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Watchdog investigates Telewest cables delay

Oftel, the telephones watchdog, has launched an investigation into plans by Telewest Communications, the UK's second-largest cable group, to delay the completion of its network for two years to cut costs.

Oftel is understood to be concerned that the delays, which will halve Telewest's pounds 500m annual investment budget, would be followed by similar cutbacks from other cable operators seeking to save money. Cable & Wireless Communications, the merged cable giant including Mercury, Nynex CableComms and Bell Cablemedia, is also thought to be planning to reduce investment in its UK network.

From next year Telewest has proposed slashing the number of additional homes passed by its cables each month from 40,000 to 5,000. The cutbacks, announced last week, include the loss of 1,400 jobs and the slimming down of Telewest's Working headquarters and regional structure.

The plans would involve delaying completion of some of its regional networks from 2001 to 2003, while the group would concentrate more on larger population centres. It is already further ahead with building its network, with just under 70 per cent constructed so far, compared with around 60 per cent for most other operators.

Oftel officials, led by Don Cruickshank, the telecommunications regulator, are debating whether to extend the agreed timetables, known in the industry as "milestones". The investigation also includes the Independent Television Commission and Department of Trade and Industry. However, in the early 1990s the regulator rebuked the industry for failing to invest quickly enough.

Oftel has been told the spending cuts are the only way Telewest can channel limited resources into encouraging more homes to take up the service.