An attempt to split up the business of JT, the telecoms operator owned by the States of Jersey, is being opposed by the island’s most senior politicians.
The Council of Ministers say the move, put forward by Senator Sarah Ferguson.
Senator Ferguson says splitting up the wholesale and retail business, as has happened with BT in the UK, would mean the States could make money from selling off the retail business but hold onto the infrastructure, which she calls ‘the family silver’.
She said: “The best value for the Island is obtained from separating the wholesale and retail sides of the company. This compares with the approach being taken to BT by Ofcom. Firstly, this would enable there to be a properly competitive retail sector for telecommunications. The retail side of the business could be sold or even floated on the Channel Islands Stock Exchange to raise funds. Secondly, there are significant future growth prospects in the wholesale side of the business. Also, if we sell the wholesale business then we are effectively selling the family silver.”
In response, the Council of Ministers highlighted the finding of research for its new telecoms strategy which concludes splitting up JT would be ‘heavy handed’.
It said: “Best-practice regulatory principles indicate that more intrusive forms of regulation, such as structural separation, should be considered as instruments of “last resort”, to be used only when other (less heavy-handed) forms of regulation have not been effective in addressing market failures. Indeed, structural separation is an extreme solution as it involves a costly and risky transition that requires the creation of a wholly new company.”
“It also results in the weakest incentives to invest and innovate for the network division (which, in turn, may require further regulatory intervention). Crucially, once implemented, the structural separation can be very expensive to undo. In the specific case of Jersey, the conditions for adopting any “heavy handed” form of intervention do not appear to be present at this time.”
The States are due to debate the move at this week’s sitting which begins today.
