Structural separation currently is looking to fail badly in Britain, after an important initial success in opening the retail market and bringing down prices from exorbitant to not so bad and spurring enormous growth. The weaknesses are now becoming visible. BT Wholesale has a reinforced monopoly of the local loop, so requires stronger than ever regulation. The loop charge alone is more than the total charge in some other regions. Richards is now talking about raising the monopoly price, an indirect way to bail out BT for losses in global, etc.
More seriously, Britain is set to have an Internet that will be 50-90% slower than most of France and now Greece. If you believe a competitive Internet is crucial to a nation, that's clearly a market failure. The difference in cost to build fiber is real but small in relation to overall telco spending. Verizon's additional capex for FIOS is about 3% of revenue... British Telecom instead has cable competition only in half their territory. The cable company has gone broke recently, and is so stretched now they have already restructured the debt. Ian Livingston isn't afraid they will lose the customers even if they do only a modest upgrade of their copper lines. So they fighting with everything they have to keep the copper valuable for many years. As long as the companies can make money on copper, they have enormous incentive to not upgrade. Verizon, France Telecom, KPN and others facing competition can't think like that. If the didn't replace copper with fiber, they would be clobbered."
More seriously, Britain is set to have an Internet that will be 50-90% slower than most of France and now Greece. If you believe a competitive Internet is crucial to a nation, that's clearly a market failure. The difference in cost to build fiber is real but small in relation to overall telco spending. Verizon's additional capex for FIOS is about 3% of revenue... British Telecom instead has cable competition only in half their territory. The cable company has gone broke recently, and is so stretched now they have already restructured the debt. Ian Livingston isn't afraid they will lose the customers even if they do only a modest upgrade of their copper lines. So they fighting with everything they have to keep the copper valuable for many years. As long as the companies can make money on copper, they have enormous incentive to not upgrade. Verizon, France Telecom, KPN and others facing competition can't think like that. If the didn't replace copper with fiber, they would be clobbered."
Amen.
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