Leaking Cables

In recent months a number of journalists on national newspapers have been anonymously sent a document labeled "Private and Confidential" and "Not to be shown outside BT."

It is an internal British Telecom (BT) briefing about the challenge from cable companies which, it says, "are literally digging themselves in across the country."  The document spells out how much of a threat they could be and explains what BT is doing about it.  For some reason no newspapers have published the document.  BT representatives, playing down the leak, claim it is between a year and 18 months old and therefore not worth regurgitating but it makes fascinating reading.  The company is worried and it shows that competition for the former monopoly is a real issue, not just a political promise.

Cable companies are digging up and laying down cable in 30 streets a day.  There are currently 127 cable franchises, most of which have financial backing from major American telephone and cable groups.  Most are ostensibly offering cable television but 26 of them are also offering phone services, with another 33 expected to jump on the bandwagon soon.  The document says there are currently (whenever it was written) more than 17,000 cable business lines, an increase of 500 percent on the previous year.  Such telephone lines are forecast to grow by 20,000 a month in the residential market and 3,000 for business.

"The threats which the cable challenge pose to BTBT must not be underestimated," warns the briefing, and lists those threats as follows: a large proportion of the residential market being "swallowed up" and pressure on the local business market; collaboration between cable companies, meaning cheap cable-to-cable calls and the potential of a national network, which could pull in larger customers; lost revenue for national and inter-national calls where traffic is carried by Mercury; the loss of phone numbers if customers are eventually allowed to keep their own when they move; exploitation of the imminent national code change.

These are indeed serious threats to BT.  Quite apart from the immediate loss of revenue, these factors could combine to make a serious dent in the company's image, which has been improving greatly since privatization.  I am not convinced its response is the most effective one, however.

The document claims: "We can and will beat off the challenge by focusing on value rather than price... and by emphasizing our quality of service."  In America, for instance, where phone services are light years ahead of ours, phone companies compete for business by putting the emphasis on value, price, and quality.  BT is relying on teething problems with cable companies and with Mercury, which there almost certainly will be, so that it can draw comparisons with its own slicker operation.  But teething problems take less and less time to sort out these days, particularly for private companies with bright young technologists hoping to make a fortune.  BT should remember, too, that only ten years ago it was a hopeless, shambolic dinosaur.

"Putting the customer first must be a reality, not a promise," the document continues.  "We must help our customers choose to stay with BT by showing them that we value their business," it says, claiming that this should be achieved through the advertising theme "We Want Your Business."  I could be wrong, but is an in-yer-face ad campaign starting "We Want..." really likely to convince customers that they are being put first?  As for receiving "help to choose" the person offering the help, there's just a chance some customers might feel the advice was a touch biased.

So here, in its own words, are the five things BT staff have been told to concentrate on to fend off the opposition: "quality of service" (improving, certainly, but far short of potential); "depth of experience" (its depth of experience lies in running a poor service - good service is a new concept to BT); "breadth of portfolio" (big deal - nonsense words); "future technology" (already far out-stripped in this field by the cable companies themselves); "understanding of business needs" (ditto).  Then, bizarrely, it goes on to suggest BT people tell their customers: "No other supplier can offer such competitive rates, a wide choice of products and high quality of service that are all designed to meet every customer's needs."  It would be interesting to see how, given what we have already read, they justify such a claim about competitive rates unless it is a purely subjective judgment along the lines of, BT is so marvelous that people should pay more.

Read on, and you find that BT admits the cable companies' typical service record includes 4-hour fault response and 24-hour fault repair, although it adds that there is some evidence Mercury lines get congested.  There then follows a table comparing BT against its rivals on a series of subjects which, again, appear to make a nonsense of the response the company is telling its staff to dish out to disgruntled customers.  The table shows that on price, cable firms are "cheaper overall"; on the network, cables have clearer lines and new technology while BT offers equivalents in "nearly all" business centers; on customer contact, cables have face-to-face and BT offers impersonal numbers like 151 for all but the biggest companies; on billing, cable calls are automatically itemized but BT's can only be supplied (on demand) on digital exchanges; on charging, where cable callers pay only for what they use and BT users pay in fixed-size units "which may make us uncompetitive"; on local service, where cable companies are leagues ahead because they are all locally-based.

Perhaps some of the contradictions in fact and claim can be explained by BT not wanting to panic its staff.  But this is a gloomy document and BT is going to have to hit back with a lot more than slogans and a good sales pitch if, in its own words, it wants to stop the cable operators "cumulatively eroding a large proportion of the residential market and a significant percentage of BT's business base."  As the company warns its employees: "Doing nothing is no longer an option."