BT has screamed long and loud, Ofcom succumbed

05 Mar 2009

There is no voice so shrill as that of someone or something that has enjoyed terrific privilege if anyone suggests taking any of it away.

There is also no doubt that BT has made an extraordinary mess of running its business.

Put the two together and you get super-shrill.

It has been rated as having the worst customer serviceof any fixed line service provider in the UK by consumers, has made a mess of big public sector contractsand its flagship Global Services division - which was to have been the engine of its transformation from POTs to pots of corporate money - has foundered.

It is also the only European Tier 1 operator without a mobile division, as it had demerge what become O2 in November 2001 due its colossal debts. (Various attempts to break back into the British mobile market with a converged product - the ill-fated Bluephone/Fusion - were farcical.) This has proved a serious handicap. If it had any sense, it would try to acquire 3 UK or T-Mobile (which is less likely to be for sale).

In the year of the O2-to-be demerger, Andreas Whittam Smith, former editor of The Independent newspaper, called BT's CEO Sir Peter Bonfield, Chair Sir Iain Vallance and deputy chair Lord Marshall of Knightsbridge, "The men who broke the bank at British Telecom". It's still a great read and pertinent today.

Big plans to revive BT's fortunes since have failed and the Financial Times called its recent Q3 results "risible", in great contrast with its continental European equivalents, Telefonica, Deutsche Telecom and France Telecom.

So it's no wonder that the British incumbent is worried about funding the build out of the next generation of broadband (and there are good number of us still who are on dial up or sub-512k, let's not forget, with no prospect of improvement).

Still, a super-shrill voice is no reason for a parent or regulator to give the perpetrator what it wants to shut it up, which is precisely what Ofcom has done - even if Ed Richards, head of Ofcom, was under a lot of pressure from communications minister Lord Carter (of Digital Britain Blueprint fame), previously head of Ofcom, who doesn't seem to realise he's not in the job any more.

In the 1990's the cable companies dug the equivalent of two Channel Tunnels without a penny in subsidies from the government and had to pay a licence fee for the privilege on top. Now consolidated under the Virgin Media brand, and is rolling out 50Mbps service across its infrastructure covers half the population of the country.

And squeaks about BT being saddled with universal service obligations really won't do unless Ofcom is going to make it mandatory that BT delivers 10Mbps to every home in the UK within the next five years, which is unlikely to say the least. The tax payer had already paid for the access infrastructure before BT was privatised to make universal service possible.

As for excuses about maintaining and upgrading the access network, BT showed an amazing lack of foresight considering that it was touting xDSL in the mid 1990s, coincidentally as the cable companies embarked on flotation on the London Stock Exchange.

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