Mercury calls for abolition of 'success tax' payments to BT

MERCURY Communications has called on the Government and Oftel to abolish a system under which millions of pounds are paid to BT by rivals to offset losses in the local telephone network. The payment, or 'access deficit charge', takes effect when BT's share of the market falls to 85 per cent, writes Mary Fagan.

Mercury, the first to make the payment to BT, will be charged about pounds 35m this year and about pounds 70m next year.

Mike Harris, chief executive of Mercury, said the payment was a tax on success and must be reviewed.

'The world is being told that the UK is an open and competitive telecoms market. It is not,' he said. 'BT has a protected 85 per cent share of the total market.

'When competitors step over the 15 per cent line to serve more customers, they pay millions of pounds to compensate the UK's biggest corporation, which made a profit last year of about pounds 3bn.'

BT, which claims that it loses pounds 2bn a year on installing and maintaining local telephone lines, said if rivals needed to use its wires they should be willing to bear part of the losses.

Mr Harris challenged BT to name the executive in charge of that part of its business. He said he wanted to know what BT was doing to stem the loss.