BT's proposals would allow viewers to choose a video from a menu on the television screen and have it sent down the wire, for a price. BT, which has yet to put forward detailed plans, says that having video delivered would not prevent the telephone being used at the same time.
The Cable Television Association has written to the Department of Trade and Industry to ask it to stop BT going ahead. It says that it would be ridiculous for video-on-demand not to be seen as entertainment and that BT is exploiting a loophole in the regulations.
A spokesman for the CTA said companies that invested in the UK cable industry did so on the basis that there was a clear regulatory environment.' If BT can offer video-on-demand, it changes the whole risk profile of the industry,' he said.
He added: 'We believe that one of the reasons behind BT's interest in video is to rock the boat for cable by undermining investors' confidence in the cable sector.'
Over the past decade about pounds 1.5bn has been invested in the UK cable industry, most of it in the past two years. Cable television companies can offer telephone services in their franchise areas and are now seen as an important rival to BT in local telephony. The main players include large North American telephone companies such as Nynex, Bell Canada and US West. Other investors include Cable and Wireless, Singapore Telecom and Generale des Eaux of France.
BT acknowledges that cable companies are a growing threat. City analysts estimate that by the end of the decade the cable industry's revenues from telecommunications will be up to pounds 1.6bn. Analysts at Barclays de Zoete Wedd say that BT will be losing pounds 1bn in revenues to the cable sector by the year 2000, although it will recoup some of that in charges for connecting calls made on cable networks into the national telephone system.
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