Telecoms and broadband
Under-investment and confusion marketing
in The end of the experiment?
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The British Telecommunications Act of 1981 enabled private providers to supply equipment to customers, and gave government powers to license new telecoms operators to provide network services. The most important developments in the sector have been the proliferation of complex, confusingly-priced product bundles and a sports content bidding war whereby British Telecom (BT) spends similar amounts on football as it does on its fibre-optic network. This chapter argues that in the case of broadband the shareholder value pressures contribute to a form of competition based on confusion marketing of bundled products that attempt to limit process of commoditisation and price competition. The business models of most major UK internet service providers (ISPs) are focused on winning market share through aggressive discounting, with minimal investment so as to ensure good return on capital.

The end of the experiment?

From competition to the foundational economy

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