TalkTalk trash talks BT

Boxing experts will tell you that their favoured sport is a noble art that owes its appeal chiefly to skill and has very little to do with ultraviolence. This is patently untrue. We watch boxing for the same nasty, mean-spirited reason that we watched playground scraps. That is, for the sheer bloody excitement of seeing people batter one another. A spat is inherently fascinating. And I’d just as soon watch two irate football mascots in animal suits going at it as I would Ali and Foreman.

Truth be told I’m just as entertained when broadband companies take to the ring for 12 rounds. And as previous contretemps have shown, this happens more often than you’d expect. This week it’s the turn of BT and TalkTalk’s subsidiary Opal to duke it out. And as you can see here, TalkTalk, which in playground logic is to blame since they started it, have not pulled any punches.

I’m especially taken with TalkTalk’s claim that their £10 business broadband offering is so goddamn cheap that it could force rivals to go under and prompt a wave of consolidation in the broadband sector. Equal parts hugely hubristic and insulting to competitors, it’s the sort of trash-talking that even Ali, who once famously rattled Joe Frazier by calling him an Uncle Tom, might baulk at.

Whether BT’s offerings will indeed suffer as a result of the new Opal deal remains to be seen. I’d like to think that the market could be shaken up further and God knows UK-based small to medium-sized businesses could do with a break right now. One thing we can say for sure is that as the broadband sector gets more cut-throat in months to come, we’ll get more of these set-tos. And best of all we’ll get see who the real contenders are. For now, it’s round one to TalkTalk.

Agree? Disagree? Let me know on: digitalmanblog@hotmail.com

March to mobile broadband leaves BT flatfooted

BT it seems is finally waking up to the mobile broadband revolution. According to a report from the Observer, the UK’s largest telecommunications company is considering launching a mobile phone network. The move comes after the firm spectacularly failed to cash in on the mass migration of broadband to mobile devices such as laptops and phones. This, it’s fair to say, hasn’t gone down too well with BT’s shareholders.

And indeed why would it? Latterly, the company has appeared to lurch from one crisis to another. Worse-than-expected profits for the last quarter of 2009 were followed by the announcement of plans to cut costs by shedding thousands of jobs. The misery was compounded last week when the firm announced a second consecutive profit warning, alongside the news that its shares are now trading at near-20-year lows. The blame we were told lies with the global economic downturn since the Great Depression, blah, blah, blah.

But does it, really? Given BT’s failure to capitalise on the exponential growth of mobile broadband, it’s hard to look at chief executive Ian Livingstone’s management and not posit that some of the blame for the company’s shocking performance must lie with him. Not least because over the last 12 months, the number of UK mobile broadband users has grown to 7.3 million. That’s billions of pounds of revenue that has gone to smaller rival providers due to BT’s inertia to reacting to the seismic shift in the market.

In order to remedy their parlous situation, BT is now in talks with T-Mobile and 3 with a view to launching a mobile phone operation. However, by the time that these preliminary negotiations have become something more concrete and the specifics of branding and costs have been hammered out, it’s likely that up to a year will have passed. So that’s another 12 months of potential profit that BT will miss out on.

But if all this just meant a lower dividend for shareholders for a couple of years, it wouldn’t be a problem. After all it’s not really our concern. But alas that’s not the case. As a consequence of this mis-management and lack of market awareness, BT is now threatening to renege on pledges to fund the roll-out of the fibre wire network. The result? The taxpayer could now be forced to shoulder the burden.

Once upon a time thanks in part to its charming and successful ad campaigns, such as those starring kids’ favourite Buzby and Maureen Lipman’s Beattie character, and the bold modernistic architectural style of the BT Tower, BT was seen as a great British institution a few rungs down in our affection from the BBC. However, once we’ve dug into our pocket to bail them out, it’ll be just another struggling company whose financial imprudence we’re irritatingly having to bail out.

Broadband New Deal - Too Little, Too Late

This week Gordon Brown hinted that the government could be prepared to fund the development of a next-generation broadband network for the UK. It was a move welcomed by ISP’s shareholders, who are fearful of the impact that financing such a network would have on their dividend, and rank and file employees who are fearful for their jobs.

It was also embraced by economists on the grounds that the government is displaying foresight to recognise the importance of a next-gen network to the nation’s economic health and is ensuring the UK’s competitiveness in the global economy in years to come. Prudent Gordon we’re invited to believe is some sort of economic next-gen visionary who sees high-tech industries as the salvation of our economy. You’ll forgive me if I demur.

Surely if this were the case he’d have impressed upon telecomms the importance of a fibre-optic network more vehemently over the past five years. Instead they’ve been offered scant financial incentive to invest and have come under even less in the way of coercive strong arm tactics. The result is that the much-touted roll-out of a fibre optic network has been a total non-event. What’s especially galling is that had they been legally compelled to start committing money to the cause at a time when their incomes were booming it would have been less of a challenge to meet the £30 billion cost of construction.

Instead what’s happened is that we’ve had to wait until the country is on the verge of economic meltdown before any action has been taken. This leaves taxpayers bailing out companies who until recently had been enjoying huge profits from us as a result of the UK broadband boom.

These developments have however left one ISP looking like a shining model of virtue next to its peers. Virgin Media has funded its fibre optic network at huge expense and is now offering 50Mb to over 1.5 million homes with 12.6 million in line for the service by summer this year. In contrast, its larger rival BT, which has repeatedly dragged its heels over committing funding, emerges with its reputation, for me at least, eternally sullied.