Sky Wants BT-Openreach Breakup, Calls On Ofcom For Competition Investigation

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Sky says BT and Openreach’s dominance is harming consumers, competition and investment and believes latter should be independent

Sky believes BT and Openreach should be split up and wants Ofcom to ask the Competition and Markets Authority (CMA) to conduct an inquiry into the UK telecoms market, claiming BT’s dominance is thwarting competition and preventing investment.

In its official submission to Ofcom’s once-in a decade review of the UK’s communications market, Sky alleges Openreach has frequently missed service targets and is preventing other firms from being able to invest in alternative infrastructure that could eventually harm consumers and the national economy

No competition

splayfoil road fibre cabinet“We are drawing attention to the problems in broadband because they are important to the economy as a whole,” said Mai Fyfield, Sky’s chief strategy officer. “They affect competition between providers and have a direct impact on consumers and small businesses, resulting in inconvenience, dissatisfaction and loss of productivity. The UK needs to get the basics right in broadband as well as develop the networks and services of the future.

“We believe that Ofcom should move quickly to ask the Competition and Markets Authority (CMA) to undertake a full competition inquiry. A reference to the CMA would allow these vital issues to be examined with increased speed and thoroughness by a body with the powers to take whatever action should be deemed necessary. Given the rapid changes taking place in the sector, we believe this should happen as soon as possible.”

Poor service

In its submission, Sky claims 90 percent of all new line installations take 10 days or longer, with a tenth taking longer that, and that Openreach changes the agreed installation date for Sky customers on average 36,000 times a month.

The company adds that Openreach misses more than 500 appointments and fails to complete 4,000 jobs each month. Sky also says fault rates have increased by 50 percent between 2009 and 2012.

Sky says its user base represents a third of all broadband customers who rely on the Openreach network for connectivity, meaning the problem could be three times as worse.

‘Failure’ of openreach

BT broadbandThe submission alleges that expenditure on the Openreach network has decreased by a third over the past ten years, a period during which competition has thrived thanks to “effective regulation.”

Sky says competition in superfast broadband is not as strong as copper, with new entrants discouraged from creating alternative ‘last mile’ infreastruvutrre because of BT’s dominance – something which could delay the arrivial of 1Gbps FTTP broadband and harm businesses reliant on good connectivity.

“When Ofcom created Openreach in 2005 it expressed a hope that the new organisation would serve other operators, like Sky, with ‘zeal, energy and enthusiasm’,” said the submission. “This is not Sky’s experience of Openreach. On the contrary, Openreach is often reluctant to engage when requested by Sky to explore innovation in its products and services and it takes a considerable period of time – often years – for proposed changes to occur.”

BT denial

TalkTalk, Sky’s partner in an FTTP ‘Ultrafast’ joint-venture in York, has also called for Openreach to be spun off, but BT has taken a dim view of the latest claims for break up.

“The forthcoming Ofcom review is an important piece of work so it is disappointing that Sky are engaging in selective spin rather than constructive dialogue,” a BT spokesperson told TechWeekEurope. “They claim that Openreach investment is down yet it is up. They can only substantiate their claim by ignoring the billions of pounds we have pumped into fibre broadband.

“They also make claims about customer service whilst failing to acknowledge that Openreach has passed all sixty of the service targets it was set by Ofcom. We acknowledge there is more to do on customer service but 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.”

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