Saturday 4 March 2023

To Hull in a handbasket: the perils of monopolies

A most unlikely anomaly persists in the area around Hull.  Uniquely in the UK, it evaded liberalisation of landline telecomms - a sop to John Prescott? - and its municipally-owned telephone network, Kingston Communications, persists as a local monopoly.  It's always claimed the locals are "proud" of KC and their crap cream-coloured kiosks - which, bizarrely, have now been granted Grade-II listed status.

I say 'claim' because in point of fact, the locals despise KC and its utterly useless landline services, telephone and broadband.  If it wasn't for the fact that everyone has mobile 'phones these days, somebody would have demanded it get fixed long since.  Such is the fate of local monopolies, or indeed any properly contestable service, that local authorities get involved with - see Bristol Energy, Robin Hood Energy (Notts), Together Energy (Warrington), not to mention Croydon's ridiculous essay into building and property speculation, and Thurrock's ruinous solar farm ventures.

It reminds me of a conversation I had, many years ago, with a bright junior member of my staff who was (is) of Indian heritage, and who would periodically return to the subcontinent to see relatives etc.  After one such trip she said to me: "You need to take an internal flight to see some of my family.  There's only one airline that flies there, and the tickets are very expensive.  It's odd, because with no competition and high prices, you'd think they would put on a really good service - but it's rubbish!"

I was able to enlighten her on, *ahem*, the Ways of the World.   She went on to become a well-known TV personality, and I imagine that by now she'll have amassed plenty of personal experience to ratify the truth of what I told her.

How many times do these simple lessons of practical capitalism need to be learned and re-learned the hard way?  


UPDATE: Jim (BTL) gives additional detail: KC no longer owned by council


James Higham said...

Hull is a bizarre city in itself. One learns a lot perusing Pearson Park and its goings on.

DJK said...

"...the locals despise KC..." You seem very sure that you know what all the citizens of Kingston upon Hull think.

My view is "let a thousand flowers bloom". Nothing wrong in principle with municipally run enterprises, and citing a few bad examples is not an argument. What is wrong is imposing a UK-wide solution from Westminster, on a man in Whitehall knows best basis. This is what happened during the Thatcher governments when municipal waterworks, buses, docks, airports, etc. were all forcibly privatised whether the local citizens liked it or not. In some cases, this resulted in better provision; in many cases not.

dearieme said...

"during the Thatcher governments when municipal waterworks ... were all forcibly privatised"

Not 'ere, mate. We'd had a private water company since the year .

Mind you, it didn't stop one of my dimmer colleagues ranting against water privatisation. This meant, I suppose, that he didn't understand his water bills even though at the top they said in large letters "Cambridge Water Company".

Nick Drew said...

DJK - I have extensive family in Hull & surrounds, visit there often. I only report what I'm told.

"Let a thousand flowers bloom", you say. YES - ergo, no monopolies!! KC has a statutory bloody monopoly.

dearieme said...

"during the Thatcher governments when municipal ... docks ... were all forcibly privatised"

But the British Transport Docks Board (BTDB) was formed in 1962 as a government-owned body. In other words it was a nationalised body run from London. Nothing municipal about it.

dearieme said...

"during the Thatcher governments when municipal ... airports, etc. were all forcibly privatised"

British airports were originally owned and operated by the British state-owned British Airports Authority i.e. they were nationalised and run from London - they were not municipal undertakings. At least that's true of the big ones: I don't know about tiddlers save to say that our local tiddler is owned by a company and had been since long before Maggie.

The first ones to be denationalised were Heathrow, Gatwick, Stansted, Southampton, Glasgow, Edinburgh, and Luton.

I'm always amused that Fatcher-haters almost never get their facts right.

DJK said...

On forcible privatisation I was thinking of Bristol.

Bristol (Lulsgate) airport was built and opened by the city council in 1957. The 1986 Airports Act required all municipal airports to be turned into plcs, with restrictions on capital raising if a majority of the shares were owned by the local authority. The airport was sold to First Group in 1997.

The Port of Bristol Authority, which was owned by the city council, ran the docks in Bristol, Portishead and Avonmouth. I can't find the relevant statute but ownership was transferred to First Corporate Shipping in 1991. I remember that there was a lot of local opposition at the time, to an ownership structure being imposed from Whitehall.

And we can add bus privatisation, which happened in nearly all English cities.

DJK said...

"KC has a statutory bloody monopoly" Ports, airports, waterworks, etc tend to natural, local monopolies. This is only really a problem if they are run to generate as much revenue as possible. I'm guessing that Hull council is now required to run Kingston Communications as a profit centre. But maximising profit is not the only way to do things. The Joseph Chamberlain style municipal enterprises (gas, water, transport etc) were originally formed as a way of providing local services, at better value than a private monopolist could provide. Sure, profits are needed to provide future investment, but there is a world of difference between the profits that some of the pre-Thatcher municipal enterprises generated and the monopoly rents enjoyed by the foreign owners of Heathrow, etc.

Sobers said...

"My view is "let a thousand flowers bloom". Nothing wrong in principle with municipally run enterprises, and citing a few bad examples is not an argument."

The issue is not whether we should let councils get involved in commerce, its more who's head should be on the chopping block (metaphorically speaking) when such a venture goes t*ts up. If senior council officials and councillors had to have some skin in the game (ie stood to lose their houses and pensions) if their new venture went t*ts up, then I'd have no problems with council's commercial adventures. As it is they get to pay with taxpayers money with no personal downside. Either the local taxpayer or the central government taxpayer bails them out and those who made the decision to go into 'trade' lose nothing. Thats where the problem lies.

Bill Quango MP said...

news today (14 February) that most top-tier councils in England are planning to raise council tax by the maximum permitted. Three councils have been given special dispensation to go beyond this limit; Croydon’s bill will go up by 15%, while Thurrock and Slough councils will raise bills by 10%..


Government review into council finances: Statement from Leader of Woking Borough Council

Wednesday, 19 October, 2022
Cllr Ann-Marie Barker, Leader of Woking Borough Council, said: “On Tuesday, I received a letter from the Minister of State for Local Government, Paul Scully MP, in relation to Woking’s high level of debt which resulted from borrowing that my administration inherited to deliver housing, sustainable energy, regeneration and major long-term infrastructure projects.

DJK said...

"The issue is not whether we should let councils get involved in commerce, its more who's head should be on the chopping block (metaphorically speaking) when such a venture goes t*ts up"

Yes, but the forced privatisations of municipal enterprises (mostly, local monopolies) starting from the 80s onwards was a one size fits all solution imposed from Whitehall. Well run and badly run, they all had to be privatised because the ideology of the time held that privately run monopolies were always more efficient than publicly run ones.

And who, pray, faced the chopping block when Carillion collapsed?

Sobers said...

"And who, pray, faced the chopping block when Carillion collapsed?"

The shareholders of course. Which in the case of a council business means the local taxpayer, who don't get a say in whether they invest or not. Ergo the people wanting to start the business using coerced money should be the ones with with their heads on the block. Councils are using their ability to raise revenue either from local taxes or from national taxation to start businesses. As a quid pro quo they should have to have some skin in the game too. make every councillor put up some of their own capital, and senior managers too. See how many fancy getting into trade then.

andrew said...

"The issue is not whether we should let councils get involved in commerce"

Beg to differ. As a point of principle you don't let people who set and enforce rules profit from their rule making powers - personally or at an organisational level
Viz various procurement scandals, most recently the ppe ones or housing planning scandals or...

jim said...

Well hang on a mo. KC is owned by Macquarie, the same folks who are into Southern Water - of poo in the river fame. Thoughts of Cash Cow as a business model come to mind.

KC is not quite a monopoly, there are other providers there. But the overall problem is that it is a very small phone company, not worth anyone's while digging up the streets of Hull. Far easier to beam in 4G and 5G from the outside. But at the root of the problem Hull is not a rich place, no rich pickings there.

Even if Hull council gave up the quasi monopoly I doubt anyone would want to move in. A strategic error - should have flogged it off years ago - but dot-com provided a false dawn.

Nick Drew said...

Jim - thanks for the extra detail (updated)

jim said...

Hope not to bore. Strategy wonks might want to look up the Negroponte Switch. Back in 1980 a smart guy from MIT proposed that television signals would end up going down wire and telephone signals would end up going by radio - on the old TV bandwidth.

Yea verily it hath come to pass much to the enrichment of bandwidth licencees. But slowly, remember those 1980s mobile phones. Back then a very big shot consultant declared 'Internet - fastest growing zero billion dollar business - ignore it'. Oh how the world changeth.

E-K said...
This comment has been removed by the author.
E-K said...

'Capitalism' or how about just plain old conservatism. A fair deal (not an equal one.)

I've been listening (in the background - 9 am to 7 pm, on and off) to a drumbeat of BBC 1 propaganda from "a woman can have a penis", "all terrorists are actually white males, according to Prevent", "the coastline is vanishing", "fat single mums are starving"(where are the dad's, asks no-one) and the funereal tones of reporting that "Boat blokes are about to be excluded from the UK" (as if) and the same funereal tones that Shamima Begum may never come back (she will) ... there are bigger things to worry about than Ms Begum.

If the Tories were serious they'd deal with the BBC first.

The telephone boxes mentioned are not for making calls in but for pissing in, don't you know.

Mr Sunak's mission ( now that Peacock Hancock's true motivations are being revealed - EXACTLY as I said they were) is to reduce inflation to 2% ... which is a crime of deception in itself.

That's 2% on top of the already inflation elevated economy.


Loved Peter Hitchens' football analogy on the Ukraine war. "This is not some sort of armed football match between Zelensky United and Dynamo Putin, in which we take passionate sides while waving the appropriate flag and yelling the appropriate chants."


And I don't buy into the Red Team vs Blue Team shit between Tory and Labour either.

Neither party cares about Great Britain. They really don't.

E-K said...

Further BBC propaganda... (the day is not over) Kenneth Noye is a working class hero and The Sweenie (circa 1983) was saved by a lesbian female rights detective.

E-K said...

I turned up at an armed robbery of a bookies' in Old Street and bets were being taken as though nothing had happened. (I was radio operator in an unmarked Zulu car with a Kojak light flashing atop.)

A Met traffic cop was already there on his motorbike sitting outside.

After many attempts to get the cashier's attention I told her that I wasn't going to bother taking her crime complaint - she didn't seem to mind. Obviously telephone orders had been given already.

So I just walked out.

I said to the traffic cop, "Fuck 'em." I asked why he hadn't gone in first and he said "Coz I fought you woz da flyin' Squod !" (sic)

Me ??? FLYING SQUAD ??? FFS, Nick. You've seen me !!!

Wildgoose said...

I lived in Hull in the mid to late 1980s and the telephone service was bloody brilliant.

It was cheap (5p for 34 minutes) and it was efficient. I had a new phone line installed where I was renting and it was all sorted in days. As a comparison, just cast your mind back to how bad BT were before it was denationalised.

It was a profit centre for the Council, but they were forced to privatise it - and that was the point when everything started to go downhill.

There's an old saw "if it ain't broke - don't fix it". In the 1980s Privatisation was seen as the universal panacea to be universally applied. It did a lot of good, (British Telecom, British Steel, Brtish Gas, etc.), but it also wrecked things that worked and should never have been interfered with such as South Yorkshire's municipal bus services and Hull's brilliant local phone network.

rwendland said...

Have to say ND, your characterisation of Kingston Communications doesn't match the press reports. It floated on the stock exchange (IPO) in 1999, with the council initially keeping just under half the shareholding, since sold I think. So in practice it was a private company since 1999, and probably effectively private management in preparation for a few years before.

The IPO article says Kingston had been the testbed for ADSL technology, i.e. it rolled out broadband before BT. It also owned Torch Telecom before IPO, running a fibre optic network that sold corporate services in Yorkshire. So hardly behind the times on the internet front.

And in 2005, a rival broadband provider in the Hull area, Hull24, complained to Ofcom about network access. In 2006 Hull24 made a deal to use KC's network, and withdrew the complaint. So KC didn't have a broadband monopoly after this. Following another complaint in 2008, Ofcom determined that KC was not acting in a way that would keep out rival companies, and KC offered local-loop unbundling just like BT. (source: wikipedia & This is Hull)

Not a "municipally-owned telephone network, Kingston Communications, persists as a local monopoly" according to these sources for over 20 years.

rwendland said...

... also interesting that at the 1999 IPO the council got 225p per share, but in the recent takeover in 2019 Macquarie bought all the share for 120.3p per share. So just like BT, the company's value has dropped a lot since privatisation. Seems that in Nov 2018 KCOM "issued a profit warning but also cut dividends and warned debts were 10% higher than during the same period of 2017". So it was in trouble during the 2010s it seems.

Cannot work out if/when the council sold its remaining ~45% of shares

Anonymous said...

Has anyone noticed much improvement in the railways?

I can remember late one cold Clapham Jn night in the early 80s, my Victoria train 30 mins late but nothing on the boards to indicate either that it was late or when it might be coming.

Freezing and a bit cross. Opened a door marked "Staff Only" to find about ten people drinking tea round a big old wooden table and a roaring fire on the go.

Now, post-privatisation, how it's changed! I live close to a line and when something goes pear-shaped I get to see one guy looking at the line/signalling gear/crossing lights while 5 guys watch him, and a dozen yards away another 20 guys in various private company vans sit drinking tea, before leaving the empty paper cups and Greggs wrappers in the hedge.

DJK said...

"I lived in Hull in the mid to late 1980s and the telephone service was bloody brilliant."

I can remember the occasional newspaper article from that time, and the general consensus was that it was bloody brilliant; much better run and more innovative than the BT monopoly in the rest of the country. No great surprise that since privatisation it's been run as a cash cow for an absentee owner.

As I said, "let a thousand flowers bloom". Sometimes private works best, sometimes municipally owned works best, sometimes charity owned or workers' cooperative, etc. The problem with KC was the arrogant, centralising instincts of Whitehall civil servants, imposing privatisation everywhere, without stepping back and seeing what already worked well at a local level.

DJK said...

"Such is the fate of local monopolies ... that local authorities get involved with"

The whole premise of this post is wrong. The problem is not that KC is owned by the local authority, but that it is privatised and is no longer owned by the local authority. Granted, some competition --- whoever owns KC --- would probably spice things up.

dearieme said...

I wish to register a complaint. "In a hand basket" is American.

The British expression is "in a handcart". Get a grip, ND. If you don't stop the rot you'll be "doubling down", "parking up", and "throwing curve balls". Uurgh.

Nick Drew said...

Mr W - yes, acknowledged, see added footnote: I had not clocked the change in ownership.

dearieme, yes uurgh: you will not catch me doubling down, pivoting, curating, leaning in, reaching out, or any such gyrations (unless with sarcastic intent)

Anonymous said...

The incompetent municipalities that built reservoirs, supplied electricity and gas while Whitehall concentrated on running the colonies.