MPs call for Openreach sell-off
January 25, 2016
By Colin Mann
An all-party group of British MPs has called for the formal separation of BT’s infrastructure subsidiary Openreach from the telco, citing BT’s “lack of ambition and under-investment” as being responsible for parts of the UK suffering from slow broadband speeds.
In an open letter published in the Daily Telegraph they say that whether at home or work, fast broadband should be a reality in all our communities.
“Sadly, this is not yet the case. A new report from the British Infrastructure Group of MPs reveals that despite the £1.7 billion [€2.25bn] of taxpayers’ cash pumped into subsidising the construction of UK high-speed broadband, there are still a staggering 5.7 million people across Britain who cannot access the Internet at the Ofcom-required 10 megabits per second. But the situation is even worse for business, with 42 per cent of small and medium-sized enterprises reporting problems with their Internet connection, at an estimated £11 billion cost to the British economy,” they claim.
The Group’s report, BroadBad, calls on comms regulator Ofcom to take radical action over the ‘natural monopoly’ too long enjoyed by BT Openreach. The report, which details connection speeds in every part of the country, argues that, given the UK economy’s reliance on the Internet, it is time to stop being held back by BT’s lack of ambition and under-investment.
“We believe that Britain should be leading the world in digital innovation. Yet instead we have a monopoly company clinging to outdated copper technology with no proper long-term plan for the future. We need to start converting to a fully fibre network so we are not left behind other nations which are rushing to embrace digital advancement,” they declare.
“However, we will only achieve this by taking action to open up the sector. Given all the delays and missed deadlines, we believe only a formal separation of BT from Openreach, combined with fresh competition and a concerted ambition to deliver, will now create the broadband service that our constituents and businesses so rightly demand,” they conclude.
In response, BT said that Ofcom, the EU and others repeatedly place the UK number one for broadband and superfast broadband when compared to other large EU countries. “The idea that there would be more broadband investment if BT’s Openreach infrastructure division became independent is wrong-headed. As a smaller, weaker, standalone company, it would struggle to invest as much as it does,” it warned.
A spokesman for Department of Culture, Media and Sport described the report as “misleading”, noting that 95 per cent of the UK would have access to superfast broadband by 2017.
The UK Government set out plans in November 2015 designed to ensure that every home and business could have access to fast broadband by the end of the current Parliament in 2020.
Prime Minister David Cameron said that access to broadband should be put on a similar footing as other basic services such as water and electricity, helping to cement Britain’s position as the most digitised major economy in Europe. The Government is planning to introduce a broadband Universal Service Obligation (USO) with the ambition to give people the legal right to request a connection to broadband with speeds of 10 Mbps, no matter where they live.
In December 2015, Ofcom chief executive Sharon White said the status quo between BT and Openreach was “unlikely” to continue, suggesting one option was the structural separation of Openreach from BT. White explained this was among four possible options being explored. Other options include more deregulation, and adjusting the existing system to make it “more fit for purpose”. That could include improving services, repairs, and laying new superfast lines.
According to White, the UK was doing “fairly well” in rolling out superfast broadband compared with other major European economies, but described it as “unacceptable” that 2.5 million homes did not have access to minimal broadband speeds of 10 megabits per second.
Ofcom’s Strategic Review of Digital Communications is examining competition, investment, innovation and the availability of all digital communications services. These include broadband, mobile, landline and bundled services.
Responses to the consultation, which closed in October 2015, will inform a statement at the turn of the year on priorities and action, which will shape Ofcom’s regulatory approach for the next decade.