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The BBC's Rory Cellan-Jones
"Gordon Brown does not have any powers to cut internet charges"
 real 28k

Anne Lambert, OFTEL Telephone regulator
"We want to bring unmetered access to consumers"
 real 28k

Friday, 18 February, 2000, 11:34 GMT
BT fears foreign takeover

BT's home page boasts of its numerous e-ventures


UK telecoms giant British Telecom says it has become a takeover target because its share price has been so depressed by comments made by Chancellor Gordon Brown.

BT's shares fell for a second day on Thursday, closing at 964 pence, 45p down on their price before Mr Brown called for internet connection costs to come down faster to help everyone make use of the web.


There will be no change ... without our agreement. That would anyway be a matter for Oftel and BT - not for the Treasury
Sir Peter Bonfield
BT chief executive
The stock is well below its 12-month high of 1520p and BT says it is now in danger of falling prey to a foreign bidder.

In a speech to City financiers on Wednesday, Mr Brown said that if web access charges were cut to US levels, this would accelerate the uptake of business and personal internet use, delivering the benefits of e-commerce to all.

He said he wanted to see current connection costs halved by the end of 2002.

BT responded by issuing a statement defending its performance in developing internet access and bringing down costs.

Opening up to rivals

Competition is being increased in the telecoms industry - on 1 July next year, the 'local loop' of copper wiring, which supplies homes and offices, will be opened up to firms other than BT.

This is expected to give a big boost to e-commerce.

Woman using Tesco website More and more internet ventures are being launched
Unmetered access deals for consumers - when a fixed fee is paid for internet connection rather than local rate phone charges - are already available.

But the chancellor is concerned that the UK is falling behind the US, and he wants to speed up the cost-cutting process.

So he sought to bring pressure to bear on the telecoms companies and the industry regulator, Oftel, to introduce competition faster, resulting in big price cuts.

BT anger

BT's chief executive, Sir Peter Bonfield, released a statement defending what the company was already doing to deliver low-cost internet access.

He said: "BT has had its Surftime package - the UK's first mass-market unmetered call scheme - on the table since December.

"It has not yet been introduced as we are bogged down in regulatory approvals which are much more complex here than in other countries.

"Opening up our local access network to our competitors is an entirely separate issue. BT shareholders own the network and BT not only needs to be consulted but to agree any timetable with Oftel.

"We have already agreed with Oftel a deadline of 1 July 2001 and there will be no change to this date without our agreement. That would anyway be a matter for Oftel and BT - not for the Treasury.

"The local network is not the only route to the internet. BT is a leader in the new wave and offers a range of exciting possibilities including interactive TV, mobile internet, WAP (wireless application protocol) and broadband.

"BT is already rolling out the biggest broadband (ADSL) programme in the world. By the spring we will have 400 exchanges equipped: no other major telecom operator comes close to the scale of this project."

Welcome

The Consumers Association welcomed Mr Brown's support for Oftel in its moves to open up BT's local lines to competition.

A spokesman said: "The Consumers Association has been calling for more effective competition in this area for many years. BT's virtual monopoly has stifled competition.

"The sooner companies can compete to deliver services to consumers, the sooner we will see cheaper prices."

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See also:
17 Feb 00 |  UK
Howww much does it cost?
10 Feb 00 |  Business
Japan gets cheap web access
07 Dec 99 |  Business
Q&A: Unmetered internet access
11 Nov 99 |  The Company File
BT's 'flawed' internet deal
07 Dec 99 |  Business
BT offers unmetered net access
19 Oct 99 |  UK Politics
Opinion: Abolish local call charges

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