When Ofcom announced is Strategic Review it included an innocent question asking everyone to consider if BT should be broken-up, so call Structural Separation. Recently a number of major ISPs published an open letter saying that this should be given careful consideration and that they favoured a referral to the Competition & Markets Authority (CMA). Their position is more nuanced than many of the headlines the letter generated – this doesn’t mean they are firming in favour of breaking-up BT, only that they have serious concerns about the shape of the market which BT dominates.
My own view is that Structural Separation is simply a regulatory instrument that if wielded in isolation would achieve very little – it would replace one monopoly with two, and the siblings have very deep cultural ties that were forged at the dawn of telecoms time. It would take several years to resolve the legal challenges to separation, and the many more before the cultural challenges are overcome.
Its true that in New Zealand it has made a radical difference but, with due respect to New Zealand, its got a population just over half that of London – BT’s domain is almost 20 times bigger, and its organisation is consummately bigger – it’s a supertanker to NZ’s speed boat. Structural Separation in the UK will achieve very little slowly.
In addition, the New Zealand Regulator didn’t simply declare Structural Separation; they put in place a series of measures to ensure it led to a market shape of their design, and they closely monitored the evolution.
In the UK we haven’t had the discussion about what kind of market we want or need, and we don’t have a regulator that has been strong on monitoring or enforcing change. For these reasons alone, we should be calling for a referral to the CMA – so we can have the public debate about the kind of market we want and what kind of regulation that new market will need.
There are some fundamental and huge shifts in the shape of the market already underway, some of which appear to be largely undebated. I don’t have the answers, and anyone that says they do is almost certainly wrong, but this debate needs to begin and it needs to be grown-up and open-minded.
I’m planning to post some of my thoughts over the coming weeks – I hope others will too.