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ET helps BT ring up 4 billion profits

The fast expanding global village of Netizens and mobile phone users helped BT ring up bumper profits of more than £4.2 billion yesterday.
Written by Chiyo Robertson, Contributor

The telecom giant's use of ET for its new media campaign couldn't be more apt. That little alien must have been on the phone a lot, during peak time too. Now he's on the Net.

Reporting year end results on Thursday, the telco reported total turnover of £18.2 million, up 13.6 percent. UK call revenues was nearly £5.2 million, up 5.2 percent for the year. Sir Peter Bonfield, BT's chief executive said that "demand for our inland mobile and Internet service is increasing fast."

Stripping out an exceptional pay-out for the sale of BT's 20 percent stake in MCI, following the collapse of the Anglo-US telecom merger last year, BT's profits may not look quite so princely. Nevertheless it has 20.1 million customers -- all of them talking and some of them surfing.

Around 18 percent of local calls are due to Net traffic, up two-fold compared to the previous year. BT says one tenth of its domestic customers now surf the Net, while corporate customers also drove up data traffic.

Boomerang customers also helped fatten up BT's coffers. Despite customer satisfaction polls that criticise BT, for every customer that leaves the company, another comes back. "Last year, 730,000 came back to BT. Why? Because of cable companies' service levels," said a BT spokesman.

Other revenue streams include BT's many international alliances and interconnect charges. The latter, where operators charge each other for connecting users to each other's networks, brings BT around a third of the cost of each call. BT saw interconnect revenues jump 30 percent for the year. Given that there are more than 200 ISPs and the same number of telcos in the UK, there is plenty of interconnecting going on today. The explosion of free ISP services is bumping it up higher. "Likewise, BT also pays other operators interconnect fees too. It works both ways," said the BT spokesman.

But BT's dominance in the last mile -- its local copper loop supplies 85 percent of UK homes and business premises -- prompting Oftel to ask questions about access to bandwidth. The watchdog has completed a consultation study, gathering feedback from the telecoms industry and customers, about unbundling the local loop.

Oftel said, depending on the feedback, it "can force BT to unbundle the loop". Telecoms regulators in the US and the EU are already introducing new rules, including or LLU, to ensure all consumers have access to new, high-bandwidth, technologies.

"We are getting a response from the industry to see what we can do. We'll issue a response in the next few months," said the Oftel spokesman.

Ironically, when the question of LLU first popped up four years ago, Oftel got little response from the industry. But back then, Internet growth was not topping 100 percent.

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