British Telecommunications Plc came out fighting yesterday in its response to the government’s Green Paper on telecommunications, voicing a trenchant condemnation of the government’s policy – the government’s approach to competition is seriously flawed, it said and called on the regulators to adopt a more laissez-faire approach to the market. It is for management to run businesses to meet customer needs, not for the government or regulators. Telecom is irked by the government’s strategy to free up the UK market by placing restrictions on itself, so that competitors can get started. The government believes that Telecom must be curbed because of its near-monopoly position, which has allowed it to dominate the market, even with the introduction of Mercury. But BT is against the proposals that do not allow it to broadcast cable television or set up a mobile network. Both are intended to stop it dominating those market areas, but Telecom describes the proposals as not consistent with the government’s desire to create open markets. On the question of cross-subsidising, which the government has said must remain, BT says, as it has before, that this denies customers the opportunity to benefit from economies of scale and argues that customers will pay inflated prices for the alleged benefit of market entry by overpriced competitors. Telecom accepts its price cap, based on 4.5 points below the rate of inflation, but within this it wants tariff rebalancing – which would enable it to stop cross-subsidising. To sweeten its argument, BT has said it would introduce an enhanced package for customers that make relatively little use of the phone, but who need it as a lifeline. The only area in which Telecom favours regulation is in considering licence applications from foreign companies. It says the government should make openess of the domestic market of an overseas country one of the criteria in licence applications from any company from that country.
