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Splitting Openreach and BT could backfire, warns Vaizey

Thursday, October 1st 2015 by Ellen Branagh

A decision to separate Openreach from BT could “backfire”, digital minister Ed Vaizey has warned.

Mr Vaizey said he was sceptical of the full separation of the companies, telling the Financial Times: “I think full separation would be an enormous undertaking, incredibly time consuming [and have] lots of potential to backfire.

“Ofcom is looking at it, I am a sceptic but we will have to see what Ofcom comes out with.”

The telecoms regulator is currently investigating whether Openreach, which owns and maintains the UK’s largest broadband network, should be separated from BT.

Deciding on the future of Openreach forms a key part of Ofcom’s digital communications review – an overarching review of the UK’s fixed and wireless networks to make sure they work for consumers.

Rivals of BT have argued that splitting Openreach from BT would create a more competitive broadband market.

An open letter from Vodafone, Sky and TalkTalk bosses said that customers are being let down by the UK broadband market and called for “radical reform” and increased competition.

The letter, signed by Vodafone CEO Jeroen Hoencamp, Sky CEO Jeremy Darroch and TalkTalk CEO Dido Harding, said: “Ofcom is currently conducting the most fundamental review of the communications market in a decade, and has identified serious problems with the ownership of the national telecoms network by BT Openreach.

“These include a conflict of interest in the role of BT, poor quality of customer service and difficulties in enforcing the existing regulatory regime.

Virgin Media has teamed up with broadband infrastructure providers CityFibre, euNetworks and Zayo to form the Infrastructure Investors Group (IIG) to campaign for more investment and competition in the communications market.

But BT hit back last week with its ambitions for the UK’s digital future, including a pledge to support the government in providing universal broadband speeds of 5-10Mbps.

The company's CEO Gavin Patterson said it wants to "forge an ultrafast future for Britain" but called for a "collaborative effort across industry and government".

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