The unholy trinity of broadband

Have you heard the one about the monopolist, the quasi-monopolist and the world's second largest PC maker?

This is no joke, but the punch line could be significant (if not all that funny).

First up is BT (which, as sole owner of the local loop, is a monopolist) and Microsoft (the company which dominates the desktop software environment). On Wednesday, the two companies announced they were joining forces to develop a range of broadband applications.

The dynamic duo (we use the word 'dynamic' in the loosest sense) will collaborate on some 30 projects, details of which will be coming to a website near you soon (that'll be silicon.com).

All we know at the moment is that these projects will cover such areas as mobile technology, web services based on Microsoft's .Net technology, broadband portals and multimedia home computing.

Now, if I were one of BT's competitors, I'd be a tad nervous right now, if not downright livid. Microsoft CEO Steve Ballmer said something rather significant about the deal: "Microsoft is strongly committed to speeding up the adoption of broadband in the UK, and we are very excited about BT's broadband strategy and innovative no-frills product, which we believe is a great catalyst for broadband penetration."

Ah yes, the no-frills product... BT Broadband (to give it its proper name) simply gives customers fast net access: no email, no web space, no broadband content, none of the usual things punters get from traditional ISP packages. But it's relatively cheap at £28 per month.

It's not exactly been selling like hot cakes, because your average consumer can't be bothered to set up their own email, although 5,500 people did sign up last week - 22 per cent up on the previous week, according to BT.

Nevertheless, BT confidently aims to capture half of the UK's consumer broadband market with this particular product.

That seemed an extremely ambitious target - until now. It doesn't take a genius to work out that Microsoft will end up supplying the bits and pieces your "traditional" ISPs provide for BT's no-frills customers. It'll be no-frills with knobs on. Frilly no-frills. Call it what you will, it's all very clever. But not as clever as adding PC giant Dell into the equation...

Just one day later, BT and Dell announced a partnership which will see them work together to provide BT Broadband to home users, and BTopenworld business broadband to small and medium sized enterprises. (AOL and Dell have had such a relationship for a year by the way, so BT isn't exactly an exclusive partner).

Although the marketing machines are hyping these 'ground-breaking announcements' to the hilt, these alliances will, in all probability, help speed-up the rollout of broadband in the UK - a good thing. On the other hand it could well speed up the demise of the smaller ISPs who simply won't be able to compete with companies of this stature - a bad thing.

One thing's for sure: BT, Dell and Microsoft make one (un)holy trinity. Let's hope there's a clued-up regulator and a strong government keeping an eye on this...

Monopoly issues have been exercising the good folk at think tank Demos recently. They released a report this week saying that BT should be broken up because it has a monopoly over the local loop.

James Wilsdon, the report's co-author, said: "While they're may be short-term advantage in allowing BT to roll out broadband as quickly as possible, there are longer term risks. The UK is sleepwalking towards a broadband monopoly, with little opportunity or incentive for innovation within the network. The government has consistently ducked this issue and tackling it should be a top priority for Ofcom from the start."

The report, sponsored by Cable and Wireless and called the Politics of Bandwidth, says that there is "compelling evidence" in favour of the break-up of BT to create a public interest company. Demos believes a "not-for-profit organisation would maximise access to all telecoms service providers and increase network innovation".

The publication of the report drew a splendid metaphorical flourish from BT. A spokesman said: "This report is sponsored by Cable & Wireless. The fact they are making another call for BT's separation is about as surprising as dead leaves falling to the ground in autumn."

Ben Verwaayen, BT's CEO, said in September that "the idea of splitting BT is a dead horse that doesn't bring the benefits some people think it brings".

Not sure too many dead horses do bring benefits to anyone Ben, but still... In short, a break-up simply isn't going to happen because there's no political will to make it happen. Oftel has (presumably) cleared the unholy trinity for take-off. So we're gonna have to make the best of it for now.

Indeed, monopoly issues don't seem to be taxing the South Koreans overly much. The country's largest telco, KT Corp, along with a few other ISPs, are investing a massive £7bn to roll out broadband to EVERY household there by 2005. The government is making loans available to help fund the investment, bringing the total amount of money it's put towards broadband somewhere in the region of £2bn.

The 'strong' UK government has committed around £30m to broadband so far. And there was Tony Blair pledging to make the UK the best place in the world to do ecommerce. What's that phrase to do with money and mouths&?

Finally this week, a few ideas for those AOL CDs you get sent in the post. Last week's Round-Up mentioned the campaign of two Americans, Jim McKenna and John Lieberman, who are trying to collect one million free AOL discs. Once they've got them, they plan to go to AOL's HQ, drop them on the doorstep and announce: "You've got mail."

Some of you think there are better things to do with your CDs. Here are a few of the better ideas...

"I suggest you do what my son does and use each CD until the free time expires. That way you never, ever pay for any internet access. My son is a student currently doing an MA and needs to keep a tight cash flow. Why don't you suggest to all your readers that instead of dumping on AOL they take advantage of AOL this way?"

"I saw a most ingenious use of all these AOL CDs. On the Isle of Mull in Scotland, they leave them dangling on garden fences to keep the deer away. So they are not wasted."

"The problem with those that resent receiving these objects is that they think they are means by which AOL attracts customers. This is of course complete nonsense. It is not well known by those who spend their lives in offices with computers that AOL has long been secretly infiltrated by dedicated vegetable gardeners.

"If McKenna and Lieberman were not so cut off from the natural world in some wired apartment building somewhere, they would know that AOL CDs hung on strings from poles or fruit tree branches make very fine bird scarers for keeping pigeons and other pests away from soft fruit, cabbages and other brassicas. The coruscating light refracted by the fine grooves on the CD produces a swirl of spots of coloured light that upset avian pests.

"The discs are of course very environmentally friendly and avoid the use of pesticides, traps, poisons and other traditional pre-computer methods. I can always use more AOL CDs to see me through the growing season. By the way, for all the slagging off of AOL by nerdy types, I find AOL very reliable. I am a very satisfied AOL customer and have been since their inception."

So there. Til next week...