TELECOMMUNICATIONS SERVICES: LIBERALISATION MEASURES (Hansard, 15 June 1989)

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)

I have received advice from the Director General of Telecommunications following a major consultations exercise which he undertook earlier this year. I am very grateful to the director general and his staff for the thorough and professional way they carried this out.

I have decided to accept the recommendations the director general has made to me for changes to the current regime for the provision of telecommunications services using the networks of, or circuits provided by, a fixed-link public telecommunications operator (PTO)—that is, British Telecommunications plc, Mercury Communications Ltd. or Kingston Communications plc.

The first and most important of these is that I have decided to liberalise entirely the use made by companies of private circuits domestic to the UK leased from a PTO. Until now, companies leasing circuits have not been permitted to resell capacity to others or to share it with them. This prohibition arose from the fact that the price of private circuits 1633WA leased from BT was historically below cost and provided significant opportunities for the use of leased lines to bypass the public network, to the detriment of the ordinary user. For this reason, the operating licences of the PTOs prohibited until 1st July 1989 the use of leased lines to provide simple resale—that is, the routeing of a call from the public network, over a leased line and back onto the public network. This was intended to allow for the rebalancing of leased line and network charges.

This rebalancing has now largely taken place within the UK, and I see no need any longer to prevent companies making use of leased lines however they choose, whether for voice or data services. I therefore intend to issue a licence permitting simple resale of UK domestic private circuits as well as other forms of resale, bypass and shared use. Those networks connected to the public switched network (PSN) will continue to be subject to the rules on technical quality standards.

Although considerable tariff rebalancing has taken place on circuits within the UK, international tariffs are still out of line with costs. I have therefore decided to retain the current prohibition on international simple resale for the time being. However, I have accepted the director general's recommendation that he should keep the situation under review and advise me as and when further liberalisation is justified. The new licence will therefore be drafted in such a way as to allow me to liberalise international private circuits on a case by case basis as opportunities arise.

The director general has also recommended other major changes to the existing licensing regime. In the light of his experience in administering the fair trading rules in the current value added and data services licence, he has recommended that they be simplified in operation and more clearly targeted on companies likely to abuse a dominant position. Thus companies which the director general considers dominant, with large businesses in telecommunications services, will continue to be covered by the present rules against cross-subsidisation, showing undue preference or discrimination and other detailed conditions. However, those rules in the current regime which impose a heavy cost and which may deter people because of the difficulty of compliance are to be removed. These include the rule on publication of prices, which is in abeyance already. Conversely, rules which are of value to users, such as those on privacy and confidentiality, metering and numbering are to be applied to all operators, rather than just the largest.

I have also accepted the director general's advice that the new licence should include a condition aimed at alleviating the nuisance to the users of the telephone, fax, or other telecommunications systems caused by persistent but unsolicited attempts to sell products and services. Sellers by telephone or fax, or those acting as their agents, will be required by the new licence to stop making these direct sales calls to any particular user of a telecommunication system when he has given them a written instruction to do so.

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Other changes which are to be made include provisions allowing greater flexibility for installers, maintainers and users of call-routeing apparatus, the reduction to 42 days of the minimum period for the termination of maintenance contracts and the introduction of a requirement to provide inductive couplers in emergency telephones in lifts. Although the limit of 200m for the provision of privately provided circuits between buildings will be retained, service providers will be permitted to run these systems on others' premises and the procedure for permitting exceptions to the 200m rule (where justified) will be simplified.

I believe these changes will add greatly to the freedom and the flexibility of telecommunications operators in the UK, and will keep the UK in the vanguard of telecommunications liberalisation both in Europe and worldwide. I intend to bring these changes about by issuing a new branch systems general licence during July. This will replace both the existing branch systems general licence and that for value-added and data services. My department and the Office of Telecommunications are currently finalising the details of the new licence and I shall inform the House when it is to be issued.