Search This Blog

Monday, 13 March 2017

Bringing Back POT

All over the UK there are many tens of thousands of manhole covers with the POT logo on them: which means they were placed originally when Post Office Telephones had a monopoly on the telephone system in this country.

In the nineteen-eighties the privatisation advocates rabbited on about the inherent inefficiencies that could be seen in a state monopoly, notably the delay in installing phones in premises as the demand for modern IT began to emerge; so when the Thatcher government decided to sell off the system this got massive press support, fueled by costly publicity by those who thought they could profit from battening on to the most obviously lucrative parts of the system. Post Office Telephones was privatised as BT - British Telecommunications - and a vast number of small shareholders took their allocation of shares, only to sell them on to institutions as those larger bodies became able to absorb them at inflated prices.

Then came the real IT revolution. Presaged by show-offs who brought their 'housebrick' mobile phones into their local pubs and restaurants, the advent of mobile telecommunications was quickly followed by the invention of the internet and the unprecedented range of mobile media that now exist: and are advancing daily in sophistication. Large and small companies sell phones, lease phones, adapt phones and make profits by enabling the individual to feel more empowered to have universal contact with the entire human race [subject to regulatory restraint] and with the whole of accumulated knowledge. The everyday user of a smartphone is likely to assume that the whole communications system is now based on the internet and the cloud; and not to give attention to the recent discussion about the future of wire-using telecommunications links that are accessed through manholes and overhead wires marked POT or BT or by the designation of the BT subsidiary OPENREACH.

Partly using copper wires of various ages, partly using carbon fibre 'wires', a vast and essential network exists - and is expanding - which the private telecommunication providers cannot avoid using, could not possibly afford to replace [or duplicate], and thus must depend upon. This system -the core of what was sold off when POT was sold - is indispensable to all communications providers for the indefinite future.

The ramshackle system of 'regulation' that the Thatcherites created [including OFGEM for energy, and OFWAT for water] includes OFCOM for communications - including telephones. A reputedly very bright lady with a good civil service record has been made the head of OFCOM, and she has announced that the core system - the wires, branded as Openreach - must be made more accessible to BT's competitors by being managed within a more obviously separate company from  BT.

Behind this decision is the government's fear that a complete separation of Openreach from BT would mean that past and present employees would exercise their right, granted in the privatisation legislation, to demand that their potential pensions would be topped-up with government money if any future corporate change in BT threatened the security of the staff's pensions entitlement. The cheeseparing government knows that it would open the floodgates to other claims if they acquiesced in that demand; so they cannot allow BT and Openreach to become wholly separate.

Openreach is the archetypal example of a natural monopoly, an organisation that is essential to the normal conduct of life, which is unaffordable to replicate by a competitor because the customers would prefer to deal with the monopolist than  to pay for a second system to be installed. Politicians - acting on the advice of Economists  - assert that by the intervention of a regulator they can make the monopoly behave in a 'commercial' kind of way. This is nonsense. Decades since the privatisation of Post Office Telephones we see that the essential underpinning basic technology can only be managed as a monopoly that allows fair and equal access to all legitimate users including rival telecommunications businesses. The same goes for the railways administered by Network Rail, the national grids for electric power and gas distribution, the postal system and access to ground water. While a charade of competition can be made in the management of the common infrastructure, there is no sense in that exercise. There is well-evidenced justification for allowing competition between innovative firms that offer customer-facing mechanisms for the delivery of the consumer experience that depends on the monopoly infrastructure: exemplified by Vodaphone, O2 et cetera. The clear distinction between the essentials of telecommunications that lie underground and the options that are made accessible in the consumer's hand by their preferred retailer should be replicated in the way these services are owned, taxed, funded and regulated. Pigheaded attitudes of Economists, politicians and publicists who have invested their reputations in the existing chaos will resist the commonsense revision of the system; but the Great British Public is very capable of seeing  sense an eventually it is probable that a decent and affordable outcome will be achieved.

Meanwhile, the charade of 'enhancing competition' will be played out; and Openreach will be pilloried for under-investment and inefficiency.

No comments:

Post a Comment