BT 2004 Annual Report Download - page 24

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The review focuses on five fundamental issues, relating
respectively to: the key attributes of a well-functioning
telecoms market for citizen-consumers; the
achievement of sustainable competition; the possibility
of a significant reduction in regulation; incentivising
efficient and timely investment in next-generation
networks; and the relevance of the issue of structural
or operational separation of BT.
Funds for liabilities
Under conditions relating to the Electronic
Communications Code, an electronic communications
provider which has apparatus on or in the public
highway is required to make financial provision to
cover damage suffered by highway or other relevant
authorities, resulting from works carried out by the
communications provider, for the removal of its
network, if necessary, in the event of the liquidation or
bankruptcy of the company.
The conditions require the company to provide
Ofcom annually with a certificate that, in the company
board’s opinion, the company has fulfilled its
obligations to ensure the availability of the required
funds.
Relationship with HM Government
The UK Government, collectively, is our largest
customer, but the provision of services to any one
department or agency of the UK Government does not
comprise a material proportion of our 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, however, be required by law to do certain
things and provide certain services for the UK
Government. General conditions made under the
Communications Act 2003 require all providers of
public telephone networks and/or publicly available
telephone services, including BT, on the request of and
in consultation with the authorities, to make, and if
necessary implement, plans for the provision or
restoration of services in connection with disasters.
Furthermore, the Civil Contingencies Bill, currently
before Parliament, contains provision enabling
obligations to be imposed on providers of public
electronic communications networks, including BT, in
connection with civil contingency planning. 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 that 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 evidential hearings are continuing
in Rome. If the proceedings are successful, BT could
be held liable, with others, for any damages. The
company has concluded that it would not be
appropriate to make a provision in respect of any such
potential claim.
23 Operating and financial review BT Annual Report and Form 20-F 2004