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Government, mismanagement and the telco: A market in disarray
Oftel's local loop unbundling bungle, Deutsche Telekom's US acquisition struggle and 3G tariffs are all up for discussion in this month's column written by the communications managers association - formerly the TMA.

By editorial@silicon.com

Published: Monday 02 October 2000

The Spinster's Art
A Daily Telegraph article recently carried the headline "Oftel speeds local phones break-up". CMA has previously pointed to a disparity between the public utterances of BT and those of Oftel on this very subject. And it seems the gap is still there.

According to the Daily Telegraph: "Oftel said yesterday it expected consumers to start benefiting from the break-up of BT's local phone monopoly from as early as January - six months earlier than widely expected. We expect it will take four months, from September to December, for operators to be able to install their equipment in BT exchanges and so the first unbundled connections would start being made in the new year."

Oftel also thundered that if BT didn't conform to the timetable without a reasonable excuse it would use its powers to force them to comply. Wow! Is that impressive or what?

But hang on. Oftel then pointed out that "a reasonable excuse would be if BT were inundated by requests from other telecoms companies to have access to its exchanges, or if special measures such as planning permission were required to enable access." (It's difficult to come up with any other excuse which BT might cobble up or need) But, undaunted by such realities, the spokesman for Oftel said: "We expect there to be widespread availability of unbundled services by July."

BT, clearly over the moon at being let off, said that it didn't expect Oftel to force it into compliance. They said: "We're comfortable with the timetable." Too right they are. Oftel had set a deadline of July 2001 to introduce unbundling, but has been pressurised by Chancellor Gordon Brown to bring the date forward, to say nothing of the little matter of threats from the European Commission if the UK doesn't comply with its end-2000 timetable for complete unbundling.

The fudge is that the date hasn't been brought forward, and "Oftel has been hoping that it could help BT's competitors to introduce services ahead of next July." So could it be that Oftel's July 2001 timetable agreement with BT is still intact and that it is trying to pretend it: a) didn't happen, b) was BT's fault with OFTEL playing no part, c) is not in conflict with the EU draft regulation and d) doesn't matter anyway because some service will be available before Christmas to a lucky few.

You can't Do That!
We've been following the saga of Deutsche Telekom, which is 58 percent owned by the German government, proposing to buy the US firm VoiceStream Wireless Corp. for around $50 billion. But there's a snag - unless the acquisition is deemed to be in the public interest, current US law prohibits a telco that is more than 25 per cent owned by a foreign government from acquiring a US firm. However, in this case the Federal Communications Commission (FCC) says that the public interest test is satisfied if the company is based on a country that is a member of the World Trade Organisation.

So far, so good, you might think. But the forces of reaction are never too far away, and the deal has raised concern among a bipartisan group of US senators who are worried that a US company controlled by a foreign government could threaten national security and hurt domestic competition. There's to be a hearing and legislation is proposed that would close the loophole in the current law that allows the FCC to approve such things. Now, enter the EU, declaring that the proposed US legislation would violate US commitments on foreign investment in the World Trade Organisation.

What should be attacked, especially by the EU, is the root cause of the problem, which is government ownership of telcos. More power to the legislation: perhaps if it's introduced it will focus minds on the real issue.

Please hold for an operator
Back in history, if your wind-up phone wasn't doing its thing you could call 151 and talk to a friendly BT help-person who would have it reported in a trice. Now things have improved. You can call 151 and muddle your way through at least three layers of IVRs and hang about in a queue before the operator hangs up on you. Your correspondent had four goes at this game, taking on average 4 mins 15 secs prior to hang-up, and still didn't get a word in, never mind a whole sentence explaining to a human what the problem was. And is the dud phone still dud? Who cares? I sent an email instead.

No Chance!
So Deutsche Telekom is to raise its international mobile call charges by 0.29 DM (8p) per minute for calls into 30 European countries. Of course, the rise is in no way linked to high costs for gaining a new generation UMTS licence (DT says). It also says: "The increase in the connection prices is Europe-wide and isn't Deutsche Telekom's idea."

But, back at the ranch, BT isn't half so pansy. It robustly raised its prices and also warned of high tariffs for 3G users, pinning the blame on the high price paid for licences. Aha! They won't get away with that one! Step forward Oftel, whose senior managers are "very robust" about the value for money to the consumer of the UK's auction process and deny the auction price will have any impact on future revenues. After all, auction prices are 'sunk costs' in financial terms, do you see. So, despite our government's dedication to the rip-off auction process, we can now expect firm regulatory action to deter BT from hiking its 3G tariffs. Glad we have an independent regulator. Mmmm.

The above are extracts from 'Coalface', to be published in the October issue of Newsline, the journal of the UK's leading business communications user association, CMA (http://www.tma.org.uk ). Coalface would like to hear from you. Email coalface@tma.org.uk