21712 - SCTE Broadband Nov2022 COMPLETE v1

72 Vol. 44 No. 4 - November 2022 Issue from the archive This article from the June 1991 issue of CTE was, at that time, incorporated in the International Cable Magazine. Arguably it was a milestone in the progress in cable in the UK since it allowed cable operators to own their own telephony customers and provide local loop access. By Alan Burkitt U.K. Government opens lines for cable in telephony .K. Government opens li c le i tel phony By Alan Burkitt T he U.K. Government's review of the telecommunica- tions duopoly opened up opportunities for the cable TV industry. But at the same time, questions have been raised about how profitable telephone services will be. The United Kingdom is unusual among industrialised countries in having two licensed telecommunications compa- nies that, in theory at least, can offer local, long distance and international services to any customer nationwide. Competition victory for cable Following the duopoly review, other companies will be able to compete in the market. No legislation will be needed. In its White Paper that announced the new policy in March, the Government says "it will consider on its merits any application to offer telecommunications services over fixed links within the United Kingdom." However, "it is unlikely to grant new international operating licences in the short term." This seems to imply that North American telephone com- panies currently investing heavily in U.K. cable and telecom- munications will be unable to offer direct links across the Atlantic. For the cable industry, the review "delivered virtually everything we hoped for," says Nicholas Mearing-Smith, chairman of the Nynex-backed Britannia Cablesystems, which has six franchises ultimately covering 643,000 households. Construction of the first is due to start in June. Just as important, the review demonstrated the Govern- ment is seriously committed to the cable industry's role in providing local telephony, Mearing-Smith says. The cable industry's biggest victory was in securing a commitment from the Government that British Telecommuni- cations will not be allowed to compete in its own right with cable operators until March 2001. That restriction also applies to the other member of the duopoly, Mercury Communications Ltd. Also covered is Kingston Communications (the company owned by the local authority that runs the phone network in the northern English city of Hull) as well as any new national telecommunications operators. Disappointment for BT, Mercury The decision, though not unexpected, came as a disap- pointment to BT, which is believed to have had advanced plans to build optical fibre networks to deliver entertainment to customers alongside local telephony. "The review demonstrated the Government is seriously committed to the cable industry's role in providing local telephony." BT and other companies will, however, be able to tender for local cable licences in competition with other applicants. The Independent Television Commission would consider such applications. The 10-year blanket ban on nationwide competition could be lifted three years early, but only if the industry watchdog, the director general of the Office of Telecommunications (Oftel), believes that it would enhance the competition. In other words, if the cable industry fails to deliver satis - factorily, BT, Mercury and other licensees could be allowed to compete. With BT out of the way in the cable business, cable oper- ators are, at the same time, much freer in the way they can compete with it in the telephony business. Following the duopoly review, there is no requirement to offer telephony only in association with BT or Mercury — which effectively has meant with Mercury. There is no need for a ruling from Oftel as telecommuni- cations is introduced in each part of the franchise. Now, operators can roll out the service gradually. And there is no longer a universal service obligation (at least until a company has 25 percent of the market), though tariffs must be pub- lished and customers must be treated fairly. Adjacent franchises now can be linked for telecommuni - cation services, irrespective of size and overall ownership. That means a phone company with an interest in neighbour- ing cable systems can run services across the boundary. Cable considers local loop The market most cable operators are looking at is the local loop. Mearing-Smith concedes that BT "probably has one of the best long-distance networks in the world." But he notes that the street cabinets carrying the local connections to individual subscribers "are an absolute rat's nest, which must cost a fortune to maintain." Mercury has built local networks in a few business centres across the country but is unlikely to go further. Bill Aitken, the company's cable operator marketing manager, explains that "to install local loops to just 10 percent of BT customers would require twice the total investment Mercury has made so far." Mercury will, therefore, mainly confine itself to the long - distance market, where it has concentrated since it went into business seven years ago. Its market share is only 4 per- cent, though it has 14 percent of international calls and an even better share (50 percent) of the obsolescent telex busi- ness. The market in which customers should be most sensitive to costs is the small business sector. It's also where busi- ness people are largely paying their own bills and where, in theory, cable operators should have the strongest potential. It's here that Mercury's record is dismal. No more than 85,000 small businesses and private cus- tomers have signed up for a special code to use Mercury's long distance and international service. At the moment, such customers must buy a special phone 4 0 J UN E / J U L Y 1 9 9 1 INTERNATIONAL CABLE U.K. Government opens lines for cable in telephony By Alan Burkitt T he U.K. Governm nt's revie of the telecommunica- tions duopoly opened up opportunities for the cable TV industry. But at the same time, questions have been raised about how profitable telephone services will be. The United Kingdom is unusual among industrialised countries in having two licensed telecommunications compa- nies that, in theory at least, can offer local, long distance and international services to any customer nationwide. Competition victory for cable Following the duopoly review, oth r companies will be able to compete in the market. No legislation will be needed. In its White Paper that announced the new policy i March, the Government says "it will co sid r on its merits any application to offer telecommunications services over fixed links within the United Kingdom." However, "it is unlikely to grant new international operating licences in the short term." This seems to imply that North American telephone com- panies currently investing heavily in U.K. cable and telecom- munications will be unable to offer direct links across the Atlantic. For t e cable industry, the review "delivered virtually everything w hoped for," says Nicholas Mearing-Smith, chairman of the Nynex-backed Britannia Cablesystems, which has six franchises ultimately covering 643,000 households. Construction of the first is due to start in June. Just as important, the review demonstrated the Govern- ment is seriously committed to the cable industry's role in providing local telephony, Mearing-Smith says. The cable industry's biggest victory was in securing a commitment from the Government that British Telecommuni- cations will not be allowed to compete in its own right with cable operators until March 2001. T t restriction also applies to the other member of the duopoly, Mercury Communications Ltd. Also covered i Kingston Communications (the company owned by the local authority that runs the phone network in the northern English city of Hull) as well as any new national telecommunications operators. Disappointment for BT, Mercury The decision, th ugh not unexpected, came as a disap- pointment to BT, which is believed to have had advanced plans to build optical fibre networks to deliver entertainment to customers alongside local telephony. "The review demonstrated the Government is seri usly committed to the cable industry's role in providing local telephony." BT nd other companies will, however, be able to tender for local cable licences in competition with other applicants. The Independent Television Commission would consider such applications. The 10-year blanket ba o nationwide competition could be lifted three years early, but only if the industry watchdog, the director general of the Office of Telecommunications (Oftel), believes that it would enhance the competition. In other words, if the cable industry fails to deliver satis - factorily, BT, Mercury and other licensees could be allowed to compete. With BT out of the way in the cable business, cable oper- ators are, at the same time, much freer in the way they can compete with it in the telephony business. Following the duopoly review, there is no requirement to offer telephony only in association with BT or Mercury — which effectively has meant with Mercury. There is no need for a ruling from Oftel as telecommuni- cations is introduced in each part of the franchise. Now, operator can roll out th s rvice gradually. And there is no longer a universal service obligation (at least until a company has 25 percent of the market), though tariffs must be pub- lished and customers must be treated fairly. Adjacent franchises now can be linked for telecommuni - cation services, irrespective of size and overall ownership. That means a phone company with an interest in neighbour- ing cable systems can run services across the boundary. Cable considers local loop The mark t most cable operators are looki g at is the local loop. Mearing-Smith concedes that BT "probably has one of the best long-distance networks in the world." But he notes that the street cabinets carrying the local connections to individual subscribers "are an absolute rat's nest, which must cost a fortune to maintain." Mercury has built local networks in a few business centres across the country but is unlikely to go further. Bill Aitken, the company's cable operator marketing manager, explains that "to install local loops to just 10 percent of BT customers would require twice the total investment Mercury has made so far." Mercury will, therefore, mainly confine itself to the long - distance market, where it has concentrated sinc it went into business seven years ago. Its market share is only 4 per- cent, though it has 14 percent of international calls and an even better share (50 percent) of the obsolescent telex busi- ness. The market in which customers should be m st sensitive to costs is the small business sector. It's also where busi- ness people are largely paying their own bills and where, in theory, cable operators should have the strongest potential. It's here that Mercury's record is dismal. No ore than 85,000 small businesses and rivate cus- tomers have signed up for a special code to use Mercury's long distance and international service. At the moment, such customers must buy a special phone 4 0 J UN E / J U L Y 1 9 9 1 INTERNATIONAL CABLE