The Divestment of Openreach from BT is not a simple case

February 8, 2016

It would perhaps be easy to jump on the band wagon and champion the case for freeing Openreach from its parent BT, which according to the press is a given. But in fairness, both Openreach and BT deserve credit in areas

BT is a truly world class business. It is a leader. It has delivered (mostly) on its promise to provide the UK with its Information Super Highway. But yet more change and progress is sought after.

Better apart?

The proposal to divest Openreach from BT may bring more challenges than we have today opposite speed of change and progress. More complexity. More governance and regularity issues. Investment may actually stall rather than speed up. There are no guarantees that Openreach and BT will perform better independently, or indeed that others (business customers, partners, consumers) will benefit from a split.

Openreach is already functionally separate within BT. The challenge is whether Openreach operates in the spirit of openness, or whether it favours the agenda of its parent. Would an independent Openreach really deliver improved competition or speed up investment? Would the perceived rate of change and progress – the perception of more innovation actually be delivered delivered if Openreach were no longer ‘restricted’ by BT’s agenda, governance and control? Both BT and Openreach’s customer service are questionable, but where would the real alternative appear from?

I know some {LWD subscribers] who believe that BT does trade on its monopolistic position. Ordinarily most would condemn the incumbent as the bullying type leveraging their position for self-interest. Perhaps part of this argument is true. Listening to a BT video link, I note that the speaker does acknowledge that the competition [Sky, talk talk, Vodafone?] consider the BT Openreach relationship as unfair.  Perhaps this is natural position for them to take. Of course they would. They are the competition after all.

Depending on an individual’s perspective

Depending on an individual’s perspective, BT are cumbersome, inefficient, and an abuser of their monopoly position. Or perhaps they could be seen as actually being efficient, well run, and a true global leader in a competitive market place.

IF the UK is to continue to benefit from the technology infrastructure that Openreach has built and delivers to us, then perhaps one of the most important questions Openreach needs to ask itself is whether it is investing enough cash fast enough to align to customer demands and expectations.

I believe BT does recognise and acknowledge the challenge. In the video, the speaker states that customer demands are very high. The customer asks that Super-fast broadband is always available, from anywhere, from any device. Realistic expectations? Or difficult expectations to deliver?

How quickly can BT deliver the services that the customer and the market place are demanding. Are BT and Openreach driving change and progress quicklyy enough? Maybe not, but the problem is tempered and made more complex by the fact that BT is a commercial organisation and no longer a nationalised industry. Therefore, it is right to treat each major investment decision with the correct level of due diligence and moderation before overcommitting spend and investment to services that may not be commercially viable in the short term.

Major Investment is still needed

That said, it is still of question when, not if the investment is needed. The speaker in the video talks about maximising the use of the existing infrastructure using innovative technology to deliver high speed broadband without replacing with expensive fiber. This sounds like an equitable and sensible compromise.

Fiber based superfast broadband for all may well be the next major step, and an end goal – but we need to be sensible with expectations around timescales. Some of that investment and infrastructure has already been made and is available to some lucky users. For others perhaps in rural areas, they need to wait. These are the folk most likely to argue BT needs to do more, and faster too.

With faster greater bandwidth comes downstream opportunities for all. The popularity of new services would grow faster than at current rates – for example: the move towards On-Demand content could happen quicker. Cloud is now a mega-trend. I remain convinced Cloud computing will be seen as a separate computing paradigm. Openreach and BT do deliver the services that underpin downstream Cloud provision.

BT is adapting too

We can also flip the argument around. BT themselves are now delivering content and challenging Sky with BT Sports. I do believe that TV as we have known it will continue to change and be disrupted. Openreach are in some ways influencing and controlling the rate of change because of the overall dependency on bandwidth and superfast broadband.

I’m sure there will be a shift towards faster lines and that eventually the demand will be there to justify the investment and provide the requisite return on investment. Eventually it’s just a case of getting the business model right.

Conclusions

I suppose my concluding thoughts are that investment represents a double-edged sword for Openreach. There is no guarantee that consumers or big business will take-up new more expensive services with immediate effect. This is very much a generic business statement though. No investment comes with guarantees. It’s about understanding the risk versus the reward.

Greater speeds and more bandwidth are nice to have, but in our cost conscious world I too often hear the phrase ‘is the provision “good enough”– often the reality is yes. What we have today is good enough and meets our needs.

So there is a dilemma here. What comes first, the chicken or the egg? Greater, faster investment from Openreach against the commercial reality and ‘guarantee’ of customer demand for new products.

If Openreach is split off from BT, and starts to either compete with rivals, or offer technologies that align with specific customer/partner needs then really we may just have new different challenges around agreed technology standards and regulation. These are the same issues that exist today, perhaps just in more complex forms.


Brexit and the impossibility of independence

February 4, 2016
I know why the caged bird singsIn the run up the the referendum over EU membership I  am coming across a large numbers of remarks about independence.  It can be a great and noble aspiration.  It can also be used as an alternative for thinking more deeply about an issue. Starting with ‘what is independence?’
This thought occurred to me as I digested my morning portion of tweets washed down with some low fat cynicism.

Today’s tweets covered a lot of territory.  Brexit was one preoccupation in England and Scotland. There is a certain amount of tangled logic about voting for independence from ‘Europe’ (the EC) and winning it for Scotland.  Several countries are celebrating or remembering their Independence Day.  A brewer brags about its independence from the chemical giants.  There are a few cries of a shackled youth for ‘ a bit of independence’.

Click here for tweet 1

Click here for tweet 2

Click here for tweet 3

Click here for tweet 4

Click here for tweet 5

Click here for tweet 6

Click here for tweet 7

Click here for tweet 8

Click here for tweet 9

Click here for tweet 10

For me, each of these tweets could be the starting point to deeper thinking about what the tweeter means by independence.

If these are not enough to suggest independence comes at a cost, here’s another regarding David Cameron’s attempts to negotiate for reform of the EC in advance of the referendum.

Those believing that a Brexit will regain control misunderstand there is no escape from shared control on international issues. Furthermore, negotiation is discussed in a totally zero sum way. That is not the only game (theory) around.

Three steps on the road to freedom

The three steps towards a better future may be seen as

dependence ‘you control me’

independence ‘I control me’

inter-dependence ‘we share control for mutual benefits’


The Big Short: The film, the book, the idea

January 29, 2016

The Big Short

The recent film The Big Short reworks the ideas of the book of the same name.  It deals with important issues of financial practices and their consequences

 The Big Short is a comedy about what otherwise is no laughing matter, the dubious practices of financial fraudsters during the period of the global economic crisis. It has opened to generally positive reviews.  The ones I came across have whetted my appetite to make the film next for a visit to my local cinema, hopefully if I understand the advert with a mate and a date (same person).

Not a book or film review

 I might have waited before blogging until after that postponed pleasure.   However, there are a few other posts in revision in the pipeline for LWD, so this is more of a mention and a heads up for LWD subscribers like myself who are no friends of home viewing.  In it, I have tried to avoid spoiling any subscriber’s future enjoyment by passing on too much plot detail.

The film is based on the well-received book of the same name by Michael Lewis.   The big short  refers to buying ‘short’ , a financial strategy involving risks but promising great rewards.  In this case (you could say case study) the financial instruments are derivatives, or ‘gambles on gambles’. Specifically, the film and book concentrate on borrowing, then selling and buying back at a profit of Mortgage Default Insurance Options. The film ducks explaining the financial details , beyond making the point that the speculators are gambling on whether a catastrophic slump is coming in the housing sector.

I found the most enlightening review of the film was the one in The Wall Street Journal.

The film deals with the practices and their consequences of financial dealers contributing to the economic crash of 2008. The topic sounds arcane.  It is arcane.  But it has the advantages of drastic tension as mega-fortunes are made and lost, alongside personal triumphs and tragedies.  We are here in the same territory of the Wall Street morality tales, but (according to the WSJ review) mostly entertaining rather than preachy.

 Villains or heroes

You can, of course argue as did the WSJ that the speculative group of financial entrepreneurs are heroes of capitalism lancing the poison from the bubble so that the markets can return (eventually) to conditions of rationality and equitable trading.

The previews suggest that the film wraps all this up as a tense and enjoyable viewing experience.  I can’t wait to see it.


Tennis Matters: I didn’t see the match-fixing

January 27, 2016

Tennis Matters Blue

Tennis is the latest sport to find itself embroiled in a corruption scandal.  It is not the problem that many observers expected
Leaders We Deserve was and still remains a blog about leadership and its implications in business.  Sport remains a useful way of ‘back engineering’ into business leadership.
In recent months sport has provided a wealth of examples of issues of global institutions failing in the most basic tenets of social corporate responsibility.  LWD subscribers will be able to track back to the most recent in athletics and football.
So now for tennis.  Over the last few weeks a story has developed in a rather predictable way.  First, a suggestion that a few low ranked players were involved in match fixing.
All credit to the BBC who can still produce world class reporting from time to time.
Silence from tennis authorities. The story builds
World number one Novak Djokovic speaks out suggesting it is a minor problem, although he was approached to fix a match early in his career.  First time I was awoken from my slumbers.  Novak was reported as dismissing the claims as sheer speculation.  oh, no  Novak.  Better to have stayed shtum.
More reports that the problem is widespread.
I start preparing this post.
Then an announcement that an official enquiry is to take place.
Tennis Matters
I recently self-published Tennis Matters, a little book of personal anecdotes. One seeded participant at the on-going Australian Open was given a copy to read.  It includes updates of several LWD posts.  I was advised by a legal friend to be careful of one of the posts which suggested there might be a drug problem in tennis.  So I listened to him, but there is still a hint of my concerns in Tennis Matters.
What I didn’t see coming 
What I didn’t see coming was a different sort of scandal.  Over the years there have been curious collapses from winning positions. Players have been fined for not trying.  Perhaps I didn’t want to see any suspicions.  I was more interested in the tensions that impair ‘thinking clearly under pressure’
This story has legs
You can find my slightly redacted comments about drugs in tennis in Tennis Matters.  Until I put out a revised version, this post will have to do.  I have a feeling the story deserves the customary not quite final words … Watch out for updates.
To be continued

Rawan Albutairi is an ‘Outlier’ at Davos and Saudi Arabia

January 22, 2016

Rawan Albutairi

The BBC introduced this story with a slightly breathless first sentence, accompanied by several images of a striking young woman copyright by Ms Albutairi herself

Not that the BBC would use politically incorrect language, or other click-bait device. I can just about imagine the treatment from the Red Tops. Here’s an extract from the BBC version:

Rawan Albutairi wouldn’t have to do much to get noticed at the World Economic Forum in Davos.

A mere 18% of all delegates at the conference are female, and women under 30 are rarer still – especially if they are from Saudi Arabia.

Through the late King Abdullah’s scholarship programme, she studied finance at The University of Maine.

But the 28-year-old is unusual for other reasons, too. She’s a leading financial analyst at the world’s biggest oil and gas company, Aramco, managing a $ multi-billion budget, and she is one of the Forum’s “Global Shapers” – a title awarded for her work in encouraging more young women to enter Saudi Arabia’s male-dominated workforce.

What’s more, she’s currently in training for the Rio Olympics later this year. where she will be competing as part of the kingdom’s first ever female fencing team.

By her own admission, she’s an “outlier” in her country.

Why Rawan Albutairi is an Outlier

The BBC assumes its website readers understand why a 28 year-old Saudi woman attending the World Economic Forum in Davos, who is an Olympic fencing athlete and a finance manager at Aramco is an ‘Outlier’.

The story would have caught my eye anyway. the World Economic Forum held in Davos in January is always good for a leadership story. It is also a source of interest for conspiracy theorists about global Galacticos such as Warren Buffet and Tony Blair secretly planning wheezes to consolidate their mighty power.

Aramco, Saudi Arabia’s giant energy producer and source of its petro-wealth, is also in the news for plans of a finance a deal to adjust for its financial shortfalls following the continued slump in crude oil prices

But my interest was also quickened because I have been revisiting Malcolm Gladwell’s ideas about Outliers for a different writing project. (I am writing a book about Jose Mourinho, someone I see very much as a Gladwellian Outsider).

For Gladwell, exceptional achievements result from exceptional effort, and motivation. Debate continues regarding the requirement of innate and special talent. There is a lively debate continuing about the nature of exceptional talent. Gladwell suggests that outstanding achievers put in thousands of hours of motivated work before their talent is developed and appears effortless. There are many anecdotal accounts to back up his idea. Successful high achievers often show an obsessive compulsion and motivation from an early age. Natural talent combines with motivation and opportunity (which is helped along by mentors or parental encouragement).

Rawan Albutairi has much in common with ‘The Special One’. Her charismatic progress may be worth following.


The great Lord Coe mystery: how institutions finger the fall guys

January 19, 2016

As the credibility of FIFA, EUFA, and IAAF deteriorates under the weight of leadership scandals and incompetence, Lord Coe, newly appointed head of IAAF, remains untouched by the crises. For the moment.

Read the rest of this entry »


Sacrificial leadership by OPEC adds to market uncertainties

January 15, 2016

Rochdale PioneersI listed over twenty descriptions of leadership last year. One that slipped through unnoticed was sacrificial leadership which has been applied to OPEC’s approach to the oil market. What’s all that about?

Read the rest of this entry »


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