BT resists Oftel over price caps: Hopes of a quick agreement recede after relations with regulator reach a new low

CITY hopes that BT will reach speedy agreement with Oftel over new price controls are set to be dashed.

Relations between the regulator and BT have reached a new low and there are signs the company may opt for a referral to the Monopolies and Mergers Commission rather than accept Oftel's plans, which could reduce its profits by pounds 100m a year.

The City expected the company to agree in principle to Oftel's proposals this week, so that BT could make an announcement at its annual general meeting on 30 July.

However, the proposals are not likely to be considered by the board, led by Iain Vallance, chairman, until shortly before the agm. Moreover, BT and Oftel had a meeting on Thursday that is understood to have been acrimonious. BT is already late with its response, which was officially due at the end of June.

Oftel has made it clear that the main points of its package are not up for negotiation in spite of the company's attempts to reach some sort of compromise.

The regulator plans to cap BT's prices for a basket of basic services to inflation minus 7.5 percentage points instead of 6.25 points today.

It is also limiting the increase in line rental charges to inflation plus 2 percentage points instead of the inflation plus 8 wanted by BT.

Equally onerous, it is forcing the company to exclude from the basic basket the bulk discounts offered to large users. This means that BT's price cap is more to the benefit of smaller customers and that it has less flexibility in competing with Mercury for large clients.

Analysts said that offering these discounts could shave a further pounds 270m from BT's profits.

Oftel sources said that if the company tried to force any big departure from the proposals, the regulator would 'need to get an MMC reference rolling on prices' before the end of July. The new price formula has to be in place by 30 July next year.

BT is particularly angry that Oftel wants separate and transparent accounting for its local and long-distance businesses. Bill Wigglesworth, acting director-general of Oftel, said this is vital if other telephone companies are to compete on equal terms.

But a senior BT executive said the system, under which everyone would know what BT charges for transferring calls from one part of the network to another, would be extremely difficult to implement.

BT's stance is that it is not against fair and transparent pricing, but that introducing a separate accounting structure for local and international operations and retail and wholesale services would be expensive. Ultimately the customer would have to pay, a BT source said.

Mr Wigglesworth has been at the head of Oftel since Sir Bryan Carsberg left in June to join the Office of Fair Trading. Oftel's new regulatory package was Sir Bryan's last act, but it is up to Mr Wigglesworth to force it through. He is a candidate to succeed Sir Bryan on a permanent basis.

(Photograph omitted)

News
peopleHowards' Way actress, and former mistress of Jeffrey Archer, was 60
Sport
Romelu Lukaku puts pen to paper
sport
News
Robyn Lawley
people
Arts and Entertainment
Unhappy days: Resistance spy turned Nobel prize winner Samuel Beckett
books
PROMOTED VIDEO
News
people
Life and Style
Troy Baker and Ashley Johnson voice the show’s heroes
gamingOnce stilted and melodramatic, Hollywood is giving acting in video games a makeover
News
i100
Life and Style
Phones will be able to monitor your health, from blood pressure to heart rate, and even book a doctor’s appointment for you
techCould our smartphones soon be diagnosing diseases via Health Kit and Google Fit?
News
people
Extras
indybest
Travel
Ryan taming: the Celtic Tiger carrier has been trying to improve its image
travelRyanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Usain Bolt confirms he will run in both the heats and the finals of the men's relay at the Commonwealth Games
commonwealth games
Life and Style
Slim pickings: Spanx premium denim collection
fashionBillionaire founder of Spanx launches range of jeans that offers 'thigh-trimming construction'
News
Sabina Altynbekova has said she wants to be famous for playing volleyball, not her looks
people
News
i100
Life and Style
tech'World's first man-made leaves' could use photosynthesis to help astronauts breathe
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

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star