Chairman admits BT is an endangered species

Iain Vallance admits BT has lost the war on Internet prices

In a keynote speech at the Telecommunications Managers Association conference in Brighton Monday, BT chairman Sir Iain Vallance described the telco he heads up as "an endangered species" and admitted BT had "lost the war" on Internet prices.

In a speech designed to silence the stream of criticism BT has faced from ISPs, users and government in recent weeks over Internet access charges and rollout of ADSL and, Vallance claimed BT was playing the role of a "lollipop man trying to restrain the over-exuberant children,"

Vallance echoed the words of his fierciest critics. "It is said that BT stands between the UK and the brave new world of the Internet and that it will have to be dragged kicking and screaming into that world," he said. Admitting the PR war was lost, Vallance remained defiant. "We have lost the war of words and once you have lost a war you have to deal with the peace."

To make that peace, Vallance defended BT's decision to operate in a commercially aggressive way and claimed the knowledge-driven age was not as important as the experience BT has at running the UK's telecommunications network. He accused his critics of living in the past. "They are living in the pre-privatisation eighties with a feeling that decisions should not be commercially driven," he said. "Everyone knows better than BT. Perception has lost contact with reality," he said.

On ADSL services, Vallance claimed the technology was not yet "fit for purpose" and that market demand was not sufficient to justify the cost. Experts predict ADSL will cost around £40 per month. Vallance did not argue, claiming prices would only come down when common standards are adopted around the world. He defended the slow roll-out "We decided to defer mass deployment of an immature technology and we made the correct decision," he said. Despite this, BT will equip 400 exchanges serving six million households by the spring of next year, Vallance said.

Vallance blamed antiquated number translation rules, designed in voice-only era for BT's inability to offer new tariffs for Internet access. "In effect, the regulatory rules for calls to the Internet promote BT into the role of tax collector on behalf of the other interested parties. We gather the money. We hand it on. And we take the flak," he said.

Vallance hinted that if the Number Translation Scheme (NTS) whereby revenue is shared between BT, terminating operators and ISPs were updated by Oftel, prices would come down but warned that free ISPs might be the casualties.

Finally Vallance sought to dampen enthusiasm for the Internet. Highlighting problems of privacy, viruses and legality on the Net, Vallance questioned the technology. "It is, in many ways, in its infancy and not yet fit for purpose," he said. "Not to put too fine a point on it, the computing world has a very long way to go to match the standards of reliability and ease of access of broadcasting and fixed telecommunications worlds."

Vallance did not stay at the conference to answer questions, heading back to London to deal with the issue of local loop unbundling. Oftel is due to announce today that BT will be forced to hand over the keys to its network in July 2001.

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