Leading Article: Profitable BT is leading the way

TAKE the third-quarter profits that BT announces tomorrow, divide by 7.949 million, and the result - the amount that the British telephone company made every second - will undoubtedly be large. Yet high profits are not proof that British telephone subscribers are being maltreated. On the contrary, the lot of BT customers is improving.

Praise must be split three ways. Customers should first thank that much-abused pair, privatisation and regulation. When BT was sold off, the Government avoided the disastrous mistake of levying a special tax on its profits. To do so would have given BT management no incentive to improve. The chosen method of capping prices - this year to 7.5 per cent below the retail price index - has resulted in real telephone prices being 26 per cent lower today than in 1984.

Technological advances are also partly responsible for BT's transformation. Thanks to the installation of fibre-optic cables under British roads and new computers in BT offices, the cost of running the telephone system has fallen sharply since the mid-Eighties. This helps to explain why telephone prices to the consumer have fallen while the charges of other public utilities have remained static or risen. As the computing and telecommunications revolution rolls on, the scope for cheaper telephone calls will increase. The potential for price cuts from the other utilities may be less, but is still there.

It would be churlish not to give BT itself some credit. Operators are more polite. Directory inquiries, although no longer free, are answered promptly and efficiently. A new phone line can be installed in days rather than months. Moreover, BT has begun to behave like a business rather than a branch of the Civil Service. It made a virtue of necessity by spending heavily to advertise the last round of price cuts forced on it by Oftel. Its abolition yesterday of the irritating peak-rate morning pricing was a direct response to research into customer needs.

There is still a long way to go. Other telephone companies, such as Mercury, rightly complain that they pay too much for access to BT's local networks. Most long-distance calls are not automatically routed via the cheapest company, as they should be. Three cheers, therefore, may be going a little too far. Say three cheers minus 7.5 per cent.