BT to get early release from bar on broadcast TV

The Government is to start early talks with British Telecom aimed at allowing the telephones giant to move swiftly into entertainment broadcasting.

Any such dispensation would end the long-standing ban on BT broadcasting entertainment across its telephone network, a restriction it has claimed has prevented it from investing billions of pounds in high-capacity fibre optic cables.

In an interview with The Independent, Chris Smith, the National Heritage Secretary, yesterday indicated Labour would fulfil the promise it made in opposition two years ago, that BT would be allowed to compete with the cable television industry sooner than 2001 when the ban is due to be reviewed. In return he would expect BT to fulfil it pledge to connect schools, hospitals and libraries to the so-called information superhighway free of charge.

He said his department and the Department of Trade and Industry would talk to BT about the proposals in "the near future". Mr Smith added: "We did set out a couple of years ago a set of proposals that enabled BT to have access to an entertainment market on a somewhat faster time scale than is envisaged in the current legislation. Those proposals are still on the page, so to speak. We'd want to begin discussions in the relatively near future."

Under the agreement, Mr Smith said BT would be committed to developing a "broadband network as near to nationwide as we could achieve". He estimated that such a project could cost BT as much as pounds 10bn, though the company has previously said this would total pounds 15bn. It currently invests some pounds 2bn a year.

A BT spokesman said yesterday: "This reaffirms Labour's commitment to the findings of the Trade and Industry Select Committee which said the ban should be lifted earlier."

However, the news will upset the cable companies and could lead to conflict with the industry regulator, Don Cruickshank. Both have argued that the ban was the only way to encourage rival operators to invest billions of pounds in developing networks. There are also question marks over BT's commitment to invest heavily in laying fibre optic cables to homes. Last year it experimented with a television service to 2,500 homes down its existing copper phone wires, but the digital technology needed to make it work is expensive.

Referring to the development of digital television, Mr Smith said the Government had a more "pro-active" role to play. While he would not be drawn on specific policies, he commented:

"We do need to put some thought into how digital television is being promoted by the Government and what sort of access people are going to have to it."

He said he would be formulating proposals within the next few months, and added: "My aim will be to find the best possible ways of ensuring that ordinary people sitting at home can have the quickest and cheapest access to digital television technology. We have to set the parameters of public policy in a way that enables that access to be achieved."

He also said that he had no immediate intention of relaxing cross-media ownership legislation, contrary to some expectations.