UKCTA React to BT’s announcement on changes to BT’s Regulatory Accounts

UKCTA, the trade association promoting the interests of competitive fixed-line telecommunications companies competing against BT, as well as each other is disappointed to learn that BT has uncovered problems within its Regulatory Financial Statements relating to leased line circuits. These circuits are used by BT and its competitors to connect UK businesses. As a result of the problems BT has announced that it will delay the publication of the 2007/8 Regulatory Financial Statements (commonly known as BT’s ‘Regulatory Accounts’), whilst it revises the methodology which it has previously used for such products in prior Regulatory Accounts.

BT’s Regulatory Accounts are a cornerstone of the UK’s regulatory regime, which Ofcom use to set cost-based wholesale prices as well as acting as a first order test that BT has complied with some of its most important regulatory obligations. As a result of BT’s announcement confidence in BT’s compliance with its regulatory obligations has been severely dented. In particular, it raises questions about the reliability of BT’s previous years’ Regulatory Accounts and whether BT will need to restate such Regulatory Accounts as well as whether there are other telecoms products that are affected.

The timing of BT’s announcement is of particular concern; after years of questions it comes just at the time when Ofcom and the industry need to rely on the information the most. With the announcement of BT’s plans to invest in next generation access, it is imperative that accurate financial information is available which will provide Ofcom and industry with confidence that those investments are appropriately regulated while providing BT with a fair rate of return.

UKCTA looks forward to working with Ofcom to ensure that there is no repetition of this regrettable situation. We will await further announcements from BT on the scale of the changes required and their impact.