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Ed Vaizey MP Criticises TalkTalk, Sky and Vodafone for Trying to Breakup BT

Wednesday, September 14th, 2016 (8:19 am) - Score 2,890
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The former Digital Economy Minister, Ed Vaizey MP, appears to have taken a different approach to the Government’s position after saying that he was “utterly confused” by those wanting to break-up BT, while singling out TalkTalk, Vodafone and Sky Broadband for specific criticism.

The MP for Wantage in Oxfordshire (England), who was speaking during yesterday’s debate on the Digital Economy Bill 2016-17, began by reciting an email that he had received from the director of the Broadband Delivery UK linked Better Broadband for Oxfordshire (BBO) programme, which highlighted the apparently successful roll-out of “superfast broadband” (24Mbps+).

According to BBO director, some 93% of Oxfordshire can now access superfast broadband (the next goal is 95% by the end of 2017) and £5m has already come back to the county council from the Government funding, with another £2.8m further to come and “he thinks that perhaps we will get it all back because of gainshare [clawback from BT] and take-up“.

I cannot think of any large scale public sector contract which has delivered on time and under cost. Very good contract to work with in protecting the public purse and incentivising successful outcomes,” said the gleeful BBO director to Vaizey.

Naturally all of this was in the cause of leading up to Ed Vaizey’s follow-up criticism of the large number of MPs and some major ISPs who want to see BT being split from control of their network access division, Openreach.

Ed Vaizey said:

“I confess that I am utterly confused by those people who want to break up BT and Openreach. Why would one simply adopt the campaign of BT’s competitors? Why would one wish to break up a highly successful British company, post-Brexit when we need all the champions we can get? Why would one break up a company that has delivered such a successful programme? In the words of the chief executive of Virgin Media, an able competitor to BT, “If you want better broadband, pick up a spade.” That is my message to TalkTalk, Vodafone and Sky, who all seek for their own reasons to break up a great British company.

I have two things to say to the Minister. I firmly believe that Openreach can deliver the [10Mbps] USO, but it will need his help in easing regulation, particularly for long line VDSL. I also hope that Broadband Delivery UK will continue its excellent work and become a taskforce. A lot of the 5% that still has to be reached is in inner-city areas, and that is usually because of bureaucratic obstacles stopping the roll-out of broadband which have nothing to do with technical challenges. A good and effective BDUK, helping roll-out in cities, would be hugely helpful.

I echo the calls about the frustration with new build. I remember dealing with Linden Homes in my constituency. For the princely sum of £6,000 it could have delivered broadband to all its customers in a multimillion pound development. It point-blank refused to do so. The attitude of too many developers is shocking. The Government refused to change the planning laws when I was a Minister. Perhaps we should look at that again.”

Mind you TalkTalk, Vodafone and Sky Broadband might well choose to point out that it’s rather difficult and expensive to “pick up a spade” when the market is already dominated by one major infrastructure, retail and wholesale provider (BT Group), which rises to two when you include Virgin Media in urban areas (note: Virgin is a closed network).

In those cases the big ISPs feel as if they have little choice but to take what they’re given and Ofcom recognises that Openreach sometimes complicates this because they “still has an incentive to make decisions in the interests of BT, rather than BT’s competitors, which can lead to competition problems” (here). A fair few alternative network ISPs are however finding some success, but often only by focusing on the bits that BT have failed to upgrade.

On the other hand neither Sky, nor Vodafone or TalkTalk have set out a clear plan for investment, coverage and service improvements should Openreach become a fully independent infrastructure company. The ISPs have all hinted at a desire for a wider-scale FTTP/H broadband network, albeit with a focus more on urban rather than rural areas (i.e. the first 60-70% of UK premises). Except most urban areas are already quite well catered for and future upgrades should continue that trend.

At this point Ed Vaizey clearly feels as if his ejection from the role of Digital Economy Minister, which was recently taken up by Matthew Hancock MP, has given him a little more freedom to speak his mind. The only problem is that a large section of cross-party MPs tend to disagree with his position on BT (example).

The Government’s new Secretary of State for the Department of Culture, Media and Sport (DCMS), Karen Bradley MP, also took the opportunity to remind the same debate that Ofcom and BT have yet to reach an agreement over the thorny issue of Openreach’s governance and the option of full separation therefore remains firmly on the table.

Karen Bradley MP said:

“I have been clear that we will not stop or cease until we get the right result. If that means the structural separation of BT and Openreach, this Government are prepared to consider that. Ofcom has made some recommendations. We are looking carefully at them, and Ofcom are consulting on them. We need to make sure we get it right and that we get this delivered, but nothing is off the table.

The Bill will ensure that Ofcom is held to account, but not at the expense of delay and intransigence. As well as holding industry to account, we must of course be supportive. The Bill will bring billions of pounds of benefits to industry. The new electronic communications code recognises that digital connectivity is as important as a connection to water or electricity supplies. Providing new rights to install communications infrastructure will herald a revolution in rural connectivity, bringing the digital economy to all parts of our nation.”

Admittedly Karen isn’t saying anything that we haven’t heard the Government say before over the past couple of months, which somewhat bats the ball back into Ofcom’s court and also gives the regulator a little extra support in the process.

The question now is whether BT will voluntarily agree to the greater loss of control (governance) over their Openreach division or if they would rather risk total separation, with the latter now seeming to be a little more likely given that BT appears to have lost some of its biggest supporters in high-ranking Government circles (e.g. Ed Vaizey).

A BT spokesperson said the operator was “making significant voluntary changes that we believe meet [Ofcom’s] concerns and remain hopeful that a voluntary settlement can be reached,” although clearly no deal has been done.. yet. Meanwhile Ofcom continues to push for Openreach to “become a ring-fenced, ‘wholly-owned subsidiary’ of BT Group, with its own purpose and board members,” which BT isn’t happy about.

UPDATE 8:38am

We’ve had a related comment on the 10Mbps USO pledge from the Broadband World Forum, which follows yesterday’s debate over the new bill.

Emma Hosgood, Programme Director (Broadband World Forum), said:

“The Government’s plans to make 10 Mbps broadband a Universal Service Obligation by 2020 is music to the ears of businesses and consumers across rural Britain, with many still limited to speeds of only 1 Mbps. But, with the exponential growth of connected devices in the age of IoT, as well as new digital services such as 4K Ultra HD streaming, 10Mbps may well not be enough to support the booming digital economy over the next decade.

While promises of more investment in fibre-to-the-home [FTTH] suggest certain hubs across the UK could in fact benefit from much faster connectivity speeds, there is a big question around how the Government’s Digital Economy Bill will be funded. Will it be the taxpayers’ or the service providers’ responsibility? What about other companies such as Skype, Facebook and Netflix, which potentially stand to benefit most from improved broadband speeds?

These are issues that need resolving if the UK is to remain a world leader in the digital economy. They will be high on the agenda when the most influential voices in the industry come together at Broadband World Forum in October this year.”

Leave a Comment
23 Responses
  1. Avatar chris conder

    Openreach’s legal dept would relish the fight to stop separation for another few years. That gives BT time to hoover up all the content market and more mobile. Then they’ll hand it over to the government easypeasy. Government will then have to pay to put real fibre in. Until then, they will keep patching up the old phone network and brand it as ‘fibre broadband’ and the politicians will fall for it. Its a superfarce.

    Trying to get separation now is a waste of energy. What we need is support for altnets, competition is the only thing that will work. It has proved that in B4RNland, where pcp and fibre cabinets are now breeding like flies. They don’t have any customers, but it proves that BT will overbuild any competition. (as long as it isn’t too difficult and the fibre is already in the road or on the route to a mast or an anchor tenant like a utility or an education establishment)

    • Avatar Gadget

      Chris – the “overbuild” issue has been done to death before and in the most part came about because the Council-run Open Market Review designated the postcodes white after no required input was made by B4RN.

    • The OMR process is far from perfect and there is evidence to show that the local authority were aware. But I won’t go back over all that again, suffice to say that we’ve seen a lot of the documentation from B4RN’s dispute.

      However our understanding from talking to BDUK and the EC is that State Aid rules do recognise the limits of an OMR, which cannot always adapt to rapid changes on the ground.

      In those cases the council has some responsibility, acting outside of an OMR, to justify why it’s still spending public money in an area that’s already being catered for by private investment and to adapt plans where required.

    • Avatar AndyH

      @ chris – And the relevance of your overbuild comments to this story is what exactly?

  2. Avatar Patrick Cosgrove

    Mr Vaizey can come and work out of my spare room for a month. Then he might change his opinion.

    • Avatar fastman

      Patrick you have had options- to do some you have chosen not to — there were people in his contstituency who had options to do so at similar cost who chose to help themselves

  3. Avatar TheManStan

    Skype, Netflix and Facebook… will improving BB speed for these example companies result in substantial increase in tax receipts???

  4. Avatar Dumb argument

    Its no wonder he supports Openreach, just like Mr Vaizeys tax payer spending spree a few years back for a £400 odd quid sofa, £250 odd quid small table, £600 odd quid larger table and a £500 odd quid chair he clearly believes the tax payer should fund the private expenses of others.

    • Avatar FibreFred

      Relevance or just trolling deduction?

    • Avatar Dumb argument

      Try reading the Update from the broadband world forum, specifically the “…there is a big question around how the Government’s Digital Economy Bill will be funded. Will it be the taxpayers’ or the service providers’ responsibility?” bit. I guess we know what Mr Vaizeys solution is.

      Now the only question is what is the relevance of you not bothering to read news items before commenting?

    • Avatar fastman

      really that is such a dumb argunement !!!

      tax payer should fund the private expenses of others. — so 2.5bn in commercial programme no public funding — 1.6bn of public funding which aother 1bn match and clawback when take up excess X% — not one else is investing at all and you still moan — are you someone else in disguise

      interesting comment re Developers

    • Avatar FibreFred

      Of course he is someone else in his usual poor (fooling noone) disguise

    • Avatar keith

      “really that is such a dumb argunement !!!”

      I hope that is you being ironic

      “Of course he is someone else in his usual poor (fooling noone) disguise”

      Thank god we have inspector Fred investigating peoples identity and policing the place for relevant posts. It must be great to live in a world with that much deluded
      self impotence (<<< that is ironic spelling).

    • Avatar GNewton

      “It must be great to live in a world with that much deluded
      self impotence (<<< that is ironic spelling)."

      A serious case of Prosopagnosia? 🙂

  5. Avatar FibreFred

    “Pickup a spade”

    Naa we will just take someone else’s thanks

    Good sound bites from Ed

  6. Avatar dragoneast

    We do like to get obsessive about structures and play the blame game don’t we? I’ve never quite got the magic of quite how changing the structure of ORs board, the boss, or vesting the assets in a different company improves performance “on the ground”. Does it swop out people’s brains or do they grow a new pair of hands, extra fingers or an extra pair of legs, or something? Does the boss snap his fingers and everyone jumps to attention and does as they’re told, or do the fairies come out from the bottom of the garden and sprinkle the magic dust . . . like hell. I’ve seen loads of changes of ownership and name changes over my lifetime. Spot the difference? Nah. Improvements in technology make a difference. They take time and patience; and happen irrespective of who owns what. Often the disruption of change is change for changes sake, and actually makes things worse.

    But I suppose if you believe the comics (and the comedians) . . . and it gives the politicians (and the Regulators) something to do. And keeps us occupied.

    • Avatar dragoneast

      I realise of course none of it is designed to make things better. It’s all designed to make us feel better. Just a placebo. Mummy’s kiss; to keep the screaming babies quiet.

  7. Avatar FibreFred

    Nor sure why losing high ranking government supporters makes a total split more likely.

    It’s either the right or wrong thing to do nothing to do with personal opinions.

    I doubt it will happen I’m not even sure ofcoms proposals will happen in full, we will see

  8. Avatar Digital-Economy-My-Thumb

    Ed Vaizey admits to being “utterly confused” on this particular issue, shame he wouldn’t admit that while he was wearing the ‘Digital Economy Minister’ hat and taking yet more taxpayer money for adding his unique perspective to issues he can barely grasp.

  9. Avatar fastman

    digtal — selective as ever whoever you are this time

    “I confess that I am utterly confused by those people who want to break up BT and Openreach”

  10. Avatar keith

    He is utterly confused on how to work out expenses and convert yards to miles obviously.
    http://www.oxfordmail.co.uk/news/9346292.MP_claimed_8p_for_car_journey/

    “Asked whether it was right that staff drove such short distances, he said: “You have to remember that if you don’t drive, you have got to walk back.”

    Yep walking 350 yards or 320 metres would kill any normal person obviously!

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