AltaVista'sdecision to pull the plug on its unmetered internet access package sparked a predictable round of recriminations yesterday. AltaVista blamed BT, accusing the latter of failing to table an acceptable deal on wholesale call charges that would have allowed it to run unmetered services. Nonsense, said BT.
AltaVista cannot escape blame. It promised the service and failed to deliver. Whatever the obstacles that may or may not have been put in its way it should have made sure it could walk the walk before it talked the talk. The episode has left the company with serious amounts of egg on its face.
BT, however, should not be allowed to shrug of the affair as someone else's problem. True enough its Flat Rate Internet Access Call Origination offer to internet service providers does meet the guidelines laid down by the regulator Oftel. But it meets the letter rather than the spirit of the guidelines. The latest deal is a mixture of capped and open ended charges - making it impossible for ISPs to draw up solid plans for unmetered access.
There is a pattern here of BT dragging its feet on making the changes needed to set the UK's internet sector free.
The company has constantly delayed its launch of new broadband connections - its fourth delay has set back the roll-out of individual digital subscriber lines until next year - and this week Freeserve blamed BT for setting the basic charge for broadband access so high. At every turn BT has sought to protect its short-term monopolies for as long as possible.
One problem is that BT is a player in the ISP market as well as responsible for the local telecoms link. It was BT's Surftime package that stirred Oftel into action and made BT put together a flat rate offer to ISPs. Nothing has happened since then - a situation that helps no one except BT's own ISP.
Britain needs cheap, unlimited access to the net for individuals and small businesses. The regulator and the government must take a hard look at BT's actions and consider a response if that is the only way to achieve such a goal.
Rate dilemma
The European Central Bank is in a bind over whether to raise interest rates. It is damned if it does and damned if it doesn't. Judging by the results of yesterday's auction the betting in the financial markets is that the ECB will raise rates either at its August 31 or September 14 meetings. Others believe the bank might do better to wait a while until it has a clearer picture of what is happening in the eurozone.
The latest sickener for the bank materialised yesterday in the shape of the German Ifo business confidence index. The index was down in June but expected to perk up in July but fell again. One fall might be thought unfortunate, two cause for some concern. If the index falls again this month markets will be talking of a trend.
On the basis of that scenario the ECB might be thought wiser to stay its hand over interest rates. At a time when business confidence in the eurozone's biggest economy appears to be faltering even a 25 basis point rise in interest rates - let alone the 50 basis points some analysts are suggesting - would scarcely be a booster for corporate confidence.
But consider the alternative case. The ECB is thought to have been preparing the ground for an increase in rates because it is worried about inflationary pressures - generated in part by what has happened to oil prices but also by the weakness of the euro.
With the pessimists already believing that the single currency will be testing its all-time low soon and the doom sayers suggesting that 85 cents could be on the cards, the consequences of ducking a rise in interest rates which the markets are now expecting could be severe.
Raising rates looks an unattractive option. Unfortunately not raising looks worse. Faced with such a tricky choice the bank would be better off to increase interest rates. Its brief is price stability and as its neighbour, the Bundesbank, knows only too well - credibility is not easily earned. But how the ECB must envy the Federal Reserve which last night left US rates on hold without raising so much as a flicker in the markets.
Off the block
Another day, another auction. This time it is UK licences to provide wireless internet links for desktop computers which are on the block. After the success, from a taxpayers viewpoint, of the sale of third-generation mobile phone licences in the UK and Germany, it is little wonder that auctions are flavour of the month with licence sellers. But are the first signs of buyer resistance beginning to develop? Yesterday Atlantic Telecom which pioneered the technology in Britain said it would not be taking part, declaring it had better uses for its cash in developing existing licences. Governments be warned.
