Financial Times

BT rivals angry after minister casts doubts on broadband split

by Daniel Thomas

October 1, 2015 | 3:15 am
  |     |     |   Start Conversation

The UK minister overseeing the telecoms sector has poured cold water over the idea of separating BT from its broadband network, dismaying rival companies who want to break up
the former national monopoly.

BT has come under attack from competitors such as Sky, Vodafone and TalkTalk over its ownership of the Openreach network, whose fleet of vans and engineers most internet
providers use to deliver broadband. They want the competition authority to investigate the market arguing that broadband would be better if run as a separate entity.
Ofcom, the telecoms regulator, has indicated that splitting off Openreach is among options in a once­in­a­decade review of the telecoms market. Its recommendations will be published
in the new year, although submissions close next week.

But Ed Vaizey, minister for the digital economy, said he was “a sceptic” about the need to split BT from Openreach. “I think full separation would be an enormous undertaking,
incredibly time consuming [and have] lots of potential to backfire,” he told the Financial Times. “Ofcom is looking at it, I am a sceptic but we will have to see what Ofcom comes out
with.”

He added: “We would go with the trend of the [Ofcom] review,” but “regulations have proved very effective” so far.
BT is fighting for its future as rival executives have ramped up calls for the split of its fixed line network, which they argue causes a conflict of interest given its own retail internet
business.

BT, they warn, is empire building given its return to the mobile market with the £12.5bn acquisition of EE and its aggressive drive into pay­TV with the purchase of Premier League and
Champions League football rights.

“Many in the industry will be unimpressed by the minister’s remarks. It’s inappropriate for him to weigh in while Ofcom is still doing its job,” said one executive.
However, analysts say Ofcom is more likely to be swayed by evidence of widespread dissatisfaction among internet users in the UK in spite of steady improvements in coverage and
speeds.

Mr Vaizey said he was happy with progress on BT’s subsidised rollout of broadband in the UK. He added that the company was on track to help deliver superfast connections ­ that is,
speeds of more than 24 megabits per second ­ to 95 per cent of the country by 2017.

“If broadband is so terrible, why are we the leading ecommerce nation in the world?” Mr Vaizey asked.

This month a group of telecoms and media companies wrote to the FT to raise what they said were serious problems with ownership of the national telecoms network by BT. These
included “a conflict of interest in the role of BT, poor quality of customer service and difficulties in enforcing the existing regulatory regime”.

Daniel Thomas


by Daniel Thomas

October 1, 2015 | 3:15 am
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