BT loses out on payments from eight rivals after Oftel ruling

OFTEL, the telecommunications regulator, has waived payments that would have been made to BT by eight rivals to help make up losses in its local networks, writes Mary Fagan.

BT's losses from the lines between customers and local exchanges are estimated to be about pounds 1.5bn a year. The telecommunications group is not allowed to raise line rental and connection charges in line with costs.

Those granted waivers include Nynex and Telewest, US companies among the largest cable television firms in Britain; Videotron, a cable company; Energis, a subsidiary of the National Grid Company; and Colt and MFS, which offer telephone services in the City of London.

Don Cruickshank, director general of telecommunications, said he believed that, in principle, all BT's rivals using its wires to deliver calls should help to cover the deficit.

Payments from the eight would be waived for two years to help them establish a foothold in the market.

Mr Cruickshank said that, in granting waivers for the payments, he would favour companies building their own infrastructure and offering services not available from BT.

He said he estimated that the cost of the payments to BT were about 10 per cent of the total cost of offering a service.

They are in addition to the normal interconnection charges imposed for the use of BT's network.

He also criticised Mercury for attacking the deficit payments as a 'tax on success'.

Mr Cruickshank said the company had been unhelpful and shrill in its campaign, launched this week, against the payments.

He suggested that if Mercury had been more active in building its own local network it would pay less.

Mercury, in its 10th year, is paying BT its first access charge of pounds 35m this year and said that this would double next year.

BT said it understood Oftel's desire to help young companies become established. A spokesman added that, if Mercury did not want to pay, it should build its own network.