Telepocalypse

OPINION://The unexpected lessons from Ryanair

Airlines run networks, too. Whilst the delivery of 80kg packets of blubbering human flesh may not be directly comparable to telco networks, there are some great similarities as well as important lessons. Airlines are becoming more deregulated than telcos, with lower barriers to entry to creating a new network (since planes are notoriously portable in a way that fiber and copper aren't).

Firstly, consider the case of BAA, which runs most major UK airports, including Heathrow. Of BAA's £1.7bn UK revenue last year, £743m was from retailing and other ancilliary service; only £665m came from charging for flying people around.

Ryanair are trying an even better trick, of extracting subsidies from regional airports merely for delivering passengers to local businesses. Their only problem seems to be European rules which prevent such overtly discriminatory subsidies. They are heading towards a model of "reverse landing fees", where they get paid to deliver wallets within reach of geographically-bound businesses.

The Scottish Executive has been busy spending taxpayer pounds on airline subsidies to encourage new routes to open up.

At last, Glasgow lands Europe flights bonanza ... Mr Dalrymple still hopes to secure support from the fund for the new routes and stresses that existing flights from Italy, France and Spain have brought significant numbers of tourists into Scotland.

For example, Continental are being given a bung just to fly between Edinburgh and New York.

The patterns is that stand-alone transport is becoming a loss leader to generate captive audiences for other forms of commerce. Telcos need to work out who their customers are, why they are communicating, and insert themselves into the value chain through means other that coercion and regulation. Failure to do this will result in extinction.