Reply to post: Re: What is the right answer to how to run National Infrastructure?

Future imperfect: A UK broadband retrospective

Anonymous Coward
Anonymous Coward

Re: What is the right answer to how to run National Infrastructure?

Some good thoughts there mate. Looking at the rather spotty record and high director salaries of Network Rail post Railtrack, and I think that the problem is not ownership but regulation. The mess they made of engineering works this Christmas is evidence of the fact that some cultural and operational problems transcend who owns the capital behind the company.

Regarding Openreach, you're bang on that it needs to be separated from the rest of BT. But that's easily accomplished without the inevitable mess from nationalisation, through requiring Openreach to be a separate legal and financial entity. That would in technical terms just be a demerger of Openreach, and initially would be straightforward. Existing shareholders in old BT would now own equal shares in New BT and in Openreach plc. The regulator would have full visibility of the margins and trading arrangements, and cross subsidy would be illegal and very obvious - this is how energy suppliers who still own distribution grids are regulated. This form of demerger has been done before, for example in 1997 when the old British Gas integrated monopoly was split into three separate businesses doing different things: Centrica (energy sales under the British Gas brand), BG Group (upstream exploration and production) and Transco (the gas distribution operation).

What's required is for OFCOM to understand this and get a grip on the issue. On the plus side there's a new girl in charge, so she might just have some get up and go (unlike Tony Blair's placeman that she replaces), on the downside she's a career civil servant and the civil service is not renowned for doing anything well (or at all).

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