In a neat side-step around regulatory controls, British Rail Telecommunications has established a subsidiary company to apply to the Department of Trade & Industry for a Public Telecommunications Operator licence (CI No 1,879). Being state-owned, legal restrictions prevented it from applying under its own colours, and it had been expected that British Rail Telecommunications would form a partnership before it made its application. According to managing director Peter Borer, the company could not do this because it was caught in a Catch 22, unable to sign a partner because the terms of the licence were not known, and unable to get a licence because it did not already have a partner. What the company hopes is that it can get the provisional go-ahead for its service, and have something concrete with which to tempt potential bedfellows. Should the Department of Trade & Industry grant the licence, it will still be dependent on the British Rail division signing partners – the White Paper that gave the go-ahead to British Telecommunications Plc-Mercury Communications Ltd rivals specified that only private sector companies could apply, which means that the maximum stake British Rail can hold in the venture is 49%. Similarly, no British Rail money can be invested in the project, and the Telecommunications division is therefore reliant on doing deals to offset the estimated cost of between UKP350m and UKP500m. The company says it is in active discussions with private sector partners and investors and that the names of the companies will be revealed later in the year when formal negotiations have been completed. It has also not been cautious in the type of licence it has applied for – its application covers public switched telephone services – national and international – value-added network services, virtual private networks, digital private circuits and mobile radio services. For its telephony service, it hopes to offer direct connections into its network, either wire-based for small customers or using millimetric microwave access for larger companies that require more than 20 lines.
Hermes project
For this purpose it has requested frequencies in the 3.5GHz band. As part of the Hermes project – an agreement under which railway companies throughout Europe have joined together to pool their telecommunications resources and co-operate in providing telephony services – British Rail Telecommunications has European coverage tied up, and it has said that it will implement services to North America and the Far East in conjuction with local companies in those regions. The company is confident that whichever political party comes to power after the General Election it stands a good chance of a successful application. The British Labour Party has said that it favours controlled liberalisation of telecommunications, and Borer also sees encouragement in the fact that its application is in line with Labour’s transport policy, which hopes to foster private sector investment in British Rail. Similarly, if a new Conservative government were to push ahead with the privatisation of British Rail – even on the regional basis favoured by Prime Minister John Major – Borer says that he has had indications that British Rail Telecommunications would be seen as a special case since the network is of greater value in one piece than it would be split.
