BT 2003 Annual Report Download - page 24

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Business review
BT Annual Report and Form 20-F 2003 23
consulting on the controls applying to removal and
re-siting of payphones.
Flat-rate internet interconnection (FRIACO)
Initially launched in 2000, this group of products
is the normal means of providing interconnecting
operators with a service to support flat-rate internet
access packages via internet service providers to end
users. Most FRIACO use involves interconnection at
local exchange level, and the period of rapid growth
in demand, following the initial FRIACO launch, has
now developed into a more stable environment. The
charges for both FRIACO services are subject to RPI
minus X controls under the Network Charge Control
regime and hence have been falling gradually. Oftel
is currently consulting on whether there should be a
further reduction in the price of one element of the
service with effect from December 2001.
Relationship with the UK Government
The UK Government collectively is BT’s largest
customer, but the provision of services to any one
department or agency of the UK Government does
not comprise a material proportion of its revenues.
Except as described below, the commercial relationship
between BT as a supplier and the UK Government
as customer has been on a normal customer and
supplier basis.
We can be required by law to do certain things
and to provide certain services for the UK Government.
The Licence obliges BT and other licensees,
after consultation with central and local government,
to make, and if necessary implement, plans for the
provision or restoration of services in emergencies.
In addition, the Secretary of State has statutory powers
to require us to take certain actions in the interests
of national security and international relations.
Legal proceedings
The company does not believe there are any pending
legal proceedings which would have a material
adverse effect on the financial position or operations
of the group.
Proceedings have been initiated in Italy against
21 defendants, including a former BT employee, in
connection with the Italian UMTS auction. Blu, in which
BT held a minority interest, participated in that auction
process. The first hearing has been scheduled for
11 July 2003, in Rome. If the proceedings are
successful, BT could be held liable, with others, for
any damages. The company has concluded that it is
not appropriate to make a provision in respect of any
such potential claim.