If this was Christmas presents for all, then both British Telecommunications Plc and Mercury Communications must have woken up this morning and decided that Santa Claus does not exist: Industry Secretary Peter Lilley’s consultative document Competition and Choice: Telecommunications Policy for the 1990s would effectively end the present duopoly policy. Applications for licences to run telecommunications systems at the local, trunk and international levels would be granted unless there were specific reasons to the contrary, and these new licences would not have to meet the universal service conditions imposed on British Telecom. At the local network level the government wishes to encourage cable television companies to provide telecommunications as well as entertainment services and so the Director General is reconsidering the restriction on cable companies which currently says that voice telephony can only be provided in conjunction with British Telecom or Mercury. However, British Telecom and other national public telecommunications operators will not be allowed to provide entertainment services until 10 years after the duopoly review, although if the Director General sees fit this 10-year limit may be brought forward to seven years. As for trunk networks, the government says it would be inclined to consider favourably applications for new licences to run such networks. The principle of equal access would be introduced gradually with digital exchanges such access could be implemented quite fast once the relevant software had been developed, says Sir Bryan Carsberg, but where analogue exchanges are in existence, these areas will have to await modernisation before equal access can be imposed. In the private sector Peter Lilley is proposing that the utilities should develop their assets for telecommunications purposes. In the international telecommunications arena the Director General is seeking to impose a price cap on British Telecomm’s international services. The lifting of restrictions on the ability of companies to compete with British Telecom and Mercury by leasing circuits from them and reselling them to third parties is also being considered. Sir Bryan believes that restrictions on the participation of foreign countries in the UK telecoms market should also be lifted. Reciprocity agreements from such countries will not be required at first – but Lilley said that the government will continue to work through GATT to open up international telecom operations.
Two-way satellite
However, he was adamant that the duopoly policy will end for international telecommunications as elsewhere. British Telecom will not be allowed to further restructure its prices as it would like to recover more revenue from rentals and connection charges and less from calls – its present price constraints will remain in place until they are reviewed in 1993. A major liberalisation of two-way satellite services is also proposed. Lilley would not be drawn on whether legislative backing would be required to force Mercury and British Telecom to modify their licences in conformance with the document if they refuse to do so willingly. Sir Bryan said he would refer the matter to the Monopolies & Mergers Commission if the two proved obdurate in the matter. When asked if British Telecom was being punished by the recommendations, Lilley replied that the built-in asymmetry of the proposals meant new competitors would enter the market which will expand so that everyone may gain. A similar answer was given in response to criticism that the possible free for all resulting from the proposals would hurt Mercury and other smaller competitors more than British Telecom.
