British Telecommunications Plc and the Office of Telecommunications resolved their final difficulties over the more demanding new regulatory framework on pricing by agreeing to an outside study with respect to the Office’s demand that British Telecom produce separate accounts for its various lines of business to make it clear that there was no cross-subsidising going on. British Telecom will co-operate on a separate consultancy study, which will advise Oftel on the implementation and timetable to achieve accounting separation of BT’s businesses in order to facilitate interconnection with other networks. Finalisation of the proposal on price control for leased lines awaits completion of another study commissioned by Oftel, which is expected to be ready by the end of October. The overall regimen, which takes effect a year from now, puts a cap on price increases of the retail price index minus 7.5 percentage points for the generality of regulated services. Within that, the cap is minus three points on domestic tariffs which should mean approximately stable prices or a slight fall so long as the inflation rate, currently around 4%, continues to fall, and between 10 and 11 percentage points for business users, which should see substantial real declines. Connection charges will be cut to UKP99 from UKP152.75, and people making 250 or fewer calls a year will pay a lower rate. The proposals, to run for four years, also include limiting increases on exchange line rentals to inflation plus two percentage points. British Telecom says it believes the balance of its interests lie in agreeing to the proposals and avoiding referring the issue to the Monopolies & Mergers Commission. The uncertainty inherent in a reference to the MMC, combined with demands on management time, would not justify such a move, it said. It says it nevertheless continues to regard Oftel’s proposals as harsh and a significant change in direction towards more interventionist regulation which could impede the development of the truly competitive and open market everyone is aiming for.
