loss per ordinary share is based on the weighted average number of ordinary
shares outstanding during the year. Ordinary share equivalents are not included
in the computation as their effect would be to decrease the loss per share. The
pro forma loss per ordinary share calculated for the year ended December 31,
1994 assumes that ordinary shares issued to the Joint Venturers in return for
the Contribution had been outstanding for the entire year.
RECENTLY ISSUED ACCOUNTING STANDARDS. In June 1996, the Financial Accounting
Standards Board issued SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities". The statement establishes,
among other things, new criteria for determining whether a transfer of financial
assets in exchange for cash or other consideration should be accounted for as a
sale or as a pledge of collateral in a secured borrowing. SFAS No. 125 also
establishes new accounting requirements and servicing of financial assets and
extinguishment of liabilities occurring after December 31,1996. In December
1996, SFAS No. 127, "Deferral of the Effective Date of Certain Provisions of
FASB Statement No. 125", was issued. SFAS No. 127 defers for one year the
effective date of certain requirements of SFAS No. 125. SFAS No. 125 is not
expected to have a material impact on the financial position or results of
operations of the Company.
Statement of Position ("SOP") No. 96-1 "Environmental Remediation Liabilities",
was issued in October 1996. This statement provides authoritative guidance on
specific accounting issues that are present in the recognition, measurement,
display, and disclosure of environment remediation liabilities. The provisions
of this statement are effective for fiscal years beginning after December 15,
1996. SOP 96-1 is not expected to have a material impact on the financial
position or results of operations of the Company.
4 FINANCIAL INSTRUMENTS
FOREIGN CURRENCY OPTION CONTRACT
At December 31, 1996, the Company held a Pounds Sterling put option to purchase
US$1,537,000,000 to hedge its exposure to adverse fluctuations in exchange rates
on the principal amount at maturity of its US Dollar-denominated Senior Discount
Debentures due 2007 ("Senior Discount Debentures"). The expiration date of this
option contract is September 28, 2000. The put option has a strike price at
expiration of (pound sterling)1.00 = US$1.4520. The foreign currency option has
been included in other assets at its fair value on December 31, 1996.
<PAGE> 38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4 FINANCIAL INSTRUMENTS (CONTINUED)
FOREIGN CURRENCY SWAP The Company has entered into a Foreign Currency Swap to
hedge its exposure to adverse fluctuations in exchange rates on the principal
amount of its US Dollar-denominated Senior Debentures due 2006 ("Senior
Debentures"). The terms of the contract provided for the Company to make an
initial exchange of principal of US$300,000,000 in exchange for (pound
sterling)196,078,000. On expiration on October 1, 2000, the initial principal
amounts will be re-exchanged. The interest element of the Foreign Currency Swap
requires the Company to make Pounds Sterling fixed-rate interest payments and to
receive US Dollar fixed-rate interest payments on the initial exchange amounts
on a semi-annual basis. The Foreign Currency Swap contract has been included in
other liabilities at its fair value on December 31, 1996.
INTEREST RATE SWAPS The Company has also entered into certain delayed-starting
interest rate swap agreements in order to manage interest rate risk on its
senior secured credit facility ("Senior Secured Facility"). The effective dates
of the swap agreements are January 2, 1997 and March 31, 1997, and the
agreements mature on December 31, 2001 and March 28, 2002. The aggregate
notional principal amount of the swaps adjusts upwards on a semi-annual basis to
a maximum of (pound sterling)750 million. In accordance with the swap
agreements, the Company receives interest at the six month LIBOR rate and pays a
fixed interest rate in the range of 7.835 - 7.975%.
FAIR VALUE OF FINANCIAL INSTRUMENTS SFAS No. 119 "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments" requires
disclosure of an estimate of the fair values of certain financial instruments.
SFAS No. 119 defines the fair value of a financial instrument as the amount at
which the instrument could be exchanged in a current transaction between willing
parties other than in a forced sale. Fair value estimates are made at a specific
point in time, based upon relevant market information and information about the
financial instrument. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment, and therefore cannot be
determined precisely. Changes in assumptions could significantly affect the
estimates.
At December 31, 1996, the Company's significant financial instruments include
cash and cash equivalents, trade receivables, a foreign currency option
contract, a Foreign Currency Swap, interest rate swap agreements, trade payables
and long-term borrowings. The following table summarizes the fair value of the
foreign currency option contract, the Foreign Currency Swap, the interest rate
swap agreements, the Senior Discount Debentures and the Senior Debentures. The
fair value of the other financial instruments held by the Company approximates
their recorded carrying amount due to the short maturity of these instruments
and these instruments are not presented in the following table.
<TABLE>
<CAPTION>
AT DECEMBER 31,1996 AT DECEMBER 31,1995
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
(POUND STERLING) (POUND STERLING) (POUND STERLING) (POUND STERLING)
'000 '000 '000 '000
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Foreign currency
option contract 25,828 25,828 85,742 85,742
Liabilities:
Interest rate swap
agreements - 4,776 - -
Foreign Currency Swap 26,481 26,481 3,983 3,983
Senior Discount
Debentures 600,799 621,367 595,266 601,222
Senior Debentures 175,203 175,582 193,113 196,975
=========================================================================================
</TABLE>
The estimated fair value of the foreign currency option contract, the interest
rate swap agreements and the Foreign Currency Swap are based on quotations
received from independent, third party financial institutions and represent the
net amount receivable or payable to terminate the position, taking into
consideration market rates and counterparty credit risk. The estimated fair
value of the Senior Discount Debentures and the Senior Debentures are also based
on quotations from independent third party financial institutions and are based
on discounting the future cash flows to net present values using appropriate
market interest rates prevailing at the year end.
MARKET RISK AND CONCENTRATIONS OF CREDIT RISK
Market risk is the sensitivity of the value of the financial instruments to
changes in related currency and interest rates. Generally, the Company is not
exposed to such market risk because gains and losses on the financial
instruments are offset by gains and losses on the underlying assets and
liabilities.
The Company may be exposed to potential losses due to the credit risk of
non-performance by the counterparties to its foreign currency option, interest
rate swap agreements and Foreign Currency Swap contract, however such losses are
not anticipated as these counterparties are major international financial
institutions.
Temporary cash investments also potentially expose the Company to concentrations
of credit risk, as defined by SFAS No. 105 "Disclosure of Information about
Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risks". The Company places its temporary cash
investments with major international financial institutions and limits the
amount of credit exposure to any one financial institution. Concentrations of
credit risk with respect to trade receivables are limited due to the large
number of customers comprising the Company's customer base.
At December 31, 1996, the Company had no significant concentration of credit
risk.
<PAGE> 39
5 BUSINESS COMBINATIONS
On January 10, 1996, the Company acquired the entire issued share capital of
Telewest Communications (Worcester) Limited, then called Bell Cablemedia
(Worcester) Limited and the owner of the Worcester cable franchise, for cash
consideration of (pound sterling)9,849,000. Telewest Communications (Worcester)
Limited was otherwise a dormant company with net assets of (pound sterling)2
representing its called up share capital. This acquisition has been accounted
for under the purchase method of accounting. The goodwill arising on acquisition
was (pound sterling)9,848,998 and is being amortized on a straight-line basis
over 20 years.
During the year, the Company made various other minor acquisitions, largely for
share consideration. The goodwill arising on these acquisitions was (pound
sterling)11,708,000 and is being amortized on a straight-line basis over 20
years.
On October 3, 1995, the Company acquired the entire share capital of Telewest
Communications (Midlands & North West) Limited ("TCMN"), then called SBC
CableComms (UK), a company which holds cable television and telephony interests
in the UK, from an affiliate of Cox Communications, Inc. and affiliates of SBC
Communications, Inc., in exchange for an aggregate of 183,994,960 ordinary
shares of 10 pence each and 230,790,208 convertible preference shares of 10
pence each. The value attributable to the shares issued was (pound
sterling)1.635 per share, being the market price of the shares on June 8, 1995,
the day the terms of the acquisition were agreed to and announced. The fair
value of the share consideration using this share price was (pound
sterling)678,174,000. The aggregate cost of acquisition was (pound
sterling)689,878,000 including payment of expenses relating to the acquisition.
This acquisition has been accounted for under the purchase method of accounting.
The goodwill arising on acquisition is (pound sterling)464,872,000 and is being
amortized on a straight-line basis over 20 years.
The operating results of these acquisitions are included in the Company's
consolidated statement of operations from their respective dates of acquisition.
The following unaudited pro forma information presents the consolidated results
of operations of the Company as if the acquisitions had occurred at the
beginning of 1995, after giving effect to the amortization of goodwill arising
as a result of each of the acquisitions:
<TABLE>
<CAPTION>
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- ------------------------------------------------------------------------------
<S> <C> <C>
Revenue 290,266 191,195
Net loss (262,608) (189,225)
==============================================================================
</TABLE>
The above unaudited pro forma financial information is presented for information
purposes only and is not necessarily indicative of the operating results that
would have occurred had the acquisition been consummated as of the dates
indicated above, nor is it indicative of future results.
6 SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS Cash paid
for interest was (pound sterling)25,795,000, (pound sterling)6,041,000 and
(pound sterling)8,013,000 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Significant non-cash investing activities of the Company are described below.
The amounts stated for 1996 represent the purchase of former minority
shareholders' interests in certain UK cable interests held by the Company. The
amounts stated for 1995 represent the purchase of TCMN for largely share
consideration as described in Note 5 to the consolidated financial statements.
The amounts stated for 1994 represent the contribution of UK cable interests to
the Company by the Joint Venturers.
<TABLE>
<CAPTION>
1996 1995 1994
(POUND STERLING)'000 (POUND STERLING)'000 (POUND STERLING)'000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchase/contribution of
cable interests:
Assets -- 428,080 3,967
Liabilities assumed -- (45,144) (2,744)
Debt assumed -- (157,930) --
Minority interest in
subsidiaries -- -- (44)
- -------------------------------------------------------------------------------------------------
Net assets acquired/
contributed -- 225,006 1,179
Goodwill on acquisition 9,874 464,872 --
- -------------------------------------------------------------------------------------------------
9,874 689,878 1,179
=================================================================================================
Share consideration/
capital contribution 9,869 678,174 1,179
Costs of acquisition 5 11,704 --
- --------------------------------------------------------------------------------------------------
9,874 689,878 1,179
==================================================================================================
</TABLE>
The Company entered into finance lease arrangements for switching equipment and
other equipment with a total capital value at the beginning of the lease of
(pound sterling)25,307,000, (pound sterling)16,920,000 and (pound
sterling)6,820,000 during the years ended December 31, 1996, 1995 and 1994,
respectively.
7 OTHER RECEIVABLES
<TABLE>
<CAPTION>
AT DECEMBER 31
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- ----------------------------------------------------------------------------
<S> <C> <C>
Value Added Tax refund 10,633 5,145
Interconnection receivables 3,865 3,019
Interest receivable 63 3,341
Accrued income 4,356 3,311
Recoverable expenses 5,714 2,808
Other 7,763 8,033
- ----------------------------------------------------------------------------
32,394 25,657
============================================================================
</TABLE>
<PAGE> 40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8 INVESTMENTS
The Company has investments in affiliates accounted for under the equity method
at December 31, 1996 and 1995 as follows:
<TABLE>
<CAPTION>
PERCENTAGE OWNERSHIP
AT DECEMBER 31
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- ---------------------------------------------------------------
<S> <C> <C>
Cable London plc 60.00% 49.00%
Birmingham Cable Corporation
Limited 27.47% 27.47%
London Interconnect Limited 16.67% 16.67%
Central Cable Sales Limited 50.00% 50.00%
===============================================================
</TABLE>
The Company has accounted for its investment in London Interconnect Limited
under the equity method because it is in a position to exercise a significant
influence over London Interconnect Limited.
Summarized financial information for such affiliates which operate principally
in the cable television and telephony industries is as follows:
Combined financial position
<TABLE>
<CAPTION>
AT DECEMBER 31
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- -------------------------------------------------------------
<S> <C> <C>
Property and equipment, net 391,189 311,265
Intangible assets, net 3,845 4,644
Other assets, net 105,475 149,786
- -------------------------------------------------------------
Total assets 500,503 465,695
- -------------------------------------------------------------
Debt 281,500 247,653
Other liabilities 91,947 50,268
Owners' equity 127,056 167,774
- -------------------------------------------------------------
Total liabilities and equity 500,503 465,695
=============================================================
</TABLE>
Combined operations
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- -------------------------------------------------------------
<S> <C> <C>
Revenue 98,329 70,016
Operating expenses (124,358) (99,184)
- -------------------------------------------------------------
Operating loss (26,029) (29,168)
Interest expense (15,945) (4,615)
- -------------------------------------------------------------
Net loss (41,974) (33,783)
=============================================================
</TABLE>
The Company's investments in affiliates are comprised as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- -------------------------------------------------------------
<S> <C> <C>
Loans 29,089 24,593
Share of net assets 40,331 56,110
- -------------------------------------------------------------
69,420 80,703
- -------------------------------------------------------------
</TABLE>
Any excess of the purchase cost over the value of the net assets acquired is
included in goodwill and amortized over 20 years on a straight-line basis.
<PAGE> 41
9 PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
CABLE AND ELECTRONIC OTHER
LAND BUILDINGS DUCTING EQUIPMENT EQUIPMENT TOTAL
(POUND (POUND (POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ACQUISITION COSTS
Balance at January 1, 1996 4,223 36,005 766,866 359,617 79,239 1,245,950
Additions -- 9,951 335,844 130,783 39,012 515,590
Disposals -- -- (749) (565) (4,792) (6,106)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31,1996 4,223 45,956 1,101,961 489,835 113,459 1,755,434
- ------------------------------------------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
Balance at January 1, 1996 -- 4,920 74,532 70,810 31,880 182,142
Charge for year -- 2,458 47,374 60,220 19,664 129,716
Disposals -- -- (725) (547) (2,346) (3,618)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 -- 7,378 121,181 130,483 49,198 308,240
- ------------------------------------------------------------------------------------------------------------------------
1996 NET BOOK VALUE 4,223 38,578 980,780 359,352 64,261 1,447,194
========================================================================================================================
ACQUISITION COSTS
Balance at January 1, 1995 4,055 16,643 321,208 149,652 30,575 522,133
On acquisition of TCMN 168 14,551 284,670 131,682 25,681 456,752
Additions -- 4,811 161,439 78,729 24,097 269,076
Disposals -- -- (451) (446) (1,114) (2,011)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31,1995 4,223 36,005 766,866 359,617 79,239 1,245,950
- ------------------------------------------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
balance at January 1,1995 -- 2,106 25,926 28,040 11,218 67,290
On acquisition of TCMN -- 833 26,201 17,080 11,660 55,774
Charge for year -- 1,981 22,507 25,791 9,740 60,019
Disposals -- -- (102) (101) (738) (941)
- ------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 -- 4,920 74,532 70,810 31,880 182,142
- ------------------------------------------------------------------------------------------------------------------------
1995 NET BOOK VALUE 4,223 31,085 692,334 288,807 47,359 1,063,808
========================================================================================================================
</TABLE>
Cable and ducting consists principally of civil engineering and FIBRE optic
costs. In addition, cable and ducting includes net book value of preconstruction
and franchise costs of (pound)13,220,000 and (pound)14,388,000 as of December
31, 1996 and 1995, respectively. Electronic equipment includes the Company's
switching, headend and converter equipment. Other equipment consists principally
of motor vehicles, office furniture and fixtures and leasehold improvements.
10 VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS CHARGED TO
BALANCE AT ACQUISITION COSTS AND OTHER BALANCE AT
JANUARY 1 OF TCMN EXPENSES ACCOUNTS DEDUCTIONS DECEMBER 31
(POUND (POUND (POUND (POUND (POUND (POUND
STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000 STERLING)'000
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996
Allowance for doubtful accounts 4,695 -- 9,020 -- (8,310) 5,405
=========================================================================================================================
1995
Allowance for doubtful accounts 1,736 1,063 5,920 -- (4,024) 4,695
=========================================================================================================================
1994
Allowance for doubtful accounts 577 -- 3,392 26 (2,259) 1,736
=========================================================================================================================
</TABLE>
<PAGE> 42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11 OTHER ASSETS
The components of other assets, net of amortization, are as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- -------------------------------------------------------------------------
<S> <C> <C>
Deferred financing costs of debentures 17,510 20,716
Deferred financing costs of Senior
Secured Facility 18,186 --
Foreign currency option contract 25,828 85,742
Other 863 2,473
- -------------------------------------------------------------------------
62,387 108,931
=========================================================================
</TABLE>
12 OTHER LIABILITIES
Other liabilities are summarized as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31
1996 1995
(POUND (POUND
STERLING)'000 STERLING)'000
- -------------------------------------------------------------------------
<S> <C> <C>
Amounts due to affiliated or other
related parties 1,901 2,052
Accrued interest 8,921 5,740
Accrued construction costs 36,397 14,859
Accrued expenses and deferred income 82,938 58,507
Foreign Currency Swap 26,481 3,983
Other liabilities 33,562 18,683
- ------------------------------------------------------------------------
190,200 103,824
========================================================================
</TABLE>
13 DEBT
Debt is summarized as follows at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE 1996 1995
INTEREST RATE (POUND (POUND
1996 1995 STERLING)'000 STERLING)'000
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior
Debentures 9.625% 9.625% 175,203 193,113
Senior Discount
Debentures 11.000% 11.000% 600,799 595,266
Senior Secured
Facility 8.281% -- 100,000 --
Other debt 7.790% 8.450% 3,349 3,886
- ----------------------------------------------------------------------------------
879,351 792,265
==================================================================================
</TABLE>
SENIOR DEBENTURES
In October 1995, the Company issued US$300,000,000 principal amount of Senior
Debentures with a yield to maturity of 9.625%. The cash consideration received
at the date of issue was (pound)188,703,000. The Senior Debentures mature on
October 1, 2006. Interest on the Senior Debentures accrues semi-annually and is
payable in arrears. The Senior Debentures are redeemable, in whole or in part,
at the option of the Company at any time on or after October 1, 2000 at the
redemption price of 104.813% of the principal amount during the year commencing
October 1, 2000, 102.406% of the principal amount during the year commencing
October 1, 2001, and thereafter at 100% of the principal amount plus accrued and
unpaid interest.
The Senior Debentures and the Senior Discount Debentures, which are described
below, were issued to finance general working capital, capital expenditure,
foreign currency swap and options to hedge against adverse fluctuations in
exchange rates, and additional investments in affiliated companies. A portion of
the net proceeds of the issue also was used to repay the (pound)157,930,000
indebtedness outstanding under the loan facility held by TCMN at the date that
it was acquired by the Company.
The indenture under which the Senior Debentures were issued contains various
covenants which, among other things, restrict the ability of the Company to
incur additional indebtedness, pay dividends, create certain liens, enter into
certain transactions with shareholders or affiliates, or sell certain assets.
The Company was in compliance with the convenants at December 31, 1996.
The Company has entered into a Foreign Currency Swap to hedge its exposure to
adverse fluctuations in exchange rates on the principal amount which will be
outstanding on October 1, 2000, the earliest redemption date, and the associated
interest payments of the Senior Debentures. The terms of the Foreign Currency
Swap are described in Note 4 to the consolidated financial statements.
The Senior Debentures are unsecured liabilities of the Company.
SENIOR DISCOUNT DEBENTURES
In October 1995, the Company issued US$1,536,413,000 principal amount at
maturity of Senior Discount Debentures with a yield to maturity of 11%. The cash
consideration received at the date of issue was (pound)566,109,000
(US$900,000,000). At December 31, 1996, the unamortized portion of the discount
on issue was (pound)296,482,000 (US$507,665,000). The Senior Discount Debentures
mature on October 1, 2007. Interest on the Senior Discount Debentures accrues
semi-annually. Cash interest will not accrue on the Senior Discount Debentures
prior to October 1, 2000 and is thereafter payable in arrears on April 1 and
October 1 of each year at a rate of 11% per annum. The Senior Discount
Debentures are redeemable, in whole or in part, at the option of the Company at
any time on or after October 1, 2000 at the redemption price of 100% of the
principal amount plus accrued and unpaid interest.
The indenture under which the Senior Discount Debentures were issued contains
various covenants as set out for the Senior Debentures above and the Company was
in compliance with such covenants at December 31, 1996.
<PAGE> 43
13 DEBT (CONTINUED)
The Company has purchased a five year pound sterling put option to purchase
US$1,537,000,000 to hedge its exposure to adverse fluctuations in exchange rates
on the principal amount which will be outstanding on October 1, 2000, the
earliest redemption date, of the Senior Discount Debentures. The terms of the
foreign currency option contract are described in Note 4 to the consolidated
financial statements.
The Senior Discount Debentures are unsecured liabilities of the Company.
SENIOR SECURED FACILITY
During the year, a subsidiary of the Company entered into a senior secured
credit facility (the "Senior Secured Facility") with a syndicate of banks. The
facility is available to finance the capital expenditure, working capital
requirements and other permitted related activities involving the construction
and operation of all the Company's owned and operated franchises, to pay cash
interest on the Company's unsecured debentures, to fund the repayment of
existing secured borrowings in respect of the London South and South West
Regional Franchise Areas, to fund loans to or investments in affiliated
companies, to bid for or purchase, and subsequently construct, licenses or
franchises which may become available and to refinance advances and the payment
of interest, fees, and expenses in respect of the Senior Secured Facility.
The facility is divided into two tranches: the first portion (Tranche A) is
available on a revolving basis for up to (pound sterling)300 million, reducing
to (pound sterling)100 million by June 30, 1998 with full repayment by December
31, 1998; the second portion (Tranche B) is available on a revolving basis
concurrently with Tranche A for an amount up to 6.5 times the trailing, rolling
six month annualized consolidated net operating cash flow, gradually reducing
throughout the period of the facility to 4 times by January 1, 2000. Thereafter,
the amount outstanding under the Tranche B facility converts to a term loan
amortizing over 5 years. The aggregate drawing at any time under both tranches
cannot exceed (pound sterling)1.2 billion. At December 31, 1996, (pound
sterling)100,000,000 was outstanding under Tranche A. During the year, the
Company paid (pound sterling)2,487,000 for commitment fees relating to the
unused portion of the facility.
Borrowings under the facility are secured by the assets of the Company,
including the partnership interests and shares of subsidiaries, and bear
interest at 2.25% above LIBOR for Tranche A and between 0.5% and 1.875% above
LIBOR (depending on the ratio of borrowings to the trailing, rolling six month
annualized consolidated net operating cash flow) for Tranche B. In September
1996, the Company entered into certain delayed-starting interest rate swap
agreements in order to manage interest rate risk on the Senior Secured Facility.
The terms of the swap agreements are described in Note 4 to the consolidated
financial statements.
The Company's ability to borrow under the facility is subject to, among other
things, its compliance with the financial and other covenants and borrowing
conditions contained therein. The Company was in compliance with the covenants
at December 31, 1996.
OTHER DEBT
Other debt is represented by property loans which are secured on freehold land
and buildings held by the Company which mature in 1997. The property loans bear
interest at a rate of between 1.00% and 1.75% above LIBOR.
14 INCOME TAXES
As discussed in Note 3 to the consolidated financial statements, the Company has
adopted SFAS No 109 as of November 22, 1994. The adoption of this standard has
no cumulative effect to be reported in the 1994 consolidated statement of
operations.
Loss before income taxes is solely attributable to the UK.
The provisions for income taxes follow:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- ------------------------------------------------------------------------
<S> <C> <C>
CURRENTLY PAYABLE 50 16
========================================================================
</TABLE>
A reconciliation of income taxes determined using the statutory UK rate of 33%
to the effective rate of income tax is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995
% %
- --------------------------------------------------------
<S> <C> <C>
Corporate tax at UK statutory rates (33) (33)
Permanent differences 1 3
Valuation allowance and other
temporary differences 30 26
Share of losses of affiliates 2 4
- --------------------------------------------------------
-- --
========================================================
</TABLE>
Deferred income tax assets and liabilities at December 31, 1996 and 1995 are
summarized as follows:
<TABLE>
<CAPTION>
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- --------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets relating to:
Fixed assets -- 2,200
Net operating loss carryforwards 310,300 97,000
Other 3,400 9,200
- --------------------------------------------------------------------------------------
Deferred tax asset 313,700 108,400
Valuation allowance (175,200) (96,300)
- --------------------------------------------------------------------------------------
138,500 12,100
- --------------------------------------------------------------------------------------
Deferred tax liabilities relating to:
Fixed assets (110,600) --
Other (27,900) (12,100)
- --------------------------------------------------------------------------------------
Deferred tax liabilities (138,500) (12,100)
- --------------------------------------------------------------------------------------
DEFERRED TAX ASSET PER BALANCE SHEET -- --
======================================================================================
</TABLE>
<PAGE> 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14 INCOME TAXES (continued)
At December 31, 1996 and 1995 the Company estimates that it has, subject to
Inland Revenue agreement, net operating losses ("NOLs") of (pound
sterling)940,000,000 and (pound sterling)294,000,000, available to relieve
against future profits. NOLs at December 31, 1995 exclude capital allowances on
assets which were available to the Company, but had not been claimed. At
December 31, 1996, NOLs include a claim for all available capital allowances.
The NOLs have an unlimited carry forward period under UK tax law, but are
limited to their use to the type of business which has generated the loss.
15 EXTRAORDINARY GAIN
The Company had entered into interest rate swap agreements in order to manage
the interest rate risk on its previous revolving credit facilities by swapping
the interest rate on part of its variable rate debt for a fixed interest rate.
Following the initial public offering of the Company in November 1994, the
Company used a portion of the proceeds from the offering to repay all amounts
outstanding under these credit facilities and the interest rate swap agreements
ceased to be a hedge of the interest rate liability. The interest rate swaps
were retained pending their use as hedges of interest rates on future drawdowns
of the credit facilities. They had been placed on the balance sheet at their
fair value at the date upon which the debt was repaid and an extraordinary gain
equal to the aggregate fair value of the interest rate swaps at this date was
recognized in the consolidated statement of operations. Any change in the
aggregate fair value of the swap agreements since this date had been recognized
in the consolidated statement of operations. On October 12, 1995, the Company
sold the interest rate swaps, recognizing a loss on disposal.
16 SHAREHOLDERS' EQUITY
MOVEMENTS IN SHARE CAPITAL
During the year the Company issued 7,604,200 ordinary shares of 10 pence each
for the following consideration: an additional 0.25% of the ordinary shares of
Cable London plc, the surrender by Trans-Global (UK) Limited of its option to
acquire 9.9% of equity in the South East Regional Franchise Area, and the
remaining 20% of the ordinary shares of Telewest Communications (Cotswolds)
Limited held by a minority interest.
On October 3, 1995, the Company acquired the entire share capital of TCMN from
its former shareholders in exchange for an aggregate of 183,994,960 ordinary
shares of 10 pence each and 230,790,208 convertible preference shares of 10
pence each. On October 2, 1995, pursuant to a court-approved scheme of
arrangement (the "Scheme of Arrangement"), the Company exchanged 735,468,440
ordinary shares of 10 pence each and 265,276,500 convertible preference shares
of 10 pence each in consideration for the transfer of shares of TCCL to the
Company. Dealings in ordinary shares and ADSs representing ordinary shares of
TCCL ceased on the London Stock Exchange and NASDAQ National Market immediately
prior to the execution of the Scheme of Arrangement and upon completion of the
Scheme of Arrangement, dealings in the ordinary shares and ADSs representing
ordinary shares of the Company commenced. Immediately prior to the execution of
the Scheme of Arrangement on October 2, 1995, TCCL restructured its share
capital by converting 112,276,500 ordinary shares of 10 pence each into
112,276,500 convertible preference shares of 10 pence each.
On November 22, 1994, immediately following the Contribution, TCCL issued
604,000,000 ordinary shares and 153,000,000 convertible preference shares to the
Joint Venturers and completed an initial public offering in which 239,744,940
ordinary shares of 10 pence each were issued to the public market.
CONVERTIBLE PREFERENCE SHARES
The convertible preference shares are convertible into fully paid up ordinary
shares at any time on the basis of one ordinary share for every convertible
preference share provided that, immediately following the conversion, the
percentage of the issued ordinary share capital of the Company held by members
of the public, as defined by the listing rules of the London Stock Exchange,
does not fall below 25%. The ordinary shares arising on conversion will rank
pari passu in all respects with the ordinary shares then in issue.
The holders of the convertible preference shares are entitled to receive a
dividend of such amount as is declared and paid in relation to each ordinary
share, subject to the dividend to be paid not exceeding 20 pence per share net
of any associated tax credit.
In the event of a winding-up of the Company or other return of capital, the
assets of the Company available for distribution will be paid first to the
holders of the convertible preference shares up to the sum of capital paid-up or
credited as paid-up unless the right of election upon a winding-up of the
Company has been exercised in respect of the convertible preference shares ("the
Elected Shares"). If the election has been exercised, the holders of the
ordinary shares and the Elected Shares will receive any surplus in accordance
with the amount paid-up or credited as paid-up on the shares held.
The holders of the convertible preference shares are not entitled to vote at any
general meeting of the Company unless the meeting includes the consideration of
a resolution for winding up the Company or a resolution modifying the rights or
privileges attaching to the convertible preference shares.
<PAGE> 45
17 SHARE-BASED COMPENSATION PLANS
At December 31, 1996, the Company operated three types of share-based
compensation plans: the Telewest Executive Share Option Schemes, the Telewest
Sharesave Schemes, and the Telewest Restricted Share Scheme.
The Company applies APB Opinion Bulletin No. 25 and related interpretations in
accounting for its share-based compensation plans. Accordingly, no compensation
cost has been charged to the statement of operations in respect of
performance-based option grants since the options do not have exercise prices
less than the market value of the Company's ordinary shares. Compensation cost
has been recognized for fixed option grants since the options have exercise
prices less than the market value of the Company's ordinary shares at the date
of grant. Compensation cost has also been recognized for awards over ordinary
shares made under the Telewest Restricted Share Scheme since the awards have no
exercise price. Compensation cost recognized for fixed option grants and awards
under the Telewest Restricted Share Scheme was (pound sterling)1,380,000,
(pound sterling)1,334,000 and (pound sterling)nil for 1996, 1995, and 1994,
respectively.
If compensation cost for share option grants and for awards under the Telewest
Restricted Share Scheme had been determined based on their fair value at the
date of grant for 1996 and 1995 consistent with the method prescribed by SFAS
123, the Company's net loss and loss per share would have been adjusted to the
pro forma amounts set out below:
<TABLE>
<CAPTION>
1996 1995
(POUND STERLING)'000 (POUND STERLING)'000
- -----------------------------------------------------------------------
<C> <C>
Net loss - As reported 262,391 137,531
- Pro forma 264,579 138,468
(POUND STERLING) (POUND STERLING)
- -----------------------------------------------------------------------
Loss per share - As reported 0.28 0.16
- Pro forma 0.29 0.16
- -----------------------------------------------------------------------
</TABLE>
PERFORMANCE-BASED SHARE OPTION COMPENSATION PLANS
The Company has two performance-based share option plans: the Telewest 1995 (No.
1) Executive Share Option Scheme and the Telewest 1995 (No. 2) Executive Share
Option Scheme. Under both plans, certain officers and key employees are granted
options to purchase ordinary shares of the Company. The exercise price of each
option generally equals the market price of the Company's ordinary shares on the
date of grant. The options are exercisable between three and ten years after the
date of the grant with exercise conditional on the Company's shares
out-performing by price the FT-SE100 Index over any three year period preceding
exercise. The Company may grant options for up to 92,000,000 ordinary shares.
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model using a weighted-average risk-free interest
rate of 8.1 per cent and 8.3 per cent for grants in 1996 and 1995, respectively,
and an expected volatility of 30 per cent used for grants in both 1996 and 1995.
The Company does not expect to pay a dividend on its ordinary shares at any time
during the expected life of the option.
<PAGE> 46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
17 SHARE-BASED COMPENSATION PLANS (CONTINUED)
A summary of the status of the Company's performance-based share option plans as
at December 31, 1996 and 1995, the first year in which the options were granted,
and changes during the years ended on those dates is presented below:
<TABLE>
<CAPTION>
1996 1995
WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE
OF SHARES EXERCISE PRICE OF SHARES EXERCISE PRICE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year 8,645,229 160.4p -- --
Granted 4,121,474 140.9p 8,871,398 160.3p
Forfeited (1,527,851) 162.6p (226,169) 158.0p
- -----------------------------------------------------------------------------------------------------------------
Outstanding at end of year 11,238,852 153.0p 8,645,229 160.4p
=================================================================================================================
Options exercisable at year end 1,023,042 154.3p -- --
Weighted average fair value of options granted
during the year 75.6p 86.0p
</TABLE>
The following table summarizes information about the Company's performance-based
share option plans outstanding at December 31, 1996.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------- ---------------------------------
NUMBER WEIGHTED NUMBER
OUTSTANDING AT AVERAGE WEIGHTED EXERCISABLE AT WEIGHTED
DECEMBER 31, REMAINING AVERAGE DECEMBER 31, AVERAGE
RANGE OF EXERCISE PRICES 1996 contractual life exercise price 1996 exercise price
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
138.0 - 141.0p 3,945,812 7.0 years 140.1p 343,954 140.6p
154.5 - 155.5p 5,275,536 5.8 years 154.6p 414,019 154.6p
171.5 - 173.5p 2,017,504 6.9 years 172.4p 265,069 171.8p
- --------------------------------------------------------------------------------------------------------------------------
138.0 - 173.5p 11,238,852 6.4 years 152.7p 1,023,042 154.3p
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
FIXED SHARE OPTION COMPENSATION PLANS
The Company also operates the Telewest Sharesave Scheme, a fixed share option
compensation scheme. Under this plan, the Company grants options to employees to
purchase ordinary shares at a 20% discount to market price. These options can be
exercised only with funds saved by employees over time in a qualified savings
account. The options are exercisable between
37 and 66 months after the date of grant.
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option-pricing model using a weighted-average risk-free interest
rate of 7.4 per cent, 7.2 per cent, and 8.7 per cent for grants in 1996, 1995
and 1994, respectively, and an expected volatility of 30 per cent for all years.
The Company does not expect to pay a dividend on its ordinary shares at any time
during the expected life of the option.
A summary of the status of the Company's fixed share option plans as of December
31, 1996, 1995, and 1994 and the changes during the years ended on those dates
is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF SHARES EXERCISE PRICE OF SHARES EXERCISE PRICE OF SHARES EXERCISE PRICE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 3,345,941 139.6p 1,666,534 150.0p -- --
Granted 2,165,009 102.5p 2,168,157 134.0p 1,666,534 150.0p
Forfeited (1,434,315) 139.8p (488,750) 150.0p -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 4,076,635 119.8p 3,345,941 139.6p 1,666,534 150.0p
===================================================================================================================================
Options exercisable at year end 75,977 32,200 --
Weighted average fair value of
options granted during the year 49.7p 79.3p 97.4p
</TABLE>
<PAGE> 47
17 SHARE-BASED COMPENSATION PLANS (CONTINUED)
The following table summarizes information about the Company's fixed share
options outstanding at December 31, 1996.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
- ----------------------------------------------------------------
NUMBER WEIGHTED AVERAGE
OUTSTANDING AT REMAINING
EXERCISE PRICE DECEMBER 31, 1996 CONTRACTUAL LIFE
- ----------------------------------------------------------------
<S> <C> <C>
102.5p 2,165,009 3.6 years
134.0p 1,258,104 4.6 years
150.0p 653,522 3.6 years
- ----------------------------------------------------------------
102.5 - 150.0p 4,076,635 3.9 years
================================================================
</TABLE>
TELEWEST RESTRICTED SHARE SCHEME
The Company operates the Telewest Restricted Share Scheme in conjunction with an
employment trust, the Telewest Employees Share Ownership Plan Trust (the
"Telewest ESOP"), which has been designed to provide incentives to executives of
the Company based on the performance of the Company. Under the Telewest
Restricted Share Scheme, executives may be granted awards over ordinary shares
of the Company based on a percentage of salary. The awards are made for no
consideration. The awards generally vest three years after the date of the award
and are exercisable for up to seven years after the date when they vest. Awards
granted under the Telewest Restricted Share Scheme may be made over a maximum of
4,000,000 ordinary shares of the Company.
The fair value of each award is the share price of the ordinary shares on the
date the award was made.
A summary of the status of the Company's Restricted Share Scheme at December 31,
1996 and 1995, the first year in which the awards were made, and changes during
the years ended on those dates is presented below:
<TABLE>
<CAPTION>
1996 1995
NUMBER OF NUMBER OF
SHARES SHARES
- -------------------------------------------------------------
<S> <C> <C>
Outstanding at beginning of year 2,616,857 --
Granted 328,297 2,857,191
Exercised (62,920) --
Forfeited (233,801) (240,334)
- -------------------------------------------------------------
Outstanding at end of year 2,648,433 2,616,857
=============================================================
Awards exercisable at year end 646,341 49,867
=============================================================
WEIGHTED AVERAGE FAIR
VALUE OF AWARDS GRANTED
DURING THE YEAR (pound sterling)1.47 (pound sterling)1.72
</TABLE>
At December 31, 1996, the 2,648,433 awards outstanding and the 646,341 awards
exercisable have weighted average remaining contractual lives of 8.2 years and
8.0 years, respectively.
18 COMMITMENTS AND CONTINGENCIES
CAPITAL AND OPERATING LEASES
The Company leases a number of assets under arrangements accounted for as
capital leases, as follows:
<TABLE>
<CAPTION>
ACQUISITION ACCUMULATED NET BOOK
COSTS DEPRECIATION VALUE
(POUND STERLING)'000 (POUND STERLING)'000 (POUND STERLING)'000
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
At December 31, 1996
Electronic equipment 46,634 (8,376) 38,258
Other equipment 8,780 (1,900) 6,880
At December 31, 1995
Electronic equipment 27,148 (3,352) 23,796
Other equipment 1,512 (432) 1,080
- --------------------------------------------------------------------------------
</TABLE>
Depreciation charged on these assets was (pound sterling)7,106,000 and (pound
sterling)3,194,000 for the years ended December 31, 1996 and 1995, respectively.
The Company leases business offices and uses certain equipment under lease
arrangements accounted for as operating leases. Minimum rental expense under
such arrangements amounted to (pound sterling)3,065,000, (pound
sterling)2,276,000 and (pound sterling)1,535,000 for the years ended December
31, 1996, 1995 and 1994, respectively.
Future minimum lease payments under capital and operating leases are summarized
as follows as at December 31, 1996:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
(POUND STERLING)'000 (POUND STERLING)'000
- -------------------------------------------------------------------------
<S> <C> <C>
1997 6,033 2,796
1998 7,036 2,234
1999 8,025 1,717
2000 9,320 1,687
2001 8,517 1,630
2002 and thereafter 32,411 10,116
- -------------------------------------------------
71,342
Imputed interest (16,952)
- -------------------------------------------------
Total 54,930
=================================================
</TABLE>
It is expected that, in the normal course of business, expiring leases will be
renewed or replaced.
MINORITY INTERESTS
In October 1993, the Company acquired all of the outstanding minority interests
in the London South Regional Franchise Area from various shareholders other than
the interest of one shareholder holding an approximately 0.03% interest in the
London South Regional Franchise Area.
<PAGE> 48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18 COMMITMENTS AND CONTINGENCIES (CONTINUED)
In consideration for such minority interests, the Company made an initial
payment to the sellers of approximately (pound sterling) 790,000 and may be
required to make an additional payment to one of the sellers upon the occurrence
of certain events (including the completion of certain share issuances by the
Company). The amount of this payment is based upon the valuation of the London
South Regional Franchise Area and the percentage of the franchise formerly owned
by the minority shareholders. The Company does not expect any payments to the
shareholders to have a material effect on the liquidity or capital resources of
the Company.
CONTINGENT LIABILITIES
The Company is a party to various legal proceedings in the ordinary course of
business which it does not believe will result, in aggregate, in a material
adverse effect on its financial condition.
19 RELATED PARTY TRANSACTIONS
The Company, in the normal course of providing cable television services,
purchases certain of its programming from UK affiliates of TCI. Such programming
is purchased on commercially-available terms. Total purchases in the year
amounted to (pound sterling)6,951,000.
The Company has management agreements with TCI and US WEST under which amounts
are paid by the Company relating to TCI and US WEST employees who have been
seconded to the Company. For the years ended December 31, 1996, 1995 and 1994,
fees charged to the Company under the agreements were (pound sterling)2,185,000,
(pound sterling)3,042,000 and (pound sterling)2,128,000, respectively. The
Company has similar management agreements with Cox Communications, Inc. and SBC
Communications, Inc. For the years ended December 31,1996 and 1995, fees charged
to the Company under these agreements were (pound sterling)374,000 and (pound
sterling)233,000, respectively.
The Company has entered into consulting agreements with its affiliates pursuant
to which the Company provides consulting services related to telephony
operations. Under the agreements, the Company receives an annual fee from each
affiliate based upon the affiliate's revenues. Fees received for the years ended
December 31,1996, 1995 and 1994 were (pound sterling)642,000, (pound
sterling)566,000 and (pound sterling)557,000, respectively. The Company also
receives a fee for providing switching support services, comprising of a fixed
element based on a number of switches and a variable element based on a number
of lines. Fees received for the years ended December 31, 1996, 1995 and 1994,
were (pound sterling)741,000, (pound sterling)827,000 and (pound
sterling)822,000, respectively.
20 QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
1996
TOTAL FOURTH QUARTER THIRD QUARTER SECOND QUARTER FIRST QUARTER
(POUND (POUND) (POUND) (POUND) (POUND)
STERLING) STERLING) STERLING) STERLING) STERLING)
'000 '000 '000 '000 '000
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue 290,266 83,663 73,123 68,320 65,160
Operating loss (155,400) (46,095) (34,512) (38,536) (36,257)
Finance expenses, net (90,788) 28,222 (30,710) (54,503) (33,797)
Net loss (262,391) (22,361) (69,303) (97,080) (73,647)
Loss per ordinary share 28 pence 2 pence 7 pence 10 pence 8 pence
=================================================================================================================
1995
TOTAL FOURTH QUARTER THIRD QUARTER SECOND QUARTER FIRST QUARTER
(POUND (POUND) (POUND) (POUND) (POUND)
STERLING) STERLING) STERLING) STERLING) STERLING)
'000 '000 '000 '000 '000
- ------------------------------------------------------------------------------------------------------------------
Revenue 144,784 57,144 32,240 28,969 26,431
Operating loss (90,197) (33,464) (20,135) (19,209) (17,389)
Finance expenses, net (34,607) (29,344) (3,662) (1,064) (537)
Net loss (137,531) (66,346) (27,325) (23,547) (20,313)
Loss per ordinary share 16 pence 7 pence 3 pence 3 pence 2 pence
=================================================================================================================
</TABLE>
The Company regularly reviews the estimated useful lives of its property and
equipment and the estimates used in calculating the capitalizable overheads
which relate to the construction of the cable network. With effect from January
1, 1996, the Company has revised the estimated useful lives of certain assets as
set out in Note 3 to the consolidated financial statements and certain of the
estimates used in calculating capitalizable overheads. The impact of these
revisions is to increase the depreciation charge for the year from (pound
sterling)110,233,000 to (pound sterling)129,716,000 and to increase the loss per
ordinary share for the year by 2 pence, and to increase the capitalization of
overheads in the year from (pound sterling)38,812,000 to (pound
sterling)54,019,000, and to reduce loss per ordinary share for the year by 2
pence. This impact principally has been accounted for in the fourth quarter of
1996.
Finance expenses includes foreign exchange gains and losses on the
re-translation or valuation of non-Sterling denominated financial instruments
using period end exchange rates and market valuations.
<PAGE> 49
SUPPLEMENTARY FINANCIAL INFORMATION -
FIVE YEAR SUMMARY
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
COMPANY JOINT VENTURE(1) PREDECESSOR BUSINESSES(2)
1996 1995(3) 1994 1993 1992
(POUND (POUND (POUND (POUND (POUND
STERLING) STERLING) STERLING) STERLING) STERLING)
'000 '000 '000 '000 '000
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property and equipment (net) 1,447,194 1,063,808 454,843 269,974 149,571
Total assets 2,241,940 2,289,720 878,156 413,865 236,474
Investment in affiliates 69,420 80,703 81,907 68,838 54,849
Debt(4) 879,351 792,265 3,886 49,386 23,386
Equity 1,070,797 1,322,748 776,934 311,695 189,015
INCOME STATEMENT DATA:
Revenue
Cable television 121,224 64,740 35,875 20,729 12,600
Telephony - residential 125,013 57,597 23,471 11,261 3,462
Telephony - business 34,562 17,449 8,812 4,908 2,043
Other 9,467 4,998 3,869 3,440 602
- --------------------------------------------------------------------------------------------------------------------------
TOTAL REVENUE 290,266 144,784 72,027 40,338 18,707
- --------------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES:
Programming (69,906) (32,194) (15,500) (8,403) (5,286)
Telephony (52,572) (29,526) (14,714) (10,203) (3,916)
Selling, general and administrative (167,323) (105,388) (60,414) (32,505) (17,411)
Depreciation (129,716) (60,019) (30,320) (17,635) (9,942)
Amortization (26,149) (7,854) (1,827) (840) (326)
- --------------------------------------------------------------------------------------------------------------------------
OPERATING LOSS (155,400) (90,197) (50,748) (29,248) (18,174)
- --------------------------------------------------------------------------------------------------------------------------
Share of (loss)/income of affiliates (15,973) (12,777) (8,466) (7,540) (6,905)
Financial expenses, net(4) (90,788) (34,607) (6,137) (651) (1,057)
Extraordinary gain -- -- 7,287(5) -- --
Net loss (262,391) (137,531) (58,050) (37,439) (26,136)
Loss per ordinary share before
extraordinary gain (pro forma loss
for 1994) (28 pence) (16 pence) (10 pence)
Extraordinary gain -- -- 1 pence
Loss per ordinary share (pro forma
loss for 1994) (28 pence) (16 pence) (9 pence)
===========================================================================================================================
</TABLE>
(1) See Note 1 (Organization and history) to the US GAAP Consolidated Financial
Statements.
(2) Predecessor Businesses refers to certain businesses owned by TCI prior to
the formation of the Joint Venture and which are now owned by the Company.
(3) See Note 5 (Business combinations) to the US GAAP Consolidated Financial
Statements.
(4) See Note 13 (Debt) to the US GAAP Consolidated Financial Statements.
(5) See Note 15 (Extraordinary gain) to the US GAAP Consolidated Financial
Statements.
<PAGE> 50
Shareholder information
SHARE AND ADS INFORMATION
Telewest shares trade under the symbol "TWT" on the London Stock Exchange.
American Depositary Shares ("ADSs") (evidenced by American Depositary Receipts
("ADRs")) representing Telewest shares trade on the Nasdaq Stock Market's
National Market under the symbol "TWSTY". Each American Depositary Share
represents ten Telewest shares.
The following table sets out, for the periods indicated, the high and low middle
market quotations for Telewest shares on the London Stock Exchange and the high
and low reported trade prices for the ADSs representing Telewest shares on the
Nasdaq Stock Market's National Market. All information with respect to periods
prior to the completion of the merger with SBC Cablecomms (UK) in October 1995
relate to ordinary shares or ADSs representing ordinary shares of the former
holding company.
<TABLE>
<CAPTION>
Ordinary shares(1) ADSs(2)
High Low High Low
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 First Quarter 187p 167p $29.88 $25.88
Second Quarter 176p 148.5p $28.00 $23.38
Third Quarter 195p 153p $30.63 $24.00
Fourth Quarter 194p 155p $30.75 $23.88
1996 First Quarter 156p 118p $24.38 $17.81
Second Quarter 188.5p 145p $28.50 $21.63
Third Quarter 161p 119p $25.13 $18.50
Fourth Quarter 141.5p 117.5p $23.25 $18.63
================================================================================
</TABLE>
(1) The prices set out for the Telewest shares are derived from the London Stock
Exchange Daily Official List. (2) The prices set out for the ADSs are provided
by the Nasdaq Stock Market's National Market.
REGISTRAR AND DEPOSITARY
Enquiries concerning holdings of Telewest shares should be addressed to the
Registrars, who are Lloyds Bank Registrars, The Causeway, Worthing, West Sussex
BN99 6DA.
Tel: (01903) 502541.
Changes in a holder's address should also be notified to the Registrars.
The Bank of New York is the Authorized Depositary Bank for the Telewest ADR
programme and all enquireies regarding ADR holder accounts and payment of
dividends should be directed to: The Bank of New York, ADR Department, 101
Barclay Street, New York NY 10286.
Tel: +(001)800 524 4458.
In accordance with US securities laws, each year the Company prepares an Annual
Report on Form 10-K. A copy of the Form 10-K for the fiscal year ended 1996 is
available without charge upon written request made to the Company Secretary at
the address below.
The Company does not currently intend to pay dividends on the ordinary shares or
convertible preference shares as it intends to retain earnings, if any, for the
foreseeable future to fund the development and growth of the business of the
Group. In addition, the ability of certain direct and indirect subsidiaries of
the Company to pay dividends, or make advances or other payments to Telewest or
other members of the Group for payment of dividends is effectively prohibited by
the terms of certain financing arrangements. However, if any dividends are paid,
holders of ADSs will receive their dividends net of fees, expenses and taxes, if
any, withheld by the Depositary, pursuant to the terms of the Deposit Agreement
relating to the ADSs. For further information regarding the tax consequences of
ownership of Telewest shares and ADSs, refer to "Certain Tax Consequences of
Ownership of Telewest Ordinary Shares and ADSs" in the Proxy Statement.
CREST - SHARE SETTLEMENT SYSTEM
The Company joined CREST, the new settlement system for shares and other
securities, on 18 November 1996. There are 376 CREST holdings, holding
239,736,385 Telewest shares as at 11 March 1997.
<PAGE> 1
EXHIBIT 21
TELEWEST PLC SUBSIDIARY LIST:
NAME STATE OR JURISDICTION OF INCORPORATION
- ---- --------------------------------------
Crystal Palace Radio Limited England and Wales
Telewest Communications (London South) Limited England and Wales
Cable Guide Limited England and Wales
Telewest Communications (South West) Limited England and Wales
Avon Cable Investments Limited England and Wales
Telewest Communications Scotland Holdings Limited Scotland
Telewest Communications (Scotland) Limited Scotland
Telewest Communications (Motherwell) Limited Scotland
Telewest Communications (Dundee and Perth) Limited Scotland
Telewest Communications (Cumbernauld) Limited Scotland
Telewest Communications (Glenrothes) Limited Scotland
Telewest Communications (Falkirk) Limited Scotland
Telewest Communications (Dumbarton) Limited Scotland
Telewest Communications (North East) Limited England and Wales
Telewest Communications (Tyneside) Limited England and Wales
Telewest Communications (South East) Limited England and Wales
Telewest Communications (South Thames Estuary) Limited England and Wales
<PAGE> 2
Telewest Communications (Cotswolds) Limited England and Wales
Telewest Communications Cable Ltd England and Wales
Telewest Communications Networks Limited England and Wales
Telewest Parliamentary Holdings Limited England and Wales
Telewest Communications Group Limited England and Wales
Telewest Communications Holdings Limited England and Wales
Theseus No. 1 Limited England and Wales
Theseus No. 2 Limited England and Wales
TCI/US WEST Cable Communications Group Colorado
United Cable (London South) Limited Partnership Colorado
London South Cable Partnership Colorado
Avon Cable Limited Partnership Colorado
Edinburgh Cable Limited Partnership Colorado
Tyneside Cable Limited Partnership Colorado
Estuaries Cable Limited Partnership Colorado
Cotswolds Cable Limited Partnership Colorado
London South Joint Venture England and Wales
Avon Cable Joint Venture England and Wales
Telewest Communications (Scotland) Venture England and Wales
Telewest Communications (North East) Partnership England and Wales
Telewest Communications (South East) Partnership England and Wales
Telewest Communications (Cotswolds) Venture England and Wales
<PAGE> 3
Telewest Communications (Midlands and North West) England and Wales
Limited
Southwestern Bell International Holdings Limited England and Wales
Telewest Communications (Telford) Limited England and Wales
Telewest Communications (Midlands) Limited England and Wales
Telewest Communications England and Wales
(Fylde & Wyre) Limited
Telewest Communications (North West) Limited England and Wales
Telewest Communications England and Wales
(Wigan) Limited
Telewest Communications England and Wales
(Liverpool) Limited
Telewest Communications England and Wales
(St Helens and Knowsley) Limited
Telewest Communications England and Wales
(Central Lancashire) Limited
Cable Adnet Limited England and Wales
Telewest Communications (Worcester) Limited England and Wales
Telewest Communications (Southport) Limited England and Wales
Telewest Communications (Lothian and Fife) Limited Scotland
Cable Internet Limited England and Wales
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in the body of the accompanying Form 10-K
and is qualified in its entirety by reference to such financial statements
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> POUNDS STERLING
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1.7123
<CASH> 79,116
<SECURITIES> 0
<RECEIVABLES> 61,699
<ALLOWANCES> 5,405
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,755,434
<DEPRECIATION> 308,240
<TOTAL-ASSETS> 2,241,940
<CURRENT-LIABILITIES> 0
<BONDS> 879,351
0
49,607
<COMMON> 92,757
<OTHER-SE> 928,433
<TOTAL-LIABILITY-AND-EQUITY> 2,241,940
<SALES> 0
<TOTAL-REVENUES> 290,266
<CGS> 0
<TOTAL-COSTS> 122,478
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,172
<INCOME-PRETAX> (262,341)
<INCOME-TAX> 50
<INCOME-CONTINUING> (262,391)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (262,391)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> 0
</TABLE>
