The BT broadband scam
BT has spent the summer trumpeting the news that all is well in the land of fat pipes, following its announcement that 99.6 per cent of the British population will have access to broadband by 2005. Much of the media, including the Economist, has bought this story. But the truth is that, mired in the molasses of monopoly, Britain's development as a broadband society has been unnecessarily retarded and the potential gains in economic growth put off for many years. Far from being in the vanguard, we are lagging behind most of the other OECD nations.
Credit where it is due: BT has now made broadband access via DSL more or less universally available. This is a great success (although most commentators have ignored the Luxembourg-based satellite internet provider, EuropeOnline, which can offer broadband internet access to the whole of Britain, including bits BT won't reach). But a reasonable scorecard of international broadband performance would not, as BT would like, merely consider availability. It would also look at how many people actually use broadband, how many companies provide broadband services, and what services ordinary householders can get.
In terms of broadband penetration - the number of people who have signed up - the most recent data shows Britain lagging behind most of Europe, as well as America, Korea and Japan. While BT boasted of 40,000 new broadband customers a week during the summer, other markets, such as France, are growing just as quickly.
Alison Ritchie, BT's broadband factotum, gave several speeches on the stump this summer proclaiming the competitiveness of Britain's broadband market. It is true that Britain has well over 200 competing broadband providers, but in practice their services differ from each other only marginally because most simply resell BT's broadband service. With the key exceptions of Bulldog and the two enervated cable operators, Telewest and NTL, Britain's consumer broadband market is served by firms hawking BT's products. Even giants like Wanadoo and AOL are merely flogging BT packages. The supply side of the British broadband industry is still highly dependent on BT and its investment choices, to the detriment of consumers. Meanwhile, in France, Italy, South Korea and Japan, an array of different companies invest to compete with national incumbents.
What do we British consumers get for our £15-£45 a month? We get broadband services ranging from 150Kb/s to 2Mb/s. What does this mean? A 2Mb/s connection is fast enough to download a movie in a couple of hours. In South Korea, broadband connections are ten times faster than ours and cost about half as much. In Japan, the average household connects to the net at 8-10Mb/s for about £28 a month. Even the French can do better, courtesy of free.fr, which will offer 6Mb/s access and unlimited national phone calls for 30 euros a month. Do folk care? The answer is yes. Higher bandwidth changes the broadband experience. Internet gaming, true video on demand and video conferencing have become the norm in America, Japan and Korea. What is more important in driving take-up of broadband - universal availability, or the richness of services on offer? For the answer, look east. South Korea and Japan have the most advanced broadband markets by penetration and quality, but comparatively poor availability.
Those who have drunk BT's lemonade will criticise my approach. They will argue that Joe Public has different needs to Joi Nagakawa, that the quality of broadband engineering is better in Britain than in other countries, and that the markets are too different to compare.
The first claim is bunk. Privately, BT insiders agree that broadband service speeds will increase to levels seen in France, Korea or Japan. The second claim is also bunk. When building a broadband service, there are myriad engineering choices to be made and the propellerheads will argue until kingdom come over which is better. What matters is what consumers want and what they use. Korea, not Britain, sets the standard. The third claim is merely an excuse, and a funky one at that. International comparisons are the only real benchmark we have in markets with hugely dominant players like BT. The costs of poor performance are not clearly measurable and, indeed, only apparent by looking at others. On that measure, Britain is paying a very high price indeed for its pottering progress.
Squareness pays
There is no doubt about it: Steve Jobs is much cooler than Bill Gates. Jobs, the boss of Apple, redefined hip with the iPod, the sexy digital music gadget which has become a must-have for geek and glitterati alike. He followed it up with the iTunes music store, which lets you buy and download songs over the net. And in September, he unveiled a delicious piece of industrial design in the shape of the latest incarnation of Apple's desktop computer, the iMac. The computer sits inside the huge, flat screen - no ugly box to ruin the lines of your desk.
Microsoft's geeks may have written the book on self-made monopolies, but they skipped style class. Gates's big news of the summer was the release of something called the Service Pack 2 and the MSN music service. Nothing remotely exciting about that. Still, Gates can content himself that although he may be a thousand times less cool than Jobs, with $40bn in assets he is about 20 times richer.
