Uphill battles - View from the Top

Since the dawn of telecom competition, regulators have been routinely criticised -- it goes with the territory. Toothless, biased and downright incompetent are just some of the more printable adjectives that have been thrown their way.

And one man who hasn't been afraid to point the finger of blame at his national regulator is William Allan, CEO of UK-based alternate carrier, Thus. From local loop unbundling to leased line pricing, Allan reckons that incumbent BT has been allowed by Oftel -- the UK's regulatory body -- to get away with proverbial murder.

"I have been very critical of Oftel as it has the power to use the UK Competition Act and take BT to court whenever there's a clear-cut case of abuse," says Allan. "But even though BT has regularly exploited its position as a monopoly incumbent, Oftel has sat back far too often."

Allan argues that Oftel must be increasingly vigilant with BT because it's not within the best interests of the customer if competition is constrained. "History shows us that rivalry is good for service innovation, which is good for customers," he says.

Yet Oftel has managed to make some progress in taming BT's domination, a fact Allan is only too happy to recognise. Specifically, he welcomes Oftel's proposal in September 2002 for a new pricing regime for partial private circuits (PPCs), where it found evidence to support a reduction in connection charges for PPCs by 50 per cent and rental pricing by 30 per cent.

He's also pleased with Oftel's decision in June this year to force BT to offer ATM interconnection for ADSL and G.shdsl services. "This was an important breakthrough for genuine infrastructure-based competition as it will allow alternative carriers to use their own networks to provide a range of products for businesses," says Allan. "But we re still disappointed that it took Oftel six months to confirm the findings of its original December draft."

BT is of course a formidable opponent for regulators and rivals alike, and so Allan does have a measure of sympathy for those charged with checking its powers. "BT has a bigger regulatory team than Oftel and clearly made the process of LLU -- which is a complex beast at the best of times -- very difficult for the regulator to deal with," he says.

It was in November 1999 that Allan was appointed CEO of Thus (he had previously held positions as chief executive officer and managing director of Scottish Telecom before it re-branded as Thus and floated on the London Stock Exchange in November 1999). He now has over 25 years' experience in the telecom industry and has previously worked for Cable & Wireless -- 1971 to 1998 -- where he held a number of senior management positions, including chief executive of Cable & Wireless Regional Businesses.

He says that he has been 'very pleased' about the level of press attention which the Thus brand has received up to now. "We have gained a lot of free column inches due to the brand-name," he says. But Allan reveals that there won't be any prolonged company marketing campaigns to promote the brand as its target audience is for the UK (not multinational) corporate market. "This means that direct sales forces, mail shots and seminars are the best way to promote the Thus brand." At the same time, the company's ISP -- Demon --primarily caters for SMEs (and residential customers) requiring advanced internet services so 'same mass-marketing is required for that brand'.

Thus -- reveals Allan -- will always remain explicitly UK focussed. "In the past, a number of UK carriers decided to purchase cable assets within the European mainland and the market believed that we wouldn't succeed unless we did too," he says. "But the majority of companies [who rushed into Europe] got into severe financial difficulties while we're still here and financially healthy."

The company, on the other hand, does sign agreements with carriers outside of the UK in order to fully satisfy the requirements of its business customers. To that end, it has recently signed a deal with Sprint, which will mean that it will shortly be able to offer its users with 'service level guaranteed' frame relay connectivity to sites in the US.

He is additionally confident that the UK market is big enough in isolation for Thus to make a profit. "We are targeting a [pounds sterling]14 bn [[euro]22 bn] UK business services market -- which still grows at around 67 per cent per annum -- and we presently only have a one per cent market share," he says. "The pie is still getting larger and our slice can only grow."

The consolidation of the telecoms industry following the downturn -- says Allan -- will also improve the company's long-term chances of success and he is keen to point out that Thus is the only carrier in the industry which has managed to have its credit ratings upgraded in the last two years. "At the beginning of 2001, we also managed to put in place a new banking facility to the tune of [pounds sterling]90 m [[euro]140.5 m]," he says. "The company is also cash flow positive, which means that we can meet all our operating costs, interest payments and debt."

And anything else which separates Thus from its many competitors in the UK? "We possess people with integrity," he says, "which will always win through in the end."

William Allan, CEO of Thus plc, knows that the life of an alternate carrier can be a tough one, particularly when the regulator appears to favour the incumbent.

COPYRIGHT 2002 Horizon House Publications, Inc.
COPYRIGHT 2003 Gale Group