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Posts Tagged ‘utility companies’

What the US row over the regulation of broadband provision can tell us about the privatisation of public services and why we must maintain the basic right to the same level of ‘public’ services for all…

November 11, 2014 Leave a comment

images-10We have so much news available to us now that it has become very easy to miss the stories which may fail to catch the public eye.

Away from the headlines today, some of our news sources have been covering the growing row between US President Barrack Obama and the Industry Leaders controlling the supply of Broadband Services in the United States.

Obama appears to be pushing for a system of regulation which will ensure the same level of supply across the Net to all customers, whilst the Industry itself is apparently looking for its own kind of controls which will allow differing levels of supply – and ultimately a ‘fast lane’ or optimum service for those to be made available for those who will pay for it.

On the face of it, this could immediately sound like something and nothing. We do after all have a whole range of choices when we buy or arrange our own internet packages and right now, it now seems pretty normal to pay for every little thing that we have.

However, whilst the speed of the roll-out of superfast broadband leaves many of us knowing only too well that different levels of service currently exist and seem to leave us with little choice, this is in itself just an evolutionary or developmental stage of provision. It is much like the experience of the switch from analogue to digital has been for those of us who used the Web from the beginning, and can still remember the rattle and hum of the tones as we hogged the phone line and dialed-in.

We may not like it and in an age where we have been conditioned to expect everything at the touch of a button, slow internet is beyond frustrating. But right now, we are accepting of it, as we are culturally acclimatised to accept that there is a direction of travel at work, which will only see services improve. (Yes, 4G apparently will at some point exist, even if you have already been paying for it for many months…).

But what would it mean to you if the next generations of technology were simply kept from you, when you knew that they existed and other people or businesses had ready access to them?

Your immediate thought might be that you are pretty happy with your iphone 6, or perhaps a Galaxy Smartphone, and that will do you just fine. But technology is moving apace, and if you were to work on the basis of Moore’s Law, which indicates that the speed and capacity of technology doubles approximately every 18 months to 2 years – which affects functionality as well as speed, you can soon begin to imagine what you might be missing out on by the time you are thinking about the phone you will be able to buy AND operate fully in the year 2020. Apply this to the services you receive through broadband too, and there is perhaps no need to say anymore.

The speed of communication through information technology mediums has been and remains a game changer which has impacts upon us all, usually in ways that leave us feeling completely untouched.

However, it is this very speed, and the capacity to move significant amounts of data from one location to another – perhaps even across the world, in timescales that as humans we at present still remain cognizant of, which have for example equipped money markets and traders to create industries within industries which literally create money from nothing as stocks and shares change hands with the potential to do so again and again over the course of a minute, whilst speculators also ‘bet’ on the transactions and the way their vales will go over the same period of time.

Speed – and therefore time, is increasingly becoming worth money where communication is concerned.

Whilst this may not be a thought that drags many of us away from our phones and iplayer-streamed episodes of The Big Bang Theory today, it will surely stand to reason that those who supply much faster internet services will see the opportunity in being able to charge a considerable premium for the product they supply tomorrow; whilst those who have the most to gain from the almost guaranteed technological leaps that are coming, will already possess and indeed have the most to gain financially from paying what will to them be trivial sums.

Not a problem for many of us today. But if the supply of service did really become as diverse as it could, there is no reason to believe that like in many other areas of contemporary life, cost will not quickly price large numbers of people out of the latest technology marketplace, with repercussions that could easily lead to the imposition of a whole tier of barriers to entry to services, apps and anything else which has then become entwined with the internet age.

Look at the behavior of the Industry in the States, and it will suddenly become very clear why our own providers could be so resistant to Government led regulation, and the imposition of a level playing field which will never have the potential for the same levels of profitability as that of the alternative.

Regulation that ensures a basic level of service for all and which is not itself qualified by a premium is essential. It can only be offered by an impartial third-party organisation – ideally good government – which has no financial interest in the services provided.

Government is today painted as the bad guy for any industry that provides either a public-wide service, or one which can ultimately have that same effect on the population and is not currently regulated – or guided with a robust ethical code that prioritises access and consideration of the consequences of profit-making actions upon us all.

This applies to the inappropriately named utility companies; companies such as the telecom providers, and also to the companies within the financial and banking sectors, where perhaps the most clear example of what happens when the fee-earners are left to regulate themselves was demonstrated by the financial crash of 2008.

The relevance of the US example should not be lost on us, just as the importance and argument that now definitely exists for greater Government intervention to regulate what are and remain public services.

The core reasoning of keeping essential services in the public domain was lost to decision makers of that time, through prolonged periods of low productivity and the high cost of running industry sized monoliths which were inherently resistant to change.

Regrettably, the long-term gift of what are effectively now monopolies to the money markets was not considered in terms of the requirements of ethical or regulatory practice, and the escalating costs of heating and electricity are just a symptom of what happens when a service is provided to a captive market by companies that are allowed to focus on nothing but the bottom line.

Sooner or later, Government will have to address these issues which face and surround all of the public services which are now in public hands.

Ed Millliband has to date probably been the most outspoken of the Political leaders in acknowledging the need to tackle the impact of unbridled energy price rises. But as with almost everything else, inflicting price changes, freezes or any kind of formula without regard to the real implications of doing so is akin to madness – and certainly so if the Industries themselves are not given adequate opportunity to reform before doing so.

Existing problems will be very complex to address. But for services such as the NHS it is not too late for politicians to do the big thing and tackle the problems that exist with meaningful reform. With Internet Services, it is in no way too late to ensure that the market continues to serve the best interests of everyone, and not just the few who will otherwise stand to make the most money from manipulating its harnessed profitability to their best advantage.

There is much for Government to do. But before anything there must be a change of mindset to one that genuinely considers the impact of polices on other polices and ultimately upon the consequences for us all.

The Internet will only come close to achieving all that it can for good if access to it is essentially the same for all.

Government will need to address this, just as it will soon have to accept that the parallel world which the Net has created will require its very own set of rules.

The distance which the Internet has created between us is already removing the humanity from relationships. We now need to ensure that our ability to pay is not the system of qualification for improving our lives that we should now be able to take for more than granted.

image: thevoltreport.com

Tax avoidance, foreign companies and the real influence of Utility providers on our cost of living

Utility companies are in the news again and this time for exploiting the foreign ownership loopholes that are allowing an increasing number of monopolistic companies to avoid paying sizeable sums in tax.

Were it not for the near exponential rises that we seem to experience from energy and water companies alike on regular basis, you might be forgiven for having a little sympathy with a company which is struggling to make money.

But these are companies which are not only achieving great success in securing stratospheric profit margins from the services they provide using what appears to be increasing levels of media-friendly scaremongering; they are arguably doing so without making any real contribution to the wider society that pays them whilst customers also seem to pay for all their upgrade work as well.

This situation has of course been in the making for a considerable time and whilst it would serve the political interests of some groups to blame the problem on the process of privatisation in its basic sense, it is pretty certain that the sale of shares to everyday taxpayers was never intended as a direction of travel which would result in foreign ownership, or to the cartel like behaviour which has contributed to the creation of rip-off Britain.

Coalition Government or hung Parliaments don’t lend themselves well to dealing with issues of any real importance when they are in power as we all continue to witness each and every day. But that of course is when they face issues that we as a public are openly aware of because Politicians have chosen to acknowledge them for whatever politically expedient purpose that it might serve.

The real travesty with the issues regarding utility companies and the influence that they are having on the true cost of inflation to us all – which has this week been suggested to be as high as 25% – is that there is not even the will to talk about the true impact of their actions upon us all in Westminster.

With the economic fall-out of credit-card government and the continuation of spending with money that the UK simply doesn’t have, reality suggests that negligible or zero percent rises in wages for the workforces operating within the commercial and public sectors alike are here to stay. That benefit and service cuts will remain the uninventive and ill-considered weapon of choice used by a political elite which seems bereft of any consideration for the mechanics of life outside their own societal bubble.

However, there are choices for our leaders and within the constraints of Coalition Government or not, Politicians taking their responsibility to the Electorate seriously would and should all be using them.

Before anything else, acknowledgement that companies providing what are in fact essential services are profiteering and are misusing the opportunities that they have would be a significant step in itself. People would at least begin to feel that leaders are identifying with what real life is really like.

This would by its very nature have to been done with clarity and purpose and with much more than a mere suggestion of what action lies ahead. Another mealy-mouthed effort like that on the part of Politicians when it has come to addressing the previous actions and future behaviour of bankers simply will not do.

It has become clear that self-regulation in such key industries isn’t working for anybody but the companies themselves, and this is where those with Government responsibility should really be taking a lead.

The next step would be to regulate pricing to allow the true cost of service provision to be reflected in the prices that we pay and dictate the formula under which such Companies can raise funds for new and improved infrastructure which in most other industries would rightly come from the bottom line.

Because the services that these Companies provide are essential to everyone, profit should be capped and systems put in place through vigorous auditing processes  to ensure that clever accounting methods cannot provide a conduit through which different cost centres or budgetary areas can be manipulated to provide an enhanced dividend.

Company owners wouldn’t like this approach, but the fact remains that with services that customers have no alternative to use, profiteering before doing what is right has created a cash-cow for the few, whilst inflicting financial misery on the many in circumstances where people cannot even earn more just to compensate. That’s why foreign owners have been so happy to throw cash in the direction of companies in the UK that governments most other Countries would at least keep very close to State control and why our Politicians must now recognise the power and influence that these industries actually have in our everyday lives.

Finally, the time has long since passed when simplification of the Tax system was required on a comprehensive basis to stem the flow of revenue from leaving the Country that we desperately need and to which we are entitled.

Tax should be applied at the point of sale; not at the location where the account managers and owners  are based. This one simple and realistic change could find tax raised from the tills where coffees are physically bought; from the sale on the actual computer and screen where products are purchased; and from the meters where our power, gas and water are measured and supplied inside the houses in which we live.

Scary as the prospect of taking on the industrial and financial monoliths might seem, it is for reasons just like these that Politicians are Elected and why Governments are given power. It might not be easy, but if those who seek our votes at Elections take the trust we have given them seriously, it necessarily follows that they will use it for our benefit too.

Isn’t it time that they started living the mantra ‘action speaks louder than words’, rather than simply just paying lip service to it?

image thanks to source unknown

Rail fare hikes and tough talk on welfare waste: Today’s problems will not simply be solved by continually taking more from pockets when there is even less to replace it.

January 2, 2013 1 comment

With a 4.2% average rise in ticket prices hitting rail commuters today, just how long do politicians think that rises in the cost of essential services, utilities and products will remain ‘sustainable’?

Stories such as this one and also the attack on welfare payouts by Iain Duncan Smith in just the past two days alone demonstrate just how little emphasis there really is in dealing with the root causes of problems, which may be unpalatable to those in power, but are nonetheless very real indeed.

As a businessman with both conservative and capitalist principles, I have enthusiastically embraced the opportunity to be both enterprising and entrepreneurial throughout my career. However, I also learned very early on that there are basic laws at work within business, one of which is that costs will generally be fixed, but profit will always be variable.

Where this goes wrong in the economy is in situations where those in control of businesses are able to fix minimum profit margins and then seek the cost of investment and renewal through price hikes which usually only affect people and other businesses who themselves have no ability to raise their own incomes or margins to cover those very same costs.

Those reading this who have experience of the commercial sector in its broadest sense will know that the circumstances which generally allow this darker side of capitalism to thrive, only exist within monopolies or within industries which provide services or products which people must have; many of which were once in public hands.

The history which has given privately owned businesses the ability to dictate the ‘breadline’ or to become able to ‘profit in misery’ is a long one. Profligate spending by idealistic politicians who believe in the principle of something for nothing, simply created a situation which left others with a more realistic understanding of the way that an economy really works with little choice in the way they had to respond.

The age of privatisation was soon born and responsibility for its evolution cannot be levelled at the door of any one Conservative, Labour or Coalition Government, as all have played their part since the 1960’s.

What can equally be said is that no one person who can ask for the votes of many thousands of people, can reasonably expect to retain any sense of respect as an MP if they have accepted that responsibility and then failed both to recognise and then to act upon the damage and pain that such levels of power are causing in the wrong hands.

Yes we need travel fares that make a job worth travelling for. Yes we need reform of welfare, benefits and taxation so that there is an incentive for all to work and stay in this Country. Yes we need managed investment in just about every area of life and infrastructure that we could conceivably imagine.

But we also need Government which is responsible, confident in taking risks and ready to deliver reforms which may well include legislative restructuring of businesses offering essential services in order to limit what they actually make.

The failure of Government to ensure and safeguard basic costs for independent living is a root cause of many of today’s problems and will not simply be solved by continually taking more from pockets when there is even less to replace it.

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