Ofcom, the communications regulator, has ruled that BT cannot charge other communications providers extra for use of its ‘Openreach’ service in order to try and plug its massive estimated £9bn pension scheme deficit.

The regulatory body has followed up an initial consultation published in December last year with its proposals on the way it takes BT’s pension costs into account when setting regulated wholesale charges for certain telecoms services, including broadband and landlines, which come under the ‘Openreach’ umbrella.

In the December consultation, Ofcom consulted with stakeholders over whether there were good reasons for changing the way it takes BT’s pension costs into account when setting regulated charges – at present it takes account of ongoing pension service costs, as reported in BT’s statutory accounts, but excludes payments made by BT related to any pension fund deficit.

The proposals from Ofcom would see no change to the current deficit repair payments and pension ‘holidays’, which are taken into account when Ofcom sets BT’s regulated charges, as it believes its current position provides customers with regulated prices that most closely match a fully competitive market. Ofcom said changing this approach could lead to fluctuations in BT’s wholesale prices, which would mean uncertainty for stakeholders and could lead to those prices being set at levels which do not accurately reflect the relevant underlying costs.

Ofcom said it would also leave the current protocol of including reported costs from BT’s statutory accounts in its regulated charges, and will also leave the cost of capital settings already in play. However, the regulator said there could potentially be a connection between the existence of a defined benefit (DB) pension scheme and the estimated cost of capital, but Ofcom at present believes there is insufficient evidence to support the need to make an adjustment.

The final statement on its pensions review will be published by Ofcom by the end of 2010.

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