Nobody seems happy with the UK Office of Telecommunications’ proposal to extend existing price caps governing UK telecommunications services beyond 1997, and to extend the current ‘retail price index minus 7.5 percentage points’ formula to a range between minus 5 and minus 9. Except perhaps for the cable television operators. British Telecommunications Plc, the dominant carrier, said the proposals were slightly worse than it had hoped for, while Cable & Wireless Plc’s Mercury Communications said it was disappointed that the proposals for price restrictions on British Telecom would not promote greater competition. Mercury chief executive Peter Howell-Davies said he did not believe that continuing with the current, broadly-based price capping system will foster effective competition. Instead, he said, it will involve Oftel in continued market management. Only Britain’s Cable Communications Association seemed to view the announcement in a more positive light. The Cable Communications Association focused on the possible ending of capping in 1999, and believes that this is due to how well cable companies have done in providing competition and driving down prices.
