September 21, 2015
A group of BT’s competitors have allied themselves with several professional bodies to send an open letter to the FT, calling for Ofcom to recommend a competition investigation into BT.
The specific issue, as is has been for some time, is with Openreach, through which BT offers wholesale fixed network access to companies such as Sky and TalkTalk, which they then resell as their own. The allegation is that BT services these direct competitors insufficiently and that the only way to solve this is to make Openreach completely independent of BT
Back in June Sky called for Ofcom to refer BT to the Competition and Markets Authority to have Openreach fully investigated. Ofcom subsequently indicated that it would be taking a look at this matter in its big strategic review, but stopped short of making any initial position public. There has been radio silence for a couple of months, which is apparently frustrating the likes of Sky.
The letter to the FT was signed by: Sky, TalkTalk, Vodafone UK, the Institute of Directors, the Independent Networks Cooperative Association, the Federation of Communication Services and Association of Independent Professionals and the Self Employed. It was headed ‘Reform market to deliver fast broadband in the UK’.
There was the customary preamble about broadband being some kind of basic human right, to establish the altruistic nature of the plea, before cutting to the chase. The letter claims Ofcom “…has identified serious problems with the ownership of the national telecoms network by BT Openreach,” although Ofcom didn’t explicitly state as much previously.
“It is therefore crucial that Ofcom moves as quickly as possible to ask the Competition and Markets Authority, with its far reaching powers, to undertake a full market investigation,” concluded the letter. “Only the CMA, with the support of Ofcom, can address the structural barriers to competition that will unlock the next wave of investment in communications infrastructure that the country urgently needs. We cannot afford to wait.”
BT, as ever, sees things rather differently.
“BT has invested £10.5 billion of capital into Openreach over the past ten years and last year we invested more than ever before,” said BT in a written statement. “This year, our investment in Openreach will be even higher. That has helped put the UK ahead of its European peers when it comes to superfast broadband coverage, speeds and prices – and we have outlined plans to go even further and faster.
“We acknowledge that there is more to do on customer service, but Openreach is exceeding all sixty of the service targets set by Ofcom and breaking up BT is not the answer. It would lead to huge uncertainty and fundamentally undermine the case for future investment, dragging the UK backwards at the very time it needs important investment in its infrastructure.”
While Ofcom may not have been quite as critical of Openreach as the letter states, neither has it taken a recommendation to the CMA that Openreach be taken away from BT off the table. It’s not clear what effect open letters such as this can have but, if nothing else, it does create the impression of widespread dissatisfaction among UK industry. Ofcom is closing the public consultation of its review on 8 October so this is unlikely to be the last open letter before then.
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