Examination of Witnesses (Questions 400-415)
ADAM SINGER,
HOWARD WATSON,
AND MALCOLM
TAYLOR
TUESDAY 26 FEBRUARY 2002
400. Do you think there should be something
parallel for satellite?
(Mr Singer) Yes. We have to carry, satellite does
not have to carry; satellite can charge, we cannot. That is iniquitous.
Alan Keen
401. I want to talk about the future, and I
am as fascinated as you are, and we have to move forward as quickly
as we can; but, before getting on to that major issue, somebody
said to me, when we started this, I should dial Telewest and we
would not have got through before you were having a cup of coffee
somewhere else on the way back to your office. With all the technology
you have got and the knowledge, and the fact that we are talking
about moving into the future, you must be doing it on purpose,
that is all I can think, because it is dreadfully difficult to
get through on the telephone?
(Mr Singer) A fair comment. Let me tell you what we
have done. I will be the first to admit, having been involved
in the UK cable industry, in one form or another, since 1983,
that we have not been exactly stellar, in terms of providing the
right kind of service to our customers; absolutely true. One of
the reasons for that is, when you spend all your capital digging
up the streets, then actually finding the capital, you have a
tendency to get focused on engineering rather than customer service;
we are now moving out of that. Your point about our ability to
answer the `phone is certainly a fair criticism of a few months
ago; a few months ago we were able to answer about 60 per cent
of our telephone calls within 30 seconds, we can now answer 90
per cent of our `phone calls within 30 seconds. If it is for helpline,
on our high-speed Internet, it does take longer. We have spent
considerable amounts of money on training, increasing our staff
levels, we are the only cable company that is increasing its staff
levels actually to meet customer needs, and it has got better.
Do we still let down individuals, yes, we still let down individuals;
are we a bit better than we were, yes, we are.
402. I cannot contradict you, because I gave
up trying to `phone months and months and months ago, and so I
cannot contradict you. I am sure that you must be improving, you
must be, because you cannot really have been doing it on purpose,
can you?
(Mr Watson) I think the other thing I would add is
that the digital TV technology, when we launched that at the start,
or finished rolling out in 2001, was complicated, and, if you
look now, the number of problems our customers have is a quarter
of what it was 12 months ago. So we have made significant improvements
over 2001, which has meant that that call-answer rate has got
better in the last couple of months.
403. Coming on to the big issue, and I speak
as somebody who worked as a systems analyst in the early seventies,
and the idea of putting information in once and losing it a thousand
times, and this is what broadband is about, talking about the
Health Service and those sorts of things; have you put a cost/benefit
analysis to Government, because it should be staring them in the
face that it is worth investing in it, and, as you say, the market
is not going to provide what we want quickly enough, saving on
transport, for one thing, must be so evident?
(Mr Singer) It took us six months to get an appointment
to see the Minister at DCMS; it actually takes a long time to
get in to make these statements. But, you are absolutely right,
and we can present this; it is how does one talk, how does one
promote dialogue. We are perfectly happy to say to Government,
"We've built the network; come and experiment on it, use
it, we're not going to charge you, just try it to see what works."
We are happy to do those kinds of things. And one of the questions
which has to be asked also about the cost/benefit analysis, just
going back to an earlier question, vis-a"-vis BT,
is, you have to ask yourself not only what does it take to repay
on the current service, but also what is their capacity to deliver
extra speed in the future, because, actually, we are just at the
beginning of this. So they are going to be delivering 512, we
deliver 512; the real question is, as you start to go forward,
who is capable of delivering 4 megabits, who is capable of delivering
8 megabits, and that is going to be where the real interesting
character of questions lies. That is a small aside, that is a
question for you to ask BT.
404. One final question, really, before the
Chairman moves on to somebody else. We have got to write a report,
and we are enthusiasts for what you would like to provide; in
two sentences, what would you like us to put in the report, from
your point of view, not from Telewest, but for the nation's good?
(Mr Singer) I think that is right, and the whole thrust
of our argument, what we are arguing for, is not Telewest-specific,
it is actually broadband for all, it has to be for everybody.
And the one thing I would like to see is the Government encourage
every Department actually to get to understand the technology,
go and play with it and come up with products which they can use
to get across to the citizen about what is going on. The whole
point about broadband is, at 55k it takes for ever to download
a photograph; at 1 megabit then, suddenly, wading your way through
a digitised museum collection, sorry to go back but that was just
a useful, simple example, becomes easy.
Chairman
405. Before I call Mr Fabricant, following on
the very final question that Mr Keen put to you, and really I
was trying to put this to you as a leading question, but, nevertheless,
could you say what damage, if any, is being done to the nation's
economy by the failure of Government to have a focused approach
on this issue, if there is such a failure?
(Mr Singer) It is remarkably hard to quantify; one
is aware, and you will know the numbers as well as I, of other
countries beginning to streak ahead. The real point is that the
quicker you have ubiquity of take-up of broadband the quicker
you have new businesses developing for it, the quicker people
see the advantage for it; it is how you actually create this as
a backbone culture. And the slowness is just slowing our ability.
It is a transport revolution; railways were a transport revolution,
`planes were, cars were, this is another transport revolution,
and we are not moving in it quickly enough.
Michael Fabricant
406. I appreciate how you welcome there being
an OFCOM set up, so that there can be a more integrated approach
to this whole problem, and it is a problem, because, as you quite
rightly said, neither Government, nor Ministers, nor Civil Service,
really understand the technology they are playing with, and they
do not understand, as you quite rightly said, what broadband is,
because some broadbands are more broad than others, and some are
distinctly narrowband. But do you think it is a disadvantage that
OFCOM, as I understand it, is going to be integrated but not integrated
as far as its responsibilities are concerned; i.e., it is going
to be responsible to both the Department for Culture, Media and
Sport and DTI? What is your view on that? Where do you see the
division should be; ought there to be a division?
(Mr Taylor) I think we have taken the view consistently
that it should have a single line of report to Government. It
does not seem appropriate at all for a regulator, that ultimately
has got to regulate the whole supply chain, to have potentially
different masters, in terms of policy. How that can be resolved
under the current situation really is down to the management of
OFCOM, once it is formed. But I think one of the things that we
have also pushed for is that it should start to be very conscious
of the impact of its decisions; we have certainly in-put into
reports, such as the Haskins Report on Better Regulation, looking
at the whole issue of regulatory impact assessment, not just on
the target for that regulation but for the impact upon the whole
market, or the whole supply chain. Now that, I believe, is a very
important point to be built into the responsibilities of OFCOM,
going forward. Certainly, it should not be silos, with potentially
different masters.
407. Yes, and, you see, I was quite shocked
when you said it took six months to see the Secretary of State
for Culture, Media and Sport; in six months things move on technologically,
and, of course, in the market it moves on. So would I be right
in saying that you would rather be under the auspices, or via
OFCOM, vicariously, of DTI, rather than DCMS?
(Mr Singer) Yes.
408. Now, tell me, let us talk about platforms;
yourselves, NTL and, to a degree as well, BT, have invested a
huge amount of capital in setting up this pipeline, if you like,
to provide broadband services throughout the United Kingdom, and
it is eventually throughout the United Kingdom, but technology
moves on, because not everyone has to wait six months for appointments,
and scientists meet, and maybe cable is not the long-term solution.
What is your view on that; what about new technologies, like low
earth orbit satellites, where there are two-way communications,
where people, like in the Rhondda, for example, who are not cabled
up could have access? Is this going to mean that in five or six
years' time cable is going to be something of the past?
(Mr Watson) LEOS, low earth orbiting satellites, were
an idea of a couple of years ago, as were barrage-balloons and
aeroplanes, that orbits continuously above the earth. I think
all of those have had their day, and, with the current capital
markets, have struggled to get off the ground; no serious pun
intended there. I think the value of cable is, literally, we put
a fibre-optic cable down to a cluster of 500 homes, and the ability
to do that, and when we have switched off analogue within our
own private band-width, we will be able to deliver up to 30 megabits
down to an individual home.
409. Can I just ask you about this; you say
up to 30 megabits, which is a lot, but one thing that I have been
understanding through this inquiry, because although I understand
the physics I do not understand the way it is actually being organised,
if you like, one thing I learned from a previous session was,
I think it was NTL that we were interviewing, I cannot recall,
when you say up to 30 megabits, if everybody is on line at the
same time that drops rather dramatically. Could you explain how
the Telewest system will operate?
(Mr Watson) Yes. What we have done, in that, the assumptions
behind that 30 megabit number are that we have 50 per cent penetration
of the homes that we pass, so, within that 500-home area, 250
homes; also, we have assumed there that up to 1 in 4 customers
could be on simultaneously. Now, today, network experience tells
us that, if you take 500 customers, only 50, 1 in 10, will ever
use it at the same time.
410. Even in prime time?
(Mr Watson) Purely bookable, on-demand type services,
inter-active type services. Broadcast and linear channels, I believe,
will be retained, in a small number, for prime time, major, public,
broadcast events; but outside of that, with non-linear television
and technologies that video-on-demand start to enable, then really
we are pushing towards that 30 megabit capability.
411. Can I just move on to the BBC, which is
something you mentioned earlier on, particularly the spawning
of all these digital channels. As you know, the BBC does not come
fully under the auspices of OFCOM; what is your view on that?
(Mr Singer) I think our view is, we cannot understand
why there should not be one regulator for all.
412. What about the argument that the BBC would
present, and that is, "We're a public service broadcaster,
we're not like the others, we're special, we're funded by the
licence fee, that's what makes us special;" that is what
they would argue?
(Mr Singer) I do not think it is really for us to
argue either for or against the BBC, in this current position.
I think you are going to see the interesting challenge, that any
broadcaster faces and the BBC will face, that, as everybody becomes
a multi-channel home, major channels like ITV/BBC will drop down,
and they are going to be looking at, tops, 15 per cent share.
And the question to the BBC is going to be very much how do you
achieve utilisation of signal to justify a licence, and they,
too, will start to have to look at how you provide more broadband
services, as well as classic linear television, actually to provide
that justification. So I suspect that is the way the argument
goes, and once you start going down that route you may as well
be under one regulator; but that is a personal opinion.
413. Do you have no comfort though that it is
up to the Department for Culture, Media and Sport and the Secretary
of State who can determine precisely how many BBC digital channels
there will be?
(Mr Singer) The question for any organisation, and
my comments apply to us as much as the BBC, is that all of us
have only got so much money, how far do you want to play the game
in depth or in breadth; and that is the issue that they face and
we face.
Chairman
414. Could I ask you one final question, I have
asked it of your counterparts on an earlier occasion. Twenty years
ago, the assumption was that cable would lead all of these developments;
what has gone wrong in those 20 years?
(Mr Singer) I think I am one of the few people who
actually was here, I actually joined the cable industry when the
Bill went through in November 1983 to allow it, so I have seen
these failed hopes up close. Originally, there was a lot of over-promise
for cable; essentially, it was seen as a device for delivering
multi-channel television, then it became a device for delivering
telephone. Actually, it has finally found its raison d'être,
the raison d'être was to provide megabittage, vast
quantities of megabittage; previously, when you were providing
limited band-width you just could not get enough return on that
limited band-width really to make it work. Now that you can provide
lots of band-width, clearly, the opportunities to get greater
return increase through the sheer amount of band-width you have,
and thus it starts to make sense.
(Mr Taylor) I think it is worth mentioning, I have
heard the use of the 20-year period, and no achievement over that
period, several times, but, if I look back at the statistics,
only ten years ago there were fewer than one million homes passed
by cable, there were only 2,000 people taking telephone lines
from cable and fewer than 200,000 taking television service; that
was in 1991. We had the duopoly review, we had the opening up
of the market to foreign investment, and we saw, between 1992/3
and about 1998, the massive spend; so all of the real growth has
taken place in a much more restricted duration rather than the
20-year period. So I think that is one point that is worth making,
an awful lot of growth in the mid 1990s, basically.
(Mr Singer) And UK cable is the only cable industry
in the world which has gone into a market, taken on the dominant
incumbent BT and taken away a third of its customer base; we have
achieved that.
Mr Bryant
415. And in relation to television, you have
also had the monopolistic practices of Sky, which have meant that,
effectively, public service broadcasters, because of the `must
carry' regulation for you, which does not apply to Sky, are subsidising
set-top box roll-out, for them but not for you; is that right?
(Mr Singer) I think that is a very good summary.
Chairman: On that note of harmony, we
will close this session. Thank you very much indeed.
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