When Margaret Thatcher privatised BT back in 1984, it was meant to usher in a new era of robust competition in the UK’s telecom market which would deliver low prices and better service. A regulator, Oftel, would keep a beady eye on BT and help set prices. To an extent, the model proved a success – most notably in the emerging market for mobile communications, which required the creation of entirely new networks and huge investments from the private sector. In other vital areas, however, such as the provision of old-fashioned regular landlines and more recently high-speed broadband internet, it has failed. That is because although BT was privatised, it remained a powerful monopoly which dominated the UK’s existing telecom infrastructure – the vast empire of cables, copper wires, cabinets, exchanges, ducts and poles which connect the country. For decades, BT has wielded its iron grip on that network like a weapon to thwart competitors by restricting access. Rivals who wanted to lay their own networks by piggybacking on BT’s cables have been duffed up with excessive pricing. Meanwhile, until recently BT had for years resisted making serious new investments in fibre which would have resulted in faster and better service for customers.
While Labour’s plan to renationalise part of Ofcom would be a disastrous waste of public money, which would not deliver the intended results, John McDonnell may have a point, the UK’s broadband is broken, the Telegraph reported. Just six percent of the approximately 30 million properties in the UK have a full-fibre broadband connection compared with 90% in Portugal and 70% in Spain. BT estimates that around 619,000 homes and businesses are unable to connect to a line fast enough to stream video. Labour is right to argue that the industry needs to change, but nationalising Ofcom won’t work the paper wrote. A better idea, that would not cost taxpayers a penny, and inject some long overdue real competition into the sector, would be to spin Openreach off into a completely independent, privately-owned company in which Ofcom’s competitors could also be shareholders.