The last decade of low prices and retail competition are the result of Ofcom enforcing the functional separation and creation of Openreach and the risk taken by TalkTalk that the public wanted cheaper broadband and telephone packages. This Thursday will see another similarly momentous decision by Ofcom and Sky is making it 100% clear as to its preferred solution.
"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. Consumers, small businesses, think tanks and MPs have all said that change is needed. I’ve never seen such a coalition of support.
So it’s important this week to focus on the heart of this debate. If the UK is to improve its productivity and international competitiveness, and ensure our businesses, homes, schools and hospitals benefit from the latest technology, then we need better digital infrastructure including an ultrafast broadband network with speeds of 1Gb/s or more, through fibre laid direct to homes and businesses (‘fibre to the premises’). Ultrafast connectivity is critical to Britain’s future economic and social welfare.
A wise man once defined insanity as ‘doing the same thing over and over again and expecting different results'. With so many agreeing change is needed, Ofcom this week has the opportunity to lead the way. The industry, with much of the nation, will be ready and eager to support it."
The Sky blog takes a poke at the BT Chairman raising concerns about the effect a full separation might have on the share dividend, which is one of the obligations of a PLC i.e. to consider its shareholders. Then Sky fires a warning klaxon over its FTTP roll-out in York when at the same time worrying about its profit margins, Sky said suggested that while demand is encouraging "it is difficult to achieve a reasonable return on investment while BT Retail remains tied to Openreach". This is an interesting comment and if we were CityFibre there would be urgent calls to understand what Sky means, as it sounds as if Sky is unsure of going forward with CityFibre and would prefer to work with an independent Openreach.
The Sky blog raises two main issues, the full separation of Openreach and mandating a nationwide FTTH/P roll-out. In both cases Thursday at best will only be the start of the process, Ofcom can only recommend a full separation it requires the Competition Commission to do a full split, and if Ofcom was to mandate a full FTTH roll-out this could destroy the emerging business model for alternate operators in the UK.