Sky’s UK CEO Ignores Weekend Reports – Makes Final Plea to Split BT

The CEO of Sky UK (Sky Broadband), Jeremy Darroch, has today made a final plea in the hope of encouraging Ofcom to split BT from control of their national telecoms network (Openreach), which Darroch claims is the only way to encourage investment in 1Gbps+ FTTH/P broadband and to stop BT “[sweating] its copper assets” for slower connectivity.

Sky has made no secret of the fact that it favours separation, although they claim that their position is about more than catering for commercial self-interest, even though that will surely make up a big part of it. Likewise Darroch points to all of the other countries that are now rolling out pure fibre optic broadband, which is restrained in the UK by BT’s approach.

On the other hand his remarks follow after a weekend of reports in which sources inside Ofcom and BT appeared to all but confirm that the regulator would NOT split the operator, although they do look set to keep the option on the table and also seem likely to make BT’s network more accessible for rivals (here).

Jeremy Darroch said (Open Letter):

“BT has shown little willingness to invest in fibre to the premises. Instead, it plans incremental upgrades to decades-old copper cables as the final connection to homes and businesses, falling far short of the potential of a true fibre network. Indeed what it has chosen to invest in faster broadband, has come largely at the expense of investment needed to maintain the existing copper network, resulting in the service levels so many complain about.

It is naive to think that under the existing structure anything will change. This approach will not deliver the 1Gb/s speeds Britain needs and anything less is unambitious. Investing in copper in 2016 is, as Henry Ford would have put it, like breeding a faster horse rather than building a car.

But because BT’s broadband network faces little competition, BT sweats its copper assets for as long as possible, knowing it will not lose its captive customers and continue to earn decent profits even if it does not invest in fibre. Sadly it is often not economically viable for other providers to roll out separate ultrafast networks.

We are working with TalkTalk to trial fibre to the premises in York. While demand is encouraging, it is difficult to achieve a reasonable return on investment while BT Retail remains tied to Openreach. Freeing up Openreach would allow the right level of investment to be made.”

Mind you it’s important to reflect that Sky aren’t promising 100% FTTP/H coverage and indeed in last year’s interview the operator told ISPreview.co.uk, “It is improbable that FTTH/P networks will reach 100% of UK premises. For example, in New Zealand their current target is 80% of premises by 2022, with the remaining premises served by other high-speed broadband technologies. We believe this is the sort of outcome the UK should be aspiring to.” Some hybrid-fibre / copper solutions will still be required.

On the other hand some FTTP/H providers, such as Cityfibre, Gigaclear, B4RN and Hyperoptic, have managed to make a workable business out of deploying ultrafast FTTP/H services into the areas that BT so often misses. However B4RN isn’t commercial and the others have yet to earn back their investments (could take a few years).

Smaller altnet ISPs may also be the losers if an independent Openreach were to hoover up all the big investment opportunities, although that hasn’t stopped some of those same providers (e.g. Gigaclear and Hyperoptic) from tentatively backing calls for a BT split (here).

BT would of course contest that broadband in the UK is still ahead of most European countries, particularly the big boys of Germany, Spain, Italy and France. BT believes also that its future 300-500Mbps G.fast technology will give consumers the speeds they need, with less investment and over a much shorter period of time than FTTP/H would take to deploy. But Darroch points out that more EU countries are planning to invest in FTTP/H networks and as a result we could eventually be overtaken.

Elsewhere Darroch says that the current situation, where some consumers are left to wait two weeks for their broadband to be connected (it can be months on some new builds), is “unacceptable for a modern society“. At this point we don’t have much data for comparison, but we know that DSL connections in other countries (e.g. Spain) can sometimes also take 2-4 weeks.

Finally, Darroch states his belief that the actual process of separation is “not complicated“, although this is perhaps an over simplification and appears to assume that BT wouldn’t contest the move or throw up too many arguments. In any case Ofcom looks set to try a half-way house solution and if BT doesn’t play ball then the prospect of separation may yet return, but even then it might not be the “simple quick fix” that Sky expect.