BT promote competition? 'It's like training a lion not to roar'

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The Independent Online

It sat on millions owed to its customers, used its monopoly to stifle competition and staged a "dirty tricks campaign" to win back business.

No, this isn't a list of charges levelled at a dodgy Russian conglomerate, but some of the recent accusations fired at BT.

The company, of course, denies them, but over the past few months the number of complaints has swelled. Just last week, telecoms regulator Oftel opened a fresh investigation into claims that BT had misused confidential customer information to stop people defecting to rival firms.

As BT prepares to present its first-quarter results on Thursday, there are real concerns that the group is damaging competition in the UK.

"BT is increasingly testing the boundaries of the regulations. It is very good at denying, delaying and degrading," says Richard Sweet, head of regulation at rival telecoms company Thus.

Huw Saunders, group regulatory affairs director at Kingston Communications, adds: "We ... have concerns about BT's increasing commercial aggression and arguably anti-competitive behav- iour. This could do much to undo 18 years of regulatory effort to increase competition."

"Teaching BT to behave in the interests of competition is like training a lion not to roar. It's not in its nature," says Barry Lane, director of UK regulatory affairs at MCI, formerly WorldCom.

The target of many of the complaints is BT's retail operation, run by Pierre Danon. He is in charge of defending the company's vast and historic customer base. BT has a 67 per cent share of the UK market but this is gradually being eroded.

Its biggest challenge comes courtesy of a process called Carrier Pre-Select (CPS). This offers the potential for real competition by letting customers switch from BT to a rival without having to install new cables and sockets. Instead, the transfer is made in a BT exchange. But the company has been accused of deliberately switching customers back without their consent. Oftel launched an investigation last year and this month ordered BT to stop. After threatening to sue the regulator, it has now yielded.

Chris Kenny, director of compliance at Oftel, says: "BT is operating in an increasingly competitive market. Sometimes it tests the limits, other times it goes beyond them. On CPS, it really dug its heels in. But when the top managers [at BT] saw what was happening, they decided the position was indefensible."

Mr Sweet at Thus is more blunt: "This was a classic case of BT sticking two fingers up at the regulator. BT used stalling and delaying tactics to string things out."

He points out that only 4 per cent of UK telephone users have switched under CPS, compared with 10 per cent in continental Europe.

Other telecoms operators have become so concerned about the power wielded by BT that earlier this month they created their own lobby group, the United Kingdom Competitive Telecommun- ications Association (UKCTA), headed by Steve Maine, chief executive of Kingston. Made up of 16 telecoms companies - including Cable & Wireless, AT&T, Colt and Energis - the UKCTA believes BT is "threatening the very objective of creating effective and sustainable competition".

Some of the blame has been laid at the regulator's door. Companies such as Kingston and Thus believe that Oftel hasn't been vigilant enough in preventing BT from abusing its monopoly position. Others, such as MCI, argue that Oftel is still the toughest telecoms regulator in Europe. However, there is a common belief that one reason why BT is throwing its weight around is to exploit what could be a regulatory hiatus when Oftel becomes Ofcom, the multimedia regulator, at the end of the year.

The company denies it is acting anti-competitively. A spokesman says: "We compete vigorously but fairly." In particular, he denies the claim made last week by Carphone Warehouse that BT is deliberately sitting on £13m owed to customers following a recent ruling on charges for calls from fixed lines to mobiles.

But Charles Dunstone, the chief executive of Carphone Warehouse, has a different take on BT's recent behaviour. "Either it is staggeringly incompetent or staggeringly mischievous ... I don't think it cheats; it just shoots itself in the foot a lot."