Sigh
Ofcom = gutless, roll-over-and-die weed
BT claimed this morning to be chuffed with a series of regulatory proposals from Blighty's communications watchdog. They include a push for faster repair times from its Openreach arm and a decision not to impose price restrictions on the telecoms giant's fibre products. Ofcom also confirmed today that it planned to cut …
Whilst it was true that the first tranche of BT shares were sold at £1.30, there were two further tranches at £3.35 and £4.10 respectively. Also, looking at the RPI index, you have to apply a factor of 2.46 to that first tranche price to correct for inflation. So that £1.30 is equal to £3.20 at today's prices. As the two other tranches were in 1991 and 1993 respectively, the effect of inflation was not so high, but you are still looking at equivalent prices well over £5 (although there were staged payments for all offerings). Against that, there are more shares in circulation now (due to a share option issued) which does dilute the price, but then the shareholders stumped up that extra cash so it really balances out. A further calculation ought to involve the O2 offload, but as that business scarcely existed in 1985, it's not really very relevant,
If you start doing all the mathematics on this, you find that BT's capitalisation value is (inflation adjusted), considerably below what it was when the final tranche of shares was issued, even making allowances for all the factors I've mentions. At the time of privatisation, BT over 250,000 UK employees, whilst these days it's now more like 90,000. As far as UK operations are concerned, it's a much smaller company than before despite the product range being vastly larger, such is the state of what is now a highly diverse telecoms industry.
OFCOM asleep on the job again, happily swallowing all of BT's bilge. Virgin Media have been actively trying to price themselves out of the market over recent months, and are only a threat to BT for those seeking a 100 Mb/s connection. I have seen little real world benefit in the change from about 10 Mb to 20, and then through to 60 Mb (soon to be 100), which leads me to conclude that Virgin Media are not COMPETING with BT, they are DIFFERENTIATING themselves from BT, by emphasising the one (largely irrelevant) metric they know BT's technology will struggle to match.
It's unfortunate that OFCOM are so clueless, and haven't spotted what most other regulators have long realised, that in weakly competitive markets you need to dismantle dominant players. The answer for BT's long suffering customers is to split BT up into separately accounted regional franchises (been done with gas, broadly speaking how water was privatised in the first place), and forcing Virgin Media to offer network access to third parties.
Unfortunately, the Ofcom wallah with the opportunity to swing the axe on BT a few years ago decided instead it was unnecessary, before getting a job with them very shortly afterwards. It was one of those once-in-a-decade-or-so opportunities pissed up the wall, that more or less guarantees we're stuck with BT as they are for a long time.
Go figure.
"A ‘fully unbundled’ line to a property. Again, the telecoms provider uses its own equipment in the exchange, but this time it takes full control of the line to offer both broadband and voice. "
Fault on the line running from home to exchange, because the wiring's about 30 years old for example.
Openreach? ISP? Subscriber hires own leccy bod to come out?
It actually sounds potentially good news for customers.
So WTF are BT so happy about it? Does the pricing freedom on fibre mean they get to stitch up ISP on their back haul from the exchange?
Cautious, but still suspicious, welcome.
Their real pièce de résistance party trick was not joining the 'bonfire of the quangos' when the ConDems got in, not least without having to shed their muppet in chief. Being liked enough by the tories to weasel their way out of becoming an ideological scapegoat speaks volumes about how useful they actually are, and who to.
Anything good they've done for the consumer was either accidental, unavoidable or double-edged.