Information society : agenda for action in the UK : evidence received after 31 March 1996 / Select Committee on Science and Technology.
- Great Britain. Parliament. House of Lords. Science and Technology Committee.
- Date:
- 1996
Licence: Open Government Licence
Credit: Information society : agenda for action in the UK : evidence received after 31 March 1996 / Select Committee on Science and Technology. Source: Wellcome Collection.
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![23 April 1996] Lord Butterworth contd.] to 15 different regulatory regimes throughout Europe as each one interprets it slightly differently. (Dr Rudge) I would just like to add one more point if I may and that is that we are going through a liberalisation transition, if I can describe it like that, not only in Europe but generally around the world. During this period we must have regulation and there is a need to strike a balance between local competition, to make sure that there is local competition and it is effective, and national competitiveness in that we are competing against big players from other countries who are just as determined to establish themselves in these markets. Keeping an eye on that balance is not something for the regulator because he has a national remit, it is something for, in our case, the DTI or Government to ensure that the balance is a sensible one. Baroness Hogg 509. Dr Rudge, if I could make another attempt at categorising those three areas where you find regulation pressing that you talked about earlier. One point was the impact of the price cap. Perhaps I can put that one on the side for the moment, that is part of the ongoing nature of life in BT in a not fully competitive environment with a regulator. You then identified, as it were, two other categories. Without wishing to lead you anywhere I wonder if you see a distinction between them in terms of the pressure. One is, as it were, the erection of a number of no entry signs, that you may not use this kind of technology or be involved in this kind of activity, where the debate must be about the extent to which you need to be held up to allow others to grow, and you could argue that is inhibiting you from growing internationally. The third set, however, was a set of regulatory restrictions which are at least designed to grow the market in ways that I know you share the ambition to grow, that is to make service providers feel that they can provide products in confidence that they will have non-discriminatory access to BT networks. Would you make that distinction that I have made between those last two categories? Which at the moment would you see as the most—I do not want to use as loaded a word as unfair—unjustified? (Dr Rudge) Let me pick up one point at least. I will not cover all the points that you have made. You mentioned the service provider and the network operator issue. We very much believe in that distinction. There are service providers and there are network operators. We, incidentally, have business interests in both but we do not see ourselves as a uniquely vertically integrated structure. Indeed, there is a very good reason why we should not see ourselves as a vertically integrated structure and that is the only way we can really justify our network investments in the future is if there are many thousands of service providers that want to use our network. I think the best mental analogy for the network is that of a giant computer. If we build a giant computer we desperately need people to provide applications and bring’their applications to run on the machine or it is not going to be exercised sufficiently to make the original investment worthwhile. [ Continued 510. Although you might disagree with the detail of regulation the principle of regulation designed to reassure service providers that they will have access to networks is not a problem to you? (Dr Rudge) Not at all. Indeed I think you will find © that many of these concepts of service provision network actually originated with us and we actually presented these to the regulator. (Mr Gavin) As a service provider we obviously operate at arms’ length from network provision. The purpose that we see in BT acting as a service provider is in part to stimulate the area, to show what is possible by putting investment into the service provider business quite separate from the network business. Too often one thinks of the network business as the primary area of risk but I would underline that establishing these services is also a critical area of risk. BT can play an important role in stimulating this area of business, because if it is not present then one key important link to the chain is not in place. BT asa service provider must operate at a discreet distance from a network operation business, the network operation business must see a whole plethora of service providers being capable on equal terms of coming to the network business. Speaking from the service provider perspective, the most important priority is ensuring that the network part of the business has the necessary incentives to be able to build the network capability to be able to deliver the services that we are imaginatively creating and to create the conditions in which the network business will be willing to take those sorts of risks to move into a market that does not today exist: therefore nobody can be considered to be dominant. What does require a degree of clarity are what the regulatory conditions will be, and a degree of clarity that the investments being made in high risk network capability will carry commensurate rewards if successful. 511.SoamI right in my inference from Dr Rudge’s earlier run through of the regulatory problems that the main focus of your anxiety, although not the only anxiety, is those no entry signs? (Dr Rudge) There are a number of regulatory issues that I touched on and you might describe them as no entry signs. Certainly those are a problem, the areas where we are not allowed to tread for whatever reasons. The vision one had a decade ago of the way telecommunications was moving and the vision today is completely different and it has to continue to change rather rapidly, it is a very fluid environment. So many of the pegs that were put in the ground a little while ago may have been very sensible when they were knocked in but they do not look very sensible today if you look at the way things are developing. Some of those no entry signs definitely slow you down if they do not stop you entirely. They do not always stop you but they do slow you down and the trouble is we are in an international competition and slowing us down is tantamount to death really, you cannot be slow in this game. When I go to talk to some of our suppliers, and some of them are suppliers who manufacture their equipment here but they are international companies, and I say: “The rules in the United Kingdom are that BT is going to be kept out of this area to see if a couple of](https://iiif.wellcomecollection.org/image/b32218631_0060.jp2/full/800%2C/0/default.jpg)
