Sky and BT clash over future of Openreach

The future of fibre: Openreach debate heats up

Sky and BT have traded a war of words over the future of Openreach as the debate over the network division heats up.

The debate comes as Ofcom holds its decennial review of the communications market in which the future of Openreach is a key point of contention.

In the latest salvo, Mai Fyfield, Sky’s chief strategy officer, made a concerted attack on Openreach in The Telegraph, claiming that its continued management by BT is holding back the superfast broadband market.

“BT’s case for the status quo is built on unfounded or exaggerated claims about the benefits of vertical integration and the risks of separation,” she said.

“Underinvestment by BT has led to unacceptable levels of faults and service problems that continue to affect consumers and businesses.”

Fyfield also questioned the true value of BT’s oft-quoted £2.5bn investment in Openreach for fibre broadband rollouts, claiming that it is just a fraction of the company’s revenues.

“Over the investment period, Openreach generated around £15bn of earnings, while its total capital expenditure remained broadly flat,” she said.

“In practice, fibre rollout has been funded in part by cutting spending on other critical parts of the network, with service quality and reliability suffering.”

Fyfield added that creating a separate Openreach division is the only practical way to ensure that investment in broadband is maintained in a fair way to benefit the UK.

“An independent Openreach would be a new, highly investable, FTSE 100 company that could catalyse the transformation of Britain’s broadband infrastructure,” she wrote.

“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.”

However, Openreach CEO Joe Garner had also written in The Telegraph, saying that he believes splitting Openreach into a single entity would be a “huge mistake” that would not be in the UK’s best interests.

“Britain has gained, and will continue to gain, from Openreach as a part of BT, benefiting from more investment, more coverage and more speed,” he said.

“On investment, BT provides us with ready access to capital. BT’s capital allowed us to meet the rapidly rising demand for internet services by rolling out superfast broadband which is, incidentally, 20 times faster than in 2005 and half the price.”

The debate comes as Openreach embarks on a major rollout of fibre services, under its own commercial project and the wider Broadband Delivery UK framework, which has seen over 20 million premises passed by fibre connections.

The firm is also testing its G.fast technology which could boost copper connections with speeds faster than those of fibre.

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18 September 2015 | 11:33 am – Source: v3.co.uk

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