Reply to post: Re: Privatisation

BT dismisses MPs' calls to snap off Openreach as 'wrong-headed'

Alan Brown Silver badge

Re: Privatisation

I lived through privatisation in New Zealand.

We _had_ similar problems to UK users, although the party lines were targetted ruthlessly for elimination.

When the Post Office Telecoms department was turned into a State Owned Enterprise (and broken up into multiple operating companies under head office), the first thing they did was eliminate most of the middle management - end result usually being that when you applied for a phone line, you'd get home and find dialtone, or a man preparing to dig up the footpath to run a cable.

It was also profitable.

Everything went to pot when ideologically driven sales resulted in the SOE being sold off. All infrastructure projects got cancelled, plans to dump short-distance toll zones were axed along with plans to majorly drop LD charges(*) and all the operating companies were repaidly remerged into one body. what followed was 20 years of flagrant market abuse (which is why NZ is held up as the poster child for how not to private your telcos). Based around the telco being secure in its belief that as 40% of what traded on the NZSE, plus the single largest investment the NZ govt had in its pension schemes, they were too big to tangle with (and they were, effectively dictating telecommunications policy, despite a "hostile environment" being cited time and time again by external outfits which declined to set foot in NZ)

One of the telling things when the NZ government finally couldn't ignore the problem any longer and moved to curb the telco was that TCNZ attempted to sell the BT/Openreach model, preemptively creating divisions.

The NZ regulators studied what had happened in the UK, realised the extent of market abuse BT has been perpetrating and made any further broadband funding contingent on the breakup of the companies.

The EXACT SAME ARGUMENTS were raised against breaking up TCNZ (Spark/Chorus) as BT is making now, down to the pension liabilities and Openreach not being viable. In the end it's the Openreach side which is robustly healthy(*), whilst the old dialtone company is in serious trouble.

(*) And so is the market. Chorus (NZ's Openreach) sells copper/fibre/duct access to all comers at the same rate, actively seeks out customers instead of hiding and without the dead hand of head office dictating anticompetitive behaviour, things get fixed or installed quickly, no matter who the customer is.

The real irony is that Spark (the old dialtone company) is loudly griping that Chorus charges too much for lines, despite the (govt regulated) figures being based on what was provided pre-breakup, substantially lower than what non-TCNZ customers were paying pre-breakup and the very same company was whining that the proposed line charge figures were too low, pre-breakup.

One caveat though: The NZ regulator has been tough on line charges and may have recently pushed them too low to be sustainable, although it's more likely that they've pushed them out of being "comfortably profitable". They're also strongly encouraging move to fibre everywhere.

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