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During a three-hour debate in the House of Commons on the UK’s superfast broadband roll-out a number of MPs backed widespread calls for BT and Openreach to be forcibly split apart following Ofcom’s market review.
During the debate – introduced by former technology journalist Matt Warman, now Boston and Skegness MP – he criticised BT’s recent pledge to raise the minimum universal service commitment to 5Mbps, saying it fell far below what Ofcom had said was the typical need, and urged the government to promote more competition in the sector.
“I admit that I do not know whether the roll-out would be better if BT were to be split up as a company,” said Warman in his opening speech. “I am certain, though, that regulation needs to be simpler and more rigorous however the company ends up… I urge the regulator to consider all possible options now.”
Jesse Norman MP, chair of the Culture, Media and Sport Committee, was blunter in his assessment. He said that, in contrast to BT’s view – that splitting the two would damage overall investment – a truly independent Openreach could actually invest better and smarter.
“It is not just a question of whether the relationship of BT to Openreach is supporting competition,” said Norman. “It is also a question of whether Openreach is itself being starved of capital because it is located within BT with its new, emerging consumer and retail orientation.
“If it at least had its own balance sheet, it might be able to borrow at very low rates and therefore support capital roll-out with it.”
Nick Herbert MP added that it was "unsatisfactory" that 75% of new superfast broadband customers on the Openreach network were BT or BT subsidiary customers.
He claimed there was evidence BT diverted money that should have gone to Openreach into the acquisition of Premiership football rights, and suggested that the merger between BT and EE would make matters worse, because Ofcom would be a correspondingly smaller unit in the overall group.
“The time has come to persuade Ofcom to take a serious look at the lack of competition in this area and make a referral to the Competition and Markets Authority,” said Herbert.
Some opposition MPs were quick to suggest the present situation had arisen because the government had forgotten that competition should be at the heart of telecoms policy.
“We have heard lip service paid to competition since 2010 but have seen no serious attempt to drive forward competition in telecommunications, and now we are paying the price,” said Labour’s Stephen Timms.
Quoting a recent leader in the Financial Times, Timms argued that the Conservative party had been too willing to cosy up to “corporate champions and established business interests” and said its “penchant” for protecting BT’s interests had been bad for economic productivity in the UK.
Digital economy minister Ed Vaizey again rejected the idea of a split between BT and Openreach, and repudiated the suggestion that the coalition government had cosied up to corporate interests.
“Those who are calling for the break-up of BT include such small businesses run out of a back bedroom as Sky, Vodafone and TalkTalk,” said Vaizey.
On nationalising BT
Meanwhile, Chi Onwurah, making her first contribution as shadow minister for the digital economy, was quizzed by Conservative backbenchers on whether a government led by Jeremy Corbyn would seek to renationalise BT.
“It is possible, as the last Labour government demonstrated, to have a telecoms network that includes competition if there is a strong regulator and a government committed to ensuring that competition delivers services for consumers,” said Onwurah. “Unfortunately that is no longer the case.”