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
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

SThree: Recruitment Resourcer

£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn