Sky (Sky Broadband) has ratcheted up the pressure on Ofcom’s Strategic Review of the UK’s digital communications market, which will decide whether or not to separate BT from control of their telecoms and broadband network, by criticising the operator’s alleged lack of investment and interest in building a national Fibre-to-the-Home (FTTH) network.
The latest criticism flows from a Telegraph editorial that has been written by Sky’s Chief Strategy Officer, Mai Fyfield, who in no uncertain terms slams BT for “under-investment” in its national infrastructure and attacks their “unacceptable levels of faults and service problems.”
At the same time Fyfield suggests that the current market situation has left BT with “little incentive to invest” in Gigabit capable Fibre-to-the-Home (FTTH) based broadband services, at least on any kind of truly national roll-out scale (they have about 160,000 premises passed with FTTP).
Mai Fyfield said:
“However, we have seen recently that BT is intensifying efforts to close down this important debate before the arguments have been heard. Most recently, Joe Garner, chief executive of Openreach, argued in The Telegraph that separation would be bad for Britain.
The mere fact that the head of Openreach, whose intended role is to serve the market equally, should argue in such partisan terms for the BT corporate interest is a graphic symbol of how the existing set-up is broken. Moreover, BT’s case for the status quo is built on unfounded or exaggerated claims about the benefits of vertical integration and the risks of separation.
Most frequent is the claim that only BT would have invested £2.5bn in the roll-out of fibre. Yet BT’s own accounts put this figure in perspective. Over the investment period, Openreach generated around £15bn of earnings, while its total capital expenditure remained broadly flat. In practice, fibre roll-out has been funded in part by cutting spending on other critical parts of the network, with service quality and reliability suffering.”
The comments from Fyfield somewhat flow on from Sky’s earlier criticisms in June 2015 (here), when the provider called upon Ofcom to launch a competition review of BTOpenreach and at the same time highlighted some of the engineering statistics and challenges that often crop up when dealing with the incumbent.
Fyfield closes the guest editorial by predicting that a truly independent Openreach, one which could be part owned by some of the markets many ISPs (we assume that must still include BT), would be magically able to deliver better services and higher quality, not to mention more effective competition.
Naturally BT’s Group Director of Strategy and Policy, Sean Williams, has been quick to rebuff Sky’s remarks as “plain untrue“, adding that “no investments have been diverted away from Openreach. BT Group has played a vital role by investing £10.5bn of capital in to Openreach over the past 10 years.”
As ever Sky’s remarks are a simplification of the many complex problems that exist in today’s market and which Ofcom must navigate through to reach a conclusion. But the question of whether or not the grass would truly be greener on the other side, with an independent Openreach, is somewhat harder to judge.
Rivals of course have their own vested commercial interests at heart and will always fight for what benefits them the most, just as BT will surely fight for an outcome that would benefit their side of the proverbial fence. A few may even see a gain to be had in disrupting an independent Openreach to their own advantage.
In the middle sit consumers, who lately appear to have become part of a somewhat industrialised game of telecoms ping pong. Apparently it’s all about us, giving us better service and delivering the connections that we all want and more.
In reality this is business, it’s all about money, and you don’t make much of that by giving such things away for free. Improvements tend to come at a cost and that usually means higher prices for consumers. As in the case of the railways, we all pay a lot more for the service and yet the service quality in many parts of the UK remains just as flaky as it was a decade ago.
At this point what might help more is if BT’s rivals could provide some proof of their sincerity to deliver on such promises, such as by making a firm and jointly agreed commitment to spend a clear amount in order to deliver a much better service. Perhaps then if we could see what we might get, how much it could cost and where the money is coming from then it would be easier to buy the “trust us.. we can do it better” mantra.
In the meantime full separation of Openreach is just one of several avenues that Ofcom are giving “serious” thought to (here). The regulator has an unenviable task and they’ve previously spoken against making any major regulatory changes. We expect to learn the first preliminary proposals from their review by the very end of this year or possibly early 2016. Place your bets now.
What do you think Ofcom will do (Strategic Review)?
Total Voters: 138
Comments are closed