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Sky and BT make final submissions to Ofcom on possible Openreach split

Friday, October 9th 2015 by Phil Wilkinson-Jones

Sky and BT have made their final submissions to Ofcom as part of the regulator’s review of the UK’s digital communications market.

Sky is calling for Openreach – which runs the country’s biggest broadband network – to be split from parent company BT.

BT, on the other hand, says Openreach benefits from BT’s capital and its investment in research and development.

It wants Ofcom to “level the playing field” by tackling Sky’s “unchecked” dominance in the pay TV market.

Sky’s chief strategy officer Mai Fyfield said the outcome of the review is “incredibly important for everyone in the UK”.

“It is a once in a decade opportunity to make sure that the UK benefits from a network that can meet the ever growing demands for better and faster broadband.”

Writing in a blog on Sky’s website, Ms Fyfield said the Openreach network relies heavily on copper wires and delivers “unacceptable” levels of faults and service problems for consumers.

“The root of the problem is that BT, just one of the major broadband providers, has sole control of Openreach.

“This means that decisions about investment in this critical national infrastructure reflect the interests of BT rather than the whole industry and the businesses and consumers that use its service.”

She said an independent Openreach would make the broadband market more competitive, be motivated to innovate more and would be attractive to investors.

Launching its Digital Communications Review in July, Ofcom said separating BT and Openreach would simplify existing regulation but may not address issues such as service quality.

Yesterday the CLA, which represents landowners, farmers and rural businesses, said splitting the organisations would distract from the rollout of superfast broadband to rural areas.

'Lop-sided'

And digital minister Ed Vaizey has said he is sceptical of the full separation of the companies, telling the Financial Times a decision to split them could “backfire”.

BT has told Ofcom that Openreach should remain part of the wider BT group so it can continue to benefit from the £500m a year BT spends on research and development, as well as the company’s capital.

“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,” it said in its latest statement on the issue.

BT said “lop-sided” regulation has given Sky easy access to the Openreach network while BT has struggled to strike similar wholesale deals with Sky over TV content.

BT CEO Gavin Patterson said: “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.

“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.”

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