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Sky responds to BT investment news
Tuesday 22 September 2015 15:38:36 by Andrew Ferguson

The PLC war continues, as Sky have issued a statement after the BT Group investment announcements around the scale of G.fast and FTTP that the group is happy to deliver and other areas today relating to the USC and USO regulations.

"For years, BT has been under-investing and delivering poor quality service for customers. What the British broadband market urgently needs is radical reform, not calculated manoeuvring and caveats to protect BT’s self-interest. Only a truly independent Openreach will unlock the investment, innovation and competition required to deliver the digital connectivity of the future.”

Sky response to BT presentation to City

The response from Sky is pretty clear, they want Ofcom and the Competition Commission to create a seperate Openreach that is not linked to the BT Group. The ambition for Sky then would be that it would be able to more closer influence product design and roll-out by virtue of being a very large customer, though unless Sky was able to pull off a master stroke BT Retail would still be the largest customer of any new independent Openreach.

It could be suggested that today's meeting with analysts and city investors was BT laying out an ultimatum in that its this from an Openreach that is part of the BT Group or nothing. In the Q&A session it was made clear that the choice was not binary, but simply that given a regulatory path not massively different to the current one, then Openreach believes it can sustain ten years of investment in rolling out G.fast and more FTTP. Guessing what the investment opportunity and revenue that standalone Openreach would generate is difficult to guess as until firm proposals are explored who will know e.g. if Sky wants FTTP available for £6 per month + VAT then we might only be looking at a slow roll-out that might have a life time of twenty years or more.

BT may seem to be playing a delaying game by continuing to exploit the ability for copper to carry data and the improved signal processing power now available at low cost, but if the comments made by the BT CEO Gavin Patterson today that if Openreach had gone ahead with a pure FTTP roll-out that they'd likely have only reached 10% UK coverage by now does raise an important point and as the pressure is less about Gigabit speeds but rather something better than the current speed people get. Do we believe the 10% figure, it is probably slightly conservative as Openreach has delivered native FTTP coverage at 0.819% anyway, but something in the range of 10% to 20% seems very likely.

Comments

Posted by gah789 about 1 year ago
As far as I am aware you have no regulatory experience and have been listening too much to BT briefings. Sky has a quite reasonable economic argument. What BT is proposing would entrench its monopoly over the copper network and reduce/eliminate any wired competition other than VM and some buildings in city centres. Under those circumstances the standard regulatory remedy is complete separation of infrastructure from service provision. The economic case is strengthened the more that Openreach wants to use technology to limit the scope for inter-network competition.
Posted by gah789 about 1 year ago
BT are making a political not an economic offer. There would be no problem in an independent OR funding exactly the same plans and recovering the costs via regulated charges. It would be in exactly the same position as National Grid and many other regulated networks. Instead what we get is classic IBM-style FUD, not a genuine economic argument. Ofcom is unlikely to be taken in but they might be overruled by political considerations, though this would be depressing and scandalous.
Posted by gah789 about 1 year ago
In fact it is all likely to end up in prolonged litigation as is usually the case in telecoms regulation. The current situation is clearly incompatible with both UK and EU competition law, so the key questions are going to focus on remedies which will then be challenged in court by all parties.
Posted by gymno about 1 year ago
Vote Corbyn.
Problem solved.

In 5 years.
Posted by fastman about 1 year ago
really >
Posted by gymno about 1 year ago
Posted by fastman 11 minutes ago
really >

Yep!
Arguments for nationalising openreach are as valid as any others.
Posted by WWWombat about 1 year ago
@gymno
Well, it is valid to have an argument. Anything can be argued.

It doesn't mean the argument makes much sense.

Even John McDonnell thinks it is too late to re-nationalise BT, even if he'd love to do it.

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/11878681/Why-BT-is-likely-to-be-hanging-on-to-Openreach.html
Posted by WWWombat about 1 year ago
@gah789
You can't get away from the fact this is a mix of both politics and economics.

However, BT put a financial figure on their proposal - £1bn over 5 years. I've not seen Sky pull their wallet out yet... and they need to start talking hard £££ to convince me.

Otherwise I will continue to believe that Sky's position is part of a strategy to maintain their monopoly (market-domineering position might be more accurate), whilst attacking any plausible competitor in their own.

I don't see it as a strategy to actually help the consumer.
Posted by TheEulerID about 1 year ago
There's always somebody wittering on about nationalising Openreach without

(a) considering where the govt will find £25bn or more.

(b) considering how EU state aid would still strictly limit what can be done in view of th presence of alternative operators.

When the phone network was run by the state it was appallingly outdated & expensive.
Posted by leexgx about 1 year ago
cant see how this will benefit us as customers as long as BT (openreach) offers lower prices for resellers like sky and talktalk (none of this LLU rubbish)

all that will happen is it cost the customers more money BT are pumping a lot of money into deploying FTTC and at some point FTTP (or at least g.fast that will be less then 100m from the property), no other network in the UK can financially do this as they dont have the currant infrastructure to do this
Posted by ThorpeCottage about 1 year ago
Forget the technical stuff why does no one see the fundamental that whoever supplies broadband they all set a base landline at £17 p month in the small print. Where is the competition here Offcom? I know folk ditching their landlines and going mobile. Tethering when at home, is cheaper, more reliable and faster. I think wires are dead like cable TVs.
Posted by leexgx about 1 year ago
wireless is never a replacement for a hardline

come and live near me and you be graced with 0.4mb/s speeds on 3 after 3-11pm as a lot of people on the new houses who have not got broadband are using there phones (and that's on contract on PAYG data might not even work)
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