I D É E S   F O R T E S    Issue 1.08 - December 1995

Labour Sells Out to BT

By John Browning

Not wired, just weird. When the history of Britain's lane of the information motorway is written, the October 1995 Labour Party conference will hopefully go down as its most surreal moment. This was when Tony Blair put information policy on Britain's political agenda, announcing a deal with British Telecom to speed construction of high-bandwidth networks. Many - even among his own advisers - wished he hadn't. It's hard to imagine a more clueless or counterproductive policy than this deal.

Here's the proposition: BT agrees to connect schools, libraries, and hospitals to high-bandwidth networks for free (although they will continue to charge for usage). In return, a future Labour government promises rapid approval for BT's plans to compete in the cable television markets. Cool soundbite; bad policy. Here's why.

Four assumptions underlie this deal. One, that the information motorway will not get built without BT's muscle. Two, that connecting schools, hospitals, and libraries is a burden to BT. Three, that cable entertainment will be a gold mine for BT. And four, that the best way to reward the company for shouldering the burden of schools, libraries, and hospitals is to allow it to use profits from the gold mine of cable entertainment to subsidise its other activities. All of these assumptions are wrong. And while the misconceptions are entirely those of BT and Labour, it is the rest of us who are most likely to suffer the consequences.

The information motorway is already being built. The Internet connects more than 5 million computers and tens of millions of people across the globe. The Internet is controlled by nobody, and it has for the most part grown despite government's lack of interest rather than because of its encouragement. Britain already has more computers connected than any other country in the world save the United States - and BT has done very little to help.

Although regulators ban BT from cable entertainment, there is no reason why it could not compete to provide Internet services and build the data-carrying parts of Britain's information motorway. But it doesn't. Unipalm's Pipex is the leading provider of Internet connections to business; Demon and other small start-ups provide the same service to individuals. Cable companies like Videotron are rushing into videoconferencing and data services.

The immediate impact of Labour's deal with BT will simply be to slow progress to BT's plodding pace. Today, new competitors are investing hundreds of millions of pounds in the infrastructure needed to compete with BT. Now that Britain's probable future government has said that it will back their most powerful competitor - in some vague way, the details of which neither side is willing to discuss - many will simply stop investing.

Back in the 1970s, both European and American trustbusters banned IBM from announcing forthcoming products. IBM, they said, had so much clout that its announcements scared away competitors and made customers reluctant to buy. Now, ironically, it is Britain's politicians themselves who are spreading fear, uncertainty and doubt across the markets they say they are trying to help.

And it's not as though schools, hospitals, and libraries are helpless charity cases that'll simply languish until big BT comes to their rescue. The NHS, with 1 million employees, is Europe's largest organisation. Its data network, parts of which will start operation early next year, will be one of the largest nonmilitary communications systems in the world.

No matter how much Bob Hoskins tells people that it's good to talk, the NHS, the Internet, and other data services are the likeliest sources of the traffic that BT needs to grow. Apart from business, it is schools, hospitals, and libraries that are the biggest potential sources of data traffic. In other countries, companies bribe their way into fast-growing markets. Labour wants to bribe BT to enter them.

True, the market should be growing faster. Many schools and libraries are short of money to buy networking services. But that is a reason for government to finance schools and libraries properly - not an excuse to condemn them to the information poor house, dependent on the charity of a giant corporation. Schools in particular should be empowered to buy what they need, not just left to take what they can get.

Irony can console as well as sting: BT's chances of making money on cable television are about as bleak as those of its cashing in on data traffic are bright despite the fact that cable is now a much larger market, and will remain so for the foreseeable future. BT can only hope to be a late third-comer into cable markets, behind both satellite broadcasters such as BSkyB, and the existing cable operators. High-tech markets are not usually kind to latecomers.

But even the most pathetic cable-entertainment revenues can still wreak huge damage if they are used to cross-subsidise BT's offerings in data-networking. In effect, this would allow BT to knock out competitors not because it offers better services but because it is bigger - with more sources of income - and thus can hold its prices artificially low until competitors give up. In most markets, this is called predatory pricing, and it is outlawed.

So there it is. Labour's proposed deal with BT would hand one of the fastest-growing sections of the most revolutionary market in Britain to one of the slowest-moving competitors, and give BT the power to keep the country in the slow lane for more or less as long as it wished. Great bargain, huh?

  n-D Cyberspace

Try to visualise the whole World Wide Web at once. The first image that comes to mind is of a globe covered with dots and lines.

But of course, cyberspace doesn't work like that - physical location is irrelevant.

Why not construct a spatial image of websites located relative to the number of times the hyperlinks between sites are used? In this way, "clusters" of sites would develop around topics of most interest to users of the web.

But this shouldn't occur in a 3-D space. Instead, it will be a multidimensional space, using the statistical technique of multidimensional analysis for its construction.

It would be Gibson's cyberspace done right.

Ric Curnow (ricc@world.net) is a freelance journalist based in the Antipodes.

  Fastening Technology

New technologies - even the most revolutionary ones - generally filter into society through a painstakingly slow evolutionary process.

Consider, for example, the lowly zip. First patented in 1893 by Whitcomb Judson, the Clasp Locker was notoriously unreliable and expensive. But Judson and his backers kept the faith, and a design very much like the modern one was patented in 1917. There followed 20 years of marginal commercial success while the zip was hawked as a novelty item - the Veg-O-Matic of the early 20th century, as historian Robert Friedel calls it. But in the 1930s, the zip finally achieved success. A whole confluence of factors - declining costs of production, new buckling fashion trends, and a shift by zip producers from retail promotion to trade marketing aimed at clothing manufacturers - finally pushed the revolutionary device into general use.

Daniel Burstein and David Kline. From Road Warriors: Dreams and Nightmares along the Information Highway.