Reply to post: Monopolies and market leverage.

Ofcom wants you to thank it for resurrecting the spectre of BT's 1980s monopoly

Alan Brown Silver badge

Monopolies and market leverage.

"It tends to create a wholesale monopoly that has such large scale efficiencies that it's very hard for a new entrant to profitably take them on."

The problem is _not_ a single large infrastructure provider. National Grid is a very good example of one such entity.

The problem is a single large infrastructure provider (the others are collectively so small they don't count) who ALSO runs a wholesale and retail operation and leverages the infrastructure monpoly to tilt the playing field in favour of its in-house operations.

BT may _claim_ that Openreach is operated as a separate entity, but apart from the "chinese walls" between BTOR and BT retail/wholesale, all BTOR operations are bundled into the parent ship and BT head office looks over all the walls, directing Openreach to operate in ways that best suit head office (and therefore the retail/wholesale arms too)

Splitting Openreach off from BT is conceptually no different from what's already done in the energy sector (gas and electricity).

The BT/openreach model was specifically looked at by New Zealand regulators looking to deal with telco problems there (the Telco had preemptively split itself in order to avoid regulatory intervention) and it was concluded that the model facilities ongoing market abuse by the dominant telco, that such behaviour is ongoing in the UK and the only way forward was full operation and financial separation.

It's worth noting that much of the push to break up TelecomNZ came from the NZ Ministry of Commerce, on the basis that ongoing telco market abuse had already caused significant damage to the economy and GDP, quantified at something around 5%. It was calculated that going by the UK market experience, adopting the BT/OR model would not result in much difference, with the monopoly provider still able to abuse the market and leverage its dominance to enter other markets (In particular, TelecomNZ's systematic attacks on NZ ISPs put almost all competition out of business during the 1990s)

The NZ version of Ofcom was about as much of a chocolate teapot as Ofcom is, with people coming and going from the telco sector and therefore not wishing to rock the boat in case it affected their future employability.

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