Perhaps it should be BT Retail that is split up, since even if Openreach and/or BT Wholesale were to be 100% independent then it is likely that BT Retail would be the biggest customer, and as a 100% independent firm why should the local loop arms not favour their biggest customer.

In reply to a post by Chrysalis:

The last line of your reply is the key here.

e.g. Openreach rolled out FTTC when BT retail decided they want it, not any of the other openreach customers.

I think you will find that Openreach rolled out FTTC when Ofcom said they could. They applied for permission and Ofcom took several years to agree - if they had done so sooner, we would be that much closer to higher coverage/take-up figures etc.

The fact that they knew that some of their customers including BT retail would sell it was obviously a factor in their business case - as events proved, they couldn't rely on Sky and TalkTalk to do so.

Sorry, I can't help with the detail you require. Any inside information wrt BT Group Board meetings and lower level strategic and tactical policies I may or may not be aware of I obviously could not reveal.

In short - why get so up tight?

It is possible, and in my opinion likely. Apparently in your opinion it is impossible - the whole of BT Group working completely independently with typical B2B major customer-supplier relationships between the multiple companies and divisions, and completely within the spirit of OfCom regulations. All BT companies and divisions trying hard to screw the best possible deal for themselves at the expense of the profitability of all other group companies and divisions, with the CEO and OfCom beaming on happily.

Nothing to argue about. Though if it is all happening your way one has to wonder what Gavin Patterson is paid for doing and why there needs to be a group board/holding company at all.

Oops! That would mean a complete breakup wouldn't cause a problem, anywhere.

[cough]

In reply to a post by BatBoy:

I saw a suggestion that BTW should be absorbed into Openreach before the split.

If I remember rightly BT themselves asked Ofcom for permission to do this in 2014 before splitting was on the cards.

In reply to a post by RobertoS:

It is possible, and in my opinion likely. Apparently in your opinion it is impossible - the whole of BT Group working completely independently with typical B2B major customer-supplier relationships between the multiple companies and divisions, and completely within the spirit of OfCom regulations. All BT companies and divisions trying hard to screw the best possible deal for themselves at the expense of the profitability of all other group companies and divisions, with the CEO and OfCom beaming on happily.

Isn't this the entire point of the regulations? That BTW do their utmost to 'screw' the best possible deal for themselves and BT Retail the best possible deal from Wholesale?

Sky, TalkTalk and Vodafone couldn't care less about the profitability of one another, why should BT Wholesale care about their profitability?

The hundreds of companies reselling BT Wholesale services couldn't care less about how profitable others are, why should BT Retail.

Your scenario is very much working as intended.

Were they to be preoccupied by the profit margins of other divisions then that'd be a legitimate cause for concern.

Blame Fatcher who blocked what was developed locally here at Martlesham!
http://www.techradar.com/news/world-of-tech/how-the-...

In reply to a post by Ignitionnet:

Were they to be preoccupied by the profit margins of other divisions then that'd be a legitimate cause for concern.

Therefore the Group doesn't need to exist at all.

That was in the 80's and obviously with hindsight a poor decision - unless you were a cable company.

I was referring to the mid-2000's when Ofcom sat on Openreach's request to roll out FTTC for several years.

In reply to a post by RobertoS:

In reply to a post by Ignitionnet:

Were they to be preoccupied by the profit margins of other divisions then that'd be a legitimate cause for concern.

Therefore the Group doesn't need to exist at all.

I'll take that as an admission your post did indeed inadvertently make the point against separation and agreed with the point of view you were trying to oppose.

The Group has other reasons for existing beyond that one.

Revenue across the Group helps to pay down the current pension scheme deficit; there are economies of scale from those functions that can be handled by Group without breaking equivalence; the Group can borrow at better rates and more readily than any of the individual divisions alone; there are certain political and national security sensitivities that don't have to be considered under the existing structure.

More importantly, if there is no competition reason to break the group Ofcom have no reason to recommend such an action, so it's entirely down to the owners of the company whether they wish to divest Openreach or any other part of BT Group, and they don't.

It it were all sunshine and roses separating an incumbent telco into its various divisions and in shareholder interests it would've been done across the board.

As it is it was done compulsorily in New Zealand, a country with no infrastructure competition of any kind, and was followed by a flood of public subsidy to build out FTTP and wireless networks.

It was done in the Czech Republic voluntarily, however it was forced by a financial group that acquired 83% of the shares with the likely intention of taking the respective companies private and following that probably borrowing against their assets.

The company was already planning to give itself a loan from O2 Czech Republic, it trashed the share price of the company by forcing the separation and isn't listing shares in the newly created infrastructure entity. Those shares become essentially worthless and with that in mind PPF have offered to buy them.

What they do with that entity from that point on is entirely up to them, though they were going to take a loan from the combined entity previously to obtain some of their acquisition costs back.

The valuation of the remaining publicly listed entity is wildly distorted by its slightly odd behaviour. It seems to be a fan of borrowing to pay dividends and buy back its own shares.

Fancy bits of BT being acquired by hedge funds on the cheap through leveraged buyouts after Ofcom trash their share price with their half-baked attempts to encourage 'competition'?

The third instance of any kind of separation was Japan where the retail and mobile arms of NTT were separated off from the rest. This kinda worked, however needs to be put into the context of the times. FTTP was deployed because there was no other option, and there were plenty of companies wanting to invest in Japan. No such interest in the UK right now.

Edited by deleted (Thu 28-Jan-16 12:43:28)

You seem to be getting into a complete knot with your own argument, and reading something about my opinion into my posts which isn't there.

I illustrated that there has to be a cosy relationship, which you earlier seemed to be denying. You have now listed some of the obvious factors driving the advantages of being a large group. Your previous statement that they all worked fully independently as business units meant that being a group was unnecessary.

The question is simply "How cosy is it?" That's all. It is very hard to imagine that policy decisions for Openreach, BTW, Plusnet et al are taken in isolation at individual company or division level, and that overall decisions are not made at Group level. If the Group wasn't driving the major decisions of the lower levels then the financial advantages vis-�-vis the outside world would not exist.

Management at all levels throughout the group also of course being appointed from above, and very aware of their own career prospects.

Do you seriously imagine that BT Consumer, BTW, OR and even Global investment and pricing structures are taken independently of the wellbeing of every other component of the group? Bearing in mind the discount strategies for major customers are not something magically appearing from above. The discount has to be available to all, but where are the steps and conditions and interrelationships within the structure?

Co-ordinating such strategies across the parts of the group to maximise the group's competitiveness and overall profitability is what it is about. Or is the Group Board and senior executive team comprised of saints with the welfare of the nation and the population at heart?

Their legal remit is to obtain the best ROI for shareholders. Not to make competition by non-group businesses easy. Ofcom supposedly wants competition. BT Group would no doubt prefer not to have that. The idea that they wouldn't within the group structure do everything they could within the Ofcom regulations to minimise the effectiveness of competition is absurd.

The equivalence in terms of formal ordering, problem reporting and day-to-day running compared with those available to other CPs is not the question, but in most of your arguments against other people you assume is the only relevant factor.

Edited by RobertoS (Thu 28-Jan-16 13:15:06)