Concerns that British Telecom (BT) is overcharging competitors fo...

findings and recommendations into account in a public consultation set to start this spring. The report found that BT allocated costs to narrowband interconnect PPP in accordance with detailed attribution methods and that the method used “does not appear unreasonable.” However, consultants Ovum and Robson Rhodes recommended, among other things, OFCOM: (1) Specify and publish a detailed and precise definition of PPP, using BT’s working definition as a starting point but amending it to exclude such things as the cost of other communications providers (OCP) bad debt. (2) Require BT to make public more information on PPP. On OCP concerns about BT’s PPP costs, the report concluded that substantial fluctuations in the costs reflect one-time events rather than, as OCPs claimed, BT’s using the PPP pool as a “dumping ground” for costs it can’t allocate elsewhere. Moreover, analysts said, PPP costs aren’t being double-counted and don’t include expenses of departments such as regulatory affairs and legal services. OCPs also worried about PPP charges. The report concluded that the current charge mechanism doesn’t reflect the main underlying cost drivers and, in fact, distorts competition in favor of OCPs that spend little on infrastructure investment as opposed to those that do. Moreover, it said, BT hasn’t tried to recover bad debt through the PPP charges. But analysts recommended that OFCOM consider several options for allowing BT to recover PPP costs in the future: (1) Remove service center costs from PPP and recover them through transaction charges per interconnect circuit order. (2) Put PPP in a “price basket of its own” because its current mix of cost structures for both PPP activities and the supply of interconnect circuits makes it difficult for OFCOM to set an appropriate price cap. (3) Recover remaining PPP costs from OCPs in a way that more closely reflects cost causality.