Examination of Witnesses (Questions 1120
- 1128)
WEDNESDAY 28 NOVEMBER 2007
Mr Malcolm Wall, Mr Paul Richmond, Mr Jon James and
Mr Scott Dresser
Q1120 Chairman:
You are becoming veterans of the competition legislation/regulation.
Is there any way that you would like to see it improved, any suggestions
or proposals?
Mr Wall: I would echo what Michael Grade said,
that one area is speed. This is a very fast-moving business and
there is a danger that we take a snapshot of the business that
develops so quickly thereafter. We have got this also in terms
of what Ofcom are doing. Largely we welcome the Ofcom process
of a market investigation that is taking place that does not look
at a particular case but steps back and has a look at the market
overall, which we very much welcome, but again with the proviso
that they are sufficiently resourced in order to move at speed
and in order to make a judgment that actually has an impact rather
than makes a ruling once the market has moved on.
Q1121 Chairman:
Your counsel feels that legislation, both in the Enterprise Act
and in the Communications Act, is clearly set out and everyone
can understand exactly what is required?
Mr Dresser: It has certainly been tested now.
Q1122 Chairman:
That was not quite my question.
Mr Dresser: We have taken issue with a number
of provisions but it seems to be working and we will see how this
plays out.
Q1123 Chairman:
Are you still interested in taking over ITV?
Mr Wall: If I may I will jump that question.
There is a time and a place, there is a 17.9% blocking stake there
so it is all somewhat academic.
Q1124 Bishop of Manchester:
You will be aware that in The Times this morning there
is an article in the wake of the departure of Virgin Media's head
of strategy and some references to the role of Mr Birkett. Among
the things that are commented on is, "The turbulent history
of the pay television and broadband group ... the myriad troubles
that the group has been facing ... Mr Birkett has conceded that
the group's status with its listing and key investors in the United
States but its operations in Britain was a bit odd." I wondered
if you would like to comment on the article.
Mr Wall: I do not believe that particular article
is necessarily influenced by the owner of the publication; however,
part of that is factually correct even if the language is somewhat
exaggerated. We have had turbulent times in cable. In response
to one of the early questions about how cable was structured,
what has happened to cable, why is cable not as great a competitor
or is not in the same status as it is in the US is because the
way it was structured has led to a number of financial restructurings:
it has been turbulent. It has been hard to put the businesses
together and subsequently we have had some management changes.
It is not altogether unexpected; you bang two businesses together
and you do have those. The shareholding structure is again down
to history. As part of the restructuring back in 2005 the junk
bond-holders or the debt-holders were converted to equity and
they were largely US organisations which led to a Nasdaq quote.
Q1125 Chairman:
Are you profitable now?
Mr Wall: We are profitable to the EBITDA line
and we are there or thereabouts once you remove the capex and
interest payments.
Q1126 Baroness Eccles of Moulton:
Could I just ask a very quick one? This is just out of ignorance
and it is just a material question. When you bought NTL:Telewest
were the cables that they had installed entirely fibre optic?
Mr Wall: As of today we are largely fibre optic
and, at this late stage, I can bring my right winger in. How much
is analogue?
Mr James: A few hundred thousand homes.
Mr Wall: A few hundred thousand. We have a small
leftover of analogue homes which have a lesser experience.
Q1127 Baroness Eccles of Moulton:
Now you have introduced another factor which I am not going to
pursue.
Mr Wall: If I may, we have a big fat pipe network
but at the end of some parts of the network it is a slimmer pipe.
Q1128 Baroness Eccles of Moulton:
Lord Maxton drew a distinction between poor old-fashioned BT with
copper wire and you who were up to speed with a much wider spectrum,
band width.
Mr Wall: We are, except for small leftover areas.
Baroness Eccles of Moulton: Which we
will keep very quiet about.
Chairman: Thank you very much, Lady Eccles,
for bringing these important issues in at this point, but we will
actually draw it to an end if we might. Going back to Lord Inglewood's
point, if you have got any more evidence, which I think at one
point you did say in your evidence, we would be very grateful
to receive that. If, on reflection, either looking at the minutes
or reflecting on this meeting you have other things that you would
like to put in front of us, we would be obviously very happy to
receive them. In the meantime may I thank you and your colleagues
very much indeed for the trouble you have taken and the very clear
way you have given your evidence.
| 
