DTI drafts contingency plans for telecoms crisis

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DTI drafts contingency plans for telecoms crisis

Mike Simons
Major telecoms users, the Department of Trade and Industry and telecoms regulators are collaborating on contingency plans to cope with the bankruptcy of a major service provider.

The demise of telecoms carrier KPNQwest and the crisis surrounding WorldCom have highlighted the need for a contingency plan, but the UK has few formal arrangements in place to deal with such problems.

There is an urgent need to get proper contingency planning in place, said Mike Mikkelsen, group leader for business continuity at the Communications Managers' Association.

The CMA, whose members run communications networks for major organisations, this week convened its second meeting in six weeks to thrash out the issue. Major telecoms users, lawyers, the DTI, industry regulator Oftel and one telecoms supplier, Energis, attended.

The DTI has also launched a formal consultation on how to protect continuity of telecoms services following the experience of Atlantic Telecom, which went into administration in October 2001.

The DTI was able to ensure an orderly transfer of services to other suppliers, but according to Mikkelsen, DTI representatives told the CMA-convened meeting that it would not be able to repeat that effort in future.

The DTI has offered a range of proposals. These include:

Creating an obligation on the administrator of licensed telecoms operators to maintain as service "for whatever reasonable time is necessary to allow alternative services to be put in place". This obligation would take priority over the claims of creditors.


Establish a bond system. A telco would use its own bond, or guarantee or insurance, to fund the continuing provision of services if it goes into administration or receivership. This would operate in a similar way to the ATOL scheme covering the travel industry.

Joint liability across the industry. This would spread the burden of a bailout across a large number of telcos.

Appointing a supplier of last retort. This model is used in the energy sector with the regulator having the power to revoke a supplier's licence and appoint a supplier of last resort.

"The DTI made it plain that whichever route we choose, it will cost, " said Mikkelsen. "This is a serious debate about how to both protect the UK critical infrastructure and individual organisations' survival. We are not going to fix things in five minutes but we need continuous dialogue with all sides of the industry and government."

"This discussion will be a prominent feature of the Telecom Managers' Association Convention in Brighton in October," said Mark Smith, head of operations at the CMA.

The DTI consultation paper can be found at www.dti.gov.uk/cii/regulatory/telecoms/index.shtml.

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