Information society : agenda for action in the UK : evidence received after 31 March 1996 / Select Committee on Science and Technology.
- Great Britain. Parliament. House of Lords. Science and Technology Committee.
- Date:
- 1996
Licence: Open Government Licence
Credit: Information society : agenda for action in the UK : evidence received after 31 March 1996 / Select Committee on Science and Technology. Source: Wellcome Collection.
59/324 page 361
![23 April 1996] [Continued Lord Gregson contd. ] important to understand the constrictions that you are working under. I still do not have a clear picture. (Dr Rudge) 1 think the constraints pinch in a number of ways but let me describe one which affects the network itself, the asymmetry constraint. We are looking at a new market which does not yet exist. It has only been over the last three or four years in particular when we have decided that our policy has to be to develop the market as well as develop the network capability. Because we can only justify the network investment based on the existence of an active multimedia market environment and that is not yet there. In examining the emerging marketplace, and considering how to address it, we have to look at all of the elements that exist at the moment. One of the most obvious targets has been the broadcast tv entertainment market. When you look at the prospect of moving into interactive services, which is the services we are particularly interested in, and you are addressing customers needs, you find that probably the best package to attract them is a mixture of services. It involves some broadcast content, with the ability to switch into interactive services, and these two things have to be integrated. Digital technology gives you _ the opportunity to do it technically but the regulatory environment would not allow us to provide it today as a package of services. We would be able to do the interactive bit but not the broadcast. This is a definite disadvantage when you are trying to put together a business plan which justifies an investment against a very risky non-existent market at the moment. So after taking all the risks into account and being constrained into only providing a part-service the sums do not add up very well. That is one example of regulatory constraint. I will give you another one and that is at the moment BT is under review in terms of its price cap. You can look at the profits on today’s mature telephony product and say “those are high profits therefore we ought to squeeze them down and put a large price cap on BT.” But it is these profits that are funding the more risky developments in multimedia services. The future is being funded on the basis of today’s mature product. That would be true in any company, it is just that it is a large scale example in the case of the telecoms business. I think that has to be borne in mind when those price caps and other regulatory constraints are considered. | can give you a third example and that is we are constrained at the moment in the use of radio technology. There are many applications where we would want to get telephony and multimedia services to a diverse and well distributed population where the economic way of starting would certainly be to use radio technology. For some considerable time we have been battling over access to some spectrum to do this. This is another example of regulatory constraint. I do not blame it all on the regulator incidently, I am just saying that the environment is changing so rapidly that you cannot put regulatory pegs in the ground and leave them there for ten years and believe that you are doing the sensible thing. 506. But one other aspect of this that worries me is that you are the only organisation in the United Kingdom that has got the switching capacity to deal with things like interactive television or interactive services. Would it not be an enormous waste to duplicate your switching capacity just to provide competition in certain areas? This worries me. (Dr Rudge) | think this is rather a deep question and perhaps it is not one on which BT’s view would be well respected because self-interest would be seen to be too strong. That is a judgment you have to make. We have a huge investment not only in switching but in the local access network and to duplicate that totally in the interests of competition with something which is virtually the same technology is questionable. I think I will leave it there. Lord Butterworth 507. From what you have said I think there is an implication, is there not, that the regulations are adequate to deal with a national competitive situation but you have described a market which is international? Is it possible for a national regulator successfully to operate in an international field? Do you see in the future regulations still being nationally organised? To what extent would you regard the European Union as having a part to play in regulation? (Dr Rudge) Perhaps I could ask John Butler to say a few words on that. (Mr Butler) 1 think it is probably best to think of regulation at three levels. First of all there is the discussions that are going on in the World Trade Organisation at the moment looking at multilateral liberalisation of telecommunications. When you are thinking about liberalisation of telecommunications regulation goes with it, because no market in the world is fully liberalised, it is always regulated. So one of the key issues in the WTO negotiations, which are due to finish at the end of this month, is the regulatory conditions that countries subscribing to WTO will adopt. If those negotiations go successfully we may well have an overall view of what the regulatory regime ought to be on a worldwide basis, at least in those countries that have subscribed to the WTO process. 508. The body that you mention has the authority to apply regulations worldwide? (Mr Butler) Correct. Assuming that the countries concerned have joined that body, yes. In the case of the European Union, the European Union is the body that negotiates with the WTO on behalf of Europe. Offers have been made to the WTO by the European Union on the scope of regulations in the future based upon the package that has been put together by the EU for the liberalisation of European telecommunications from | January 1998. A similar offer has been made by the Americans and we are hoping that the Japanese and others will make offers too. The European Union, therefore, will also legislate for telecommunications regulation but that legislation will probably be fairly vague in the way that it is written and provide a degree of scope for national regulators to interpret that legislation in different ways. The framework will be set at the European Union level but individual national regulatory agencies, such as Oftel, will interpret it in each country. We have a concern that that may lead](https://iiif.wellcomecollection.org/image/b32218631_0059.jp2/full/800%2C/0/default.jpg)
