Broadband: BT must put house in order or face split, say MPs

A committee of MPs has said that BT is '˜significantly under-investing' in Openreach, its infrastructure subsidiary which is responsible for much of the country's broadband roll-out.

By The Newsroom
Tuesday, 19th July 2016, 3:55 pm
Updated Tuesday, 19th July 2016, 4:59 pm
An Openreach engineer on the causeway to Lindisfarne as part of the iNorthumberland programme.
An Openreach engineer on the causeway to Lindisfarne as part of the iNorthumberland programme.

Based on a report commissioned from a panel of independent experts, the Culture, Media and Sport Committee concluded the shortfall in investment could potentially be hundreds of millions of pounds a year.

The Committee says BT has exploited its position to make strategic decisions that ‘favour the Group’s priorities and interests’ and is likely to have sacrificed shareholder value and customer benefit as a result.

The Committee is demanding that BT invests significantly more in Openreach and allows the subsidiary much more autonomy over what it invests, when and where. It supports Ofcom’s plans for establishing greater separation between Openreach and BT Group, but makes clear that if BT fails to ‘offer the reforms and investment assurances necessary to satisfy our concerns’, Ofcom should move to enforce full separation.

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A statement from BT read: ‘We’re disappointed to be criticised, having invested more than £1billion a year in infrastructure when the UK was emerging from recession and rival companies invested little. As the report acknowledges, BT’s investment has made the UK a broadband leader among the major economies in Europe.

‘Openreach investment is 30 per cent higher than it was two years ago and it will grow again this year. We’re already pumping in hundreds of millions of pounds of extra money and we’ve committed to invest a further £6billion over the next three years.

‘We agree that service levels have to improve and yesterday we announced that we’re making significant progress in this area. We’re hitting all of Ofcom’s service targets and we’re determined to exceed them given customer expectations are rising all the time. Thousands of engineers have been recruited and we’re fixing repairs and installing new lines quicker than before.

‘We are in discussions with Ofcom about increasing the autonomy of Openreach and we’re hopeful that a settlement is possible that will meet the concerns of the committee.

‘Separating Openreach from BT would lead to less investment, not more, and would fatally undermine the aims of the committee.’

Earlier this year, MP Anne-Marie Trevelyan called for an end to BT’s ‘broadband monopoly’. The Tory MP for Berwick co-signed a report, BroadBad, from the cross-party British Infrastructure Group (BIG) of MPs, which called on the regulator Ofcom to take radical action over the ‘natural monopoly too long enjoyed by BT Openreach’.

However, the company hit back, citing its efforts to equip rural areas. At the time, a BT spokeswoman said: “In excess of 70 per cent of households in the Berwick-upon-Tweed constituency have already been upgraded and this will increase to more than 90 per cent by the end of the current plans.”