Theories of the Information Society, Third Edition - Cryptome

INFORMATION AND THE MARKET
Office, British Telecom has operated on distinctively commercial lines, prioritising
customers with the deepest purses (i.e. corporate and large government
sectors) in its development of new and existing services and in taking measures
aimed at ensuring its success as a capitalist enterprise.
In the days preceding its 1980s strategies, though its policy was rarely articulated,
telecommunications in Britain operated with what may be called a loose
‘public service’ ethos. This guided the provision of services, aiming for universal
geographical availability, non-discriminatory access and a pricing policy that
aspired towards ‘reasonable costs or affordability’ (OECD, 1991, p. 26) that was
achieved by a complex system of cross-subsidy of discrete points on the network
from lucrative urban and international links. The telecommunications monopoly
also played an important role in supporting the British electronics industry by
purchasing over 80 per cent of its equipment from these domestic sources,
thereby acting for all intents and purposes as an arm of government economic
strategy.
However, the market-orientated policies introduced during the Thatcher
years (1979–90) encouraged deregulation and promptly took away the ‘natural
monopoly’ of British Telecom that had just been set free from the Post Office
and the encumbrances of mail delivery. In response, Mercury came into existence
from private capital – with a mission not to supply an alternative telephone
service, but rather to win business traffic, easily telecommunications’ major
market. Since Mercury had but little market share (less than 10 per cent), its chief
significance was not primarily as a competitor to BT, but more as an indication
of new priorities prevailing in telecommunications (by the mid-1990s, Mercury
was merged with several other operators by its parent company Cable and
Wireless, and later took its parent’s name).
BT’s subsequent privatisation announced a renewed commercial emphasis
in the organisation, one it marked with a decisive orientation towards the business
market. This was expressed in various ways. First, responding to Mercury’s
attempt to cream off major corporate customers, BT reduced its prices in those
areas. The company was quick to complain that it was ‘making losses on local
access’, which it had once supported by charging over the odds to business users.
This had not, of course, been a problem before, but by 1990 Mercury, free from
the burden of offering a universal service, was attacking the corporate market,
gaining almost 30 per cent of the national call revenue from customers with 100
or more lines. Now BT moaned that ‘high usage customers (i.e. corporations) pay
too much for their telephone services’ while BT itself ‘fails to make an adequate
return from about 80 per cent of customers (i.e. domestic users)’ (British Telecom,
1990). The consequence of such a diagnosis was predictable: though following
privatisation some regulatory influence remained, setting a formula to restrict
BT’s price rises, this was only an average ceiling. In practice domestic users’ costs
rose ahead of those charged to businesses.
Second, BT, now a private corporation aiming to maximise profit, made
moves to enter the global telecommunications market. As such it purchased
manufacturing facilities in North America and became less interested in buying
equipment from British suppliers. Further, during the early 1990s BT took a
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