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November 24, 1995

BRITISH TELECOM’s LICENCE TOO TIGHTLY DRAWN IN FAST-MOVING MARKET – OFTEL

By CBR Staff Writer

The UK Office of Telecommunications watchdog called yesterday for new regulatory powers designed to enable it to respond more quickly to complaints of anti-competitive behaviour from British Telecommunications Plc and other operators. At a public meeting in central London – the first of its kind in the UK – Oftel aired plans for a new measure that would give it more general powers. The news of the debate sent BT’s stock to a 17-month low – 351p on Tuesday – in the days before the meeting. In Oftel’s view, the present licence conditions – which aim to prevent anti-competitive behaviour through a series of specific prohibitions – leave loopholes that BT in particular is able to exploit. Although we do have a number of specific licence provisions to deal with anti-competitive behaviour, they tend to be very specific and laid down in great detail, and we often find that we can’t apply them to a particular piece of behaviour, said Anna Walker, Oftel’s deputy director general. Further, says Oftel, it would be more or less impossible to create a set of behaviour-specific rules to deal with all types of anti-competitive behaviour. As things stand, BT’s licence already contains 76 specific conditions. Oftel therefore wants the introduction of a general condition against anti-competitive behaviour which could be used to cover a wide range of activities. Decisions could thus be taken within 28 days, rather than the year or more it often takes at the moment. BT, unsurprisingly, has an alternative suggestion. Broadly similar to the Oftel proposal, it would, however, rely on existing competition laws for its force, and merely introduce a new procedure for dealing with complaints. It would also entail a longer delay – six weeks or more – before a resolution could be reached. Oftel is unimpressed. Another element of the BT proposal is the creation of an advisory committee to advise the director general on competition issues, and here Oftel is less antagonistic. On the one hand, it says, such a committee could provide valuable independent and professional input into the regulatory process; on the other, it could lead to further delays. Although the ground-breaking meeting was described as public, it was not quite so in practice. The vast majority of the 200-odd who attended were industry players or lawyers representing Oftel and BT. The next stage, however, is for Oftel to produce its recommendations, which will be published in the national press, and which are intended to attract public comment. The sticking point is that BT has to agree to the new licence condition; if not, the Monopolies & Mergers Commission steps in. If BT accepts, the new provision would appear in its licence and those of other operators in around six months’ time.

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