BT in New War of Words with Rival ISPs on the State of UK Broadband

The CEO of BT Group, Gavin Patterson, has blasted his rivals behind the Fix Britain’s Internet campaign (Sky Broadband, TalkTalk and Vodafone) for making “misleading statements” and using “Orwellian tactics” in order to argue that UK broadband services would improve if the operator didn’t control Openreach.

The three ISPs believe that Ofcom should be working to deliver full structural separation of Openreach (BT’s network access division) from the BT Group, which they claim would improve fairness in the market and enable an ultrafast future where old copper cables could be replaced by pure fibre optic (FTTH/P) services. But so far Ofcom has chosen to reject that approach (here).

As a result some of BT’s biggest rivals established the Fix Britain’s Internet campaign, which among other things argues that BT spends more on TV football content than it does on broadband infrastructure and that “nearly half of premises” in rural areas can’t get an Internet download speed of 10Mbps (Megabits per second).

Meanwhile Patterson’s letter, which has not been seen by anybody else except the FT (we did ask for a copy but were refused), claims that the campaign “paints an unfairly diminished view of connectivity across the UK and makes a number of misleading statements.” BT’s most recent financial report suggests that Openreach’s capital expenditure in the last financial year was actually much more than they spent on sports rights.

Furthermore BT states that only around 4.2% of households are actually unable to achieve 10Mbps and this gap is slowly being closed by the Government’s Broadband Delivery UK programme (e.g. fixed line superfast broadband [24Mbps+] coverage is expected to reach around 97% by 2019). The Fix Britain’s Internet campaign also appears to use some fairly out-of-date Ofcom data, which pegs the 10Mbps figure at 8%.

Over the coming weeks BT intends to fight back by using evidence based arguments against the campaign, which should be interesting. In the meantime the Fix Britain’s Internet campaign has issued a lengthy letter of their own, which unlike Patterson’s has at least been made available to the public.

Opening Letter Extract

Dear Gavin,

Thank you for your letter of 9th August regarding the campaign to “Fix Britain’s Internet“. We welcome your commitment to engaging in a debate on broadband, which remains critical to the success and international competitiveness of our country, both today and in the future.

Within this debate there is some clear common ground. We all agree, and your letter acknowledges, that the service Openreach provides today is unacceptable and must improve. There are too many faults, delays and missed appointments. Worryingly, Ofcom has found that this is getting worse in some areas, not better. Consumers across the country know this only too well, and by creating this campaign we want to enable their voices to join those across business, other organisations and even the Government, who are demanding meaningful change.

Looking ahead, we do not appear to share the same level of ambition for the digital future of this nation. 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.

Our concern is that none of this will happen if Openreach’s strategy and budget remains controlled by BT Group. Not only will fundamental challenges to rapidly improving service to customers today remain; but 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.

We have serious concerns that, in contrast to separation, more complex regulatory intervention will not deliver swift and meaningful change. In the coming weeks we will be responding to the new Ofcom proposals for Openreach reform. But we also want to ensure that our customers have a way to more directly express their views, and we hope that the campaign to Fix Britain’s Internet can play a role in helping them do so.

In relation to the campaign statements you ask us to reconsider, we have done so and address your specific points below.

[Read the Full Letter]

The problem for BT is that it has become the default recipient for all negative feedback concerning the United Kingdom’s telecoms and broadband network, although plenty of that criticism is fair comment and if you happen to be living in an area where the only lines are of a slow connection via Openreach’s copper then who could blame them.

On the other hand independent data, such as from Thinkbroadband, does appear to show that superfast broadband speeds are now available to 91%+ of the United Kingdom and it’s hard to ignore that improvement, unless you live in the remaining 8-9% of course and have been waiting years for something faster.

Sadly improving coverage does take time and a lot of money. Similarly the UK is doing quite well for superfast broadband coverage in the EU (here), although a lot of other countries are now focusing on FTTP/H and thus our hybrid-fibre (FTTC/NFC) fuelled lead may struggle in the future.

Meanwhile Anna Soubry, the Government’s former business minister, recently suggested that such coverage figures were “flawed” and “meaningless,” which may or may not be true (estimates are always subject to a degree of error), but such accusations are often presented without providing correctly researched evidence to prove any inaccuracies.

In this case Soubry merely appeared to be reflecting a belief based on local feedback, which could just as easily have come from those in the final 8-9% where you’d expect plenty of complaints. Meanwhile the Government does claim to audit their own BDUK coverage data, although crucially we don’t get to see those audits.

Anna Soubry MP said:

“It looks like a good headline, but when you dig down and listen to people in the real world you get incredibly suspicious that it’s a meaningless statistic. The vibes I’m getting back from the real world are that this is not accurate. I don’t trust these figures at all … Diving into those figures and revealing them, which I was in the process of doing before I left Government, I think you will find will show that those figures are flawed.”

Of course one big problem for the Fix Britain’s Internet campaign is with their ability to prove that an independent Openreach could magically fix all of this and without hurting investment in alternative networks, service quality or significantly raising consumer prices.

Improving connectivity to rural and some disadvantaged urban areas is always going to be an expensive and time consuming process no matter who holds the reins, with neither Sky nor TalkTalk making any concrete pledges to roll-out FTTH/P to such areas. Instead BT’s rivals would be more likely to focus on the low hanging fruit of urban areas and adopt hybrid-fibre in rural areas, which funnily enough is not unlike the approach that Openreach takes today.

On the flip side Ofcom claims that their regulatory fix is as close to fully separating Openreach as you can get without splitting up BT, which avoids some of the claimed downsides. But as ever only time will tell whether the situation really improves and we’ll probably be back here to consider the same question again in 2025.