Telewest ponders plan for national network licence

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The Independent Online
Telewest, Britain's leading cable operator, is weighing plans to apply for a national network licence, becoming a wholesaler and a retailer of telephone services in its franchise areas.

The news emerged as the company confirmed it would undercut BT's standard charges by 10-15 per cent from 15 July, as part of an aggressive pricing policy aimed at winning new business from BT.

A national network would allow Telewest to provide services to other companies in its extensive franchises, which covers 3.7 million homes.

International CableTel, the country's third-largest cable operator, bought NTL, the television transmission company, earlier this year, as a move towards creating a similar national network for telephony services.

Telewest's new residential pricing scheme, first revealed in the Independent earlier this month, includes an undertaking that the company will beat BT on all residential phone calls, barring "one-off" discounts such as BT's "surprise special".

It is also offering a 20 per cent discount on bills over pounds 20 a month, not counting line rental. It is expected to introduce number portability in the autumn, in a further move to attract new customers.

Alan Michels, chief executive, said: "We want to make it easy for our customers. We're not going to confuse them with special offers, or schemes to join every few days or weeks."

His comments were directed at BT, which has offered a range of discounts, including its Friends and Family scheme, in response to aggressive pricing from the cable companies.

"Our discount schemes make our service very competitive," a BT spokesman said. "Far from being confusing, they are very straightforward."

The residential and business telephony markets have helped to fuel cable's growth in the UK. According to a report by Kleinwort Benson, published this week, Telewest is "now in a position to start building a national brand previously lacking in the UK". Kleinwort argues that new services, such as high-speed Internet access, will generate additional revenues, and sets a target price of up to 250p a share, compared with last night's close of 167.5p.

Telewest is also moving ahead on the cable television front, confirming yesterday it would offer the new Sega games channel in the UK. Owned by Sega, Time-Warner and TCI, the channel is distributed in the UK by Flextech, the pay-TV programmer. It will also be launched on the Continent.

Subscribers will be able to download and play up to 25 games a month for a fee of pounds 10. They will need a Sega Mega Drive system, a cable link and a connecting adaptor.

Roger Luard, chief executive of Flextech, said the new service would be rolled out by other UK cable companies in coming months. Telewest and Flextech have a common parent, TCI, the giant US entertainment and distribution company.

Meanwhile, Flextech said yesterday that negotiations with Rupert Murdoch's Fox entertainment arm about the sale of a stake in the Children's Channel, had ended "amicably." Fox had been discussing the purchase of a 50 per cent stake in the Flextech channel, which now may be offered to other broadcasters.

While Flextech declined to comment, it is understood that Cox Communications and Pearson could be potential partners.