The Industry Secretary’s green paper with white edges on the future of UK telecommunications realised British Telecommunications Plc’s worst nightmare – capping of international prices, an open invitation for anyone to set up alternatives to the domestic trunk and international networks and more featherbedding for the cable companies to compete against BT in the local […]
The Industry Secretary’s green paper with white edges on the future of UK telecommunications realised British Telecommunications Plc’s worst nightmare – capping of international prices, an open invitation for anyone to set up alternatives to the domestic trunk and international networks and more featherbedding for the cable companies to compete against BT in the local loop. Simultaneouly it denies BT the opportunity to put entertainment television down its wires for at least seven years. But if British Telecom is effectively the loser, who are the outright winners from the duopoly review? The cable companies are the most obvious beneficiaries. They have not only won their battle to stop British Telecom putting television down its lines, but their position as The Competition to BT in local loop fixed line market has been endorsed, putting them in a similar position to Mercury’s position in the trunk and international arena before the review. The government has given the 150 companies, which are mostly backed by US phone companies, the level playing field that it had promised, to impact the local call market. Cellular operators have also been given a big boost. After Peter Lilley read out the paper in the House of Commons last Tuesday, Racal Telecom’s shares put on 19p, taking them to 278p. Sir Ernest Harrison, chairman of the Racal Telecom, said we welcome all the proposals which, if fully implemented would free Racal from many constraints to the development of our business and which provide for virtually all the changes we have been seeking. A spokesman said the company would be unlikely to move outside its current core communications businesses – providing value added network services and operating a mobile network. But the review has thrown up plenty of scope for Racal within those two areas. The cellular operators will have more freedom in their methods of national networking which, along with Telepoint operators may enable them to offer a more comprehensive service and perhaps even provide cellular local loop competition. Specialised satellite operators are also set to benefit if proposals are enacted. The paper says that these companies – which provide satellite alternatives to British Telecom and Mercury – should be allowed to offer bi-directional data services. At the moment the operators can only broadcast data from the UK.
Two weeks ago, at a pre-duopoly review conference, British Aerospace Communications announced a deal with the German Telecommunications Ministry, which allows it to provide the sort of two-way services in Germany that the Government is now proposing in the UK. British Aerospace Communications says it is prepared to grow… and with the restrictions lifted we can do that more easily. And if the satellite operators are allowed to interconnect to the public network, the difference to the likes of Aerospace will be great. In the area of international calls an extremely lucrative sector – companies with spare capacity to the US and perhaps Japan, could pick up considerable profits, by reselling spare private circuit capacity, originally leased from British Telecom or Mercury. Michael Norton of Applied Network Research says that there are innumerable companies with spare capacity to sell and although not all of them will take on the considerable investment costs of setting up a service there are a lot of companies around the world eyeing the UK market, particularly large US operators that already invest in telecommunications as part of their business. There is also the possibility that companies providing value-added data network services at the moment could migrate to telephony. Either would erode the pricing and profitability of British Telecom and Mercury. UK public utilities, such as the Post Office and British Rail have been gearing up for windfalls from the review: British Rail set up BR Telecom in September, the utilities can now use their comprehensive networks to real advantage. Simple resale the selling of spare capacity on private circuits for data transmiss
ion, has been allowed for some time, but under the terms of the paper, companies such as British Rail, can provide services to local service providers, such as cable operators. Sonya McGilchrist