“These competitors only want to put up roadblocks, while we want to build motorways for the UK.” So said Olaf Swantee, the chief executive of EE, in response to critics of his company’s planned merger with BT.
He and BT’s chief executive, Gavin Patterson, were launching a double-headed assault on critics of their deal, and there are plenty of them: Vodafone, Sky, PlusNet, to name but three. Together with the stick the pair used to beat that lot, they also offered up a carrot for the Government, which is no doubt watching the progress of the Competition and Markets Authority’s work on this quite closely.
It was the promise that if the two companies are left to it they’ll power the digital economy that ministers are rather keen to encourage.
The intervention was thus well timed. The Government’s critics – and I count myself among them – are increasingly raising uncomfortable questions about its alleged economic achievements and its future economic policy.
As David Blanchflower recently noted in The Independent, the Chancellor is fond of banging on about how Britain doesn’t make, export, build or train enough and how it remains far too reliant on the City of London for its prosperity (and tax revenues). But despite having had five years in Number 11 Downing Street, he’s done precious little to address the issue.
Unlike another deal currently being pursued by Hutchison Whampoa’s Three and O2, which European regulators are (rightly) scrutinising, the BT-EE tie up won’t remove a mobile operator from the market. But the combination of a former state monopoly with the big dog in mobile will still create a company with an awful lot of clout. As a result, the regulators should beware of simply waving it through.
Roadblocks that impede competitors, stifle markets and end with the creation of monopolies, or monopolistic entities, are no more welcome than roadblocks that might stand in the way of a boom in the digital economy. That boom, of course, would be the motorway. But the danger is in it coming to resemble the M6 toll road in the Midlands.
That toll road is super-fast, state of the art, and an absolute pleasure to use. But lots of people don’t, because it is so expensive. Instead they opt for the alternative, despite it being slow and choked with traffic.Reuse content