BT to face monopoly inquiry
Saturday 01 April 1995
BT is to be referred to the Monopolies and Mergers Commission over its refusal to accept proposals by Oftel, the industry's regulator, on number portability - the ability of customers to keep the same telephone number if they switch to another operator. The company said it accepted the need for portability but could bot accept Oftel's view that BT should bear the brunt of the cost.
Meanwhile, BT has accepted far-reaching changes to its licence that will ensure that it accounts separately for different parts of its business. There are also new provisions giving greater powers to Don Cruickshank, director-general of Oftel, to prevent unfair cross-subsidy and ensure fair play for BT's rivals.
BT said that the changes in accounting: "Confirm the UK's place as the most open telecommunications market in the world. They provide a model which, we believe, should be followed throughout Europe and in other countries committing themselves to open their telecommunications markets."
The decision to accept fundamental changes but to go to the MMC on number portability comes as a shock to industry observers. The company has gone to the brink of a referral on several occasions but has only been referred in one instance - concerning "chatlines".
A BT spokesman said: "BT is committed to number portability, but cannot accept Oftel's proposal that BT's customers and shareholders should pay the continuing costs of providing it. We have told Oftel that, and Oftel now intends to take the matter to the MMC. We do not want to go to the MMC."
Trials on number portability, which some City analysts say could cost tens of millions of pounds, are already underway. The BT spokesman said: "BT promised Oftel that pending the report of the MMC, it will continue with existing trials and not delay implementation of number portability."
He said that the allocation of costs following an MMC report would be backdated.
Mr Cruickshank said that he is "disappointed" at BT's decision on numbers but pleased that the overall changes on accounting have been agreed. "BT's acceptance of the package represents another important milestone along the road to really effective competition. These modifications will provide the confidence in the regime governing interconnection (to BT's network) that the industry needs."
BT has also attacked Oftel for "lacking vision" and has said that the regulator has an "indecent" combination of powers. The comments came as BT responded to an Oftel consultative document on the future framework for the industry. The company said it is alarmed that Oftel appears to envisage a strengthening of regulation into the future. Peter McCarthy- Ward, BT's manager for public and commercial policy, said he has "ongoing discomfort" at Oftel's ability to act as "lawmaker, investigating attorney, prosecutor, jury and judge". That is an indecent combination of roles. It is not consistent with natural justice," he said.
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