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TWST: Can we begin with a quick introduction to Easynet (London: ESY.L)?

Mr. Rowe: Easynet is a specialist in Business Broadband connectivity and services. It has a pan-European footprint and has been doing business for eight years now, six as a public company, with pretty strong year-on-year organic growth during those eight years. We have our own fiber optic backbone in the UK. We operate one of Europe’s largest IP networks with services throughout Europe and we are also pioneers in unbundling of the local loop in various countries in Europe.

TWST: Can you tell us about local loop unbundling and progress being made? I understand it’s at different stages across Europe.

Mr. Rowe: Yes, the big thrust for local loop unbundling is in the UK and I am reasonably pleased that we have achieved what we said we would two, even three years ago. I think the consensus, from the banking analysts camp anyway, is that the unbundling of the local loop is a) a failure and b) doesn’t hold any prospects. The reason I am pleased is because it is nice to prove the pundit’s wrong and in doing so also steal a march on the competition. So what evidence do we have that we are proving people wrong? Well I guess we have to put that in terms of what we have said over the last 3 years, that investment in the local loop could be justified with a properly designed business plan based around business services, and that our sales-led bottom-up approach to the build of exchanges would mean there would be a fast return on investment, very low risk in terms of that investment and a growing strategic footprint in the incumbent network. We have got enough evidence now to say that we were accurate in what we forecasted, so I am pleased about that.

TWST: What is the evidence?

Mr. Rowe: Firstly in terms of execution, we said back in 1999 that the first exchanges would be live at the end of 2001 and that is pretty much what happened. Since then we have worked with BT on our roll out and it has gone almost exactly to plan with 80 plus exchanges by year end and up to an additional 100 during the following 18 months all within the costs we initially calculated. Just to put that in perspective, that gives us strong coverage in greater London and a good coverage of major metropolitan areas in the UK. So we’ve got good economic builds and what we think to be very competitive back-haul from the exchanges to our fibre optic network. The equipment we put in the new exchanges is very fairly priced so the overall build costs have been in line with expectations or bettered. Secondly we are creating momentum on the revenue and margin side. Sales of DSL business ethernet solutions have been strong, slightly ahead of our expectations. What is also pleasing is our penetration of the high end of that DSL market. As you will appreciate, there is a difference between a low-end business product, say for example, I MB, 256K ADSL and the very high end SDSL product with high service level guarantees, and it is at the high end that we have done particularly well. High end Broadband Ethernet across our own loops is great because it means higher margins and therefore a quicker return on the investments we have made in the local loop. It also demonstrates that by unbundling we are able to offer unique products in terms of pricing, quality and service propositions that are accepted by the market. Thirdly we are able to build on our capabilities by multiplexing our own loops to provide high-end leased line type products, giving further resilience and speed. So while in the past there has been a bit of a gap between a 2 megabits leased line and a 34 or 45 megabits fibre connection, we intend to fill in the gaps between, which is good news because instead of the customer being forced down one route because of the lack of range of option for access, they will be able to have a service that meets their business requirements. What we have to do now is to build on our early successes and continue to innovate and capture market share at this critical time of technology shift. The mass market for Business class DSL is happening now and it will probably be in this phase for another 18-24 months, so this is the key time to gain market share and we are really pleased that we are so well positioned to exploit the opportunity.