Telecoms becomes a political football as UK government leans on service providers to keep prices down.
Nov 19, 2013
In the UK the bigger partner in the country's coalition government, the Conservative Party, is very much on the defensive over its inability or unwillingness to intervene in any meaningful way to call to account the rapacious greed of Britain's (allegedly) competitive gas and electricity utility companies.
The British people are united in outrage at the seemingly endless series of massively above-inflation price rises that are playing hell with straitened family budgets and living standards in a period of ongoing recession and there is strong popular suspicion that the sector is being rigged by cartels rather than being the openly competitive environment that was promised when the publicly owned utilities were privatised.
So, having missed the bus and been left on the kerbside juggling with that particular political hot potato stuffed down his pants, Prime Minister David Cameron has decided to drop it down his trouser leg and into the gutter and then have a bash instead at the UK's fixed and mobile telecoms companies.
Thus he has summoned the heads of the UK's fixed and mobile network companies to 10 Downing Street to hear a sermon on the need for them to keep price inflation under control and consumer bills down.
As a piece of brass-necked party political opportunism it takes some beating.
Unable to do anything about the fat cats running the gas and electricity companies Cameron has cast around to find a different villain and has decided it is the telecoms industry. And now Whitehall spin-doctors would have us believe that telcos are pushing up bills and making excessive profits.
As an argument it is as ersatz as it is disingenuous not least because the UK has a properly functioning and highly competitive telecoms sector.
Apart from the national incumbent, BT, the telco which back in 1984 was gifted the national network that had been built with taxpayers money over many, many years, the other fixed and mobile players in Britain paid for everything for themselves, raising cash from investors and paying huge sums into the national exchequer in exchange for bandwith allocations and licenses to provide service. Let us not forget that the Labour government of the day got a £22 billion windfall from the 3G licence auction alone.
Sure there have been some price rises of late (in February my own particular ISP - Virgin Media - is upping the ante by what I regard as an unacceptable amount after 14 years of customer loyalty on my part so I'll be taking my custom elsewhere. That's the strength of the UK telecoms environment - it really is competitive and I can spend my money with a host of hosters) but in the main the rises have been limited and responsible, especially in comparison to the cold-eyed, cynical price-gouging being practiced by the utility companies.
In an ominous statement Maria Miller, the Minister of Culture, Media and Sport (and there's a strange collection of bedfellows ever to be brought together in a single ministerial portfolio) is pledging that she will "work with" the telecoms industry to protect consumers from unfair charges and price rises.
Of course, to "work with" actually means to apply political pressure or, as Ms Miller says, "We want to help hard-working families by ensuring they are not hit with unexpected charges and rising bills." The minister was not so concerned a few weeks ago when the utility companies started their shenanigans.
It is true that from time to time we hear stories about someone going on holiday to Sicily and allowing (usually a junior) family member to steam several episodes of a TV series and then being faced with a bill for thousands of pounds on return to the UK but these cases are few and far between and anyway a couple of months ago the government announced a review intended to improve the transparency of information presented to consumers and to prevent bill shock.
So, later this week, senior representatives from BT, Virgin, BSkyB and TalkTalk EE, O2, Vodafone and Three will duly traipse down Whitehall to get a wigging-cum-pep talk from the PM. What fun! What japes! What nonsense!
It is all a political stunt with the 2015 General Election in mind and the government is looking for sound bites and what is described as "a quick announcement" to bolster its popularity. A hard task under present circumstances.
Now what Minister Miller could do that might have some real effect would be to make Vodafone fulfill the commitments it made about 3G roll-out when it bid for, and was awarded, its 3G licence.
Last week the UK regulator Ofcom took Vodafone to task for failing to meet its 3G coverage obligations. It transpires that all these years on just 35 per cent of Britain's main roads have 3G coverage whilst nine per cent have no coverage at all. But that's not such a headline grabber.