The dismemberment of British Telecom, once the global flagship of privatisation, makes a sorry sight. But it had to happen. The tragedy is it did not occur sooner. If BT's wireless operations had been hived off years ago, it might have made a better fist of competing against Vodafone, a company that came from nowhere but whose total value on the stock market is now more than three times that of BT.
Large monolithic companies like BT often cannot cope with new disruptive technologies that threaten their traditional base. The new world of wireless demands a different mindset to that of traditional telephone companies that still see the world in terms of protecting historic monopoly incomes. Even so, it will not be easy for BT Wireless to become a world force, if only because so many of the existing players it could have taken over have been gobbled up by the likes of Vodafone. But at least, freed from BT, it will have no one to blame but itself.
Sir Peter Bonfield, chief executive of BT, was right to say yesterday that what will remain of BT itself will still be a very powerful company. Indeed, it is too powerful because it still retains its monopoly of the "local loop", the last bit of copper wire going into each household. Here there is a continuing conflict between what is good for BT (milking its monopoly revenues as long as it can) and the national interest, which is to get broadband, or high-capacity, internet access to as many people as possible, as soon as possible.
BT has been slow to open its exchanges to rivals so they can install their own capacity and is "cherry picking" where it offers broadband (big towns in preference to the country, and commercial rather than domestic customers). It is not all BT's fault because the problem only arose because the Conservatives privatised BT with minimal competition.
What is BT's fault is the way it pursued an ill-thought out global strategy only to withdraw when the £30bn debts incurred proved too much for shareholders to bear. (When it was in public ownership, it had hardly any debts.) It is not too late to recover because the wireless revolution is in its infancy and BT has realised that the sum of its parts (including its underexploited research subsidiary) is worth more than the whole. At this sad stage in its history it ought to be deeply grateful that calls made from mobiles still have to be routed through a network. That will give it something to fall back on while it reinvents itself.
