Eye2Eye: John Pluthero talks to ZDNet, Part III

In part three, John Pluthero talks about Oftel's role, what he told Tony Blair and the rumours about BT.
Written by Richard Barry, Contributor on

Part I

Part II

On the ADSL trial: We were supposed to start on 22 November 1999. We started in February. They [BT] gave us 150 lines. We only have about 10 people up so far, because every time we say, "One of our trialists would like to sign up", BT says "Oh no, we can't do that." Either it can't fit it, or it can't do that exchange any more, which it said it would do, and so on. It hasn't got its stuff together on any of this at the moment."

You're obviously not happy about it at all

No, BT is holding back the narrowband market. It is holding back the broadband market.

We interviewed Patricia Hewitt recently, and we told her "BT appears to be dragging it's heels on ADSL". She said "no". She flatly rejected it.

I met Patricia Hewitt myself, and I had a conversation with Tony Blair about it as well. Earlier in the year, I think it was before Christmas, my representations were very simple. That I'm 100% behind what you say publicly, about wanting to drive down access price. Free access to the Internet would do me a power of good. So I absolutely applaud that.

Secondly, be very careful how Oftel is interpreting your desire to see reduced prices, because then there is a risk of it saying, "the way to do this is to cosy up to BT and let BT come up with some products". This will bring traffic back to BT and reduce competitiveness. In the short term, you make a little jump. You get to £9.99 off-peak, but you don't get any further if everyone has got to use BT. So be very careful how that plays out in practice.

Give Oftel the necessary resources to really understand what's going on. BT has a bigger department of people fighting Oftel than Oftel's got people. I'm not sure at the nuts and bolts level whether Oftel has all the resources it needs to really dig into this and understand it. ADSL and the Surftime product is the same kit that is going into exchanges to deliver both. We have very high ADSL pricing. Is there cross-subsidy and how does it work?

I make a simple point to both of them. We did something special in the UK with Freeserve: Removing subscriptions. We got a lot of coverage worldwide for our innovation and our positive impact on the Internet. We can blow all of that away, like ADSL and be the last man in Europe to get on with some of the stuff. Unless we really pull our finger out and get to it.

That requires BT to be unlocked. Local loop unbundling would do it for sure, because then you say any telephony operator can come in and set up propositions for the customer. BT is fighting real hard to do it as late as possible, undoubtedly. But my appeal to BT was that if you want to achieve what you want to achieve, this is not so much a commercial thing. We're a commercial enterprise, we're there to make to make money. But if you want schools to be on the Internet, if you want to democratise politics in the UK by allowing people to understand policies, to have instant votes and referendums and enfranchising the lowest and the poorest, then you have a real interest in seeing this happen. All the rest of us want to see this happen. There is only one thing that doesn't, and the trouble is they sit on the gate to all customers -- and that's BT. And frankly, we can either get on and achieve, or we can be an embarrassment internationally.

So do you think when Tony Blair goes back on stage and says, "I do want schools to be online, and I do want cheap access so that we don't have social divide between the rich and poor", he is being sincere? Do you think he means what he says on that ?

Yeah, I believe they are absolutely sincere on that. Peter Wilkinson of Planet, who we did the original equations with on Freeserve, said it at the time -- the reason he wanted to create Freeserve was for the children. Now that sounds horrible and clichéd, but it's a hugely empowering and levelling thing. It creates an enormous opportunity for people to learn and understand -- and all the rest of it. And I do believe they are sincere. But as is usual in life, having the desire is only half the battle. You need the tools to go away and deliver it. The tools are about getting BT to do some of these things.

Do you think government intervention is required as AOL has suggested?

I don't think it works, unfortunately. BT has shareholders. And those shareholders bought BT stock on the basis of particular regulatory environment that will govern BT's future. You can go around and treat it like a nationalised industry and say, "These are your local telephony charges, go away and do it." Statutorily, commercially -- that is kind of impossible.

AOL is desperate that the infrastructure of the Internet and the charging on the telephony, and the rest of it, comes back to meet it somewhere in its subscription model -- because it is under threat worldwide.

I think it needs to be far more subtle than stepping in. I think, in practice, BT will do it out of fear or reaction in some shape or form. It's difficult to know what can be done right now, to unlock it quickly. You can't issue an edict. There's no structure in the UK, which will allow you to do that. Indeed, when Brown gave a speech saying, "Local loop unbundling quick", Oftel said, "Hang on -- no-one has spoken to us." Then Bonfield got up and said, "You can't do that." Technically, he's absolutely right.

Is the problem that BT is acting on behalf of its shareholders?

That inherent problem of having a national infrastructure owned primarily by shareholders -- that was a debate that raged 20 years ago about privatisation.

I think BT would be worse without being private by now, thank you. There is a mechanic to make it happen. The mechanic is the capitalist market itself. It's the capitalist mechanic. It's the fact that BT is a publicly quoted company that will be the mechanic to make them do this.

If you look at its share price performance, it is down the pan. And it will continue to go down the pan as long as BT shareholders think that they are mucking this up and not getting the picture, and that they should be getting those things. There is a point at which those shareholders say to the management, "This is not acceptable", and we'll get some sensible people in here who are going to take the market on, or the existing management will say we have to do something to halt this decline. Therefore, let's be bold, let's be brave and do it. And I think that mechanic, well you can see it working today.

The market is rife with speculation about major reorganisation. With Bonfield going, Angus Coburn... who's going to do what? Are they going to spin out the Internet? Are they going to do that? They are under pressure to act. Let's see if the system works the way it should work. I suspect it might work pretty well.

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