16:01 PM

Silicon Valley startups told: Come to London ... BT wants your business!

By Tom Foremski for SiliconValleyWatcher

This week the British have been trying to drum up interest from California companies to locate their European offices in London.

I ran into the dapper Dale Smith, vice consul on trade and investment (think Denzel Washington in a well-tailored blue English blazer) and Rob Hull, bus dev manager at BT Group, formerly giant British Telecom. Mr Smith had recently authored an interesting research note on wireless infrastructure in the UK. Mr Smith noted that London is the world's most unwired city, with 1,200 public hotspots out of about 10,000 across the UK.

I also spoke with Michael Charlton, chief executive of Think London a private promo group. His pitch is that the UK, and London in particular, are especially attractive locations to base California's mobile content/services companies because of the extensive cellular and wi-fi infrastructures. Plus a large and savvy urban population of avid tech adopters.

Think London, along with the government organization UK Trade and Investment, can "fast track" the process of establishing an office in London.

They will also help US companies with making the right business connections. I asked if an old school tie was included in the deal. Mr Charlton said, "A personal introduction is always much better."

BT wants your business, really.

The BT guy explained how companies could buy infrastructure services from BT, such as wireless (although that's actually supplied by Vodaphone) and how BT will partner with mobile content/services companies, handle the billing, etc.

However, should your wireless service become hugely popular, BT reserves the right to "port" the service to its machines and reverse a 20 percent / 80 percent revenue split in its favor(!)

Mr Hull says that this provision is rarely implemented. But then why have it? Seems a discouragement to me...

Maybe a company could go to a BT competitor? I asked Mr Hull.

He seemed flustered and had trouble understanding the question. "What do you mean a competitor, to me?" No, BT.

"Is there any other company that is investing $16 bn in a next generation platform?" I said, isn't there?

It had turned into a rhetorical dialogue and it showed that BT does not have to think about competition, which is not a good thing.

Let's recap the value proposition here: Come to London and establish a mobile content/services business using the services of BT, the 8,000 pound guerrilla, which BTW, has the right to grab your service and the lion's share of the revenues (after you have labored to build up your business!)

That is not an attractive scenario IMHO.

And as for London, I grew up there and it's a tough place to live and work...I'd shoot for Paris, Berlin, Amsterdam or Barcelona.

Find out more about locating in London and the UK, from Janet Coyle UK Trade and Investment in San Francisco. janet.coyle at fco.gov.uk or 415 617 1360.