BT's search for a future
Published: 10 Feb 2006 14:20 GMT
Transition is a testing time for any company. We're pleased to report that BT is keeping profits flying as its customers move from legacy telecommunications to a broadband future. Look ahead a little further, though, and there's trouble on the line. Growth in broadband will hit a wall when everyone who can afford it has got it: any further movement will come from cutting prices or increasing speed, and both have limited power to boost profits.
Yet the factors that are nibbling away like goats at BT's rosebush are not so easily limited. BT's big advantage is its presence in so many homes and businesses, and that's being unbundled at an ever increasing rate. Its wireless strategy is piecemeal and unconvincing — it owns no mobile network and has no licence for future services, which is a poor start. And you have to be uncommonly optimistic to see WiMax, mobile phones that work at home and home wireless networking kits as saviour technologies.
BT's continued investment in its core network has bought it some time; it will be able to keep costs down while offering interesting service bundles. But it will be fighting in a very competitive market – one where even the larger customers will be able to switch suppliers and services far more rapidly than before, and where the cost of entry will be constantly reducing. It's also no global player.
There is a plausible future where BT becomes primarily a national bit shifter, selling ever more bandwidth for ever less reward while others pick off the big revenues through services provided from America or Asia. At that point, it would be a tempting takeover target for any company seeking to build out and control a substantial global network — a company fed up having its growth held back by increasingly fractious telcos, that is already gearing up for a full-on battle in its home territory. That company is Google, BT's future home.
True, this is entirely unsubstantiated guesswork. But with the media happy to print any Google rumour as news that just hasn't happened yet, we think we're on safe ground. Remember, you heard it here first.
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