Racal takes the plunge into Internet business services

Racal Electronics yesterday became the latest UK company to plunge into the exploding market for Internet business services, announcing a plan to connect government departments and private-sector clients to the global "network of networks".

The news followed confirmation earlier this month that BT, in league with its US partner MCI, planned to spend pounds 300m upgrading their network to supply businesses with Internet connections. Cable companies are also developing Internet services for their telephone customers, and at least two operators plan to develop national networks to support telephony and business applications for the Internet.

Telewest Communications, the country's largest cable company, is considering applying for a national network licence, and will be rolling out cable modems later this year, targetting business customers.

The third largest cable operator, International CableTel, bought transmission company NTL earlier this year, promising to develop a national network. The US telephone giant AT&T is also planning to provide business Internet services in the UK and on the Continent.

Under chairman Sir Ernest Harrison, Racal has been aggressively expanding its telecommunications business. The company spent pounds 133m late last year to buy British Rail Telecommunications, a network of 5,000 miles of trunk cables and 7,000 miles of distribution cable.

The Internet market currently boasts about 20 million users worldwide, and analysts forecast rapid growth in the next five years. The network is particularly attractive for clients looking to communicate not only internally but with suppliers and customers across the globe.

Racal also announced yesterday that a consortium in which it has a leading role had won a multi-million pound contract to reconfigure the Ministry of Defence's accounting, financial management and planning systems. The contract, part of the Government's resource accounting and budgeting initiative, known as Capital, will see Racal Datacom design and supply infrastructure and cabling for the new system, in association with management consultancies Deloitte and Touche and Coopers & Lybrand.