Re: Peston on Sunday Interview with Mike Rake , Chairman of BT Plc, his 'Freudian Slip'
"Mike Rake at this point still can't stop chuckling to himself...(he knows BT basically owns ofcom). He make several further chuckles to himself, knowing the mistake he made was really the truth."
Same problem in New Zealand. It was the Ministry of Commerce which forced the breakup after quantifying the economic damage the original NZ setup was doing and documenting how BT was systematically abusing the UK market with the BT/Openreach model that TNZ was attempting to sell to NZ regulators as the way forward.
The subsequent experience in NZ is a good indicator for the UK:
The split-off lines company has proven to be very sucessful, selling to all comers and actively recruiting customers who the original Telco regarded as competitors. In the UK the effect would be seeing duct access sold to Virgin so they can run their own cables at a fraction of the cost of digging up roads, etc.
Contrary to doom and gloom predictions, the lines company has proven to be attractive to banks (financing for investment in infrastructure), whilst the telco has started looking quite ill.
Also contrary to predictions, the actual cost structures that the telco had presented as arguments against a breakup (claiming the lines company was a major cost/loss centre) proved to be completely fictional.
The exact same arguments against the breakup of BT/Openreach were presented against the breakup of TNZ/Chorus - and anyone who looks at what's happened in the last 5 years in New Zealand will know that the effects have been good for the country.
None of this will happen unless Openreach is 100% separated from BT.
The problem is not that Openreach is a monopoly, but that Openreach is a natural monopoly which BT can use (and IS using) as leverage to behave anticompetitively in other areas. Directors, board and offices must be completely cleaved from the mothership to end up with a company that is not subject to undue influence and anticompetitive pressures.
BT is terrified of losing Openreach, because:
1: Openreach is actually a major profit centre
2: It is being used to lever their monopoly to seek additional rent on interconnections with or circuits used by competitors
3: Without it, BT will be an extremely sick company without much political influence.
If Openreach really was such a massive pensions liabliity, BT would be actively seeking to unload it on the government.
Biting the hand that feeds IT
