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BT could jack up line charges to fill pensions hole

Ofcom consults - unbundlers set to scream

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Ofcom is pondering allowing BT to jack up its line charges to allow it to lighten the £9bn pension deficit hanging round the neck of the former state-owned telco.

The possible move by the regulator could see OpenReach, BT's wholesale arm, up its charges by as much as 4 per cent.

This would in turn land on those companies which lease lines form BT, such as Carphone Warehouse and Sky, forcing them to ramp up their own prices, or look for cost cuttings.

BT has long grappled with a pension fund that has liabilities of around £40bn, and which is currently about £9bn short of what it needs to keep former British Telecom/GPO workers off the breadline.

Ofcom said, "Because of the financial significance of these payments in the case of BT, Ofcom considers it right to consult on whether or how such payments should be factored in when setting BT's regulated prices."

It said it was launching the consultation, "to promote a broad debate on whether it is appropriate for Ofcom to maintain or change the approach it currently takes to the treatment of BT's pension costs."

It added, "So far Ofcom has not taken a view on whether it is appropriate or not to change its current principles in relation to pension costs. If Ofcom changes its approach, any adjustments in wholesale charges would not necessarily be felt proportionately by consumers."

This suggests the regulator is leaving open the possibility that those third party providers might be expected to take up some of the slack themselves.

Afterall, they do benefit from a network that was built and maintained over the course of many years by an army of BT engineers who are either now happily ensconced in retirement, or pondering wondering they'll get to retirement before their jobs are outsourced. ®

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