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BT rejects Sky calls for Openreach competition inquest

BT hits back after Sky asks telecoms regulator Ofcom to initiate a full investigation into Openreach

BT has accused broadband and pay-TV supplier Sky of engaging in “selective spin” after its rival called for a full market review of BT’s infrastructure arm, Openreach, highlighting the impact of deep-rooted service quality problems for its own customers.

In a submission to Ofcom’s ongoing Strategic Review of Digital Communications, Sky said it believed that the problems affecting competition and quality of service were severe enough that Ofcom should ask the Competition and Markets Authority (CMA) to look into Openreach as a matter of urgency with a view to forcing its split from BT.

Sky said that a “history of underinvestment” had left Openreach struggling to repair network faults in a timely fashion, leaving consumers waiting ages for appointments to install new lines, missing appointments and failing to complete jobs.

It claimed that more than 90% of new line installations that require an Openreach engineer to attend took 10 calendar days or more, and around 10% took more than 30 days; that Openreach was changing agreed installation dates for Sky customers an average of 36,000 times a month; that Openreach was missing more than 500 appointments and failing to complete around 4,000 jobs a month, again for Sky customers; and that faults on the Openreach network had spiked by 50% between 2009 and 2012, which is the most recent year for which reliable data is openly available.

Sky said it represented about a third of customers in the UK relying on the virtual unbundled local access (Vula) process to access the Openreach network, and said that if its own experience was typical of other broadband providers, the problem was very likely far worse.

Its submission suggested that the loss to the UK economy per annum could be as high as 18,000 days or 70 years, assuming all affected customers lost a day of work by waiting in for a no-show engineer.

BT said that Sky had completely failed to acknowledge that Openreach had been working extremely hard to reduce missed appointments and had in fact passed all 60 of the service targets it was set by Ofcom.

“We acknowledge there is more to do on customer service but breaking up BT is not the answer,” said a BT spokesperson. “It would lead to huge uncertainty and fundamentally undermine the case for future investment dragging the UK backwards at the very time it needs important investment in its infrastructure.”

Read more about BT Openreach

Sky also submitted research by consultancy Frontier Economics that highlighted years of declining investment in maintaining the existing copper network. It claimed that expenditure here had fallen by a third since 2005, with knock-on effects on service quality and reliability.

“The forthcoming Ofcom review is an important piece of work so it is disappointing that Sky are engaging in selective spin rather than constructive dialogue,” countered BT. “They claim that Openreach investment is down yet it is up. They can only substantiate their claim by ignoring the billions of pounds we have pumped into fibre broadband.”

Superfast transition

Finally, Sky highlighted concerns about future competition in the market for broadband. It said that although since 2005 Ofcom had supported effective competition and allowed new market entrants to challenge BT, lowering costs and increasing choice for consumers – a point not disputed by Openreach – the transition to superfast broadband, which is regulated differently, might put those gains at risk.

Sky chief strategy officer Mai Fyfield said: “We are drawing attention to the problems in broadband because they are important to the economy as a whole. They affect competition between providers and have a direct impact on consumers and small businesses, resulting in inconvenience, dissatisfaction and loss of productivity. The UK needs to get the basics right in broadband as well as develop the networks and services of the future.

“We believe that Ofcom should move quickly to ask the CMA to undertake a full competition inquiry. A reference to the CMA would allow these vital issues to be examined with increased speed and thoroughness by a body with the powers to take whatever action should be deemed necessary. Given the rapid changes taking place in the sector, we believe this should happen as soon as possible,” said Fyfield.

Read more on Telecoms networks and broadband communications

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