Telecoms industry slams BT for changing leased line accounting

The UK Competitive Telecommunications Association has lambasted BT after the former telecoms monopoly said it was changing the way it accounted for leased telephone line circuits.

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The UK Competitive Telecommunications Association has lambasted BT after the former telecoms monopoly said it was changing the way it accounted for leased telephone line circuits.

The trade association representing a range of UK telecoms companies, including Easynet, Opal Telecom, Orange, Cable & Wireless and Thus, said it was “disappointed” at the “regrettable situation” that BT had uncovered problems within its financial statements. The reports are made annually to telecoms regulator Ofcom, but BT is delaying this year’s results by several months from the July deadline.

In a statement made at the end of July, BT Wholesale, which leases line access to rival telecoms firms, said: “Following an internal review, BT believes it is necessary to revise the methodology it uses for estimating turnover for partial private circuits [leased lines to other telecoms providers] within these statements. Any revisions made in this area will not impact on the BT Group’s statutory financial results.”

“Should this timetable impact the setting of any price controls for partial private circuits and wholesale Ethernet products, BT accepts that such controls would have effect from 1 October, retrospectively,” it added. It is understood that BT is revising how it calculates the turnover it makes from the leased lines.

The UKCTA reacted angrily to the news. “UKCTA is disappointed to learn that BT has uncovered problems within its regulatory financial statements relating to leased line circuits. ... 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.”

It added: “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 trade association said it had been let down “after years of questions” and “just at the time when Ofcom and the industry need to rely on the information the most”. It called on BT to provide the financial details so that the industry has confidence BT’s investments in next generation access are “appropriately regulated”.

BT did not provide immediate comment.

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