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BT CEO pledges more broadband investment if Openreach isn't split

Wednesday, February 24th 2016 by Ellen Branagh

BT has pledged to make more investment in fibre broadband if telecoms regulator Ofcom decides against splitting its infrastructure company Openreach.

In a final argument for keeping the company together, BT CEO Gavin Patterson reportedly told the Mobile World Congress that the company is ready to made “significant investment” if it gets “regulatory certainty”.

Ofcom will announce tomorrow whether it recommends that Openreach, which owns and operates the UK’s biggest broadband network, should be split from BT.

The decision is part of its Review of Digital Communications – an overarching look at the UK’s fixed and wireless broadband networks.

BT’s rivals, who rely on Openreach’s infrastructure supplied on a wholesale basis, have pushed for its separation, saying it effectively has a monopoly on the market.

But the company insists that it is heavily regulated and has poured investment into the UK’s telecoms market.

Bill Murphy, the company’s managing director of next generation access, previously told Cable.co.uk that Openreach's position within the BT group had helped create “low prices and high choices” for consumers.

Mr Patterson, in his final defence of the current setup, this week reportedly told an audience at Mobile World Congress in Barcelona: "There's a significant investment that we are ready to make now in the next generation of technology”.

That will include more fibre to the premises (FTTP), G.fast – which uses a combination of fibre and conventional copper wires to deliver gigabit speeds – and fibre to the cabinet (FTTC), the main technology currently used by BT to roll out superfast broadband.

'Big decision'

"That's a big decision, we are ready to make it if we get some regulatory certainty coming out of the Ofcom review,” the CEO added.

The outcome of Ofcom’s review is expected to be one of three options: separation, further deregulation, or stepping up service requirements expected from Openreach.

But earlier this week, Sky CEO Jeremy Darroch said the regulator has “an opportunity to lead the way” by recommending a split.

Writing in The Times, Mr Darroch said: “BT has shown little willingness to invest in fibre to the premises. Instead, it plans incremental upgrades to decades-old copper cables as the final connection to homes and businesses, falling far short of the potential of a true fibre network.”

Mr Darroch also said the status quo was “not an option”.

“With so many agreeing change is needed, Ofcom this week has the opportunity to lead the way.

“The industry, with much of the nation, will be ready and eager to support it.”

Analyst Matthew Howett, from media research firm Ovum, said Ofcom is unlikely to recommend splitting Openreach from BT.

"On balance, the case for structural separation and how to make it happen in practice probably has not been made and we are likely to see a strengthening of the current model," he said.

"Of the options available, a refreshed and energised governance framework for a more tightly managed Openreach would be both good for the industry and be workable for BT."

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