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Newly privatized British companies draw fire from customers

Margaret Thatcher, a strong proponent of selling off state-owned enterprises, is discovering that transferring giant corporations to the private sector does not necessarily improve their performance. Problems have arisen as the Thatcher government, having sold such high-profile enterprises as British Airways and British Gas, is preparing a new round of privatization that is likely to include a large chunk of the nation's water supplies and even railways and coal mines.

Much of the controversy centers on British Telecom, which was offered to the British public in 1984. At the time BT, which two years earlier had been broken off from the post office, was widely criticized for its poor service to customers.

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Getting new telephone lines installed in Britain's larger cities - and sometimes villages, too - was notoriously difficult. Repair work was heavily delayed and expensive. Large numbers of public call boxes were in a permanently vandalized state. Telegram and telex services were antiquated, and all too often the people dealing with the public were inefficient and rude.

Above all, BT lacked the benefits of modern electronic technology; for example, outdated telephone switching systems produced long delays in dialing numbers, and there was a high proportion of misdialings, especially at peak hours.

Privatization was supposed to fix all this. But earlier this month, the Office of Telecommunications (Oftel), a watchdog body set up to monitor BT's performance in the past three years, issued a report that heavily criticized BT in a number of areas. Oftel proposed fixed financial penalties for delays in repairing faults and providing services, and urged the government to allow Mercury, a small privately owned telecommunications network, to link its services into BT and expand its own operations.

The Oftel recommendations follow several months of snowballing public criticism of BT. It has been hammered for dragging its feet in the installation of System X, a high-grade electronics telephone switching system, and for charging private subscribers at a higher rate than it charges businesses.

BT has had the worst attacks because it has been privatized longer than other services that have been moved out of the public domain. But British Gas, another monopoly, sold off last year, is beginning to get heavy public criticism for failing to improve its services and, at the same time, racking up high profits.

There is concern, too, that British Airways, already by far the nation's biggest air carrier, will begin to lose a sense of accountability to the public. The concern has been heightened by BA's bid to take over British Caledonian, the second-largest airline. Worried about the virtual airline monopoly in prospect, and conscious of a rising tide of public resentment about the dubious performance of other monopolistic privatized corporations, the Thatcher government has ordered a three-month inquiry on the airline merger, which is now heavily in doubt.

The buildup of resentment among the British public is causing the government to move carefully in its plan to privatize the 10 regional water authorities in England and Wales.

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Under the plan put forward by Nicholas Ridley, Mrs. Thatcher's environment secretary, the authorities, once they are privatized, would lose the powers over water management that the existing public authorities exercise. Mr. Ridley plans to vest powers of management and regulation in a publicly controlled body, the National Rivers Authority. He believes this is the only way to ensure that the public interest is preserved.

But Roy Watts, chairman of the Thames Water Authority, the largest in the country, spoke for his peers in the industry when he attacked the Ridley plan. He called it unworkable and threatened to oppose it vigorously. Mr. Watts and other leaders of the water industry believe that privatization, which most of them welcome in principle, will work only if the modified corporations are given their commercial head and are not subject to interference.

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