How Thatcher Killed UK Superfast Broadband • Hacker News Board

Re: How Thatcher Killed UK Superfast Broadband

#11

Post by pjc50 » Thu, Aug 20, 2015, 1:18 PM UTC

austinjp wrote: post #10

almightysmudge wrote: post #4

Earlier quoted context omitted.

Lucky they nipped that one in the bud, eh?

I'm genuinely amazed that anyone still buys the argument that competition in a capitalist economy will improve quality. It does nothing but encourage corner-cutting, box-ticking, de-skilling of the workforce, and the extraction of revenue away from the electorate by monopolies who covertly cooperate to game the system. It demotivates, impoverishes, and homogenises. Truly dreadful.

Genuine market competition does work, or at least provides customers with a choice from cheap corner-cut option to expensive high-quality option.

What people forget is the list of prerequisite conditions for good market competition: plenty of buyers and sellers, good information about products, easy comparison, low transaction and switching costs, low cost of entry.

Fake markets for denationalised industries (I've seen this called "playing at shops") do not generally work very well because they're missing one or more of those attributes.

Re: How Thatcher Killed UK Superfast Broadband

#12

Post by pjc50 » Thu, Aug 20, 2015, 1:20 PM UTC

The tragedy is that merely not privatising it probably wouldn't have saved the project and it would have been killed in a search for "cost savings" to save "taxpayer's money" anyway. This was the era of the Advanced Passenger Train and Concorde.

Re: How Thatcher Killed UK Superfast Broadband

#13

Post by mattgibson » Thu, Aug 20, 2015, 1:47 PM UTC

almightysmudge wrote: post #8

mattgibson wrote: post #6

Earlier quoted context omitted.

If you want to take a cynical stance, you could look at it as deliberately introducing competition to an obvious natural monopoly, which pretty much guarantees an inefficient market and therefore monster profits. Thatcher (and later Major) did the same in other places e.g. deregulating the City, privatising the railways. Pretty much the same story there, with monster profits and seriously degraded infrastructure. If…

She wanted to encourage competition, but that competition never arrived, so we still have a shit infrastructure and an ineffective monopoly essentially?

If you define 'effective' as 'maximises the amount of money that shareholders get', then it's not ineffective at all. The best investments you can get are monopolies where the companies provide shit services. Costs are very low (because you pay for as little as possible, therefore it's shit), but the monopoly keeps revenues artificially high, leaving big profits in the middle. A cynic might say that this approach was deliberate, and that the competition not arriving was predictable and intentional. You get a system that looks like a free market, but which isn't.

See the recent parallel in how competition does not work well in the natural monopoly of postal delivery: http://www.telegraph.co.uk/finance/11596796/Royal-Mail-share...

"Whistl's announcement shows it is very difficult to set up a delivery service in urban areas in the UK that makes a profit, the vast majority of the cost is in that last mile of delivery."

Not likely to be much competition then. What better investment could you get (for your mates)? http://www.dailymail.co.uk/news/article-2455653/George-Osbor...

Re: How Thatcher Killed UK Superfast Broadband

#14

Post by hackerboos » Thu, Aug 20, 2015, 3:14 PM UTC

almightysmudge wrote: post #8

mattgibson wrote: post #6

Earlier quoted context omitted.

If you want to take a cynical stance, you could look at it as deliberately introducing competition to an obvious natural monopoly, which pretty much guarantees an inefficient market and therefore monster profits. Thatcher (and later Major) did the same in other places e.g. deregulating the City, privatising the railways. Pretty much the same story there, with monster profits and seriously degraded infrastructure. If…

She wanted to encourage competition, but that competition never arrived, so we still have a shit infrastructure and an ineffective monopoly essentially?

I wouldn't say the competition never arrived. We have competition in rail and internet in the UK (rail is slightly different as companies bid for contracts to provide services over a period).

The point is that each company is not going to roll it's own track or fibre. They lease the railways from the government and they buy wholesale bandwidth from BT.

Energy, rail, communications are natural monopolies. It's hard to produce competition in these sectors.

The East coast mainline fell back into government ownership because of the failure of the private company that was running it. The government has earned a lot of money running the line.

http://www.theguardian.com/uk-news/2015/mar/01/east-coast-ra...

Re: How Thatcher Killed UK Superfast Broadband

#15

Post by flarg » Thu, Aug 20, 2015, 4:00 PM UTC

almightysmudge wrote: post #8

mattgibson wrote: post #6

Earlier quoted context omitted.

If you want to take a cynical stance, you could look at it as deliberately introducing competition to an obvious natural monopoly, which pretty much guarantees an inefficient market and therefore monster profits. Thatcher (and later Major) did the same in other places e.g. deregulating the City, privatising the railways. Pretty much the same story there, with monster profits and seriously degraded infrastructure. If…

She wanted to encourage competition, but that competition never arrived, so we still have a shit infrastructure and an ineffective monopoly essentially?

She did not want to encourage competition - if she had then she would have gone for the cheapest solution for all basic infrastructure (power, waste, internet, transport) and used that to power a stronger economy - instead what she really wanted was to break the back of the Labour-funding unions (stronger in public organisations) and provide tax-derived profits for large corporations who would then provide for her and her colleagues in the future.

IMHO

Re: How Thatcher Killed UK Superfast Broadband

#16

Post by slgeorge » Fri, Aug 21, 2015, 7:46 AM UTC

hackerboos wrote: post #14

almightysmudge wrote: post #8

Earlier quoted context omitted.

She wanted to encourage competition, but that competition never arrived, so we still have a shit infrastructure and an ineffective monopoly essentially?

I wouldn't say the competition never arrived. We have competition in rail and internet in the UK (rail is slightly different as companies bid for contracts to provide services over a period). The point is that each company is not going to roll it's own track or fibre. They lease the railways from the government and they buy wholesale bandwidth from BT. Energy, rail, communications are natural monopolies. It's hard to…

I don't know about rail, but I don't think it's true to say we have competition in Internet in the UK. We do have some, but it's "constrained" competition, defined in a way that will never be truly disruptive to BT.

The natural monopoly BT has is the core network and the geographical exchanges in every town. In the case of BT it was handed a national network which it then gets to monetise: in return it had to continue to provide 'universal service'. The problem with this type of set-up is that it puts BT in the position where their best minds are in an arms race against the regulator: they use all sorts of tricks to show how expensive their core network is and they make it very difficult for alternative providers. It's just natural, if they can create barriers to competitors or price competitors out then it's to their benefit.

While I'm not in that industry more I'm citing personal experience - I was at a provider when ADSL was coming onto the scene and they made it very difficult and complex to form your own backbone network. It means that you're going to "innovate" on top of the BT network - which will never be disruptive to BT.

There are other situations where you can see the level of monopoly they have. For example, they basically held the government to ransom when they said they "might" not built the advanced network (21CN) which got them a pile of cash.

It's consumers and business outside of the South East (London) that suffer - consumers because it's basically everyone is held to the speed of BT's innovation, and business outside the South East because there often aren't alternatives.