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19 February 2001

In praise of clunky old Beattie

BT's profits are down, its telephone kiosks history.Stefan Sternon a fading national icon

By Stefan Stern

You cannot buck the market. This was the painful lesson Margaret Thatcher tried to impress upon an ungrateful nation for much of her time in office. The first of her major privatisations – British Telecom in 1984 – was a radical act, an exercise in economic shock therapy. Market forces were thrust upon the telecoms side of the gentle and friendly world of the old General Post Office. The numbers tell the story: nearly 250,000 employees at privatisation, down to fewer than 140,000 now.

In the past few days, the continuing saga of BT plc has thrown up its latest mini-drama. A sharp drop in third-quarter profits resulted in a 9 per cent fall in the share price. Even after a partial recovery on the back of the Orange flotation, the shares stood at just over 600p at the time of writing, less than half what they were worth at last year’s peak. The company also has the small matter of £30bn of debt on its balance sheet.

The City, already nervous about telecom stocks in general, is furious, and the financial pages are full of disdain. BT is the lumbering giant that never threw off its public sector origins, say the critics. In this age of communications, BT, with its virtual national monopoly, has blown its chances. It has missed out on both the “wireless revolution” (mobile phones) and the internet, failing to build a “broadband” network for the UK that would make those much-vaunted web miracles come true. Vodafone, a mere start-up in 1983, is now judged by the market to be worth four times as much as poor old British Telecom.

BT’s leadership team is a botched, confused compromise between a company lifer (Sir Iain Vallance, the chairman, who joined the Post Office on coming down from Oxford 35 years ago, and whose father was a director of the Scottish Post Office) and a nifty, entrepreneurial chief executive, Sir Peter Bonfield, who has top-level experience at US and Japanese technology firms. To Lord Beaverbrook’s timeless question, “Who’s in charge of the clattering train?”, the answer appears to be: “Can we get back to you on that one?”

Not all of BT’s critics have been utterly condemning. “The problem lies in the process of privatisation itself,” the economist John Kay wrote recently in the Financial Times. “Few of these organisations were ever designed to be private sector companies. Their functions and structures came from their public sector histories . . .”

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Almost as painful as BT’s financial crisis is the symbolic one. The telephone exchange, the operator and those charming red phone boxes seemed to stand for an organisation that embodied solid, dependable Britain. Dating back to 1935 (the silver jubilee of George V), Sir Giles Gilbert Scott’s red Jubilee Kiosk has taken its place alongside the Beefeater, the red bus and the Hackney cab as an instantly recognisable icon of Britannia. Gilbert Scott’s designs have stood the test of time: his Bankside power station has been transformed into London’s Tate Modern art gallery. But the remainder of his red boxes survived only after popular agitation, and have more often been replaced by the soulless modern cubicle. Where once there were useful telephone directories, there are now postcards of impossibly supple, naked women, offering rather more than talking pages.

To be sure, the state-owned British Telecom made people wait for their phone lines and installations. There probably was some overmanning; and new technology was bound to force changes on the old organisation. But nostalgia lends a kind of clunky charm even to the frustrations of the past.

The public has been able to trace BT’s transformation through its changing media image. In the 1970s and early 1980s, there was the cheerful bird Busby, voiced by the loveable Bernard Cribbens, who chirped how economically we could call our friends and family far from home. Then there was Maureen Lipman as Beattie (BT – geddit?!), Jewish mother to the nation, urging us to communicate with each other more often.

The high recognition factor of its advertising confirms BT’s place at the heart of our lives. At some time or other, we have all nodded ironically and agreed that “it’s good to talk”. Today BT, aided by ET, urges us to “phone home”. But now, clever new arrivals such as Orange and Vodafone have marched on to BT’s land and deprived the old master of its pre-eminence. We worship new icons – the “killer brands”. Modernity has come to the GPO, overturning BT and menacing the Post Office. In post-privatisation Britain, market forces and brand management rule.

No, you cannot buck the market. But should we always be giving the market houseroom in the first place? Misguided notions of “competition” have damaged the NHS and many other public services. Introducing so-called market disciplines and mechanisms where no competitive market actually exists, or should exist, can be destructive.

Co-operation sometimes delivers more than competition. Profits are sometimes less important than quality of service. The state has a role in providing public services that are essential to the functioning of a good society. What do we want: trains that are safe and run on time, or impressive returns on equity for shareholders in Railtrack and the train-operating companies?

Coming soon to a country near you: a privatised Tube and air traffic control system. It’s a funny old world, as Maggie used to say.

Stefan Stern writes for FTdynamo.com

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