Credit: Adriaan Wessels/Wikipedia

Broadband battles: BT outmanoeuvres Sky with £6bn broadband plan

Of course BT will invest in ultrafast broadband... so long as Ofcom leaves Openreach well alone.

by Adam Gale
Last Updated: 05 May 2016

Veiled threats, catty insults, outright jibes – no, the Republican nomination race isn’t suddenly back on. Welcome instead to the delightful world of telecoms. In case you’ve missed it, there’s a juicy spat in the sector over the future of BT’s infrastructure wing, Openreach.

Sky wants it severed, claiming it gives BT an unfair advantage that ultimately harms consumers. BT, led by the photogenic Gavin Patterson, counters that its continued ownership is the only way Openreach will get the investment it needs. Regulator Ofcom settled for an uneasy compromise earlier this year that forced BT to allow rival networks to use its infrastructure while stopping short of splitting the company, but this has done little to quieten Sky.

Patterson tried to settle the matter today by revealing a £6bn investment plan, which aims to get 10-12 million homes and businesses connected to its copper/fibre hybrid network by 2020. The investment plan, however, comes with a proviso. It will be ‘subject to regulatory certainty’, he said.

Taking on Sky at its own game - read the MT interview with BT's Gavin Patterson

Are you listening, Ofcom? It’s the kind of message that some people would call a threat, but it’s really just a statement of fact – if x happens, then y will inevitably follow. And why indeed should BT make a firm plan to invest in a division of its company that may have been forcibly spun off in a year’s time or two?

Sky was not happy. ‘Today's statement shows that BT continues to see copper as the basis of its network for 21st century Britain,’ said its COO and CFO Andrew Griffith, referring to the fact that still uses copper wire.

‘Despite BT's claims, it is clearer than ever that their plans for fibre to the premise (FTTP) broadband will bypass almost every existing UK home. This limited ambition has been dragged out of BT by the threat of regulatory action, demonstrating once again why an independent Openreach, free to raise its own long-term capital, is the best way for the UK to get the fibre network it needs,’ Griffiths said.

Sky has a point, in that BT’s investment plan was indeed probably driven by the desire to hold onto Openreach. But for all its bluster, Sky has a problem. The odd accusation won’t count for much when pitted against £6bn in cold, hard cash.

Sky could, of course, propose its own investment in a fibre network using Openreach’s infrastructure, but then BT would say that proves there’s no need to spin off Openreach in the first place - Ofcom’s compromise works. The idea that an independent Openreach could raise the same kind of capital, meanwhile, remains untested and therefore risky. For now, then, Sky can thunder, but BT still rules on the ground.


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