Sky CEO calls for the end of BT Openreach ‘status quo’

Sky CEO Jeremy Darroch

Sky CEO Jeremy Darroch has urged Ofcom to call for BT and its infrastructure arm Openreach to separate, as the regulator prepares to publish the conclusions of its digital communications review.

In an open letter, published in the Times newspaper today, Darroch said that ultrafast broadband is “critical to Britain’s future economic and social welfare”, and said that “it is clear the status quo is not an option”.

“It’s no secret that Sky supports separation. But while some portray the issues as a battle between commercial rivals the truth is it matters to us all,” said Darroch.

“BT invests virtually the same amount today in the network as 10 years ago. This has seen the annual level of faults grow to 10% of all customers, and customers waiting more than two weeks for their broadband to be connected. Unacceptable for a modern society.”

The Sky boss claimed that despite its own fibre trials with TalkTalk in York, it is “often not economically viable for other providers to roll out separate ultrafast networks.”

“Because BT’s broadband network faces little competition, BT sweats its copper assets for as long as possible, knowing it will not lose its captive customers and continue to earn decent profits even if it does not invest in fibre,” said Darroch. “Freeing up Openreach would allow the right level of investment to be made.”

He said that the process of separating BT from Openreach “is not complicated” as the latter already functions separately.

He added that the current BT Openreach approach to highspeend broadband improvements “will not deliver the 1Gbps speeds Britain needs” and that “investing in copper in 2016 is, as Henry Ford would have put it, like breeding a faster horse rather than building a car.”

Last month a cross-party broadband study, backed by 121 UK members of parliament, said that BT should be forced to sell off Openreach to encourage “more competition and a better service for every internet user”.

However, BT hit back at the findings, describing the report and its recommendations as “misleading and ill-judged” and said that the UK is “number one for broadband and superfast broadband when compared to other large EU countries.”

“The idea that there would be more broadband investment if BT’s Openreach infrastructure division became independent is wrong-headed. As a smaller, weaker, standalone company, it would struggle to invest as much as it does currently,” said BT.

Openreach was created 10 years ago to house BT’s local access network business, which can be accessed by third-party service providers in a regulated market. The division has been in the spotlight due to Ofcom’s digital communications review, with rivals including Sky alleging poor service and slowness in investing in ultra-fast networks.

Ofcom is due to announce the conclusions to its review of digital communications this Thursday.