Sky responds to BT investment news
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.