MPs call on Ofcom to separate 'unambitious' BT and Openreach

MPs say radical action must be taken by regulator

A cross-party group of MPs has called on Ofcom to take "radical action" to separate BT from its infrastructure arm, Openreach.

A report by the MPs, entitled Broadbad, looked into broadband investment in the UK and the role of BT and Openreach. It follows on from a discussion paper published in July by Ofcom that suggested that BT should separate its networking business Openreach from its retail business in order to create more competition in the market.

BT's rivals have long complained that it has enjoyed a monopoly, particularly as the likes of Vodafone and Sky rely on BT's infrastructure for their own broadband services and on Openreach to install broadband and fix faults. Ofcom said that a fully separated Openreach business "would remove BT's underlying incentive to discriminate against competitors".

Now the British Infrastructure Group (BIG) of MPs, who are dedicated to promoting better infrastructure across the UK, has come out on the side of many of BT's rivals and Ofcom.

"Today's report, ‘Broadbad', calls on the regulator Ofcom to take radical action over the ‘natural monopoly' too long enjoyed by BT Openreach," the report reads.

"Given our modern economy being so reliant on the internet, it is time to stop being held back by BT's lack of ambition and under-investment," it states.

BIG said it believes that Britain should be leading the world in digital innovation, but instead it has "a monopoly company clinging to outdated copper technology with no proper long-term plan for the future".

BT has been criticised for continuing to offer fibre-to-the-cabinet (FTTC) broadband rather than fibre-to-the-home (FTTH), which would require a substantial investment. It does have a FTTH product available in selected areas, but has claimed in the past that demand is not high enough for it to make FTTH available across the whole of Britain.

BIG states that the UK will only be able to keep up with other nations by opening up the sector.

"Given all the delays and missed deadlines, we believe that only a formal separation of BT from Openreach, combined with fresh competition and a concerted ambition to deliver will now create the broadband service that our constituents and businesses so rightly demand," the report says.

BIG's report found that despite £1.7bn of taxpayers' money pumped into subsidising the construction of UK high-speed broadband, there are still 5.7 million people in the UK - 3.5 million of which are living in rural areas - who cannot access the internet at what BIG calls the "Ofcom-required 10 Megabits per second". Although the government has hinted that 10Mbps would be the new minimum, that isn't actually the case - it currently still stands at 2Mbps.

As for issues with broadband, BIG said the problem was even worse for business -with 42 per cent of SMEs reporting problems with their internet connection, at an estimated £11bn cost to the British economy.

BT has hit back at the report, and has once again claimed that it should not be separated from Openreach.

"We understand the impatience for progress to be even faster, but improving broadband is a major engineering project that involves contending with all manner of physical and geographic challenges," a spokesperson said.

"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," they added.