BT's rivals hope for progress on link-up charges: Mary Fagan reports on industry expectations for an Oftel consultation document

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The Independent Online
BT'S expanding group of competitors in the provision of telecommunications services are hoping for a boost from Oftel, the industry watchdog, with the publication tomorrow of a consultation document on how much telephone companies should be charged to use BT's wires.

The consultation document on the issue of interconnection charges will be accompanied by Oftel's thoughts on the controversial question of accounting separation at BT.

BT strongly resists the idea of separating and clarifying the costs of running different parts of its business, fearing this would be a precursor to a potential break-up of the company. However, it is regarded as vital in the industry if new telephone network operators are to succeed.

Cable television companies and new entrants such as Energis, the telecommunications arm of the National Grid Company, argue that they will not obtain fair play when using BT's network until the costs of each part of BT's operations are made clear and there is transparency in interconnection charges. Oftel is also expected to rule soon on a new interconnection agreement between BT and Mercury Communications. Any new deal is expected to be considerably cheaper for Mercury. Mercury also believes that BT owes it up to pounds 50m in back payments, as the new agreement is supposed to be backdated to August last year.

Until now the terms for interconnecting to BT's network to complete calls have been negotiated between BT and the operator concerned. Oftel is called in when talks collapse, and the process can take many months.

New telecommunications companies have been waiting for months for some sign of a resolution. However the problem has been exacerbated by BT's resistance and by changes at Oftel. Since April, the watchdog has had a new director-general, Don Cruickshank, a former Virgin executive.

David Dey, the chief executive of Energis, hopes that Mr Cruickshank will take a radical new approach to regulation. He says that Oftel must publish without delay a schedule of interconnection tariffs so that each telephone operator knows exactly what it is faced with when it makes business plans.

Energis, whose basic network will be founded on the nation's electricity system, expects to be one of BT's biggest interconnect customers. It hopes to be able to serve 70 per cent of the population within a year.

However, according to Mr Dey, himself a former senior executive with BT: 'We do not want a war with BT but we are running into obfuscation. We do not intend to allow Oftel to spend 12 months looking into it.' The implied threat is that Energis could take the matter to the Monopolies and Mergers Commission.

The Oftel consultation documents come at a sensitive time, as the Government is weeks away from the pounds 5bn sale of more shares in BT. A key issue for BT is the expansion of cable television companies into telephony, as they will be the most serious threat to BT's local services. The companies depend on BT or Mercury to deliver their calls beyond their franchise areas. A favourable move from Oftel on interconnection charges could give them a substantial boost.