Examination of Witnesses (Questions 80-83)
1 MARCH 2005
Ms Karen Thomson, Mr David Carr, Mr Eric Abensur,
and Mr Simon Persoff
Q80 Mr Clapham: That is good to hear.
So your concerns, really, come down to the discrimination in the
market and the feeling that Ofcom have got to be positive in dealing
with that?
Mr Persoff: Yes. Ofcom is a national
competition authority as well as a national regulatory authority.
In its Strategic Review it has recognised the fact that competition
law has not acted as a constraint on BT's behaviour up till now.
We are part of an international company, which has its historic
operator in France; it is our position that where competition
law acts as a competitive constraint on the incumbent to the extent
that they are not engaged in unlawful activity, then such structural
measures as are being suggested (and may even go further, according
to some of our competitors) may not be necessarily appropriate.
However, to the extent that there is clear evidence that BT is
not constrained by its competition law obligations then equivalence
is appropriate.
Q81 Chairman: How do you view BT's proposals
to reform themselves? Some people have welcomed them, some people
have said "We'll have to wait and see how far they actually
go", and other people have been telling us that they are
a bit thin on the detail; that they have the bones but not much
flesh. Are you in any way concerned about this restructuring of
BT or is it not something that is a great source of anxiety to
you?
Ms Thomson: I am quite a practical
person and while I think good intentions are wonderful things,
you do not get many points for that. I have been in the industry
a very long time and I have heard lots of good intentions from
BT about how they are going to operate as a wholesale provider,
and on the matter of equivalence that is a very good intention
but what I want to see is them operating like the best wholesale
type of companies that we work with in other sectors. The intentions
and what they are saying are very good, but it is really about
the practical details, it is about saying "If you are going
to launch certain types of products then what are the required
services, what are the support systems that go into that? What
can we (AOL) as customers, expect?" If the equivalence agenda
works then we will essentially have that which mimics structural
separation; it will be a true wholesale market for our (BT's)
customers who do have the kind of input that we have in other
commercial situations. I have heard BT say a lot of those things,
I still have not seen an overwhelming drive from the company to
operate like that. David is the person in our business who operates
with BT on a day-to-day basis, so do you want to add anything
to that, David, in terms of the practicalities?
Mr Carr: Coming back to the way
that Ofcom is looking at the regulation, they are talking about
a light-touch regulatory strategy, and that seems to us sometimes
to support BT's infrastructure investments rather than rolling
out the LLU process and really driving competition. We are keen
to see Ofcom actually get its hands dirty on some of this stuff
and drive down into the detail. It is great that they have set
themselves a strategic framework, but I think now what we really
need to do is to see them start delivering on some of the practical
stuff, and that includes to force BT to put some more detail of
what they are talking about in terms of equivalence and actually
to see it working and operating and driving results.
Q82 Chairman: Just one last question
to you, on the impact of Next Generation Networks. How do you
view this in relation to the products you will be providing?
Mr Abensur: If we are—and
we want and we must be—to be thinking always about the consumer,
if we talk about giving much more high speed, if we talk about
developing a new form of communication in services, to provide
entertainment and communication services to the world through
broadband and through DSL technology, Local Loop Unbundling, obviously,
as we can observe that across Europe, is a very good route to
do that. If we were talking three or four years ago about developing
15 megabit speed over DSL, I think few people would have believed
it was achievable, and today we talk about 20-25 meg. It is not
only about having the DSL technology enhanced every time; we talk
about compression, we talk about new application and services
that can be provided to the customer much easier. Do we need to
talk about New Generation Network when we have today a copper
wire which is available that can improve and enhance and provide
all sorts of services? We are talking today about providing home
watching through DSL technology with a WiFi connection; we are
talking about mobile and fixed conversions through DSL, GSM, 3G
network. We have all this technology available today. Make them
work. Once again, we talk about Local Loop Unbundling, that is
three letters, and as we mentioned earlier it is just at the beginning,
so let us try to use this extraordinary network available to this
country successfully and be available as much as possible to everyone.
Ms Thomson: I would add to that
there is an implicit assumption that innovation will come from
BT's roll-out of new network technology, whereas I think we would
agree with what Eric just said, which is that we have a network
available, let us get out there and get our customers on to it.
We both come from companies that have a history of innovation
and bringing new products and services to market; what we need
is access to the infrastructure and the actual certainty in terms
of getting out there to enable us to move on to different services
and platforms. That should not be uniquely delivered by BT; BT
will make certain decisions about reducing its operating costs
and opening up new networks that allow it to do that, but the
innovation agenda is something that I think the whole industry
can actually contribute to. I think there is a distortion; an
assumption that BT will bring products to the market and then
we will necessarily buy them; what we want is to get out there
to have access to the infrastructure and then I think competition
will deliver a whole range of services that are really only starting
to be thought of at the moment. The question is how fast can we
get there, to get that competitive environment operating as broadly
and as deeply in the network as possible?
Q83 Chairman: What sort of requirements
are there of the regulator in relation to NGN? Is it to have these
what seem like endless consultation processes, where everybody
gets first, second, third and last words, as it were, or do you
have to move more quickly?
Ms Thomson: First of all, there
is one thing we could do, which is to bring IP Stream back into
the regulatory framework. If you bring that in there is more certainty
and, therefore, the business cases start to be built in a different
environment. That is the first thing we could do. The second thing,
really, is about setting very strong service standards around
the delivery of LLU. I think the adjudicator is doing a good job
on that, and we need to push further and faster, because the big
customer bases have not migrated yet; as I referenced earlier,
the thought of moving in excess of two million customers is a
really significant move. These are two things that would support
the next stage.
Mr Abensur: I do not have anything
to add specific to that. Stability: let us get delivery of Local
Loop Unbundling in this country. It is a formidable opportunity
we have; we have key players willing to invest in that—Tiscali,
AOL and Wanadoo—that have already got 40, 50 or 60% of the
market. We are willing to get there, we are wiling to bring those
new services to our customers; it is a formidable opportunity
to invest money in this country, and we want to do that.
Chairman: Thank you very much. It is
very often in these inquiries that, when we have had a lot of
other witnesses, the last witnesses seem to get a shorter time,
but I think in some respects the clarity and precision of your
responses have been such that we have not taken very long, but
please do not think that is in any way a lower consideration of
your evidence, because it was helpful. If there is anything else
you want to let us know about then please get in touch. We may
well get back to you on one or two points once we have crawled
over what you have said. Thank you very much.
|
