BT ordered to pay bulk of pounds 220m switching costs

Across the wire: Squabble with regulator follows MMC's ruling on customers who change phone systems

BT was yesterday told to pay the bulk of the pounds 220m of costs when customers switch to its competitors but wish to keep their existing telephone numbers.

The decision by the Monopolies and Mergers Commission will cost BT pounds 150m and the cable companies and other competitors pounds 60m over the next five years.

But its real significance is that it could herald a sharply increased flight of customers away from the telecoms giant.

The decision led to a day of bitter squabbling between BT and Don Cruickshank, the telecoms regulator, over which side had won an argument about who pays for so-called "number portability."

Each side also claimed that the precedents set by the MMC's decision foretold victory in important regulatory battles to come, including a key argument over interconnection charges in the telephone network, which is expected to be sent to the MMC.

The City appeared marginally more sympathetic to the BT view and marked the shares up 5.5p to 348.5p, on the grounds that the situation had been clarified by the MMC.

Ian Morfett, director of network services and pricing at BT, agreed that the current 50,000 customers lost each month to cable companies would rise but he rejected suggestions that they would double.

The first switches will be made under the new system from next spring and it will be in full operation in 1997.

Cable companies will have to pay BT pounds 8 to pounds 12 every time they win a customer and BT will be entitled to charge the same if it woos them back.

But the biggest cost for BT will be in financing the system changes that make portability possible. Industry experts expect the competing sides to absorb most or all of the cost in their general overheads, rather than add it directly to the bills of new customers won from other companies.

Mr Cruickshank has long argued that number portability is essential to increasing competition in telecommunications. Both he and the cable industry believe BT has been dragging its heels.

He said he was pleased that the MMC had endorsed his view that number portability was in the public interest and that BT should not be able to recover all the costs from other operators, as its licence provided at present.

Mr Cruickshank added: "The MMC's detailed recommendation of the allocation of costs between BT and other operators is very close to my original proposal, which would have resulted in a 75:25 split of BT's total portability costs over the next five years."

He said the MMC had recommended a 70:30 split and he alleged that BT's best offer to date would have resulted in a split the other way round, of 15:85 in its favour.

He further claimed that BT's estimates for the total cost of portability had fallen considerably during the course of the MMC inquiry from pounds 557m to pounds 220m.

Mr Morfett said he failed to recognise any of the numbers put forward by Mr Cruickshank to back his claim that the MMC had backed the regulator's line, including the proposed 75:25 split of the costs.

Suggesting that the regulator had in fact been defeated in a campaign to get BT to pay everything, BT said: "Other telephone companies will now have to pay a share of the cost of implementing number portability. BT will be up to pounds 60m better off." Dr Alan Rudge, BT managing director, also said: "Our decision to push for an MMC reference has been vindicated" and he denied that BT had ever opposed number portability.

The Cable Communications Association reacted with delight to the MMC report, saying: "They knew they would ultimately lose but they have tried as long as possible to postpone the evil day."

Mercury Communications said the report was an important step towards effective competition in the UK telecoms market.

Comment, page 21

PROMOTED VIDEO
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
tv
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
News
Kristen Stewart and Rupert Sanders were pictured embracing in 2012
people
News
President Obama, one of the more enthusiastic users of the fist bump
scienceBumping fists rather than shaking hands could reduce the spread of infectious diseases, it is claimed
Sport
Mario Balotelli posed for this selfie during AC Milan's 5-1 defeat to Manchester City
sport
Sport
Laura Trott with her gold
Commonwealth Games
Arts and Entertainment
Gal Gadot as Wonder Woman
arts + ents
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
Sport
France striker Loic Remy
sportThe QPR striker flew to Boston earlier in the week to complete deal
Extras
indybestSpice up your knife with our selection of delicious toppings
Sport
sport
News
Orville and Keith Harris. He covered up his condition by getting people to read out scripts to him
People
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

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

.NET Software Developer (.NET, C#, ASP.NET, front-end)

£30000 - £45000 per annum: Harrington Starr: A Global Financial Service Organi...

C# Web developer (C#,MVC,ASP.NET,SQL)

£30000 - £40000 per annum + Bonus+Benefits+Package: Harrington Starr: C# Web d...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried