BT fires new salvo in Oftel war of words

MARY FAGAN

Industrial Correspondent

Sir Peter Bonfield, BT's chief executive, has warned that proposed changes in the regulation of telecommunications could damage the entire industry and hamper investment in the UK. Sir Peter also said the BT board was "not averse" to an inquiry by the Monopolies and Mergers Commission if it decided the moves by the regulator, Don Cruickshank, were bad for the company.

His comments come as Mr Cruickshank's office, Oftel, consults on proposals to clamp down on BT's rate of return in setting tough new price controls for the company. Mr Cruickshank is also seeking a sweeping new power on anti-competitive practices and is expected to publish reports on both subjects within the next few weeks.

Sir Peter said: "If the return is too low then the industry as a whole will not invest and you will not get competition. I have told him [Mr Cruickshank] that if you get the balance right, you can help innovation and and sustain competition but that if you get it wrong the whole thing can flip the other way. He's got a tough job. I've got a tough job. But it's his decision."

Sir Peter, who joined BT less than three months ago, warned that while he hopes for a realistic outcome on both the main issues at stake, the company may end up at the MMC. This would be the route taken when BT cannot agree on Oftel with changes to its licence.

In his most public statement on the debacle so far, he said: "The board has shown in the past that it is not averse to the MMC. The board has told me that they are not averse to going this time as well if they think the alternative is bad for the company and the industry." He added that many of BT's institutional shareholders were extremely concerned and had written to Oftel outlining their objections to the plans.

BT believes that its profits could be halved if Oftel pursues the pricing proposals . Under the proposals, BT's rate of return would be cut to 9-13 per cent from around 15-17 per cent at present. The company alleges that it faces increased risk in a rapidly changing market place and that, if anything, a higher return is justified.

The issue must be resolved by mid-year with a view to the introduction in 1997 of new price controls. At present the cap on BT's overall "basket" of services is inflation minus 7.5 percentage points.

On anti-competitive powers, Oftel intends to replace a range of licence conditions with a more general power allowing Mr Cruickshank and his successors to clamp down much more quickly on the company.

Start your day with The Independent, sign up for daily news emails
Sport
Super BowlAfter Katy Perry madness it's back to The Independent's live coverage of Super Bowl 49!
News
See what Twitter had to say about the first half of the Super Bowl
News
people
News
people
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

The super-rich now live in their own Elysium - they breathe better air, and eat better food, when they're not making beans on toast for their kids

The super-rich now live in their own Elysium

They breathe better air, eat better food, take better medicine
A generation of dropouts failed by colleges

Dropout generation failed by colleges

£800m a year wasted on students who quit courses before they graduate
Entering civilian life 'can be like going into the jungle' for returning soldiers

Homeless Veterans appeal

Entering civilian life can be like going into the jungle
Sam Taylor-Johnson: Woman on top

Sam Taylor-Johnson: Woman on top

Fifty Shades of Grey director on bringing the hit to the screen
Shazam! Story of the $1bn 'what's that song?' app

Shazam: Story of the $1bn 'what's that song?' app

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch