Jim Armitage: Despite Ofcom’s crowing, the result is BT 1, UK nil
Forget David Davis. Forget Liam Fox. Forget Theresa May. The person I want leading our Brexit negotations with Brussels is Gavin Patterson.
In his bargaining over Openreach, the BT boss has — as they say on BT Sport — played a blinder.
Despite the monopoly broadband division’s years of frustrating the British public and rival telecoms providers with lousy service, Patterson has successfully persuaded the regulator to let it remain under his control.
Okay, Openreach gets its own board and, sure, Patterson has “relented” to grant it legal separation.
But who gets the ultimate power of veto over appointing Openreach’s boss?
Who owns Openreach’s equity?
Who dictates how much funding to give it?
BT.
Yet, for all that, thanks to Patterson’s sublime negotiating skills — the ones that enabled his firm to buy EE with nary a whisper from competition watchdogs — today’s outcome is trumpeted by all sides as a great success.
Even TalkTalk and Sky are giving it a cautious welcome.
But they’re only feeling satisfied because BT skilfully started negotiating from such an extreme position, declaring nothing was wrong with the status quo and offering up only the tiniest of titbits. Bit by bit, it has made enough concessions to make it look as though Ofcom has won a doughtily fought battle.
In fact, by retaining ownership of Openreach and avoiding a referral to unpredictable Brussels watchdogs, it’s BT that can claim victory. Today’s 4% jump in the share price, putting £1.4 billion on BT’s value, tells you as much.
Though the outcome is great for Patterson and his shareholders, it’s not so great for the rest of us.
For, not only would Openreach better serve the customers of TalkTalk and Sky if it wasn’t owned by their biggest rival, but, as a truly separate company it would attract new pension fund shareholders prepared to invest for a decade or more. These would be happy with dependable, low-risk, utility-style returns, rather than shorter-term investors attracted to BT’s retail and media interests.
As it is, funding of this crucial piece of British infrastructure remains at the will of a risktaking business that just blew £1.2 billion on European football rights.
There’s logic in BT investing in this new direction of media content — particularly given the sharp slowdown in its public sector telecoms orders.
But the fact BT Sport will be screening more matches such as last night’s Man United v FC Rostov (who?) will offer little comfort to people waiting on hold for decent broadband.
