BT fails numbers game
The Competition Appeal Tribunal has referred a BT appeal against Ofcom’s calculation of pricing for local loop unbundling (LLU) to the Competition Commission.
Sky and TalkTalk supported the Ofcom calculation, which BT claims contain “material errors” in the allocation of costs or income associated with LLU and WLR (wireline rental) services and the valuation of relevant assets.
In June the commission found in favour of Ofcom’s refusal to allow BT to recover sums towards its pension deficit via wholesale broadband access prices, and in its calculation of BT’s average weighted cost of capital (WACC). WACC is a key factor in establishing BT’s costs and therefore the price of regulated products such as LLU.
The tribunal allowed BT to withdraw some of the grounds for its appeal against Ofcom’s LLU and WLR calculations. This will save the commission some time. It has until 29 March 2013 to reach a determination.
In a separate issue, BT said in its financial report for the first quarter to 30 June that it could be liable to repay £145m to customers who rented Ethernet services. This is a sequel to several complaints that BT overcharged for the products, and upheld by Ofcom.
BT said, “We expect Ofcom’s final determination on disputes over historic Ethernet pricing in the next couple of months. The draft determinations proposed that BT should repay up to £145m to other communications providers.”
Ofcom recently announced proposals for a revised charge control on Ethernet and wholesale leased lines which may apply from the end of 2013. These will essentially allow the price of BT’s copper-based services to rise by the retail price index +3.25%, and for Ethernet prices to drop by RPI-12%. However, prices in west, east and central London (WECLA) will be less strictly regulated as Ofcom believes there are enough competitors to ensure low prices.