Transparency as important as wholesale separation

BT has crossed the line from being forced into a more competitive stance to seeing advantages in it, says telco strategy specialist

One of the less obvious advantages of broadband is it relieves companies’ bookshelves of weighty tomes on trends in the telco industry, says Ovum telco strategy practice leader Mike Cansfield. Industry monitor Ovum now provides most of its detailed content online, with only short summary reports delivered in print, he says.

More seriously, the increase of broadband penetration in the UK has given small and medium-sized businesses the ability to transmit rich content through the company’s LAN, intranet and the extranets that link it with suppliers, customers and partners, he says.

Cansfield visited New Zealand recently to talk with customers.

To encourage the incumbent telco to move itself and competitors (who may become wholesale customers) into broadband requires incentives rather than penalties, Cansfield says. ”Only the incumbent can provide anything like universal service. It has to be made part of the solution, not part of the problem.”

The only long-term incentive is revenue from new services — an ever more persuasive prospect as revenues from basic voice services decline. “[Incumbents] know they can’t stay where they are, or they would simply cease to be part of the economy.”

“A few years ago we concluded that the incumbent starts making a real return only after about seven years.”

UK incumbent BT has changed a lot in recent years and crossed the line from being forced into a more competitive stance to seeing advantages in it, Cansfield says “I worked for BT from 1988 to 2000 and they still displayed monopolistic tendencies. It takes a generation to bleed out.”

Under new CEO Ben Verwaayen, BT has developed “a more constructive dialogue with the regulator” than previously, says Cansfield. Some of this is owing to the maturing of BT’s attitude, but the change in regulator, from Oftel to Ofcom, has also been positive. “Oftel liked to micromanage” the industry, while the new regulator takes a more hands-off approach. “The industry decides for itself how it wants to be regulated.”

The more positive attitude is bringing definite benefits, he says. “Arguing with the regulator never solves the problems in your own business.” BT still wants to hang onto as much of its retail business as it can, but recognises that wholesale will do it good, he says. The company runs 2.4 million retail lines, giving it approximately a 30% market share, but it also has 8.1 million wholesale lines.

The UK market is still too obsessed with speed, Cansfield says. This tends to generate “me-too” services with the only advantage being price. Lately, however, companies seem to be moving away from this, putting more emphasis on service and service bundles.

BT and its competitors are moving heavily into video on-demand and time-shifting television services. “The public wants entertainment from broadband and wants to watch a programme at the time that’s most convenient for them, not when a broadcaster wants to transmit it.”

Telcos’ accounting, operational and structural separation is largely a red herring in Cansfield’s view. The watchword is transparency. “The best companies make it clear that there is no cross-subsidy. There are restrictions on sharing information between the parts of the company. It doesn’t matter what kind of separation you call that, as long as everyone knows the rules and sticks by them."

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags TelcoovumBTwholesale

More about BT AustralasiaLANOftelOvum

Show Comments