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BT Retail’s turnover is
mainly derived from BT’s UK fixed network customers through the provision of
fixed-network call services, exchange lines and private services.
Turnover from fixed-network
calls declined by 4.3% to £5,655 million in the 2001 financial year following a
decline of 2.0% in the 2000 financial year compared with the 1999 financial
year. Fixed-network calls comprise all calls by customers made from fixed lines
in the UK, including outbound international calls. In both the 2001 and 2000
financial years, call volume growth was more than offset by the effect of
significant price reductions.
Price reductions had an
impact on turnover from fixed-network calls for all the years under review. In
the 2001 financial year, the principal reductions were in the prices for most
types of geographic calls. In the 2000 financial year, the principal reduction
was the 25% cut in fixed to mobile call prices from the end of April 1999 as
required by the CC. Other reductions included enhanced discounts and lower
Freefone and Lo-call prices charged to other service providers. The combined
effect of the price changes to fixed-network calls totalled approximately £280
million in the 2001 financial year, which was equivalent to a 5% reduction in
call prices following falls of 9% and 3% in the previous two years.
The main volume growth in
fixed-network calls in the 2001 financial year was derived from a significant
increase in calls to mobile phones and the increased use of the internet. In
the 2000 financial year, similar factors were also behind the increase in calls
over BT’s fixed network. The call volume growth of 2% in the 2001 financial
year compares with 7% in the 2000 financial year. While fixed to mobile and
internet-related local calls continued to grow strongly, traditional geographic
fixed-network calls declined in volume, which we attribute partly to mobile
phone substitution and also to intense competition. The trend in fixed network
call volumes, which we expect will continue, is illustrated in the table below: |
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| Non-geographic calls: |
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| Internet related and other |
38 |
|
95 |
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| Fixed to mobile |
30 |
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48 |
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| Geographic calls: |
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| Local |
(12 |
) |
(9 |
) |
| National |
(7 |
) |
(4 |
) |
| International |
(3 |
) |
(3 |
) |
| Overall |
2 |
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7 |
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Turnover from exchange
lines grew by 4.2% in the 2001 financial year to £3,674 million after
increasing by 5.2% in the 2000 financial year. The increased turnover was the
combined result of the growth in business lines and rental price increases. The
number of business lines grew by 5.4% in the 2001 financial year and by 5.9% in
the 2000 financial year, with ISDN services being the main driver behind this
growth. The numbers of residential lines declined slightly in both years due to
the competition from other fixed line providers largely offset by the high
number of BT customers installing second lines. Overall, BT’s total
fixed-network lines grew by 1.3% in the 2001 financial year to 28.95 million
and by 1.9% in the 2000 financial year to 28.58 million.
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