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| In My Opinion.......
Is World Class Technology possible in the UK? Is it possible to build a world class technology company in the UK? That was a question posed at the recent meeting of the British Venture Capitalists Association. According to Bob Jones, chairman of UK-based Internet start-up Equiinet, itself recently funded by Schroder Ventures to the tune of �5 million, “We are often compared poorly with North America and it’s true. Relatively few investments mean that people agonise over each one. They are bolder in America and the professional� infrastructure is much less well developed here. In fairness things have improved dramatically in recent years – but there is still some way to go”. Bob went on to say why it is so much tougher than it needs to be to build a world-class business in the data networking industry in the UK, even given the right financing and support. “Start-up businesses need a deregulated market”, says Jones. “Developing a product and getting it to market is tough enough. They don’t need any other barriers, certainly not artificial ones. Now I’m told we have a free market, and indeed competition in the trunk telephone and data network has worked wonders in expanding services and bringing costs down”. “But there is a bottleneck – the connection from a business to the nearest exchange – the local loop”, he says. “And because that is largely the province of British Telecom, and because it will take an age for any other organisation to recreate that network, BT still has a virtual monopoly. In such a situation investing further in the local loop doesn’t get a high priority when it is facing fierce competition in the trunk network”. America saw the light on this some while ago. There was a similar infrastructure in place - copper in the ground to the local exchange, usually owned by one organisation - and legislation was introduced to unbundle the local loop where capacity was sold at commercial rates to other operators. What you have as a result is a wealth of new competing high-speed services – something that we can only dream of in the UK at present. Just as it did with ISDN in the past (another one of BT’s snail’s-pace deployments which earned the wrath of Mr Jones), BT has constantly dragged its feet when it comes to rolling out the high-speed DSL services which could offer a significant boost to the communications industry in the UK. It can do this because the company still has that cosy monopoly via its stranglehold on the “last mile” of copper cable. Finally, however, Oftel has stepped in to specify how BT will be pushed into unbundling the local loop to speed the rollout of high-speed Internet access services, which the governing body sees as essential for British businesses to maximise their full potential. BT and other companies will almost certainly base future offerings on ADSL (Asymmetric Digital Subscriber Line), or other flavours of DSL which allow an 'always-on' service for large amounts of data and simultaneous voice calls. Alternative telecomms supply routes to deliver higher bandwidth services, such as cable modems, are beginning to be used and Oftel expects that there will be a range of supply routes in the medium term. However, until then, most users will be reliant on the supply of telecomms services over BT’s local copper network. BT has said that it expects to begin rolling out higher bandwidth services over its copper network within the next few months. When it does, there will theoretically be competition in the supply of higher bandwidth services, since BT is under a regulatory obligation to allow others to supply services over its network on the same basis as it allows its own businesses to supply such services. However, given the growing importance of access to higher bandwidth services, Oftel has concluded that it is not right simply to leave it to BT to provide these services as and when it felt it was in its commercial interest to do so. The telecomms watchdog believes that it is in the national interest that other companies should have the opportunity to specify the type of higher bandwidth services to be run over the BT local loop and to make the necessary investments - they should not have to be simply the followers of BT. There is likely to be a great deal of sympathy for this view outside the hallowed halls of British Telecom. For these reasons, Oftel has published its 'Access to Bandwidth: Proposals for Action' statement which concludes that BT should be required to permit access to its local loops. This document sets out what it calls a ‘twin-track’ approach. First, as BT upgrades its network, other operators will be entitled to use the infrastructure “at fair prices”. Then, after 1 July 2001, competing operators will have direct access to BT's network to carry out upgrades themselves. Some, however, such as Charles McGregor, Chief Executive of Fibernet, feel that Oftel has not gone far enough. “Effectively, BT still has a two year monopoly on providing new high speed services over the local loop”, he says. And he has a good point. Two years is a heck of a long time in this industry – plenty of time for any number of fledgling UK businesses to try – and fail -� to bring a product to market that could well be stifled by BT’s stalling tactics in the DSL market. Sure, BT has recently announced plans to roll out ADSL technology across 400 exchanges, but given that it has 5500 local exchanges in the UK this barely scratches the surface. It will also be interesting to see which exchanges BT selects for this roll out. Will they be in areas that most benefit the business community�– or will they be chosen where competition from cable operators is strongest? Only time will tell. This is an issue that clearly needs to be monitored closely by Oftel, which could – and should - do even more for the UK telecomms industry and force BT into a full unbundling in less than two years. According to Bob Jones there is no time to lose. “British business will benefit from the infrastructure and new businesses will be established in the UK to supply this market - businesses with the potential to become world-class”.� It would be a shame to see them fail at the hands of BT.
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