Would re-opening the UK Broadband market to competition be a fitting tribute to Mrs Thatcher?

Amid all the “tributes” and suggestions for memorials we have forgotten what would have happened if some of her less controversial achievements, such as telecoms liberalisation leading to full competition in the local loop, had not been reversed after 1997. The independent regulators put in place to open up competition to the utilities she had privatised and to subject them to market forces, such as Oftel, Ofgas and Offer, were replaced by instruments of state control run by former political advisors (Ofcom and OfGem), which “helped” plan investment, set policy, agree prices based on “acceptable rates of return” and protect incumbent players from uncontrolled innovation.

I therefore suggest that a fitting memorial, additional to a giant handbag on the fourth plinth in Trafalgar Square, would be to complete some of her unfinished business: beginning by re-opening the UK telecoms market to genuine competition. This does not appear to require any legislation. I have blogged before on the difference between the statutory duties in the Telecoms Act 2003 and those quoted on the Ofcom website . The recent spat between the bosses of Carphone Warehouse and of BT illustrates the need for an order from the Secretary of State to Ofcom to follow its statutory duties and take its anti-competitive powers seriously.

That new sense of purpose should begin with an instruction to organise a public enquiry into the supply of high speed connections for business users. The core objective is not, however, to indulge in another round of BT bashing. It should be to give BT and Virgin a vested interest in helping expedite investment in cheaper, faster, more reliable, basic utility infrastructures which they too can use. Rationing investment to the speed and scale that they can fund from existing sources, while they simultaneously try to create quadruple play businesses, should not be a serious policy option .

The attitude of a BT spokesman that a competitive market is one in which it resells local loop connections to its competitors at the same price as it sells to its competitors reflects the mindset which the 1979 policy of telecoms liberalisation, not just privatisation was intended to bring to an end. It is BT that is using a different definition of monopoly to the rest of the world.

This was a subject in which Mrs Thatcher was well briefed and took a personal interest. One of the few Britons who really understood what was at stake was a contemporary of hers at Oxford. Derek Broome, a dashing young fleet air arm pilot who went out with her best friend at University also fought hopeless seats in the 1950 and 1951 elections and briefly ran a Bell Operating Company before Arnold Weinstock put him in charge of Reliance Systems. 

Some older readers will remember Derek for his work on the PITCOM programme committee and his trenchant views on those who wasted time and effort because they had failed to analyse the reality of what they were trying to address. I was privileged to work alongside him on the 1979 computing and communications policy studies, having been introduced by Michael Spicer who was Sir Keith Joseph‘s link man with the Computing and Telecoms industries before Ian Lloyd was tasked to produce policy recommendations for the party to agree and announce. The election came earlier than expected and my “consultation paper”, intended to provoke debate on the issues in wider context was published after the election as “Cashing in on the Chips“.  

As a consequence of the decisions taken under Mrs Thatcher, the UK was well on the way towards having “at least two competing cable suppliers providing broadcast quality video to every home by 2002”. Then New Labour put the policy into reverse with Local Loop Unbundling. Before the turn of the millennium BT already had fibre to within a mile of more than 60% of British homes. Meanwhile the Cable Companies had struggled to compete and ended up hiring Stephen Carter to help them replace “competition in the local loop” by “local loop unbundling” and to salvage NTL for its bondholders. That change, which saved the cable companies from bankrupcy and take-over by those with deeper pockets, wrecked BT’s forward plans and its finances, delaying its plans to bring fibre to rest of the UK by over a decade (its much trumpeted current £2.5 billion roll-out). We are still waiting for its plans to provide fibre to every business, let alone home, to restart. 

Hence my modest suggestion that part of the memorial to Mrs Thatcher should be to mandate the regulators who lost their way under New Labour to stop trying to micro-manage markets and technologies and to focus on restoring competition to the industries she privatised. 

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She would probably like the outcome of a pro-competitive FTTP market in urban areas, choice, low prices, and no need for ongoing regulation. She would not like the means of getting there, namely the need to instruct private companies on infrastructure sharing, creating detailed investment incentives and defining new markets by declaring the internet a universal right, so local authorities could fully participate in working with industry on in-fill and mutualising their own duct where needed. She would see the need and would start shouting for the detail, and would back it but not like it.

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