Changes to BT and KCOM’s regulatory and financial reporting 2011/12 update

Relevant, reliable and timely regulatory financial information informs many of our decisions. We require this information in order to monitor and enforce various obligations that are placed on dominant providers in markets where they are found to have significant market power (SMP).

In this statement we set out the minor modifications we have decided to make to enhance the presentation and improve the quality of BTs regulatory financial statements (RFS).

As set out in the February Consultation, these modifications reflect developments over the last 12 months in the regulatory, technological and competitive environment, our ongoing analysis and use of the RFS, comments from users of the RFS and discussions with BT.

There are no significant modifications to the RFS in the current year. The Cost Orientation and Regulatory Reporting (CORR) project is running at the same time with the remit of addressing fundamental issues and proposing modifications to financial reporting. As set out in the February Consultation, in order not to duplicate the work, we consider that the CORR project is better placed to consider concerns in depth this year.

In the February Consultation we consulted on two minor modifications to BTs 2011/12 RFS. Both were modifications to reporting of services in the Alternative Interface Symmetric Broadband Origination (AISBO) market. We proposed to disclose Ethernet Access Direct services for rentals and connections separately by bandwidth. These modifications are aimed at improved disclosure of services in the RFS. We also proposed to amalgamate Wholesale Extension Service connections due to the forecasted low revenue of these services.

The regulatory financial reporting regime is also applicable to KCOM. This year, however, we have identified no reporting modifications relating to KCOM which require consultation.

This statement sets out our final decisions in respect of the proposals in the February Consultation.

We have decided to implement the two modifications to AISBO market reporting that were proposed in the February consultation. These modifications are:

• to require BT to disclose Ethernet Access Direct services for rentals and connections separately by bandwidth; and
• to amalgamate Wholesale Extension Service connections.