Select Committee on Trade and Industry Minutes of Evidence

Examination of witnesses (Questions 307 - 319)




  307. Good afternoon, Sir Peter. Perhaps you could introduce your team?
  (Sir Peter Bonfield) Good afternoon, Chairman. On my right is Colin Green, he is our Commercial Director and Company Secretary. On my left is Ian Morfett, he runs our Regulatory Affairs operations.

  308. Can I just say personally that I met Mr Morfett on Friday in Edinburgh and he showed me around some of your exchanges and explained to me what LLU was all about. I might not be any the wiser but I am a wee bit better informed, so thank you very much.
  (Sir Peter Bonfield) We appreciate you taking the opportunity to look at the situation.

  309. We invited you today because there have been concerns about the speed at which LLU is being rolled out. There have been concerns expressed by people no less than the Regulator talking in terms of the discussions with you as being "bitter conversations" and "almost trench warfare". Have the relations improved or deteriorated or were they never like that in the first place?
  (Sir Peter Bonfield) As you found out last week, we are dealing with a complex subject. The issue in terms of local loop unbundling has been discussed on many occasions. Until two years ago the general view of the administration at the time was that infrastructure competition was the way forward, not local loop unbundling. That subsequently changed and there was a bit of a u-turn in approach. We had an agreement with Oftel to introduce it on an agreed timescale. It needed a change in our licence conditions, which the BT Board agreed to back in April, and then as a result of the EU legislation, or regulation, it was all brought forward six months. I think we are in a very accelerated time frame in a complex situation. We would not be surprised that there are concerns around but I think some of those concerns need to be put against that sort of background.

  310. The impression we got from David Edmonds was you are not on his Christmas list and, in fact, if you had been it might have been if you were in Dartmoor or somewhere like that from his throw away remarks about sending you to jail. It was just a flippant remark, I do not think your legal advisers need necessarily to exercise themselves. The fact was that relations did seem pretty bad between yourselves and Oftel, or is that the way you deal with most regulators?
  (Sir Peter Bonfield) I think you have to understand we have got a professional discussion going on with Oftel. Oftel was set up to regulate the industry but was specifically set up to regulate BT, so most of the regulation is really aimed at a very tight control on BT. I think Oftel themselves said that BT is now suffering the tightest regulation ever suffered by a British company. Do we agree with all the things that Oftel come up with? No, but we do have a professional relationship going forward and that is the way that I try to keep it open.

  311. So you think that professional relationship is now improving as a consequence? Would you say that you have co-operated more of late because of the character of the EU Directive, which is really forcing the pace? It was not really in your interests to move very fast anyway, was it?
  (Sir Peter Bonfield) As I say, I think you have to understand that in April the BT Board went through the whole process with inputs from the Regulator in terms of how we would change our licence conditions. That was the agreement that we reached, that we start to unbundle the local loop, but it would be next July before there was a large implementation. That was subsequently brought forward by the EU Regulation. Would we have brought it forward ourselves? No. In response to the EU Regulation we responded in a professional manner in a pretty tight timescale.

  312. Do you think you will be able to meet the requirements of the Directive within the timescale?
  (Sir Peter Bonfield) Yes.

Mr Berry

  313. Oftel is one thing, the other licensed operators are another, and some of them appear to me certainly to be somewhat incandescent in terms of their criticism of BT alleging anti-competitive behaviour and so on. What are BT's relationships like as of today with the other licensed operators? Do you think they have improved? Are they still tense?
  (Sir Peter Bonfield) I think there was a fair amount of concern in the summer period, put it that way, after we had the agreement with Oftel. For us to change our licence is a big commitment from the BT Board, and this occurred in April. Then, as I say, there was the subsequent acceleration of the EU timescale. That did cause us some concerns in the summer period and I am sure caused a lot of concerns in the industry as we tried to respond to an accelerated timescale. I think that by and large we try to conduct ourselves professionally with these people. We supply them other products as well. Of course, they want to get into new markets as quickly as possible so why would they not take that approach?

  314. The specific issue was, of course, the debate about space allocation and, of course, Oftel had to intervene because the industry could not, as it were, sort it out and that was a very specific concern. I think one of the difficulties is that as a consumer I wonder what chances there are of local loop unbundling working well if there does not appear to be communication within the industry facilitating this?
  (Sir Peter Bonfield) We have to understand that by and large the companies that are going into local loop unbundling at the moment are not aiming at the consumer industry, that is mostly being left to BT to discharge that responsibility. I think in terms of our relationship with them, we do try to conduct ourselves on a professional basis and we do have ongoing discussions, we are meeting them at Board level and we are trying to allay their fears. By and large the situation has improved since the pull forward of the Regulation occurred in the summer.

  315. Can I just pursue a particular issue that Energis raised in their submission. They were complaining they had not received confirmation from BT as to when the site allocated for trialling co-location in Leeds would be available to them. Has that now been done?
  (Sir Peter Bonfield) Yes. We have handed over one of the Leeds sites. The distant co-location trial site in Leeds has been delayed because of a concern about laying cable across a road, which is a planning issue from our point of view, but that has now been confirmed.

  316. The cause for the delay there is simply laying a cable across a road?
  (Sir Peter Bonfield) No, the cause for the delay in one of the trial sites for distant co-location is to route the cable from the exchange into the other building and that does require essentially to cross a main road, which needs planning permission, and underneath the main road is somebody's cellar, which again needs planning permission. These are the logistics issues that you get into in unbundling a full exchange.

  317. I do appreciate that entirely, it is just that Energis obviously felt that it was sufficiently significant to include that complaint in their written submission to the Committee. They presumably understand the very practical problems that have to be addressed so I am wondering why they felt it was such an important issue to raise it in their submission?
  (Sir Peter Bonfield) The Leeds trial site for the LLU has been handed over. When was it, last week?
  (Mr Morfett) Yes, it was. I think the situation with planning permission and the road crossing is for another operator, not Energis, that is Fibrenet. The issue for Energis is it was pulled forward from the day we originally told them and they made the complaint at the Operational Policy Forum, which I attend every month, that they were taken by surprise because we had managed to pull it forward by, I think, three weeks from the date that Oftel had originally asked, 3 January.

  318. Forgive me, the trials are starting?
  (Mr Morfett) The rooms for co-location, Oftel asked us to prepare those and have them ready by 3 January.

  319. How many sites would that be?
  (Mr Morfett) Seven. The one that Sir Peter has mentioned is the only one that will go into January, all of the others will be in December and will be early.
  (Sir Peter Bonfield) So on the trial sites we will be this side of January, apart from that one.

  Mr Berry: Thank you.

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