BT ‘hampered’ over broadband rules

BT is growing increasingly frustrated at what it regards as foot dragging by the telecommunications regulator on rules surrounding its £1.5bn ($2.2bn) plan for a superfast broadband network.

BT is concerned at the time it is taking Ofcom to finalise the regulatory framework, partly because it risks extending Virgin Media’s competitive advantage on broadband speeds.

Ian Livingston, BT chief executive, said the company was “a little bit hampered by regulatory detail”.

He also used an appearance at an investor conference in Barcelona to reassure shareholders that BT would retain a “very good dividend”. Some analysts are forecasting that the 2008-09 dividend will be cut because BT is expecting its earnings to fall.

Mr Livingston became BT chief executive in June and his first significant announcement, in July, was the £1.5bn plan for a superfast broadband network based on optical fibre.

His move followed statements by ministers that the UK’s competitiveness might be damaged without high-speed internet access.

Mr Livingston said the £1.5bn plan was conditional on a regulatory framework that enabled BT to obtain an appropriate investment return.

BT had been hoping Ofcom would finalise the framework by the end of the year but it looks unlikely to be completed until well into 2009.

Ofcom published a consultation document on a potential framework last year and a second paper was issued in September.

Ofcom caps the prices that BT charges rivals such as Carphone Warehouse for gaining access to its existing copper-based broadband network. Carphone uses the network to supply broadband and telephone services to consumers.

In September, Ofcom said BT might, to a considerable degree, be able to determine its own investment return on fibre.

Ofcom is considering the case for not imposing price controls on certain fibre-based wholesale products that BT sells to rivals.

Mr Livingston told the conference: “In terms of Ofcom, it is fair to say we have been talking in depth, and Ofcom has been very open and engaged but we do have to make some decisions.”

He said BT was offering to sell fibre-based broadband products to rivals at a “good rate”.

“We certainly found the customers we talk to probably more enthusiastic than the regulator on some of the details,” he added.

Ofcom said: “We are just as enthusiastic as BT and other communication providers for the rapid development of fibre technology to benefit Britain.”

Virgin is due to offer consumers broadband download speeds of up to 50 megabites per second before the end of the year.

BT currently supplies most customers with download speeds of up to 8mbps although it will increase this to as much as 24mbps on its copper-based network.