Will BT’s number be up after the MMC’s directories inquiry?

Scrutiny of BT-controlled Yellow Pages may open up the market –

I had to find a glazier the other day, so I reached for one of the directories by the phone. “How did you find us?” asked the artisan at the other end of the line. “Yellow Pages,” I replied, automatically. Except that it wasn’t Yellow Pages. It was a Thomson Local Directory.

I relate this little tale because it is illustrative of a rather more important issue than my inaccuracy over the telephone.

The end of November is scheduled as the deadline for the delivery of the Monopolies & Mergers Commission’s report on business directories to Ian Lang’s Department of Trade & Industry.In a week when we are wondering whether we deserve Kenneth Clarke’s Budget, what Andrew Neil intends to do with Express Newspapers and to whom Gerry Robinson intends to sell The Savoy if Granada wins Forte, business directories are perhaps not on the main highway of public interest.

However, it is an issue that should not be overlooked. There is a slight danger that should the business directories inquiry be subsumed by glitzier issues of the moment, a very important market could remain shackled by anachronistic and uncompetitive restraints.

It is important not only because there are political imperatives that it might suit the Government not to have examined in the current febrile climate – BT has a monopoly of the Yellow Pages brand in the UK and BT monopolies are not something that our Government is over-anxious to examine right now.

It is also important because the operational freedoms of business directory marketers in the UK will prescribe the speed with which and degree to which we are able to implement business information on the developing information superhighway.

The key issue, to my mind, is whether BT’s propriety over the Yellow Pages name constitutes a barrier to market entry for the likes of Thomson.

At first glance, it would seem not. One shouldn’t be allowed to argue successfully that brand strength alone constitutes anti-competitive behaviour. It would, for example, be more than a little officious to suggest that the Mars Bar exercises a monopoly position in the confectionery market because its brand strength knocks many a competitive chocolate bar into a cocked hat. Successful marketing should not run the risk of MMC censure unless there is abuse of the strength of market position.

Similarly, I am always somewhat dubious of claims that, because a brand has become a generic term to some members of the public, the market as a whole has a claim on it. Again, that would be to penalise successful marketing. I have always thought that, just because we all call the household utensil under the stairs “a hoover”, there have never been grounds for plundering the brand name from Hoover.

On both counts – successful marketing and the protection of “generic” brands – Yellow Pages would appear to deserve the protection, rather than the censure, of the competition authorities.

Yet Yellow Pages is rather different from the Mars Bar and the Hoover. For one thing, Yellow Pages is not a created brand, so much as a nicked generic name.

Yellow Pages in the US is called yellow pages and is a term applied to any provider of business directories. BT adopted it when it was a state-owned monopoly and invented walking fingers and so on to wrap around it as a proprietary brand.

Nothing wrong with that, but life has moved on. You will have noticed that BT has been privatised and there are others in the market who would benefit from access, in an increasingly cosmopolitan and US-oriented climate, to what is at root a generic term.

In a supposedly free market for advert-ising, this presents a circumstance full of anomalies. When advertisers say they want to take space in yellow pages, are they speaking with capital letters or not? If they are, are they happy that there is sufficient competition in the market to make Yellow Pages strike a keen price? If they are not, should not the likes of Thomson have a chance to bid its own yellow pages? There is more here than a debate over semantics.

Furthermore, there is a consumerist point to be made. Anecdotal evidence suggests that the domination of the market by Yellow Pages leads to some of the less engaging traits of the public sector to which privatised monopolies are by no means immune. If service to local advertisers is slow, inefficient or inaccurate, there is, as things stand, little or no competitive threat to shape it up.

It is a bitter little irony that the restriction on BT which prevents it from supplying entertainment services through its network is “against the public interest”. But BT’s quasi-monopolistic position seems to get it restricted on the wrong services, while it remains free to restrict competition in other areas.

Yellow Pages is one such area. I might add that Thomson was acquired by US West last year. In a screen-based future, we might like to think that we were being served with as wide a range of business information as possible.

That future could be served now by the DTI knocking down the capital letters on Yellow Pages.

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