BT is proposing a number of changes, in response to Ofcom’s recent consultation document that proposed only minimal changes to the current arrangement.
The London, UK-based carrier says that the universal service obligation scheme costs it approximately 70m pounds ($133m) a year, and is governed by rules that have hardly changed since BT was privatised back in 1984. The only other UK carrier burdened with the universal service obligation is Kingston Communications (Hull) Plc, as it was the only other fixed-line operator in the UK at that time.
BT says that the growth of mobile phones, and the fierce competition across the telecoms market, justifies the overhaul.
Essentially, the idea of universal service is to price residential telephone service at such a rate that everyone in the country can afford it. The price is set by what the residential customer can afford rather than the normal market conditions and competition dictate.
BT has to make up any potential shortfall by charging its business customers more for the same service. Now the carrier wants Ofcom to use a means test in offering residential universal service protections.
BT will also appeal to Ofcom for a revamping of the so-called light user tariff – a scheme to exclude customers with second homes and mobile phones from universal price protection. The company argues that it is funding many wealthy users with second homes, which was not the goal of universal service. Also, users with mobile phones should not qualify for universal service coverage.
BT is also looking get rid of thousands of unprofitable telephone booths, whose revenues have dropped 40% in recent years after the uptake of mobile phones. Under the universal service scheme however, BT still has to provide payphones, which costs it approximately 30m pounds ($57m) a year.
The carrier argues that mobile phone operators and local councils should now help to support what is essentially a community service.
BT says that 67% of the 70,000 payphones in the UK are unprofitable and are putting a strain on its payphone business. Recently the company revealed plans to turn some phone booths into soft drinks and confectionary dispensers, and is now using them increasingly as advertising platforms.
In the mid 1990s there were more than 92,000 payphones. The number has been culled over the past year, but only after long, enforced consultation between BT and local groups.
BT’s payphone unit, part of the BT Retail division, reportedly has to spend an average of 1,914 pounds ($3,627) to maintain the kiosks each year. In other countries the cost of payphones is funded through a levy on all telecoms operators.
In the UK BT’s biggest pay phone rival is NWP Spectrum, which is not under any obligation to provide the kiosks, and can cherry-pick the most profitable areas in which to place them.
