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Why BT's plans are on hold

MCI's deal in the US with Rupert Murdoch's News Corporation will let it broadcast TV signals over telephone lines - something that BT, which holds a 20 per cent stake in MCI, would dearly love to do in Britain. It has the technical expertise to send radio and TV signals down phone lines: using that, it could compete for advertising revenue with commercial stations.

But the British government has always banned BT from broadcasting (that is, sending signals simultaneously to many receivers), because radio and TV stations would not be able to fight back by offering phone services. In 1991, the Government extended its restriction on broadcasting to 2001, though it may review it in 1998.

However, in the past few years an extra element has entered the equation: cable television companies, aided by tax concessions, are providing TV channels such as Sky, as well as competing with BT to sell phone services.

BT has said repeatedly that this skews the market against it; the Government's answer is that it gives the fledgling cable companies a chance to establish themselves. But most are in fact owned by American telephone companies which are comparable in size with BT.

BT does not expect the MCI deal to change government policy overnight. But it suspects it might eventually lever open a door that has long been closed.

"Whatever happens in the US gets watched very closely by the British government," says Peter Cochrane, head of BT's research and development division. "The present situation in the UK is ludicrous. When we go to the US it's hard for us to get our way.

"The US government certainly doesn't do us any favours. Then back here the Government encourages foreign companies and clobbers us. We just want an equal basis for our global aspirations." CA