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PA ADVISES GOVERNMENT AGAINST PUTTING UP THE CASH FOR A UK-WIDE FIBRE-OPTIC NETWORK

The UK Department of Trade & Industry is advised not to finance the installation of a fibre optic telecommunications national grid by 2010. The recommendation comes in two recently published reports from PA Computers & Telecommunications, which were commissioned by the Steering Group on Communications. The starting point for the current research was Recommendation 15 of the Peacock Report which pushed the idea of providing a universal fibre optic grid in such a way that British Telecommunications Plc and Mercury Communications Ltd would have ended up with a monopoly over the subsequent delivery of communication services. Exploring this idea, the Steering Group set up three general scenarios and followed through the economic consequences of each one. These scenarios were firstly, that of lightly regulated competition, summarised as a projection of current government policy; secondly, the laissez-faire model with rapid deregulation, which was characterised as the let British Telecom do it model; and, thirdly, the interventionist implementation of a national grid. The main differences between these three scenarios concern the communication services which domestic and business users can expect by 2010. Under lightly regulated competition 2m households would have cable entertainment, while businesses could expect optical fibre networks to be concentrated in city centres. With laissez-faire, 8m to 10m homes would have cable TV, and there would be patchy optical fibre coverage for regional businesses, as well as city centre coverage. If a national grid were installed domestic users, would have a wider choice of entertainment, and business users would have complete national coverage. However, the report concludes that most businesses will enjoy the benefits of broadband linked communications service by 2010 anyway, since British Telecom will have to replace many local loop networks in the next 20 years. Further, the report claims that the average household would not be willing to pay more than UKP10 a week for additional TV channels, and, consequently, approximately UKP2,000m of the estimated UKP21,000m investment needed for a national grid would never be recouped. As regards job creation, David Rumble, head of the Telecommunications Strategy Group for PA Computers & Telecommunications, acknowledged that this was an area of intense political disagreement but maintained that the implementation of a national grid by the year 2010 would have a minimal effect on the long term creation of jobs. The two reports, The Infrastructure for Tomorrow, and Evolution of the United Kingdom Communications Infrastructure, are available from Her Majesty’s Stationery Office at UKP2.95 and UKP6.95 respectively.

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