Rather as “democracy is the worst form of government except for all the others” (Winston Churchill), I am currently trying to decide whether public ownership or private enterprise is the worst method of providing goods and services. Much like communism, it might be argued by radical economists that the reason capitalism fails is because it has yet to be properly tried (to which I say: preferably on a charge of fraud).
For strong evidence that competition often goes horribly wrong, one need only look at the UK telecoms market. In theory, if it is regulated at all, then it is strongly in favour of encouraging competition. In practice, British Telecom - it’s good to talk, though not to send data - dominates the residential sector. Frustratingly, they are rather good at what they do: the phone service is reliable, well-maintained and insistently discounted (even if this insistence springs more from the regulator than from BT’s largesse). BT Internet, much as I hate filling the coffers of a monopoly, is a responsive, reliable service to which my modem successfully connects at any time other than around 7pm, which is more than can be said for any of the “free” ISPs I once tried.
Unfortunately, in the larger scheme, what they do is Not Very Much. If you want to phone your mum in Somerset once a week off-peak, thank BT for a clear, cheap line that connects first time, every time. If, on the other hand, you want some extra services - such as caller ID, ring back or, in a fit of naked greed, high bandwidth Internet access - you will either pay heavily or not pay at all, because you can’t have it. When we’re talking about caller ID, a useful service that allows you to detect when your cousin is ringing and thus avoid lifting the receiver, the few quid a month they demand for this simple service that can’t cost more than buttons to provide is merely annoying. When you’re talking about ADSL - your only hope of escaping metered 33.6K hell - it’s fucking rude.
Unfortunately, BT have built up a nice little earner in providing ISDN (“turbomodem”) in recent years, and are extremely reluctant to gut it by encouraging people to switch to ADSL, even if (or because) it is unmetered and at least four times faster. They are even more reluctant to heed the call for unbundling of the local loop, allowing their competitors to locate equipment in BT exchanges. So they’ve responded to these twin threats by: * Charging a net price of £35 a month for ADSL lines (which translates to £40 a month retail to the end user); * Dragging their heels over opening up the exchanges and claiming that many have no space left - conveniently, the most popular, profitable ones. Because they’ve already been filled up with BT’s own ADSL equipment.
What this means to me - the consumer who is allegedly the whole raison d’etre for the marketplace - is either fork out or stick with my crappy 33.6K modem. And, thanks for offering, but I’m gonna stick with the modem. Forty quid a month is waaay too much for the pleasure of downloading banner ads and the odd MP3 double-quick. If it comes down to twenty quid, let me know and I may jump onboard the ecommerce revolution promised by Mr Blair.
What competition do BT have for high bandwidth net access? Well, NTL are rolling out cable modem in selected areas (though not yet Manchester). The cost? £40 a month…
Competition, it seems, is emphatically not about giving the customer what they want, regardless of the £240 a year they might be willing to pay. Instead, it results in companies that: * won’t sell you what you want because they think you should want what they sell instead; * won’t sell you what you want because less than a million other people want it too; * would rather charge lots and sell a few than charge a bit and sell lots; * insist you pay through the nose even though they and you know that the product costs peanuts to produce - and if you won’t pay, the other suckers will do nicely; * would rather pluck out their eyes than sell something that is better than what they’ve already made a killing on for the past ten years; * will sell the same thing as all the other companies, with a confusing tariff to hide their own surcharges and prevent any form of meaningful comparison; * aren’t interested in you and your petty, grasping needs because they’re doing alright, Jack, so you get jack too.
To take another example: public ownership gave us British Rail. Private enterprise made it worse.