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Last Updated: Thursday, 23 June, 2005, 14:24 GMT 15:24 UK
BT ducks break-up with price cuts
BT office
BT Group is Britain's dominant fixed-line telecoms provider
Telecoms giant BT Group has agreed to offer rival operators equal access to its UK fixed-line network.

BT also announced several cuts in wholesale prices for its rivals in exchange for lighter regulation.

The move comes amid an ongoing review by telecoms regulator Ofcom and could lead to cheaper telephone services.

The deal means BT will avoid being referred to the Competition Commission - a move which could have led to the break-up of the company.

BT is Britain's dominant fixed-line telecoms provider, and the prices it charges competitors to access its network can determine the services they offer and the prices they charge.

The move could mean a wider choice of phone providers for consumers, with greater price competition.

'Tough journey'

Ofcom launched its wide-ranging review of the UK telecoms sector in April 2004, amid widespread concern that BT's dominant position was stifling competition.

The regulator is looking at whether BT Group should be broken up into separate retail and wholesale operations and its full report is due to be published in September.

This has been a tough journey but it is important that we have regulation that encourages investment and innovation
Sir Christopher Bland, BT Chairman

On Thursday, BT said it had "agreed in principle to offer undertakings" to Ofcom, the details of which will be published on 30 June.

BT said it planned to set up an Access Services business unit, which would provide other companies with equal access to its UK-wide local network.

Access Services will be staffed by about 30,000 people and headed by BT independent non-executive director Carl Symon.

The unit - which will be closely monitored by regulators - could be established within months.

BT chairman Sir Christopher Bland said the deal with Ofcom struck "the right balance" for every player in the market.

"This has been a tough journey but it is important that we have regulation that encourages investment and innovation," he said.

Ofcom chief executive Stephen Carter welcomed BT's proposal "on the critical assumption that BT does not merely deliver the letter of the undertakings, but also the spirit".

Rival relief?

BT Group chairman Sir Christopher Bland
BT's chairman says the deal will boost investment and innovation

Rival operators have previously complained that BT Retail, the group's consumer arm, receives preferential treatment from BT's network-owning wholesale division.

Telecoms operator Cable & Wireless described BT's deal with Ofcom as "encouraging".

"What is now vital is that Ofcom maintains the pressure over the next year to ensure that equivalence is delivered in full so that consumers can share the benefits of full and open competition," Cable & Wireless chief executive Francesco Caio said.

Telecoms firm Thus also welcomed Ofcom's settlement with BT. However, the National Consumer Council said it was not fully convinced the proposals would work.

"We are glad (Ofcom) has left the sword of the Competition Commission hanging over BT's head. It is vital that BT's undertakings to Ofcom are underpinned by a meaningful threat," the consumer group said.

In lunchtime trading on the London Stock Exchange, shares in BT Group were up more than 3.5% at 225.25 pence.




SEE ALSO:
BT to launch fixed-mobile service
15 Jun 05 |  Business
Broadband demand boosts BT profit
10 Feb 05 |  Business
BT offers equal access to rivals
03 Feb 05 |  Business
Ofcom cuts prices for BT rivals
16 Dec 04 |  Business
Ofcom demands BT mindset change
18 Nov 04 |  Business


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