How Thatcher Killed UK Superfast Broadband(techradar.com) |
How Thatcher Killed UK Superfast Broadband(techradar.com) |
Thatcher (and later Major) did the same in other places e.g. deregulating the City, privatising the railways. Pretty much the same story there, with monster profits and seriously degraded infrastructure.
If you are in the business of doing absolutely anything to maximise profit, then you need to be of the opinion that your changes are a good idea for the population as a whole, otherwise you'll feel guilty. The belief that competition always makes things better for everyone, regardless of the observed outcome, fits the bill here.
See the recent parallel in how competition does not work well in the natural monopoly of postal delivery: http://www.telegraph.co.uk/finance/11596796/Royal-Mail-share...
"Whistl's announcement shows it is very difficult to set up a delivery service in urban areas in the UK that makes a profit, the vast majority of the cost is in that last mile of delivery."
Not likely to be much competition then. What better investment could you get (for your mates)? http://www.dailymail.co.uk/news/article-2455653/George-Osbor...
The point is that each company is not going to roll it's own track or fibre. They lease the railways from the government and they buy wholesale bandwidth from BT.
Energy, rail, communications are natural monopolies. It's hard to produce competition in these sectors.
The East coast mainline fell back into government ownership because of the failure of the private company that was running it. The government has earned a lot of money running the line.
http://www.theguardian.com/uk-news/2015/mar/01/east-coast-ra...
The natural monopoly BT has is the core network and the geographical exchanges in every town. In the case of BT it was handed a national network which it then gets to monetise: in return it had to continue to provide 'universal service'. The problem with this type of set-up is that it puts BT in the position where their best minds are in an arms race against the regulator: they use all sorts of tricks to show how expensive their core network is and they make it very difficult for alternative providers. It's just natural, if they can create barriers to competitors or price competitors out then it's to their benefit.
While I'm not in that industry more I'm citing personal experience - I was at a provider when ADSL was coming onto the scene and they made it very difficult and complex to form your own backbone network. It means that you're going to "innovate" on top of the BT network - which will never be disruptive to BT.
There are other situations where you can see the level of monopoly they have. For example, they basically held the government to ransom when they said they "might" not built the advanced network (21CN) which got them a pile of cash.
It's consumers and business outside of the South East (London) that suffer - consumers because it's basically everyone is held to the speed of BT's innovation, and business outside the South East because there often aren't alternatives.
IMHO
All want to use it, but noone wants to invest to build it.
On the other hand, there were those frequency auctions, where providers lost a fortune and mobile internet got really expensive.
(Note to non-UKians: BT do, in fact, control most of the ADSL provision in the country and are still a defacto monopoly.)
(As above, this is actually the case. )
What people forget is the list of prerequisite conditions for good market competition: plenty of buyers and sellers, good information about products, easy comparison, low transaction and switching costs, low cost of entry.
Fake markets for denationalised industries (I've seen this called "playing at shops") do not generally work very well because they're missing one or more of those attributes.