Alpha male accuses BT of cross-subsidy

Poison Pill, he quips

The MD of Alpha Telecom has launched a scathing attack on BT and its new discount telecoms operation voicing concerns that the monster telco is cross-subsiding Quip.

Andy Middleton demanded "transparency" in dealings between BT and the fledgling operation to ensure a level playing field in the growing cut-price telephony market. He also said BT launched Quip to win back some of the business it is "haemorrhaging" to the cut-price operators. BT would be in breach of its licence agreement if it engaged in any form of cross-subsidy.

Middleton said: "Competition is good for everyone, especially the consumer, but there has to be a very real concern that BT is using its 49 per cent share in this new venture as a poisoned pill to win back the tens of thousands of customers it is losing prior to the unbundling of the local loop.

"Everyone knows that BT's international rates are hardly the most competitive, so it will be interesting to see what kind of rates Quip will be offering, and whether there is any suspicion of cross-subsidy.

"I've read that Quip intends to keep its costs low by employing relatively few people, but the major costs by far in our business are carrier costs and I am curious to know how Quip can reduce those with no volume to barter with."

Steve Gandy, CE of Quip, dismissed the allegations: "I refute any inference that we are being cross-subsidised by BT. We are not tied to BT," he said.

"We don't buy any international minutes from BT so we can't be accused of cross-subsidy. "In fact, we haven't bought a single minute since we launched the service two weeks ago.

Middleton also slammed telcoms watchdog Oftel, saying that he had reservations whether Oftel would be "sufficiently motivated to look closely at the potential for BT to use Quip as a Trojan horse for anti-competitive behaviour".

"It is ironic in the extreme that the UK telecoms market was the first to be de-regulated, but is one of the last in Europe where the unbundling of the local loop will take place," he said.

"The relationship between Oftel and BT is regarded by many operators in the telecoms industry as being too cosy, therefore many of us do not hold out a great deal of hope that BT's latest move will be scrutinised by Oftel as a matter of urgency," he said No one from OFTEL was available for comment by press time.

Middleton's outburst could be in retaliation for comments made by Gandy at the launch of Quip when he talked about "cowboys in the (discount telephony) market". ®

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