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Jane Wakefield: BT caught in the offside trap

BT receives yellow card as a warning from government over its Surftime offer
Written by Jane Wakefield, Contributor on

What Manchester United is to football, so BT is to telecoms -- the company people love to hate. Like Manchester United, BT is a British institution with plenty of cash and a high public profile to maintain. But while Man U has no problem scoring goals, BT is increasingly missing the Net.

Last week started badly for BT, with confusion over the price of its Surftime package. BT's flagship unmetered service -- offered, of course, as a result of its forward-thinking Internet policy rather than government pressure -- was announced to a fanfare back in December.

The fanfare, though, was followed by silence. ISPs were incensed and confused over how revenue share would work. Nobody was over-impressed with the £34.99 price tag for monthly unlimited Internet use. Then Telewest came along and stole BT's fire, with unlimited monthly use for £10.

BT claims to have had a "very positive response from ISPs", which is PR-speak for "not that great actually". A member of BT's own ISP group -- caught off-message for a second at the ISPCON exhibition in Olympia -- admitted that the majority of service providers wanted "something different" from the Surftime offer on the table.

BT has responded with an attitude approaching contempt. "I wonder why the ISPs don't like it?" a BT spokesman asked me last week. "Could it be that it is because they won't make any money out of it?" Well yes, that may well be the problem. What I find amazing about this, is BT's ability to wear two faces.

When ISPs don't like one of BT's products, it comes over like a lentil-eating liberal, as if worshipping at the temple of Mammon is an activity it would never get involved in. Yet, when anyone questions the company's own obsession with making profit, it puts on its red braces and pinstripe suit and wears a smile for capitalism -- "of course we want to make profit, what else would we be in business for?"

Whatever it thinks of the ISPs it has been forced to climb in bed with, BT cannot get Surftime out of the door without them. So it looks as if BT will be forced to change the prices announced in December, and has admitted that they may change before the April launch. According to BT, this is perfectly normal procedure. "The market is changing very fast," it claims. Oh really? That must be why BT is coming to market so quickly with unmetered tariffs, ADSL, and so on. Forgive me for finding it bizarre that a product announced two months ago is already out of date.

If that was a bad start to the week, it got a whole lot worse. On Wednesday, government goliath Gordon Brown made it clear that the current lack of competition and high prices was stifling e-commerce, and that the local loop needed to be unbundled more quickly.

The power of words -- especially when they come from the mouth of the Chancellor -- should never be underestimated. Overnight BT's share price plummetted by £2bn, and the next day the company told the Chancellor to shut up, stating bluntly that treasury and telecoms don't mix.

Which raises an interesting question about where the line is drawn between government pressure and interference. The Internet is, according to the government, a major communications revolution. Revolutions are usually about making things better for the majority, but ask the man-on-the-street if he is prepared to pay £420 a year (which is what unlimited Internet access from BT would currently cost) to be a part of the new Net epoch, and he will probably say no. So how far should the government interfere to drive costs down to man-on-the-street level?

The government is desperate to get everyone online and scared of creating a divided society -- those able to afford access enjoying information riches while the rest of the population stumbles in ignorance. As people start shopping online in ever greater numbers, the idea of per-minute paying for Internet access becomes as ludicrous as doormen at Marks & Spencer charging a fee for entering the shop.

The government seems to agree, advocating cheaper Internet access more and more loudly as the months go by. E-Minister Patricia Hewitt has made it clear she is in favour of unmetered access.

On Friday, ZDNet News interviewed e-Minister Patricia Hewitt -- who was less than willing to admit BT was holding back UK Net adoption. MPs, it would seem, are firmly toeing the government line. At points, it was difficult to tell if Hewitt was on-message for the government or for BT. She staunchly defended the telco, refusing to describe it as a monopoly, and claimed that competition in the Internet market was flourishing. She pointed to Telewest's £10 a month offer as the direction she hoped prices would go in. Which, to me, seems like a strange example of competition. Telewest only reaches around four million households -- now I don't call that an example of a flourishing or competitive market.

I think the government needs to get a whole lot firmer with BT, otherwise its speeches about e-commerce and Internet opportunities will become empty soundbites. The Internet is just as important as TV. However, we pay £100 a year for a TV license -- BT wants us to pay four times more for Internet access. And, while mobile, cable and all the other technologies are snapping at BT's heels, the telco still controls 85 percent of home phone lines. So we don't have any choice but to look to BT.

Manchester United lost three-nil to Newcastle recently, proof positive that those at the top of the pile can't maintain a winning streak forever. With reports that Deutsche Telekom and US-based SBC are sniffing around the UK's largest telco with a view to take-over, perhaps BT should take heed. Even if it manages to win back the affection of its share-holders, it is certainly losing the real match -- between its profits and the online needs of its customers.

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