Examination of Witnesses (Questions 440-444)
CABLE & WIRELESS
PLC
13 JULY 2004
Q440 Mr Clapham: Is it possible to say
where some of our main competitors are at in Europe, for example?
How are they closing the gap? You mentioned, for example, your
own country, Italy, are there others?
Mr Caio: I go back to broadband,
because broadband is a key driver from a consumer end of the speed
and ease with which you interact in buying services. We were talking
a moment ago about music; and the speed with which you can download
music is a function of the propensity you have to buy it online.
Forget the issue of piracy—intellectual property rights
is a big issue in this industry and it will become even more so
going forward. If you just stick to the very simplistic example
of somebody wanting to buy a piece of music in narrowband or broadband,
you might consider the idea of downloading a CD in three minutes
on the network if you have broadband, but you would probably prefer
to go out and buy from a shop if you are on narrowband where you
need to dial five times and spend the afternoon at home to get
the piece of music. As we move to a service economy, and we have
the data here for the time needed to download a DVD video, for
dial-up it is seven and a half days; with a DSL of 20 meg, which
is available today in Korea, it is 26 minutes. These are the fundamental
drivers of e-commerce. It is also fair to say that companies are
increasingly realising that it is a kind of virtuous circle. The
higher the population which is online the higher the propensity
of companies to invest into systems capable of delivering those
services online. As you can imagine, music or content is the most
evident type of trend, but there is an increasing number of financial
services being delivered to consumers through online services.
Clearly, in France and Italy we are now seeing a rapid growth
of those services and users of those channels, because it is a
function of the audience you have on the other side of the country.
There is a virtual counter; if it looks pretty and it is broadband
you will have customers buying; if it is not then it is much more
difficult.
Q441 Chairman: We have been told that
the main characters in the communications story are Internet and
e-mail, but they bring with them additional problems—SPAM,
for example, inappropriate mailing. We have had expressions this
morning from our previous witness about security concerns. As
a commercial provider of Internet services what are you doing
to promote the confidence of consumers in using e-commerce?
Mr Caio: Security on networks
in general has always been a big issue irrespective of the network
you are talking about—from roads, to electricity grids,
to telecommunications. We at Cable & Wireless have invested,
and continue to invest, in creating secure environments for the
services we offer. For instance, in the area of e-mail, we are
in a position to offer online services such that before e-mails
are delivered, they are filtered and scanned to understand their
origin and, to a certain extent, if they have viruses or not.
There is no doubt that we will continue to invest in this area.
I think there are other initiatives we are looking into, again
associated with the ability to put consumers in full knowledge
of the options they have when they navigate on the Internet, and
creating an opportunity for them to positively, actively choose
to go the way they are going. I am confident there is an industry
acknowledgement of this issue that is much higher today than it
was two years ago. I see an increasing amount of capital going
into investment in this sector.
Q442 Chairman: That is helpful. Perhaps
one last question. The implication we have had this morning, and
this is where we started in some cases, is that the incumbent
has had a dominating role which, to an extent, has limited at
least in part the competition you would see as a major driver.
By the same token, would I be right in saying there is an implied
criticism of the degree of regulatory involvement here, that perhaps
the regulator, Oftel, could have been more proactive in pushing
the level of change and the opening up of a liberalised market?
Mr Caio: Again, we would prefer
to look forward.
Q443 Chairman: Let me put it the other
way then: have you more optimism in Ofcom than you had in Oftel?
Mr Caio: The answer is absolutely,
yes.
Q444 Chairman: Could it get any worse
or is it going to get better?
Mr Caio: It should get better.
It is difficult to see how it could get worse, let us put it this
way.
Chairman: I think we will finish on that
note of cautious optimism! Thank you very much. If there is any
additional information—and you have been very generous in
what you have given us already—we will be in touch. Thank
you very much for your time so far this morning.
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