Britain in danger of falling behind on cable network: Select committee criticises government for lack of vision and enthusiasm

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The Independent Online
THE GOVERNMENT yesterday came under fire from the Trade and Industry Select Committee for its lack of vision and enthusiasm in the creation of information superhighways.

Publishing their report on fibre- optic cabling, the MPs said that Britain was in danger of falling behind the US and the rest of Europe. They want ministers to help create the conditions for a national fibre- optic network that can deliver services, from interactive television to remote medical services, home shopping and education.

The MPs called for a gradual end to a government ban that prohibits BT from offering entertainment down its telephone lines. They want the company to invest pounds 15bn in a high-capacity network to homes, businesses, hospitals and schools.

Keith Hampson, a Conservative member of the committee, said: 'Having stimulated cable, the important thing is to unlock the huge potential of BT. BT does need a certain degree of certainty if it is to put in such huge investments and the current framework does not offer that at all.'

The ban on BT was imposed in 1991 and lasts until at least 2001, with a possible review in 1998. It is intended to protect the cable television industry, which plans to invest pounds 10bn by the end of the decade. It is also now seen as BT's main rival in local telephony.

The report was published as BT announced a 3.2 per cent increase in pre-tax profits to pounds 781m in the first quarter of the year, after a redundancy charge of pounds 54m.

The Government is expected to reject the report's main recommendations. Whitehall sources said there was no intention of changing the system. The regulator, Oftel, also believes that there is no case for an early end to the ban, and that there may not necessarily be a reason to lift it in 2001.

The report also fell short of BT's expectations as it recommends only a phased lifting of the ban, with protection for cable franchises for seven years after licences are issued. Although the report says that after 1995, BT and other telephone companies should be free to offer any service they wish in areas where no cable franchise has been awarded, it does not recommend an open market until 2002.

BT says that it is not interested in building a piecemeal network. The company also said that much depends on the response by the Government and Oftel.

The Cable Television Association said it was pleased at the recommendation for a seven-year protection for all new franchises.

Separately, BT said that it will announce price cuts of up to pounds 500m over the next few months and would keep up its onslaught on the competition. The company also said that it is on target to make 15,000 job cuts this year at a cost of pounds 750m.