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MPs say splitting BT and Openreach will benefit consumers

Thursday, February 19th 2015 by Ellen Branagh

Breaking up BT could help consumers get a better service and increase competitiveness in the broadband market, MPs have suggested.

MPs want to separate BT's consumer division from its Openreach business, which owns and runs the UK's largest copper and fibre network.

Discussing the issue in a recent debate on rural broadband, some MPs suggested that the time has come to separate Openreach completely from BT to ensure a better service for consumers.

Speaking to Cable.co.uk, mid-Worcestershire MP Peter Luff said he had not only heard from constituents having problems being passed from ISP to Openreach and back again, but had experienced them himself and resorted to signing up with BT because he felt "blackmailed by their monopoly".

'Confusing for customers'

“I think the problem is that it’s confusing for customers and I believe very strongly that BT Openreach favours BT.

“I have long felt that the challenge to consumers in understanding this arrangement leads to these problems.

“It would be substantially easier if we had a proper legal separation. I believe that would benefit the consumer ultimately.”

Hundreds of smaller broadband providers which compete with BT, including Sky and TalkTalk, have to pay Openreach for the right to use the network, which many believe gives BT an unfair commercial advantage.

Concerns have been raised that confusion over the arrangement between Openreach and providers, as well as difficulties for customers trying to communicate directly with Openreach, make it difficult for consumers to get the service they are entitled to.

Fellow MP Jesse Norman, who has highlighted the issue of rural broadband, told the Commons he had been flooded with complaints about Openreach.

Mr Norman (Con - Hereford & South Herefordshire), told MPs: "The problem is compounded by a lack of direct accountability to end users, and, I might add, to Members of Parliament."

He added: "I should like to see much more openness towards end users, a public commitment to higher standards of service, and, potentially, an opening up of the network so that other operators can offer enhanced services, including customer service — if not, indeed, the possibility of full separation.

'Major surgery'

Speaking to Cable.co.uk, Mr Norman said any separation would be "major, major surgery" on BT.

Asked about the possibility of a structural full separation of Openreach from the rest of BT, Anna Coast, from UK-based consultancy Telcoconsulting, said it was an option, but would require careful scrutiny.

She said: “The idea of ‘full separation’, ie a separate public company is an option but would require very careful regulatory scrutiny and justification as well as the approval of BT shareholders, although it might raise significant amount of cash that could be reinvested in the network or reduce BT's debt levels.”

She said the key issues for any solution are: the benefit to customers wanting access to more broadband; a bigger investment in local connectivity; and a fair deal for competitors.

Openreach is operated by BT Group on the basis of an agreement with Ofcom that it provides the same products, support, and levels of service to all service providers, including BT.

Last year Ofcom introduced new performance standards for Openreach, dictating that "the majority of phone and broadband faults have to be repaired within two working days, while most customers requiring a new line must receive an appointment within 12 working days".

The watchdog also said that Openreach should make the timeframe for any repairs or installations clear to consumers, and that it should produce quarterly reports on the time taken to repair faults and to install new lines.

According to Openreach's website, for the period of October 1 to December 31, 2014, 93.54% of new lines were installed on time, with less than 1% of faults not cleared after 31 days or more.

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