The time has come to move from confrontation to co-operation in the roll out of rural broadband

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BT is under attack from all directions at a time when it will be seeking to maximise cash flow to fund its entry into the quadruple play market. With hindsight, Ian Livingstone may well have optimised the timing of his departure, especially if he is forced to part with his shareholding at current market prices. But I rather hope that his successor will use the opportunity for a change of tactics which could not only do even better for BT shareholders (and here I declare a vested interest) but also for UK plc.

The most serious threat to BT, even though it is by no means the only player under assault, is the OFT enquiry into supply of ICT services to public sector . This not only adds a cutting edge to any follow up to the NAO enquiry into value for money from the BDUK framework, it also opens up the opportunity for assaults on BT's commercial practices from its competitors in any and all public sector markets, not just  central and local government but also education, health and law enforcement. Given that public sector spend will be under pressure for the next decade or so and given BTs need to fund its content operations and upgrade its core networks to provide the necessary quality of service, the obvious way forward is to use the opportunity to politely exit those markets which are a net drain on resources. And exiting a market gracefully, especially if you hand over to partners you can work with, can be highly profitable. 

Thus instead of seeking to justify deficit funding models for rural broadband and to win every drop of business where public subsidy might make a difference between loss and profit, the BT strategy should be to work with any partnerships capable of building and maintaining  local networks which will operate to the appropriate (international) standards. BT could then leave to others the hassle of pooling funds, organising subsidies to others and tailoring networks to local need. Its side of the bargain would be to offer trunking (and all its other services, including content) to connection points with succesful local partnerships. It might also support the process with terms and conditions for taking over operational responsibility should the partnership go down - provided the local network has been built and operated to the relevant international standards.

The benefit to BT is not just the savings in cash flow and funding costs, but the management time. The latter will be at a premium as BT takes on Sky, Liberty, BBC, ITV et al over content, and Vodafone, EE, O2 et al over the converging mobile/wifi markets. Fighting the OFT at the same time is a challenge too far.

I personally believe that BT would similarly benefit from supporting, not opposing, the various inner city dark fibre projects, provided it too can use them to cut the cost of providing greatly improved access from teleworkers and business parks to data centres and cloud services, including G-Cloud.

Those who think that BT can take on the OFT and win should remember the fate of AT&T and its ambitions. The time has come to turn on the charm. A surprising number of BTs small competitors are run by those with residual (and in some cases not so residual) BT pensions and a dual loyalty at heart. Clarity as to which parts of the UK are not, and probably never will be, economic for BT to serve, and entering into win-win partnerships, to also win back public, political and business good will, would greatly reassure this shareholder that BT does indeed have a life after Livingstone.       

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This page contains a single entry by Philip Virgo published on July 5, 2013 7:24 AM.

What's in an (electronic) Name ... ? From restoring confidence in .UK to the identities we use for communicating with HMG was the previous entry in this blog.

Building on the NAO Report into the Rural Broadband Programme is the next entry in this blog.

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