Sky: Make Openreach Independent From BT

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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The war of words about the future of Openreach continues as BT refutes Sky’s latest calls for separation

Sky’s chief strategy officer has reiterated the company’s calls for Openreach to be made a fully independent organisation, claiming the current structure is handing BT an unfair advantage in the superfast broadband market and stifles competition.

Ofcom’s once-in-a-decade review of the communications market is considering a formal split, alongside a range of other proposals, but BT says the current structure is working well and that an independent Openreach would result in less investment in infrastructure.

Sky’s official submission to the review says Ofcom should ask the Competition and Markets Authority (CMA) to conduct an inquiry into the UK telecoms market with a view to a formal separation – a stance which has not wavered.

Read More: The battle for the future of UK communications

Writing in The Telegraph, the company’s chief strategy officer, Mai Fyfield, said that if telecoms regulation was created from scratch there is no way the current structure would be the one decided upon.

Unfair advantage

BT broadband“Who would start by putting Britain’s only national telecoms network under the sole control of the company that is also the biggest broadband service provider?” he asked.

“It is time for a thorough examination of the merits of separating the national telecoms network from the rest of BT. This would apply the principle of separation of ownership between infrastructure operators and service providers, which is well established in other sectors like energy and transport.

“An independent Openreach would be a new, highly investable, FTSE 100 company that could catalyse the transformation of Britain’s broadband infrastructure. BT constantly emphasises that Openreach is entirely functionally separate with its own assets, employees and accounts. So it is contradictory to argue that the next step of full separation is impracticable.”

Sky said BT’s strong position in copper was tempered by strong regulation, but such measures were outdated for the fibre market. Fyfield says investment in Openreach’s fibre infrastructure has come at the expense of other parts of the business, harming the quality of service it delivers to third party providers like Sky.

Additionally, he claims BT’s dominance has meant it has invested in fibre to the cabinet (FTTC) technology rather than fibre to the premise (FTTP) – a choice which risks the UK falling behind other nations in the connectivity race.

BT dispute

BT has previously said Sky’s allegations are merely a smokescreen to distract from the latter’s “dominance” in the Pay TV sector and told TechWeekEurope Fyfield’s claims were simply untrue.

“No investments have been diverted away from Openreach,” said a spokesperson. “In fact, BT Group has invested £10.5 billion of capital in to Openreach over the past ten years and last year we invested more in Openreach than ever before. This year, our investment will be even higher.

“Sky’s comments on fibre to the home technology show a lack of understanding when it comes to research and developments in broadband. We’ve proven how ultrafast broadband speeds can and will be delivered over fibre to the cabinet technology using technology and they ignore the fact that the current model has put the UK ahead of its European peers when it comes to superfast broadband coverage, speeds and prices.

“Meanwhile, the idea that an independent Openreach would be a new, highly investable, FTSE-100 company that would completely transform Britain’s broadband infrastructure is pure wishful thinking.

“Being a FTSE-100 doesn’t give you an open-ended cheque book. As we’ve seen with other infrastructure companies there’s a huge risk it could fall in to the hands of a vulture capitalist determined to sweat the assets rather than invest in the way Openreach has in the past decade. All in all, Sky arguments are extremely hypocritical, given their own vertically integrated operations have double the market share of BT’s.”

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