Sky calls on Ofcom to separate BT and Openreach

Mai Fyfield

Sky has urged Ofcom to separate BT and its infrastructure arm Openreach in its final submission to the UK broadcast regulator as part of its strategic review of the UK’s digital communications market. 

In a statement explaining its stance, Sky argued that as BT has sole control over Openreach its decisions about investment in national infrastructure “reflect the interests of BT rather than the whole industry and the businesses and consumers that use its service”.

“Openreach’s ownership structure means that companies that compete with BT, like Sky and TalkTalk, cannot work with Openreach on innovations like fibre to the home,” said Sky’s chief strategy officer, Mai Fyfield, discussing Sky’s Ofcom submission.

She also claimed that “the national network run by Openreach relies heavily on copper wires and delivers unacceptable levels of faults and service problems for consumers and businesses.”

Fyfield said that it makes sense for BT to use the existing copper network for as long as possible. However, with “no prospect” of BT’s retail arm using an alternative high-speed fibre network to deliver services, there is “limited scope for new infrastructure entrants as they would only be able to compete for Sky and TalkTalk’s business.”

“The separation of Openreach from the rest of BT will allow it to form part of a more competitive market solution as an independent company. For example, if BT’s retail arm could purchase network services from alternative suppliers, an independent Openreach would be motivated to respond with investment and innovation of its own,” said Fyfield.

“As a standalone FTSE 100 company, Openreach would be highly attractive to long-term investors and able to raise fresh capital to invest on the back of future growth from the whole industry.”

The comments come after the chief executives of Sky, TalkTalk and Vodafone UK called for an “urgent need for increased competition” and urged Ofcom to ask the Competition and Markets Authority (CMA) to “undertake a full market investigation,” in an open letter published last month.

The Financial Times reported this week that Vodafone would also call for the break-up of BT, ahead of the Ofcom consultation deadline of October 8. It quoted Vodafone’s head of regulatory affairs, Matthew Braovac, as saying: “we want to see a separate Openreach whose business is selling network connectivity and access for all.”