View from City Road: World lies in wait for BT and Mercury

Four of the six companies just awarded UK public telephone licences by the Department of Trade and Industry have their sights set firmly on the international call market.

This is where, until now, BT, with the bulk, and Mercury, with a 20 per cent share, have accounted for all but a few per cent of lucrative traffic to and from the UK. The heat is on.

Telstra and Telia, two of the new licensees, are respectively the state- owned operators in Australia and Sweden and both are on the road to privatisation and hungry for new markets.

Sprint and WorldCom are already big players in their native North America and around the world.

All this bodes ill for BT and Mercury and well for consumers. But the stumbling block - interconnection between BT and its rivals - remains.

The growth of competition assumes that customers can physically link into the new services, and, apart from very large companies that can lease private lines to access the new operators, customers will mostly have to link via BT.

While BT is obliged to interconnect to rival operators, the terms under which it does so remain a notoriously difficult issue.

But the pressure for easier access will now mount inexorably. If BT thinks that more competition might mean less regulatory pressure, it must think again.