news The CEOs of Sky, TalkTalk and Vodafone in the UK have contacted the communications watchdog Ofcom arguing that BT-subsidiary Openreach should be split off from the telco in order to improve services for customers and build a “truly world-class national broadband network”.
Founded in 2006, Openreach owns the conduits and telephone cables that connect most premises in the UK to the national broadband and telephone network, access to which is sold wholesale to ISPs.
Following calls from a number of parties, Ofcom has already proposed partially separating Openreach from its parent firm, suggesting it become a “legally separate” company but stay within the BT Group fold.
To the ISPs, which have complained of poor service from Openreach, this does not go far enough and they recently called for a full split from BT in a “Fix Britain’s Internet” campaign.
In a letter to Ofcom responding to its suggestion of “dialogue” over the matter, Sky, TalkTalk and Vodafone said the service Openreach provides today is “unacceptable” and needs to improve.
“There are too many faults, delays and missed appointments,” they said. “Worryingly, Ofcom has found that this is getting worse in some areas, not better.”
The CEOs suggested they did not seem to share with Ofcom the “same level of ambition” for the digital future of UK, saying:
“We, as a coalition of Openreach’s largest customers, agree with Ofcom’s assessment that a network that still relies heavily on copper, with limited plans to roll out fibre direct to the premise, will not meet Britain’s needs in the future. We believe that the UK is capable of funding, building and deploying a truly world-class national broadband network that can stand shoulder to shoulder with other world leaders, supported by strong retail competition driving better consumer outcomes.”
If Openreach’s strategy and budget remains controlled by BT Group, though, they said, none of that may happen.
Without reform, “we will limit our ambitions and hinder the industry’s ability to play a greater role in developing the broadband infrastructure we need for the future”, they said.
Seeking more complex regulatory intervention rather than a split of Openreach from the BT Group will not deliver” swift and meaningful change”, the letter said.
The CEOs went on to address a number of points made by Ofcom, backing up their argument for “meaningful change”.
Firstly they said, BT is paid billions of pounds to maintain the UK’s network, however in rural areas “nearly half of premises can’t get speeds above 10Mbps”.
The letter cited two sources stating that 48% of rural premises receive a maximum of 10Mbps on standard copper connections – a figure greatly at odds with BT’s figure of ‘roughly 4.2%’ of households unable to achieve 10Mbps, and Ofcom’s statement that “Around 2.4 million, or 8% of premises in the UK are connected by lines that are unable to receive broadband speeds above 10Mbps”.
The ISP heads also criticised BT’s spending of “billions” on buying the rights for televised football suggesting the profits should be spent on “investing in Britain’s broadband infrastructure” rather than “remitting them to other parts of the BT Group” or “passing them to shareholders”.
Further, they CEOs said, BT has kept Openreach “reliant on copper” rather than investing in “state of the art pure fibre”.
“Copper is up to 100% slower and less reliable,” they added.
Ofcom has stated: “The UK’s communications sector needs significant investment to meet the needs of people and businesses and to avoid being left behind by our international competitors… We want to see the large-scale deployment of new ultrafast networks, such as fibre- to-the-premise”
Despite this, the letter said, Ofcom data shows that deployment of pure fibre in the UK is “below that in Turkey, Mexico and Poland”.
“This is a wasted opportunity which risks Britain’s future competitiveness, prosperity and quality of life,” they said.
The CEO’s concluded that they will continue to “engage constructively” in the debate over the future of Openreach.
An interesting reaction from the CEO of Virgin Media – the HFC operator in the UK:
Tom Mockridge, chief executive of Virgin Media, which is investing £3bn to expand its cable and fibre network to reach 17m homes, has called on BT’s rivals to stop carping and to invest in fibre themselves. “Some have said we need to ‘fix’ Britain’s internet. I would urge them to pick up a spade,” says Mr Mockridge.
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