Emotional language has been bandied about over the last few weeks, as the deadline passed for responses to the government’s consultative document on the future of telecommunications. The Scottish Development Agency warned of cherry-picking, in a repetition of the arguments for not privatising British Telecommunications Plc in the first place – that private companies are solely interested in making profits and not in providing a comprehensive service. Unfettered competition would result in a patchy level of service, says the Scottish Agency, and to save rural areas from being left out of the multiplicity of new services it says that companies licensed to provide local telephone services should have a requirement to make their services available to a stated percentage of potential users within a given timeframe. This view is supported by mobile telecommunications companies that already have licences obliging them to cover the whole population. Unitel, a Personal Communications Network operator, says selective service coverage is cream skimming and warns that it could occur in the proposed Telepoint-to-the-home services unless safeguards are built in. The Telecommunications Managers Association, on the other hand, wants to make market entry for new players as easy as possible, to encourage firms to take up telecommunications opportunities. The Managers’ lobby has therefore argued that existing companies should be made to share wiring ducts, as well as any other civil engineering structure that may be of use to new entrants. British Telecom, of course, is enraged at the suggestion that it might share any of its infrastructure inheritance with anyone but its shareholders, and Iain Vallance has called for the abolition of what he calls favourable market entry devices. Vallance claims that these only buffer foreign monopolies. Especially Telecom’s greatest potential competitors, the US Baby Bells, which have been making considerable investments in the UK cable television market. Although it welcomed most of the Review, consultancy consultant Systems Dynamics is on British Telecom’s side when it comes to cable TV, and says that if Telecom is not allowed to carry entertainment television it will not invest in multimedia telecommunications. The result, says Systems, will be a competitive, but obsolescent local distribution network. For its part, the Cable Television Association has rather ambitiously stated that British Telecom should not be allowed to carry television for 15 years. And it adds that an alternative local loop service, will bring the benefits of competition, to the long neglected residential and small business consumer. And the row between British Telecom and the Office of Telecommunications industry regulator over the future shape of the industry is becoming focused on the two main protagonists, Telecom chairman Iain Vallance and the director general of Oftel, Sir Bryan Carsberg. Both sent letters to the Financial Times last week, Vallance setting out his opposition to price-capping and Carsberg in reply. Iain Vallance’s letter appeared in the paper a week after British Telecom published its agressive response to the government’s consultative document on telecommunications. The consultative document was published by the Department of Trade & Industry with Office of Telecommunications advice and in a previous letter Vallance made it clear that he was completely opposed to its proposals. In the letter, Vallance concentrated on the issue of distinct price capping for international services, something that British Telecom vehemently opposes. Vallance writes that Oftel’s proposals on separate price caps for international services, together with the government’s apparent endorsement of equal access, undermine the understandings and the conditions under which the current pricing agreement was reached.
Personal
If the game is to be radically changed, then the rules need to be reviewed in their entirety. In answer to the charge that the game is being changed, Sir Bryan says that equal access has been avai
lable under Telecom’s licence since 1984 – international price caps were introduced in 1988. And he says the international capping arrangement, which keeps Telecom prices 4.5 points below the rate of inflation, explicitly contemplated the introduction of a control on international prices. The letters put the row between British Telecom and Oftel on a personal footing. Talking about Vallance and price caps Sir Bryan refers to the agreement I made with him. Sir Bryan also acknowledges that the tension between Oftel and British Telecom has reached extraordinarily fraught levels. He begins, I do not believe that a regulator should normally conduct exchanges with his regulatees through the correspondence columns of newspapers.
