Liberalisation of directory enquiries and third party rights to subscription information

Ahhaaa AB (“Ahhaaa”) and Itesco AB (“Itesco”), two Swedish companies providing directory enquires services, reported to the Swedish Post and Telecom Agency (“PTS”) that the conditions offered by the operator Telia AB (“Telia”) for the provision of Telia’s telephone subscription information were unfair and therefore not in accordance with Swedish law. PTS issued an order regarding subscription information for fixed telephone networks in May 2002 and another order as regards subscription information for mobile telephone networks in November 2002.

Ahhaaa and Itesco initially based their claim on Article 23 of the Swedish Telecommunications Act and, following the amendment of the Telecommunications Act in July 2002, on Article 66 of the Telecommunications Act. Under Article 66 of the Telecommunications Act an operator is obliged to provide subscription information to a party who pursues or has the intention of pursuing directory enquiry services, which information shall be provided on conditions that are fair, cost-oriented and non-discriminatory. Article 67 provides that subscription information may only be processed if the subscriber has consented to it.

The view of the parties

Ahhaaa and Itesco claimed that the following conditions of Telia’s offer were unfair:

(i) The level of charges;
(ii) The demand for a per-transaction fee;
(iii) Conditions relating to which information could be provided;
(iv) Conditions relating to the forwarding/resale of the provided information;
(v) Conditions relating to the use of the information following the termination of the agreement.

Telia claimed that an annual charge of SKR10.800.000 was a reasonable charge for existing subscription information plus daily updates. The proposed charges were based on an estimated price according to which the subscriber should pay an annual fee of SKR 3 920 400 for information concerning the fixed telephone network and an annual fee of SKR 6 892 435 for the mobile network. Included in the price were:

  • customer services operators;
  • support systems and IT;
  • day-to-day updating and storage;
  • publication of information;
  • group overhead costs;
  • a reasonable return on capital.

In response, Ahhaaa and Itesco, claimed that SKR 167 858 SKR was a reasonable annual fee for acquiring existing subscription information plus daily updates. According to Ahhaaa all that was required was the annual production of two CDs containing the register of all subscribers plus daily updating and supervision of one hour. Itesco based its position on the fact that Telia had, separately, offered to pay another Swedish operator, Tele 2, this annual amount for the purchase of Tele 2’s current subscription information plus daily updates.

In addition to its proposed charges, Telia claimed a commission of two per cent of Ahhaaa‘s and Itesco’s annual revenues for the use of the subscription information. This claim was based on an alleged infringement of Telia’s “catalogue protection” (i.e. the sui generis right granted under the Database Directive). Ahhaaa and Itesco claimed that this would be neither fair nor reasonable and so would not be consistent with the Telecommunications Act.

Another controversial question between the parties concerned which information Telia should be required to provide. Telia offered to provide:

  • telephone number;
  • name;
  • address;
  • c/o address;
  • the identity of husbands/wives/partner for its subscribers.

Ahhaaa and Itesco also claimed that complementary identification information should be provided such as personal numbers and corporate identity numbers. Telia claimed that such information could be provided only with the explicit consent of subscribers.

Itesco went on to say that a condition prohibiting Itesco from forwarding or reselling subscription information to other directory enquiry companies without Telia’s prior written approval was in conflict with the Act’s requirements for fair and reasonable conditions. Telia claimed that the condition requiring its approval for resale was justified by the need to regulate the terms of resale to other directory enquiry companies.

Finally, Itesco said that a condition that the company should immediately cease using the subscription information if the agreement were terminated, would be unfair and unreasonable. Telia justified this requirement by saying the purpose of the condition was to prevent the circulation of out of date subscription information.

The PTS ruling

PTS noted that Telia AB activities were subject to the notification obligation in the Telecommunications Act, giving Telia an obligation, in accordance with Article 23 (later Article 66), to provide current and updated subscription information to a requesting party, provided that the information was to be used for directory enquiry purposes.

On the question about which information Telia should be obliged to provide, PTS referred to the “PTS’ Directions on the obligation for operators to provide subscription information on individuals for directory enquiry purposes” (PTSFS 2001:11). The Directions provide that an operator should make available all the information which the subscriber has given, including identification information such as personal numbers and corporate identity numbers, provided that the subscriber has consented to this information being available for directory enquiry sevices. Thus, according to PTS, Telia was obliged to provide Ahhaaa and Itesco with the identification information which they sought, provided that the necessary subscriber consents were obtained.

PTS further held that in the light of the conditions for the use and forwarding/resale of subscription information which are regulated by law, Telia’s conditions regarding approval for resale could not be seen as reasonable. PTS further held that Telia AB should not be allowed to prevent the subscription information from being used following termination of the agreement.

On charges, PTS found that Telia’s costs for customer service operators and IT and systems support would have been incurred, notwithstanding the agreement with Ahhaaa and Itesco. These should therefore be treated as necessary costs for Telia‘s activities and should not be borne by purchaser of subscription information. PTS declared that the costs of updating, storage and publication of subscription information related directly to the composition and sale of the directory information, which it was reasonable to charge to purchaser. The PTS also found that group overhead costs and the return on capital were reasonable.

PTS held that a reasonable charge to recover the accepted costs would be SKR 240 062 for fixed telephony and SKR 263 600 for mobile telephony. As regards Telia’s claim for commision payments, PTS found that the provision of subscription information (in bulk) was capable of infringing Telia’s catalogue protection. However, PTS held that commissions on annual revenues could not be a reasonable condition but that a reasonable profit charge (i.e. a reasonable return on investment) could be.