BT rivals press again for divestment of Openreach as UK Prime Minister hints at market intervention

Martyn Warwick
By Martyn Warwick

Oct 6, 2016

via Flickr © btphotosbduk (CC BY 2.0)

via Flickr © btphotosbduk (CC BY 2.0)

  • BT boss loses the plot as its rivals again demand Openreach be divested
  • Rants at the "cynicism" and "lies" of it's competitors
  • Telco claims they are acting out of narrow commercial interests. Which, of course, BT never does.
  • TelecomTV effects an introduction: "Mr. Pot, this is Mr. Kettle.  You can't recognise one another because you are both larded in the greasy soot of obfuscation"

Summer's over but the temperature is rising at the UK's incumbent telco, BT, as pressure again mounts to compel the regulator to split the operator's supposedly 'functionally separate' Openreach wholesale division from the Vulcan death grip of its gargantuan and jealous parent.

To make matters worse for BT, yesterday, Britain's new prime minister, Teresa May, said that it is “just not  right” that “that half of people living in rural areas, and so many small businesses, can’t get a decent broadband connection”.

Ominously (for BT at any rate) she added that her administration is prepared to “take big, sometimes even controversial, decisions about our country’s infrastructure”, because "Where markets are dysfunctional, we should be prepared to intervene." Now If that isn't enough to galvanise the denizen's of BT's executive suite into some kind of measured and, hopefully, constructive ameliorative action then I don't know what is. Rants certainly won't help.

John Petter, the head of BT's consumer business unit has a lengthy history of lambasting his competitors and they are all big enough and ugly enough to withstand a verbal doing-over, but his latest outburst caused fits of outraged indignation, particularly at Sky, the rival that bore the brunt of of his intemperate pique.

What particularly exercised Mr. Petter is a revelation from the Daily Telegraph newspaper, a venerable, trusted and conservative upmarket British broadsheet. The Telegraph scoured documents filed with the somnolent UK comms and media regulator, Ofcom, to discover that Sky has reduced some of its overheads by significantly downgrading the terms of its repair contract.

Hitherto, Sky customers reporting a fault to their supplier would, supposedly, get a visit from an engineer within one working day. That engineer would be from BT Openreach. Now Sky has quietly downgraded that response time to two days and Openreach is affecting the sort of cosmetic outrage that was wont to be exhibited by maiden aunt characters in the drawing room comedies of the late Victorian era. It would be amusing if it wasn't so pathetic.

The result of the revelation was spectacular with Mr. Petter accusing Sky of "cynicism", "lies" and "sinking to a new low". He added, “Ofcom's report makes it clear that millions of customers have been downgraded to a slower repair time but none of our rivals seem to be telling their customers. To be complaining about Openreach's service on the one hand and then choosing in secret to degrade the service to customers suggests a surprising level of cynicism.”

The whole lot of them need their heads banging together

Let us not forget that BT Openreach has a lamentable history and appalling reputation across the entirety of its subscriber base for missed appointments and huge delays in fixing even the most simple faults. This really is a case of the pot calling the kettle 'black'

In a cutting response to BT, Stephen van Rooyen, head honcho of Sky UK said “Quite simply, Openreach has failed us and our customers. We all know that there are too many late repairs, missed appointments and recurring faults. We therefore changed the contract – which was not being delivered – and have stepped in ourselves to provide the level of service Sky customers expect. This has required significant investment over and above the fees we continue to pay to Openreach for a sub-standard service. Yet more evidence, if it was needed, of how failed this system is."

He added that while Sky's own engineers are precluded from mending BT line faults they can usually fix many broadband issues and do it more quickly than BT's merry men.

Perhaps the most risible of BT's recent moans about its rivals, including TalkTalk and Vodafone (and others) in addition to Sky, who for years now have been agitating for Openreach to be spun-out of BT and into a totally and provably separate company, is that they are acting in their own "narrow commercial interests". Perish the thought that BT would ever do anything so déclassé.  

And now the clouds are gathering on another quarter. Teresa May, keen to stamp her mark on the Conservative Party, the government and the people of the UK and channeling Margaret Thatcher like a hyper- demented Madame Arcati from Noel Coward's 'Blithe Spirit', is casting her beady eyes in the direction of intervention in the telecoms market and the sluggish workings of Ofcom. They should be afraid...

Mrs. May is not alone in wondering if, despite the fact that they are supposed to be functionally independent, one hand washes the other as far as BT and Openreach are concerned. Yesterday was the deadline for the lodging of responses to Ofcom's feeble position that it should stop short of enforcing full divestment but instead make Openreach a legally separate company which just happens to be wholly owned by BT. What a cop out and negation of Ofcom's purpose. It is expected that the filed rejoinders to the regulator will be what is euphemistically referred to as "full and frank". They need to be.

Meanwhile, the new Chancellor of the Exchequer, Philip Hammond, whilst not yet actually consigning the "endless austerity" of the previous Conservative administration to the dustbin of history, has given up on trying to balance the books by 2020 and has indicated that it may well now be time to start investing properly in various infrastructure projects - including telecoms. With interest rates at an historically low level it seem probable that the government will soon begin to borrow again and the much-derided promise of 'Broadband Britain" may take a step closer to reality. Or not.

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