Take a bow, BT
This week Geo Networks became the latest competitor to exit the crucial middle mile market, following Vtesse back into the corporate market. Br0kenTeleph0n3 will have more to say on this later.
In addition, Cable & Wireless Worldwide wrote off more than £460m in goodwill, destroying its balance sheet and crippling its ability to fund a competitive offer to BT. Fujitsu, once so vociferous in condemning BT’s prices for physical infrastructure access, is now the first to use BT’s poles and ducts to fibre up homes.
Other competitors are small, weak, disorganised and scattered. With voice and broadband prices in decline, no bank in its right mind would lend to them. None has the weight to get useful deals with content providers. State, i.e. BDUK money will go to firms with turnovers of £50m a year.
Game, set and championship to BT.
But how was the match lost?
On the basis that we should look at what people do rather than what they say if we are to discover their true goals, the DCMS’s web page for press releases should offer some suggestions. These reveal that DCMS’s main preoccupations these days are the Olympics and to prevent the export of bits of art.
The most recent mention of long term matters is on 14 September, which is about using taxpayers’ money to extend “superfast” broadband in Suffolk and Rutland, both of which will depend on BT.
How does DCMS decide on the appropriate level of funding? From the release: “the Government has looked at the areas where the market will fail to deliver superfast broadband to enough premises on its own, and the cost of that. It is not based on the number of people living or working in a county.”
Which begs the question, what is it based on?
Wherever BT has been threatened by competition (Erbistock, Ewhurst, Iwade, Cornwall…) it has responded with alacrity. The one exception has been with the cable tv network, but even there BT’s Infinity roll-out largely mirrors Virgin Media’s network for competitive reasons.
One could say the market, as expressed by the level of competition from, not to, BT, has worked extremely well. The more competition BT faces the more pro-active it is.
This lesson has been lost or hidden from DCMS.
It has been in BT’s interest to disguise or hide the lesson by tolerating weak competition where it cannot avoid it, and to be ruthless in destroying competition where it faces the loss of its monopoly. In this it has done a brilliant job.
The future of the national communications infrastructure is no longer on the DCMS agenda, or rather, it is safely in BT’s hands.