For over two decades, I have enjoyed a 'hot-and-cold' relationship with the City of Hull and its home grown telecoms operator, Kingston Communications.  It is ironic that in the very year when the world looks to Hull and its Christian son, William Wilberforce, to celebrate the 200th anniversary of the abolition of the slave trade, quietly and almost hiddem from view, the newly elected Lib-Dem controlled Hull Council. commits the most scandalously ill informed act of enslavement of its citizens to the tryanny of the telecoms sector when uniquely, they were potentially more liberated than anywhere else on the planet.   I should explain.

Like most other major cities of their day, Hull developed its own local telephone company back in the nineteenth century.  When, at the beginning of the 20th century, the destructive heavy hand of the state intervened in the UK (and in most of the rest of the world) to distort the open and free market of telephony by nationalising these local telephone companies and creating national PTTs, for some odd reason, Hull was left on its own, effectively as a Department of Hull City Council.

During the remainder of the analogue era, there was no place in the UK that enjoyed better service and more focus on local needs than Hull.    Value and benefit from the Hull telephone network remained with its local users.   So, come the 1980s and the dawn of the digital era (and Hull was the first telephone network in the world to deploy 100% digital exchanges) it is a tragedy when the refreshing wind of free markets and privatisation were let into the UK economy by Margaret Thatcher, that the Government did not look to Hull and use this as an exemplar for 'unwinding' the destructive monopolisation of the UK's local telephone companies into what was by then, British Telecom.   As anyone who has heard me speak will know, the reasons for this gross error are all too clear to understand.

But, as it was, the monopoly BT was privatised as a vertically integrated operator, wedded to a 'service provider' business model and the rest of the world was invited to 'compete'.   And compete they did - making rich pickings from end users by pursuing this self same vertically intgrated business model which, as the digital dawn turned into digital day, proved ever more of a nightmare for preserving shareholder value.  

But Hull went on its local way during this period, under the steady hand of Ray Matthews, its CEO.   I knew Ray well and respected him and when I first conceived the idea of COLT as an OPLAN for the financial area of London, I approached Ray to see if the Hull City Telephone Department (which by then had become Kingston Communications plc but still wholly owned by the Council) would joint venture in my COLT venture, bringing unique knowledge and experience of local network operations to this potential world-first OPLAN.  Ray was very keen but his owners, the Labour burgomasters of Hull were not and they declined.  As a result of that, I was forced to look elsewhere and eventually found a US investor - Fidelity Capital.   Had Hull been my partner in COLT, the world would look very different today.  As it was, Fidelity Capital soon decided to abandon the OPLAN strategy and become a me-too telco.  So along with all the other lemming telcos, COLT went for an IPO and watched its share price defy logic, gravity and losses, and climb up and up and up ........such that, without ever making a penny of profit, COLT ended up being in the FTSE top ten.

Come 1999, Matthews and Matson were forgotten men in Hull and as the Councillors watched this telco frenzy, they could only dream of the riches that would be theirs if they followed suit and went for an IPO.   They did, and KIngston Communications (KCOM) was floated at a price of £2.25 per share which raised £225 million for the council which got them a spanking new football stadium along with some other bits of civic bling.  Before the end of the dot corn boom the shares in KCOM rose in value to £17.   Hull Council thought it was onto a winner.   Ironically, I was even approached by KCOM to join its board as a non-executive director but I am afraid my suggestion to the Chairman, Michael Abrahams, that the Company's best longterm profitability lay in adopting an OPLAN strategy, met with nothing but bewilderment - and no invitation to join the Board.

In the past eight years, KCOM has expanded both its geographical reach with acquisitions such as Torch Telecom, and the range of services it offers and now looks like any other telecom operator - languishing share price, confused strategy, BUT with the difference of an unchallenged monopoly local network in the Hull area.   Not even BT has found it worthwhile to invest in competing infrastructure in Hull - the market is too small.  So if you live in Hull, you can have anything you want .... provided KCOM offer it!    And judging by the comments on the web - they don't think much of that choice in Hull!

It is not surprising therefore that with Hull City Council still owning what was an effective controlling interest in KCOM, that I turned my attention to trying to get the leaders of the Labour Council to see what a priceless jewel they owned.  Their significant shareholding was valuable NOT because of what 'cash today' it could realize - but because they were in a unqiue position to use their holding to force the management to realign the corporate strategy towards an open access, horizontal model.   Not only would this have yielded great socio-economic wealth to the community of Hull, but it would have put the city on the global map as the first to break lose of the slave-like stranglehold of the vertically integrated telecoms business model.

I well recall the meeting in February 2002, set up by local Member of Parliament, Alan Johnson, (now vying for deputy leadership of the Labour Party) who could see the potential of the OPLAN opportunity facing Hull that I was presenting.  Behind locked doors in Hull City Hall, and with independent advisors in tow, I went through the strategy with leading Labour Councillor Tom McVie - explaining how, if they used their shareholder influence to persuade (replace?) the management of KCOM to adopt an OPLAN restructuring, Hull would place itself at the very vanguard of cities entering the emerging information age with a future-proof infrastructure.  He certainly 'got it', but six months later, the ballot box had intervened and Labour had lost control of Hull City Council.   As Alan Johnson, MP wrote to me at the time, "You will understand that I do not have the same influence and association with the new Council Cabinet and, as you say, they have now taken an extremely retrograde step, thus scuppering your ideas, which I continue to believe would have been in Hull's best interest".  Indeed they would!

So while I am now sought out around the world by local political leaders to advise them on how their city can adopt an OPLAN strategy to out-compete cities like Hull - the one place in the world which was uniquely positioned to beat them all, turned its back on that opportunity.

But still I do not give up easily and about a year ago, after Hull City has been put through the mill as an underperforming local authority, and appointed a new Chief Executive Officer, Kim Ryley, I approached him with the very same story.  "Use the Hull City shareholding in KCOM (now down to about 31%) to facilitate a restructuring and refinancing of the company which would not only bring great long term benefit to the citizens of Hull through the development of a future proof OPLAN, but also release further shareholder value for the other owners of KCOM."    As always, sensible men and women, see the logic but as always, the timing was not exactly opportune in that there was no overall control of the Council and hopefully the May 2007 local elections would sort that out.

The elections come and go and once more, the Lib Dems are in full control - with a one seat majority.  Only this time, KCOM is the hidden item at the top of their Agenda.  Never mentioned as a policy issue in the election campaign, none the less within days of assuming control the cash strapped Council announced that it has appointed Deutsche Bank to investigate interest in the sale of its remaining holding in KCOM - with an expected cash windfall of around £113 million.   Shortly thereafter, Hull City Council announces that it has completed the sale of its stake in KCOM - ending a 105-year partnership with the business.

Apparently, the new Liberal Democrat ruling group decided to sell the shares because, "the local authority was not making enough money on the investment".   Well, if that's the name of the game, I could make a lot of money for them by selling the roads in Hull to Toyota or General Motors.    "We will not be embarking on a sudden spending spree" claimed Councillor Andy Sloan, KC shareholding committee spokesman.

And then Councillor Sloan makes a statement that I hope will go down in history to equal that of Sir William Preece, Chief Engineer of the British Post Office who said in 1876, "The Americans have need of the telephone, but we do not. We have plenty of messenger boys."

Councillor Sloan said, “The decision to sell the council’s remaining stake in KC was made because it was in the best interests of the city, its people, local businesses, local shareholders, and indeed the company".

He went on to stress that the money made from the sell-off would not be used to “splash out on councillors’ pet projects.  We have lived in an environment in Hull where the local authority has not spent money wisely and not got value for money,” he said.  Oh really!

Eat your heart out Hull!   You have just thrown away a golden key to the future - and you haven't a clue what you have done or why that will come to haunt you and future generations as an act of ill informed madness and the very antithesis of public probity.  Future generations will look back at this act of Will-By-Force, and see it as the moment when the citizens of Hull were finally delivered into Digital Slavery!