The revolution in telecommunications that will be pioneered in Britain is but dimly understood even in the City, where people are paid a lot of money to gaze into their crystal balls and forecast the shape of things to come so as to be able to value the shares of major companies like British Telecommunications […]
The revolution in telecommunications that will be pioneered in Britain is but dimly understood even in the City, where people are paid a lot of money to gaze into their crystal balls and forecast the shape of things to come so as to be able to value the shares of major companies like British Telecommunications Plc and Cable & Wireless Plc accurately. The upside of the Personal Communications Network licence with regard to Cable & Wireless is beginning to be reflected in the share price, but the threat to British Telecom’s hegemony in the UK is less well understood, although Telecom chairman Sir Iain Vallence understands it well enough, which is why he delivered such an agonised plea for less regulation on his company to the House of Commons Parliamentary Select Committee for Trade & Industry last week (CI No 1,223). We’ll next be getting threats that Telecom will have to increase its investment abroad at the expense of investment here at home. Such threats should be ignored – far better that Telecom become a major player on the international stage than that it maintain its present dominance of the UK telecommunications service market. Personal helicopter The only worry on that score is that Cable & Wireless’ Mercury Communications Ltd will have things so much its own way that the various companies that will be confined to Telepoint or to Personal Communications Networks only will find that they face a duopoly of two equally strong companies. The idea of Mercury being as powerful as British Telecom in the foreseeable future is difficult to grasp, but the potential is clearly there – in the US, MCI Communications Inc and US Sprint Communications, against almost all forecasts in 1983, are today truly powerful companies, well able to hold their own against AT&T Co in long-distance telephony. The concept of the Personal Communications Network is to provide a two-way digital telecommunications and data service that is largely liberated from the tyranny of fixed terrestrial telecommunications infrastructure. It’s as revolutionary as would be providing everyone who has a private car with a short range back-pack personal helicopter that liberated the populace from the tyranny of having to use the fixed local road network or find garage space for a car. It would still be necessary to fly to the nearest station for long distance journeys, but runaround travel would be made unimaginably more liberating. Why is the Personal Communications Network licence such an extraordinary benefit for Mercury? The reason is that it already has a UK-wide trunk network in place, but the next step, that of putting Mercury into the reach of every home rather than only – as now of homes in cities where there are large concentrations of businesses, would be a hugely expensive and time-consuming undertaking: if that were Mercury’s only option, it would take decades for the company to wire the country. Wayleaves The Personal Communications Network short-cuts all that, enabling Mercury to offer a complete alternative to British Telecom almost anywhere in the country. Instead of digging up tens of thousands of miles of road and railway wayleaves, all it has to do to reach towns and villages in the regions is to negotiate points at which it can install small and unobtrusive radio transmitter-receivers operating on the same cell principle as today’s cellular telephone networks. All the cost and hassle of putting telephones into individual homes is eliminated, and all anyone who wants to start receiving phone service needs to do is buy a phone and sign up with Mercury for a number, which no doubt would soon become personal and individual rather than tied to a whole family. And the existence of that long-distance fibre optic network that would carry trunk calls for most of their journey means that Mercury is suddenly liberated from having to call on British Telecom for connections in any part of its network, except where the caller wants to reach somebody still stuck with fixed link copper cable telephone service. While fixed – all fibre-optic – links to any bu
siness big enough to need even a small PABX would likely remain the norm, it is difficult to see any good reason for maintaining fixed links to people’s homes except perhaps where an optical cable is already delivering television – which is why British Telecom is so keen to be allowed to get into cable TV. And even then, fixed home phones are likely to be supplemented by pocket phones for most individuals. To start with, with three alternative types of mobile telephony – the present cellular systems, Telepoint and Personal Communications Networks, there is bound to be a period of consumer confusion, but ultimately the next generation cellular system is likely to remain the system of choice for car telephones, and Personal Communications Network will become the pocket phone system for everyone else, with Telepoint turning out to be an interim system that will have to be replaced over time with the Personal Communications system and standards. And as things stand, provided the provisional licence is confirmed, Mercury Communications is the only company with both a Telepoint and a Personal Communications Network franchise. Happy position That puts the company in the happy position of being able to manage the transition from one to the other with full understanding of both markets and of the costs and benefits of each system. No wonder Cable & Wireless shares shrugged off the downside of the company’s exposure to Hong Kong as soon as the Personal Communications Network provisional licence was announced. The most striking feature of this revolution – as significant as the privatisation revolution that started here and is now orthodoxy from Moscow to New Zealand, is that the UK will have several years lead over the rest of the world in personal mobile communications. The export payback to the UK of privatisation was necessarily limited – all British companies and agencies could export was consultancy on how to do it – but the potential for British industry of mobile communications is enormous: the challenge will be to ensure that for once the exports are in the form of tangible phones and equipment and not simply, as so often in the past, ideas.