Protecting consumers by promoting competition

BT RESPONSE TO OFTEL STATEMENT dated 20/06/2002 -  'PROTECTING CONSUMERS BY PROMOTING COMPETITION'

Download full response in PDF format.

 1. Overview

The BT Group Board will consider Oftel's proposals for Licence modifications once these have been finalised. The following comments are made without prejudice to its decision on whether or not to object, but the comments do indicate the main issues that the Board will need to consider.
To summarise the key points, BT:

Welcomes Oftel's strategy of focusing on wholesale competition while taking steps towards relaxation of retail price controls. However, care must be taken not to extend the specification of the Wholesale Line Rental (WLR) product beyond the list of essential features already identified, and to ensure adequate provision for cost recovery for all developments beyond any initial launch of WLR in September 2002.

Believes that an incentive based trigger should be as effective as possible. Oftel should focus only on milestones which BT can deliver directly.

Understands Oftel's desire to see competition increase further, but is concerned that its proposals are based on overly 'compartmentalised' market definitions. These give little weight to the interactions between services or to existing pricing constraints. Despite the narrow market definitions, BT would expect Oftel to adjust the level of regulation if competition increases further from sources other than the WLR e.g. increased mobile substitution.

Is concerned about the application of Oftel's costing methodology in setting the WLR price. Oftel stated that the WLR methodology was based on that used for setting charges under Local Loop Unbundling (LLU). In practice, the cost adjustments to update the historic data used in the LLU determination have been asymmetrically applied to BT's disadvantage. BT does not believe this constitutes good regulatory practice.

Requests that Licence conditions which hamper pricing innovation by BT Retail are linked to the trigger for delivering the essential features of the WLR.  In particular, the proposal to disallow improvements in standard Inclusive Call Allowances (ICAs) to count towards the retail price control appears out of kilter with Oftel's recently published Competition Act strategy, which is to use this Act wherever possible in place of sectoral regulation. 

BT welcomes comments on this submission:

Contact Points
Francine Ravetllat - Tel 020 7728 4111 - Fax 020 7236 3439
Email: - price.control.review@bt.com