Mr. John O'Dwyer:

There are a few ways it can be done in practice. The companies know which employees work in wholesale or retail. They can be identified through employee reference details and so on. The wholesale employees are incentivised and paid bonuses to do a good wholesale job, and that is their function. There is reporting internally and the company would know its finances and so on. If wholesale does well, the employees working in the wholesale area would be rewarded, as one would expect.

Another way is through system separation, where the wholesale division has its own databases and systems for order handling, etc. The wholesale division owns the systems and retail has a different set of systems. If retail wants to buy something from wholesale in those cases then it goes through the same front door as everybody else who uses wholesale. One creates a system separation level. It has become much easier to do that these days because with cloud-based systems, new physical systems do not have to be built. Retail and wholesale versions of software can be run. Systems can be created to ensure the wholesale division is separate. In doing it this way, we can see the space that has been created between the wholesale and the retail divisions. Retail employees should not be on the wholesale systems and they should not have access to the data other than for items they are buying from the wholesale division. A split is created with space between them.

With regard to the bonus schemes and incentives, an overlaying governance is needed to make it clear to the wholesale division employees that they are wholesale, that they do not share the confidential information of the other operators with the downstream arm and that they do not talk to the downstream retail arm about what other companies such as Sky, BT or Virgin are doing. The governance is set up so that employees understand the rules. There can be disciplinary practices if the rules are broken and so on. There are ways of doing it. In the UK it has been done by BT with its Openreach set-up. It has evolved to another step now but the discrimination issues are well handled with functional separation.