BT and Sky trade blows over broadband as war rages on

The two telecoms giants swap online punches over the potential spinout of Openreach.

by Rachel Savage
Last Updated: 15 Jan 2016

There’s nothing like a corporate rivalry to simultaneously entertain and bore with catty, repetitive veiled insults. Step forward BT and Sky, which are continuing to trade blows over whether the former should be broken up. No prizes for guessing which side each is on…

Sky, along with TalkTalk, has been lobbying communications regulator Ofcom to force BT to spinout its broadband infrastructure division Openreach. The former state-owned telco has to sell wholesale access to the network to other providers at regulated prices. But its rivals have consistently argued they are discriminated against through slow service and repairs.

‘BT’s case for the status quo is built on unfounded or exaggerated claims about the benefits of vertical integration and the risks of separation. Most frequent is the claim that only BT would have invested £2.5bn in the roll-out of fibre,’ Sky’s chief strategy officer Mai Fyfield wrote in the Telegraph yesterday.

‘In practice, fibre roll-out has been funded in part by cutting spending on other critical parts of the network, with service quality and reliability suffering,’ she said, clearly aiming to tap into the gripes of anyone who’s had to wait weeks for broadband or suffered with interminably slow speeds.

‘This is plain untrue, no investments have been diverted away from Openreach,’ BT’s strategy director Sean Williams hit back. ‘BT Group has played a vital role by investing £10.5bn of capital in to Openreach over the past 10 years.’

Fyfield’s barbs were a direct response to an article by Openreach chief exec Joe Garner in the Telegraph (which one suspects is orchestrating this particular phase of the battle) on Monday. ‘BT provides us with ready access to capital,’ he argued.

‘Our fibre roll-out might look like an obvious investment today, but it didn’t in 2009. Who other than BT would have had the courage to invest £2.5bn in superfast broadband when no one else was interested?’

Rhetorical or not, that’s a question for Ofcom. The regulator is currently in the midst of a once-a-decade review of an industry convulsed by the rise of online streaming services like Netflix and ‘quadplay’ consolidation (companies increasingly offering combined TV, mobile, landline and broadband packages).

But BT, Sky and TalkTalk (Vodafone has generally been staying schtum on the sidelines) know that if they get enough public opinion on side they could make some options untenable for Ofcom – hence the public sparring.

It’s also not the only live battlefield. BT’s rivals have been haranguing the Competition and Markets Authority to block its £12.5bn acquisition of mobile network EE. Meanwhile, the two big players have been driving up football TV rights to ever more ridiculous prices, while BT landed a blow recently by nicking Australian international cricket (i.e. The Ashes when they’re Down Under) from Sky. There’s still plenty to play for.

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