The UK Office of Telecommunications yesterday got to grips with the thorny issue of interconnect charges, saying that it wants British Telecommunications Plc to say exactly how much it costs to run its national network and charge competitors no more than cost price for using it. At the same time, Don Cruickshank, director general of […]
The UK Office of Telecommunications yesterday got to grips with the thorny issue of interconnect charges, saying that it wants British Telecommunications Plc to say exactly how much it costs to run its national network and charge competitors no more than cost price for using it. At the same time, Don Cruickshank, director general of Telecommunications, dispelled fears it would call for a break-up of the company. He said that British Telecom had convinced him that it should not be broken apart but he insisted that it should produce two sets of financial accounts, one for BT-Network and one for BT-Retail. Publishing his proposals in a document, Interconnection and Accounting Separation, Cruickshank said our aim is to obtain the best possible deal for customers in terms of quality, choice and value for money, Cruickshank said.
This aim is to be pursued principally by promoting efficient competition so that customers are served by the operator which provides services most closely matching their needs at the lowest cost, and that the terms and conditions on which operators could interconnect with BT’s network were the key to this. I am particularly concerned that BT’s competitors should have confidence in the new arrangements, he said. The Office expects information resulting from accounting separation to be provided by the end of the current 1993-94 fiscal year, but recognises that full separate accounts could take longer. It will change BT’s licence to require the company to publish its network charge before it introduces any new retail prices, and to make that charge available to all interconnecting operators on a similar basis. Oftel wants interconnection arrangements to meet four key criteria: they should be transparent and the charges published so that operators can understand how they relate to costsl; they should be set at levels that are efficient and sustainable so that no under- or over-recovery of BT’s costs will result; arrangements should not be unduly discriminatory either between competing operators or between BT and other operators; and sufficient information should be available to give operators confidence in interconnection arrangements with BT. The proposals seem to meet most of the criticisms levelled at the UK regulatory environment and British Telecom’s practices by AT&T Co to the extent that if the US company is honourable, it should in due course support British Telecom’s application to be allowed to operate in the US market as a common carrier. British Telecom responded positively to the proposals, putting out a statement saying We accept the need for a clearly established set of interconnect prices which are published so that operators can plan their businesses and, with this in mind, we have made our own proposals to Oftel, but the company was less welcoming of the proposal to alter terms of its licence, saying that it was against further extensions of Oftel’s discretionary powers because they create uncertainty and unpredictability for BT and competitors alike. According to the Evening Standard, it privately regards the recommendations as ill-conceived and almost unworkable. The City was unhappy at the proposals coming now since it means that part of the prospectus for the BT3 share issue next month will have to be rewritten.