Britain's telecoms revolution has only just begun

On rapid growth in Telephone usage and a new book on the Guinness affair
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The Independent Online
It was reported recently that around one-tenth of British Telecom's local telephone traffic is now generated by use of the Internet. While this figure may be a little exaggerated, Internet usage is undoubtedly growing at an astonishing rate - around 10 to 15 per cent per month compound according to some estimates. In time, this and other forms of data transmission will revolutionise the revenue base of telecommunications in Britain.

According to research commissioned by Energis, the National Grid's telecommunications company, the Internet market in Britain was worth around pounds 300m last year in terms of cost of service provision and telecommunications. Schema, the consultancy which undertook the research, reckons this will nearly double in 1997-98, rising to at least pounds 2bn by 2005. The importance of this type of business for telecommunications companies is that people tend to spend a lot longer with the meter running while wired to the net than they do gassing on the telephone.

The average Internet call is 40 minutes against less than 10 for an ordinary local telephone call. Telephone usage in Europe is still much lower than it is in the US despite the best efforts of BT and others to change things. All those BT advertisements about how good it is to talk have failed to lift it by much. So where Bob Hoskins hasn't worked, the Internet might be about to succeed.

Nor is it just the Internet which is causing telephone traffic to grow at more aggressive rates. In the US last year, some $150bn worth of goods and services were sold via 0800 freephone numbers. These now account for around 40 per cent of AT&T's total revenues. Unfortunately for Joe Public, the 0800 number is not actually free. The businesses that use these numbers pay for them, and that cost is eventually oncharged to the customers who buy their services. But it is a different way of paying for telecommunications and the effect has been greatly to enhance telephone use.

Another avenue of payment already in use in some Scandinavian countries and being market tested here in Britain is for the customer to be offered a free phone call in return for listening to a voice advertisement before making the call. The advertiser picks up the tab, but he also sells more product.

If all these new methods of dragging people on to the telephone networks do indeed succeed in significantly increasing usage, then there are clear regulatory implications. Much higher volumes of traffic at present tariffs will transform the economics of the business, tilting the balance of advantage violently back towards the network providers.

Alternative avenues of payment, such as freephone numbers, also provide important openings to new entrants like Energis. Plainly it doesn't make sense for new and relatively small network providers to sell directly to the customer; they don't have the billing systems or the local networks. But by providing businesses with their telecommunications needs they can do the next best thing and tap into the revenues being generated by the end user. Thirteen years after BT was privatised, Britain's telecoms revolution is still gathering pace.

When the first book on the Guinness affair was published about 10 years ago, Jonathan Guinness, then a non-executive director of the company, wrote a review of it for The Independent which he memorably began with the words: "Le Beaujolais nouveau est arrive", the intention being to illustrate that the first stab at any history is rarely reliable. Now he's published his own tome on the scandal, Requiem for a Family Business. Unfortunately the wine doesn't seem to have gained much in maturity.

The most interesting parts of this book concern the pre-Saunders years, although disappointingly there isn't nearly enough in the way of juicy detail on the scandal-prone nature of the family which then controlled the company. The few indiscretions offered by Mr Guinness are gentle and well-meant ones, but then as Lord Moyne, Jonathan Guinness is now titular head of the family, any more, I guess, would have been too much to expect.

There is also some genuinely fascinating stuff about the establishment of Guinness as an internationally recognised brand. How the family must now be grinding its teeth at the present management's insane plan to abandon the company name in favour of the ridiculous-sounding Diageo. And finally Mr Guinness gives an illuminating insight into the decline of a family company as it passed from one generation to the next.

Unfortunately, he doesn't have much that is new to add on the scandal itself. This, too, may not be altogether surprising, for as Mr Guinness points out, the scandal generated more column inches of news, comment and analysis than the Falklands War. Even his first-hand descriptions of Ernest's last months with the company, which ought to be good because he was there, contain much which is now familiar.

So what's Mr Guinness's take on the affair? In the end this is a relatively sympathetic portrayal of Ernest Saunders, who Mr Guinness seems genuinely to like. Mr Guinness stops short of saying the former Guinness chairman did not deserve his fate, but he plainly thinks him badly treated and believes Mr Saunders was made to suffer too much. He also raises, by way of suggestion, that entirely unproven old canard - that the other lot, Argyll (now Safeways), were just as bad but managed to get away with it. No evidence has ever been produced to support this contention so it is pointless trying to offer it by way of mitigation for Mr Saunders. That hasn't stopped Mr Guinness trying.

The Guinness affair is rather in the nature of ancient history now, so why is Mr Guinness still chewing over the entrails? Silly! It is because the scandal is about to be in the news again, with publication of the long-awaited Department of Trade and Industry report on it all. With luck that might help shift a few more copies of Mr Guinness's book. Don't hold your breath on that one either, though. We already know what's in the report, because a draft was leaked to the press some years ago. If anything, the final version is likely to be even more watered down than the first, as the lawyers have got to it since then. Mr Guinness's account, which is as much about the passing of his family's involvement in the company as the scandal itself, may yet upstage the inspectors.