BT to barter over video: MPs will be told that creation of new network depends on lifting ban

SIR IAIN VALLANCE, chairman and chief executive of British Telecom, is to step up the pressure on the Government to scrap the ban that stops BT offering 'entertainment' services until 1998 at the earliest.

At the start of March, Sir Iain will give oral evidence to the Select Committee on Trade and Industry, which is investigating the practicability of creating a national fibre-optic network that extends to individual homes and business premises.

He will tell the committee that BT is prepared to create a fibre-optic network which covers the local loop - the copper wire connection between BT's main networks and every property - at an estimated cost of pounds 15bn. However, it will only do so if the Government agrees to let it provide a range of broadband services.

BT and Mercury, the telecommunications subsidiary of Cable and Wireless, have already given the committee written evidence on the subject. In the past, they have both argued that the cost of installing optical fibre at local-loop level cannot be justified. Instead, they have studied the possibility of extending their fibre-optic trunk networks to street level and covering the last lap, to homes, with radio waves. This would be much cheaper.

However, BT now seems willing to invest in optical fibre right up to consumers' doorways, to avoid being left behind by cable television operators. The cable companies have been building fibre-optic broadband links into individual premises. They have a monopoly on providing cable TV services until 2001, although this is subject to review in 1998. They are also free to provide telephony, giving them a dual income stream.

Sir Iain will be seeking similar rights to supply broadband services. According to a BT spokeswoman, the group will be looking for permission to supply interactive educational facilities, home banking and direct shopping. However, it also wants the restriction on providing television removed - or at least a clear indication it will be lifted soon. 'BT believes that the technology has moved on so far that the original timescale is now out of date,' she said.

'You don't spend pounds 15bn without plans to recoup your investment.'

The committee - whose terms of reference include assessing the importance of a national optical fibre grid that extends to individual homes and businesses, and considering what system of regulation would be most suitable - is not expected to reach a conclusion for some time after taking evidence.

(Photograph omitted)