ec: Editorial - End the phoney war - bt needs to champion competition and deregulation.

ec: Editorial - End the phoney war - bt needs to champion competition and deregulation. - Forget headline grabbers such as British Telecom's £100-a-second profit last year or the rumblings over chairman Iain Vallance's recent 12.5% pay rise. The real iss

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Last Updated: 31 Aug 2010

Forget headline grabbers such as British Telecom's £100-a-second profit last year or the rumblings over chairman Iain Vallance's recent 12.5% pay rise. The real issue facing BT is the imperative need to spread the virtues of competitive and de-regulated telecoms markets round the world, starting on that bastion of over-protection, over-pricing and under-performance: Europe.

Slowly but surely BT is learning to work in the liberalised and highly competitive British market for telecom services. BT's battle with rival Mercury has resulted in one sure winner: the consumer. Prices in the most competitive telecoms sectors have tumbled. International calls cost were cut by 10% in July. A peak-rate call to the US is now 34% cheaper than in 1981. Local calls have felt the benefit of competition and tumbling technology costs. A three-minute local call, which cost 4.3p in 1981, costs the same today. If it had kept up with inflation, the cost would have been 7.65p. Further real falls are a certainty.

All this is vital for the information revolution and the knowledge industries, the backbone of wealth creation in the next century, to mushroom. Without cheap, instant and reliable voice and electronic communications, the new (and different) jobs will not appear. Ten years ago, Mercury did not exist. Today, it is one of Britain's fastest growing companies in jobs and sales. Similarly the whole mobile phone industry has grown from nothing to a multi-billion pound affair. Multiply these jobs a hundred-fold into the next century, but only if costs keep falling and access to cheap international telecoms is possible for the whole world and not just for Britain and the US.

Here, the abysmal record of the Europeans needs to be questioned. The Germans and the French, particularly, have dragged their feet on opening up their domestic markets, only conceding reform under pressure. It took German unification and the realisation that the Bundespost could not service the newly enfranchised telecom consumers of the east for Germany to allow overseas operators a foothold. But when the European Commission discusses proposals to formally end telecom monopolies later this year, it is expected to meet stiff opposition from the French and Germans, anxious to "protect" their patches. Protection condemning captive customers to a higher tariff than they should pay - is more akin to an Al Capone racket than to securing markets and it will be futile. Telecoms competition is unstoppable.

This year, in Britain alone, some 16 new operators have applied for telecoms licences. International telephony has been growing at 20% a year since the mid-'80s. The British Government must strive to break down the French and German resistance to change. Not only is it in our commercial best interest to use a vibrant British Telecom competing with that other British giant, Cable and Wireless, on the world stage, but better communications would break down international suspicion - important when liberation from totalitarianism could easily give way to a cruel nationalism.

Britain must use its newly-established relations with the Germans, post-Maastricht, to press for open access to their telecoms market. Once Germany cracks, the rest of Europe will follow. In pressing for cheaper telecom charges throughout Europe, the Government could show itself, rather than Jacques Delors, to be the true friend of the European consumer.

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