UK: Brr, Brr ... BR runs along new lines.

UK: Brr, Brr ... BR runs along new lines. - If the train can't take the strain then the telephone will, should British Rail's current ambitions to become the third force in UK telecommunications eventually materialise. The duopoly review has freed BR to

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Last Updated: 31 Aug 2010

If the train can't take the strain then the telephone will, should British Rail's current ambitions to become the third force in UK telecommunications eventually materialise. The duopoly review has freed BR to follow in Mercury's footsteps and act on plans to turn the country's biggest private telephone system into a "green button" network.

But the format of the newly established British Rail Telecom (BRT) does not make an ideal vehicle for challenging the combined might of British Telecom and Cable and Wireless. As corporate communications manager Amanda Kay explains: "Because BRT is a wholly owned subsidiary of a public sector enterprise, it can't spend money on what might be seen as a risky venture." So, with an £80 million dowry from BR in the shape of its telecoms assets, BRT is instead seeking partners from the private sector to plough in a further £300 million of capital.

Chris McFadden, electrical research analyst at Smith New Court, reckons that BRT and its bedfellows "would need to spend a cool £1 billion" before making a dent in the market. As if this were not challenge enough, that market is really a three-in-one job, he explains. Jointly worth somewhere in the region of £8 billion, it actually comprises the local residential market, worth about £4 billion, the long distance market, worth about £2 billion, and the international market at another £2 billion. However, BRT would only have the resources to pitch for the lucrative business sector where Mercury first made its presence felt, thereby earning accusations of cherry picking. With the young and vigorous Mercury already battling it out in this sector, there can be little doubt that BRT will have a tough task on its hands.

Yet, not daunted, BR has just announced plans to extend its ambitions to Europe. In conjunction with 10 other European railway authorities it proposes to invest some $2 billion on setting up a system which will initially be used for ticketing, though the intention is ultimately to turn it into a fully fledged telecoms network. Both projects have been devised to bring much needed cash into BR's hard-pressed coffers, but with capital expenses likely to soar before any return is apparent, it is hard not to suspect that the ultimate victim will be the great British public.

The significance of BR's telecoms operations could, of course, extend much further. If BRT's managing director, Peter Borer, does get it right and develops a lucrative source of additional income for the straitened railway, the privatisation prospects for the rail network would receive a badly needed fillip.

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