Loathe her or love her, Margaret Thatcher’s telecoms policies have strongly influenced the structure of European Union policy. But how far did they pave the way for Internet communications?
As we learn of the death of Baroness Thatcher yesterday, it is worth reflecting on the ways in which her policies have shaped the telecoms industry that we have today. She was politician who prompted very mixed and divided reactions, and her policies were not always welcomed or liked. And it is so with her telecoms policies.
The process of liberalisation and deregulation, begun by her in Britain and later copied in the EU, was arguably a positive move, without which the commercial Internet could never have happened – or at least, not so quickly. Other aspects of her policies allowed the sell-off of telecoms equipment manufacturers. Arguably, these were negative for the long term health of British industry.
It was Mrs Thatcher’s government who began the process of transforming the telecoms industry in Europe away from the old state-owned monopolies to create a regulatory structure that enabled the building of a commercial, state-independent Internet. She began with the privatisation of British Telecom (BT) in 1984. The newly privatised BT was given a competitor, Mercury Communications, owned by Cable and Wireless. It was a move that paralleled the divestiture of the Bell system in the United States, creating the so-called Baby Bells.
I’m told unofficially by a former Professor that Mrs Thatcher’s real reason for forcing through the BT sell-off was not entirely ideological, but was done because the Exchquer needed the money.
Mercury no longer exists, and the competitive landscape is vastly different in a way that could not have been predicted in 1984. But it did have an effect simply by its existence, in putting on BT to improve its services, and in very painful steps, BT did improve.
The utlimate legacy of the Thatcher government’s policies probably lies in two areas. Firstly, in the deregulated system, a new class of services was created, known then as ‘value added services’, which could be set up without a licence. The waiving of the licence for a telecoms service was innovative in those days, and it was this new class of service that facilated the setting up of Internet Service Providers in the early 1990s.
Secondly, the notions of privatisation and deregulation fed into European policy, and to this day, the British remain influential in Brussels in this policy area. This was important because in the previous era of State monopolies it was difficult, if not impossible, to set up telecoms networks in most other EU member states. I cannot count the number of times I heard the complaints of corporate telecoms managers about buying modems in Germany – any one would do, as long it was made by Siemens. The EU, influenced by the British policies, set up new legislation to address this kind of controlling market behaviour.
Another legacy of the Thatcher era is the mobile phone industry. By insisting that there were two licences granted, it set up a competitive environment that forced the growth of the networks. And of course, this structure was also copied at EU level.
A downside of the Thatcher government policies, that sadly remains today, was an attitude of not caring when British telecoms companies were sold off. The British were pioneers of many of the technologies that we rely on today, but we no longer lead the world in this field. Instead, the Chinese do. That is a sad legacy.
For example, Plessey was carved up in 1989, with its telecoms division going to to a Siemens-GEC joint venture. It was not long before the British technology was discarded, and German-made electronics were being delivered to BT inside a British casing. Indeed, I recall that I wrote an article to that effect and the Siemens press office were very annoyed, because they did not want their British customers to know.
Another legacy was the rise of Rupert Murdoch’s British Sky Broadcasting (BskyB), which got its kick-start from a personal deal between Mr Murdoch and Mrs Thatcher. Now, BSkyB is one of the biggest ISPs and hence controls a chunk of the telecoms infrastructure as well as broadcasting. This is a factor that policy-makers should keep a close watch on.
It does give us pause to reflect that the regulation of the telecoms infrastructure plays a major part in 21st century life. It is a crying shame that so many students and policy academics dismiss it as boring. It is one of the most fascintating, and critical topics for policy study.
This is an original article from Iptegrity.com and reflects research that I have carried out. If you refer to it or to its content, please cite my name as the author, and provide a link back to iptegrity.com. Media and Academics – please cite as Monica Horten, Lest we forget - Margaret Thatcher’s telecoms legacy , 9 April 2013, in www.iptegrity.com. Commercial users - please contact me.