BT WILL be forced to open its local network to rival operators or face the risk of legal action under a compromise deal aimed at averting a break-up of the former telecoms monopoly.
The company has signed up to a lengthy list of legally binding changes to its structure and behaviour that are designed to ensure that it gives competitors such as Cable & Wireless fair access to its network and products.
In return, Ofcom, the telecoms watchdog, has backed down from threats to split BT’s retail and wholesale divisions and has also signalled plans to lighten BT’s regulatory burden.
Shares in BT jumped 8½p to 226p yesterday as investors cheered the resolution of the protracted negotiations over access to BT’s network.
Rivals, who have complained for years that BT’s retail arm was receiving preferential treatment from BT’s wholesale arm, also welcomed the result. Under the compromise deal they have the right to sue BT for damages in the High Court should the telecoms group breach its contract with Ofcom.
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BT also agreed to compensate rivals if it fails to abide by a timetable for ensuring “equivalence” with competitors.
Ofcom said that the deal, which comes 20 years after BT’s privatisation, would benefit consumers by reducing the price of calls and by leading to new broadband products.
But yesterday’s agreement could also help BT by removing regulation in key areas such as retail calls and calls made by large businesses.
Stephen Carter, head of Ofcom, said that the watchdog had decided against referring BT to the Competition Commission because of the uncertainty it would create in the market and the time it would consume.
The centrepiece of the compromise deal is a new business unit, to be launched early next year, which will manage the copper wires that run from BT’s telephone exchanges to consumers. The division, which will employ 30,000 staff, will have a separate brand and uniform from BT. Staff will be eligible for bonuses for providing equal access to BT’s network to all telecoms companies.
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The division will be overseen by a new board. Although it will be chaired by Carl Symon, the BT non-executive director, three of the other four members of the board will be appointed from outside BT.
From September BT will also be legally bound to ensure that its rivals are given an equal chance with its retail division to contribute to the development of products such as local loop unbundling products. Rivals must also be offered such products at the same price as BT’s retail arm.
The group has also agreed to cut the rent for fully unbundled access to its local network for rivals from £105 to £80 a year.
It will also lower its charges for wholesale line rental, under which rivals can take full control of their customers’ accounts.
WHERE BT WINS