UK accused of hindering competition

Date: 10/07/1997

By Chris Johnstone

A BATTLE is looming between the UK and other EU member states over how and when some measures paving the way for full telecommunications competition should come into effect.

Unusually for a country which has been in the vanguard of liberalisation, the UK government and its dominant phone company British Telecom (BT) stand accused of slowing down the pace of competition and acting to protect their domestic market on the issue of carrier pre-selection.

This allows callers to use different telephone companies for local and long distance calls and pre-programme their handsets to switch automatically between firms.

Carrier pre-selection has become one of the most contentious issues ahead of the opening of most European telecoms markets to full competition in January 1998. This stems partly from an almost theological argument between countries over whether pre-selection boosts or slows down competition between phone companies.

Germany and France, who will both phase in carrier pre-selection from January next year, argue it boosts competition by allowing callers to divert phone traffic in advance to their preferred carrier and away from the established dominant operator.

But the UK claims it is a brake on competition because callers are likely to stick to their pre-selected carrier and rival firms offering local calls could see part of their lucrative international traffic being siphoned off.

London argues this could discourage investment in alternative local lines in the long run. “The main worry with pre-selection is that it does not encourage that local investment. It gives the customer a partial choice on some aspects of telephone use but not a full choice,” said a spokesman for the UK's cable companies.

Critics suggest, however, that London is taking its line from BT, which wants to put off pre-selection on its home ground for as long as possible despite welcoming the change in the rest of the EU.

Telecoms ministers were divided over the issue at their June meeting and asked the Commission to draw up proposals to tackle the problem. These are expected in September.