Cable rival reveals its portable weapon

'Keep the same number' experiment will shake BT, says David Porter

The streets of Derby will be the focus of a battle in coming weeks that may mark the thin end of the wedge in tackling British Telecom's domination of the residential telephone market.

Last week, Nynex, Britain's second largest cable operator, announced it would offer telephone number portability to Derby's 86,000 homes, removing at a stroke the inertia that prevents many from switching from BT to cheaper operators.

No more hassle in telling friends and family the new number, none of the expense of changing stationery - you just take your old BT number with you.

The experiment, which was hailed by industry watchdog Don Cruickshank as "a milestone on the road to effective competition in UK telecommunications", will shortly be rolled out around the UK, with an estimated pounds 1bn saving to customers over 10 years.

Nynex's 15 other franchise areas, covering 2.5 million homes and 167,000 businesses from Bolton to Bournemouth, will benefit by August. Telewest, the biggest cable operator, with 4.7 million homes in more than 30 areas, will start in the autumn.

BT was privatised in 1984. Despite the entry of the likes of Mercury, it still has 85 per cent of the market. It is, however, losing 50,000 customers a week to cable operators, and this is likely to accelerate. "It will provide a kick start to the cable operators," said analyst Jo Oliver, of broker NatWest Securities.

Research by the Consumers' Association has shown that 70 per cent of BT customers would be tempted to move if they could keep their telephone numbers.

New Nynex residential customers wishing to retain their old BT numbers will be charged a one-off fee of pounds 19.99, (pounds 40 for businesses) plus a connection charge of between pounds 25 and pounds 50. However, call charges are 25 per cent below BT's standard tariff.

The company has already captured a quarter of the home phone market among those cabled up in its areas. Telephony services also account for more than half of UK cable operators' total revenue, and the proportion is set to rise.

It has been a long haul to Derby, however. BT was understandably dragging its feet, and a clash with the regulator, Oftel, was only resolved last December by the Monopolies & Mergers Commission. It ruled that BT should pay 70 per cent of the costs involved, while cable operators paid the rest.

Mercury, owned by Cable & Wireless, said that it had lost at least pounds 211m of revenue in the three years before the MMC report, but believes battles with BT are far from at an end. "It has taken 10 years for limited telephone number portability to come about. It only covers single exchange lines, and BT still has control over blocks of telephone numbers to business users. Companies cannot retain their direct dial numbers if they switch from BT," a Mercury spokesman said.

However the Scottish Office showed the way ahead when it retained 10,000 direct dial numbers after switching to Mercury.

The ultimate aim of the regulator is to see full telephone number portability across the country. "More competition will result in greater efficiency among operators," a spokesman said. "There will be fewer misdialled calls, fewer updates to telephone directories and fewer directory enquiry calls."

Specialist operators are springing up to offer a telephone number for life. St Albans-based Telecommunications UK offers this service through a 07000 number prefix. It charges a one-off pounds 125 fee plus a pounds 36 annual service charge.