Telcos set for price war

Telecommunications providers will face increased competition following the latest round of consolidation among cable operators, writes Gavin Clarke.

Cable company NTL has bought rival operators Diamond Cable Communications and Comtel in deals worth a combined #943 million. The move will allow NTL to offer services such as virtual private networks and data networks across both its existing and newly-acquired networks.

Telecommunications regulations bar other cable operators from linking up to offer data services across more than one network, and from extending their networks beyond their franchise zones.

These restrictions do not extend to cable networks when they are owned by the same parent company.

Although cable operators have primarily used their fibre optic cable networks to provide home television, they can also use excess capacity on that fibre to also offer business services.

NTL, who recently cut the installation price of its ISDN service, said it expected to make more price cuts for its business customers because of the economies of scale offered by its acquisitions.

The ISDN price deal offered by NTL will now be offered to businesses in the Diamond Cable Communications and Comtel franchises areas in the Midlands and the South of England. Previously, the offer was restricted to NTL?s existing six franchise areas and to users based near its nodes.

NTL?s decision to offer more price cuts was backed by Gartner Group vice president and research director David Neil, who said prices should be pitched 5% below those of BT to attract businesses.