Competition per se is not worth anything. The free-market dogma is that the more companies compete to sell you something, the better and cheaper that thing will be. But it’s not a magic spell. If ten people are competing to sell you apples, they are each selling a different apple; one can sell apples cheaper by using more automation, another can breed better-tasting apples, and so on. There’s a reason why you get better and cheaper apples through competition. But it doesn’t apply if everyone is selling you the same apple. Local-loop unbundling is pure Thatcherite cargo-cult reasoning: if we perform the dance of competition, the market will be pleased and shower us with riches.
In the UK, your bits are carried over BT wiring to a BT cabinet, and from there they are carried to the rest of the world by BT Reacharound (or in some cases Virgin Media). You can choose who processes your bills, but you can’t choose a different infrastructure because there isn’t one. You could argue that this competition gives you more options for phone call pricing structures (which still mattered in Thatcher times), but that’s just a choice between different rearrangements of the highly artificial price structure developed in the monopoly era.
If the internet hadn’t come along, BT and all its new “competitors” would still be gouging us by charging different rates to send a bit next door, or to Leeds, or Mumbai. Far from breaking down the old abusive price structure, they’d still be using different permutations of it to create the illusion that their “competition” was meaningful. But internet-age consumers only care about a single number – the cost to send a bit anywhere – and that’s pretty much the same regardless of provider. It’s not competition that determines this number (how could it be?); it’s government regulation.
