View from City Road: Hard lines for besieged BT

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The Independent Online
BT is used to being clobbered by the regulator, so Oftel's latest judgement in favour of the fast growing cable television industry should not have come as any great surprise. The way things are going, however, its senior executives must begin to wonder whether they will have any domestic franchise left at all by the turn of the century.

Up until now, customers wishing to eschew BT in favour of cable telephony have had to change their telephone numbers. Oftel yesterday announced that number portability would be introduced as soon as possible, ending this anomaly in the marketplace.

Undoubtedly this is a bad blow to BT. Even without number portability, cable is proving a powerful threat. Backed by foreign groups with deep pockets and able to offer both telephony and television in their franchise areas, cable companies have been making deep inroads into BT's traditional monopoly.

Lack of number portability has been a significant barrier to entry. Videotron salesmen reckon they lose half those prepared to sign up after revealing that it will require a new telephone number.

This makes all the more remarkable the success achieved by cable so far. The competitive threat to BT, which was already serious, now looks that much worse. The number of cable telephone subscribers is already growing by 40,000 a month.

Many believe the 4 million telephone subscribers predicted for cable by the Cable Television Industry Association by the end of the decade to be a severe underestimate. That's around 15 per cent of BT's domestic customer base. With some individual cable franchisees predicting 40 per cent penetration within their franchise areas, there seems little BT can do to stop the cable juggernaut.

Oftel is determined to do everything it can to help cable succeed. Privately BT has already resigned itself to loss of a significant proportion of its domestic customer base.

'It might prove easier if we just gave these subscribers to the cable companies', one executive muttered with an air of desperation now commonplace at BT.

Tightening of the regulatory screw seems never ending. Managers already demoralised by deep job cuts find it increasingly difficult to come to terms with. Responding to the demands of the regulator seems a thankless task. Success merely results in the regulatory playing field being tipped yet further against them.

For a company so constrained and browbeaten at home, the only way forward is to expand overseas. Though Iain Vallance, chairman, seems to have found his feet in the drive for an overseas business after some spectacular false starts, the cost is high and the returns so far entirely unproven and unknown.