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LONDON (Alliance News) - BT Group PLC on Friday said it is vital for the digital health of the UK that its broadband infrastructure arm Openreach remains part of the wider BT Group.
UK telecoms regulator Ofcom has put on the table the potential separation of Openreach amongst other options as part of its Digital Communications Review. It closed a consultation that formed part of the review on Thursday.
BT's response comes after rivals including Sky PLC, TalkTalk Telecom Group PLC and Vodafone Group PLC called for the separation of Openreach. Vodafone argued that BT has generated GBP6.5 billion in "excessive profit" in the past ten years from Openreach, whilst Sky suggested that BT has failed to invest in the upkeep of the network, leading to "unacceptable levels of faults and service problems".
However, the Country Land and Business Association, which represents rural land owners and businesses, has called on Ofcom to not separate Openreach from BT, as it believes this would distract from efforts to roll out broadband in rural areas. The group did note that there have been "frustrations and shortcomings" in Openreach's performance to date, and said it expects the government to be more demanding.
At the beginning of this month, UK Digital Economy Minister Ed Vaizey expressed scepticism about the need to separate Openreach, telling the Financial Times a full separation would be "an enormous undertaking" that would be time consuming and have "lots of potential to backfire".
BT argued it is vital for Openreach to remain part of BT as it will allow the business to continue to benefit from BT's capital, as well as around GBP500 million a year that BT invests in research and development.
"BT is keen that Openreach continues to provide regulated services to all companies on an equal basis as this model has served the UK exceptionally well over the past decade, and the company believes, others have failed to make a convincing and evidence based case for change," BT said.
BT focused its argument around what it called a flourishing UK broadband market, with rising broadband speeds and user numbers. It also pointed to what it sees as continuing problems in the pay television market, where rival Sky remains the dominant player.
BT argued that regulation has been lopsided, with Sky having easy and highly regulated access to the Openreach network, whilst BT has struggled to obtain wholesale deals for Sky content.
"BT is driving the transformation of Britain?s digital infrastructure, but we need the right regulatory regime that supports fair competition for all and large scale investment. With this in place, there is no doubt that we can meet the challenges of the next decade, fulfilling the needs of consumers and businesses, driving the growth of the UK economy and supporting social progress for the whole country," said Chief Executive Officer Gavin Patterson in a statement.
"Ofcom has the opportunity to level the playing field by tackling Sky?s dominance of Pay TV. That dominance has led to poor outcomes for UK consumers, and it is about time that converged regulation was introduced to deal with a converged market. The current lop-sided approach isn?t serving customers well," Patterson added.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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