Ofcom bloodies BT nose over pensions


Ofcom bloodies BT nose over pensions

Ian Grant

Ofcom has refused to change the way it works out the pension portion of BT's regulated prices to relieve the estimated £9bn hole in the network operator's defined benefit pension fund.

Ofcom said evidence for a change presented to it so far was "not compelling".

Its present method "provides consumers with regulated prices that most closely match a fully competitive market", it said.

Trustees for BT's pension fund  have approached the High Court looking for taxpayers to guarantee its pension benefits.

Ofcom sets the prices that Openreach, BT's wholesale access division, can charge. It also controls prices of some other services provided by BT Wholesale, such as leased lines.

In setting regulated charges Ofcom takes account of ongoing pension service costs, as reported in BT's statutory accounts, but excludes payments made by BT in respect of any pension fund deficit.

"Ofcom has not received compelling evidence from stakeholders which would justify a change in approach," Ofcom said. It proposed to leave things as they are in a second consultation. Ofcom expected to publish its final report in December.

Ofcom said predictability and consistency were important to create an environment in which regulated firms, such as BT, and their wholesale customers were willing and able to invest.

Wholesale prices would become more volatile if they were dictated by changes in the pension deficit, Ofcom said. This could lead to prices that did not accurately reflect the relevant underlying costs. This would discourage investment in networks, it said.

Email Alerts

Register now to receive ComputerWeekly.com IT-related news, guides and more, delivered to your inbox.
By submitting your personal information, you agree to receive emails regarding relevant products and special offers from TechTarget and its partners. You also agree that your personal information may be transferred and processed in the United States, and that you have read and agree to the Terms of Use and the Privacy Policy.

COMMENTS powered by Disqus  //  Commenting policy