The fire started at around 2 a.m. on Monday, in a tunnel 30 metres below the ground. This mile-long tunnel carries 44 cables, each containing 24 optical fibres, and connects two of Manchester's largest local telephone exchanges.
Both voice and data services have been affected, and the damage has been felt as far away as South Wales.
"This tunnel carries a lot of private circuits, and there's been an impact on broadband services as well," a BT spokesperson said.
"We are rerouting traffic where we can, and we are also helping corporate customers to forward their calls to other numbers."
Emergency services in the area were badly hit, with ambulances having to be issued with mobile telephones. Other parts of the BT network are also affected by congestion, due to the rerouting.
The outage came at a bad time for Cardiff-based Newport Networks. It announced on Monday that it is planning to raise £15m by floating on the Alternative Investment Market (AIM), ahead of the launch of a session controller that it says will make Voice over IP services commercially successful.
As news broke of Newport Networks' plans, people who rushed to its Web site found that it was unavailable -- downtime that the company says was due to the turmoil caused at its hosting company by the fire.
By mid-afternoon, though, the firm had managed to mirror the site and get it back online.
Other firms affected by the Manchester fire may be less fortunate. At the time of writing, BT engineers had not been allowed access to the tunnel so the extent of the damage is not yet known. Replacement cables have already been ordered.
Talkback
I was trying to pay my water bill via the alliance and leicester 'billpayment' site and my card wouldn't authorize; later the site was shut down completely. I phoned the helpdesk number and they said this was due to the fire.
Any other websites affected?
It is not only businesses in the North West that are hit. We are an international company based in Hampshire and have broadband access provided by North West based Total Web Solutions.
Our business depends totally on the internet and whilst we can obtain dial up access through AOL it is rather like trying to fly to the moon in a steam driven rocket!
David Almond
Alliott Group
Petersfield
Hampshire
It's not only internet traffic and phone calls affected.
We have had to literally go to the bank to draw out cash to pay our employees this month, due to Barclays Online Banking issues and are also unable to transact credit card orders via our office based PDQ terminal.
Many banks in the area have closed, due to the inability to operate due to this fire.
We are also pretty much unable to call any Yorkshire based customers from down here in South Cheshire.
It's like going back into the middle ages in the North West at the moment.
[30/3/04]
It's also effecting us in Nottingham
We have mobile phones for our company we have just changed contracts from 02 to vodafone we ported every number accross we have been told that if we'd been with anyone else we wouls have been ok - sadly we don't own a crystal ball!