BT dials up better times

AFTEr the boardroom shenanigans at BT, there is the promise of better to come. On successive days it has won the biggest share of the 5G spectrum auction for the cut-price of £450m, and won freedom from price regulation for fastest fibre broadband and the right to charge ‘a bit more’ for regulated full fibre products.

The importance of replacing Britain’s century- old network of copper wires has become crystal clear over the pandemic year.

That is more than can be said for online communication which drops in and out even for people who can afford the highest tariffs. BT customer service levels are slow, clunky and expensive. That’s why so many consumers opt for private contractors and booster equipment bought from Amazon, which arrives in hours rather than days or longer. In spite of paying for an upmarket ‘business’ service, I was driven out of my house to the office at the height of the current lockdown, even though a family member was shielding.

Ofcom chief executive Melanie Dawes has rightly adopted a free market model in the belief it will usher in a more connected future and drive digital change.

By letting the market decide the price of fastest fibre, the hope is that alternative players such as City Fibre will ramp up operations in the knowledge that they will make decent returns. The danger is that fibre to the door comes to be regarded as premium service, available only to those who can afford it, and this will hold back digital transformation. As is the case with satellite, cable and streaming TV, the better the package, the higher the price.

It does looks as if the regulatory pressure placed upon Openreach, BT’s infrastructure arm, has been useful in sweeping away some of the non-tariff barriers – in the shape of access to existing exchanges, ducts and poles – to BT’s competitors. Nevertheless, whatever the good intentions, it is an inescapable truth that having the national telecoms champion owning and controlling distribution must be a barrier to entry. It is as if British Airways was the arbiter of who controls landing slots at Heathrow.

Vodafone has just obtained a good price for its ‘towers’ enterprise by hiving it off through a float. BT boss Philip Jansen should follow his instincts and do the same for Openreach, even if it means bringing in a private equity finance. Until then one fears that the system will always be slanted in BT’s favour and genuine price and service level competition stifled.

It could also put a Bunsen burner under BT’s improved, but still feeble, share price.

Climate control

THE Government’s decision to wind up the Industrial Strategy Council, chaired by the Bank of England’s Andy Haldane, has caused concern.

There are strong signs that Boris Johnson’s climate change targets – ramped up hydrogen production by 2030 and a carbon neutral economy by 2050 – are working a different magic. Bernard Looney at BP is embracing a more sustainable agenda. The decision to take advantage of existing infrastructure on Teesside, capturing and storing carbon dioxide and producing blue hydrogen, is a case in point. Japan is already powering cars on the streets of Tokyo using hydrogen. Next generation UK locomotives, trucks and even some aircraft could be hydrogen users.

Britain’s biggest power distributor National Grid is tilting back to electricity. It is splashing out £14.4bn (including debt) to buy England’s largest electricity distributor Western Power from its American owners. It is finding a chunk of the cash it by selling off the rhode Island utility Narragansett Electric Company to America’s PPL. National Grid has also put its gas network up for sale.

The private sector will not do this alone. If Downing Street really wants to make a difference it could do so by insisting that every department of government redirect the £284bn of the annual procurement budget towards firms with ambitious carbon neutral targets. That would speed change.

Second rate

TWO of the big four central banks, the Bank of England and Federal reserve, have spoken. Both have forecast faster output, recommitted to record low official rates and done nothing to douse inflation fears.

The result is that the US 10-year Treasury yield has soared to 1.75pc and the UK tenyear gilt climbed to a year high of 0.876pc.

A battle of wills has been enjoined.