UK Chancellor gives BT another good kicking

But share price rallies

Chancellor Gordon Brown is to take another swipe at BT amid criticism over the continued high cost of Net access in Britain. Brown's aides reportedly briefed journalists over the weekend and it seems he'll tell the British and American Chambers of Commerce tomorrow about his desire to see the cost of Net access fall -- and quickly. And yesterday, even Foreign Minister Robon Cook threw his own tuppence into the debate. Interviewed by BBC Radio Four's The World This Weekend about Britain's possible entry into the single European currency, Cook said that right now there were more important matters to British business, including the cost of Net access in the UK. Last week an interview in the FT was responsible for wiping more than £2 billion off the value of the telecoms giant. And there is speculation that unless BT can regain the confidence of its investors it could fall prey to a hostile take-over bid. A spokeswoman for the Department of Trade and Industry (DTI) denied Brown's intervention was a snub to the e-commerce minister, Patricia Hewitt, who has held talks with the industry and campaigners over bringing down the cost of Net access. She also denied that Brown's personal involvement was a direct criticism of Hewitt's handling of the issue, and that she had failed to deliver any tangible benefits to consumers. Regardless of whether Hewitt has been sidelined, or whether the Government has changed its policy towards letting the market decide the cost of Net access, what's clear, is that BT is enraged by Brown's intervention. A spokesman for the telco said that July 2001 -- the date by which the local loop would be unbundled -- was already a "tight deadline". At the moment it is reluctant to see that date brought forward claiming that the logistical barriers would simply make it too difficult. The issue is whether Brown, OFTEL or anyone could realistically bring forward local loop unbundling by any sizeable amount. Even with BT's co-operation and a following wind how much could be shaved off. A month? Two? Whatever your view of BT, is that a sufficient reason to wipe billions off its share price? BT is expected to send a timetable detailing the rollout of local loop unbundling to OFTEL within the next four to six weeks. This morning BT's shares had rallied up 76p to £10.40 by lunchtime. ®

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