BT fires new salvo in Oftel war of words
Monday 11 March 1996
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.
- 1 Reyhaneh Jabbari: Iran due to execute woman for murder of her alleged attempted rapist
- 2 Sainsbury's '50p challenge' poster telling staff to encourage customers to spend more placed in shop window instead of staff room
- 3 Expert urges cat lovers to own just one animal each
- 4 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 5 The Simpsons death: Creator Al Jean would 'kill himself' before character like Homer or Lisa
Expert urges cat lovers to own just one animal each
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
Isis an hour away from Baghdad - with no sign of Iraq army being able to make a successful counter-attack
British man raped while urinating in bushes at Oktoberfest beer festival in Germany
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
'Women, walk wherever you want' posters taken down in Stamford Hill following 'unacceptable' signs separating men and women
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Mark Reckless becomes second Tory MP to defect to Ukip in a month
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...