BT has submitted its response to Ofcom Digital Communications Review

The BT Group is facing an uncertain period of time and the Ofcom Digital
Communications Review could see the most drastic changes to the group since it
was floated on the stock market back in 1984.

The press has been full of the major players in the UK Telco market making
their case and a steady flow of horror stories over failed installs or faults
that have gone on for weeks and it has been interesting to compare the press
coverage of the fault level compared to a couple of years ago when problems
were worse but very little press coverage resulted outside the tech sector.
Whether this is down to the growing importance of broadband connections or the
ability for online articles to create vibrant comment sections when you cover
an Openreach problem is hard to judge.

So the BT Group has issued a press release headlined Continuity of
Investment Key to Britain’s Future and this is the key message BT is
making in its submission to the Ofcom market review. Investment is often a
hotly debated topic, and BT says it has invested £20 billion over the last
decade in its network, and questions will be asked whether more investment was
possible or if profit levels were too high. Page 75 of the BT 2015 Annual Report has an interesting snippet on profit
and revenue, fibre broadband services in 2015 accounted for 10% of the
Openreach revenue (so around £501m) and this was 7% higher than in 2014, the
annual capital expenditure was £1,082m and is net of £378m grant funding and
shows that even with the lower cost FTTC heavy roll-out payback periods are
likely to be long.

“The company also sets out how the average UK broadband speed has risen from
just 1Mbps in 2005 to more than 22Mbps currently, and how around 24 million
households and businesses are using the service across all networks, around
three times the eight million who used broadband a decade ago.

Demand is growing with customers increasingly reliant on the internet and
demanding higher levels of service. BT outlined plans on 22 September to meet
this surge in demand now and in the future, and today’s submission sets out the
regulatory changes that would help UK consumers and businesses enjoy the best
possible outcomes. These include:

• Long term commitments from Ofcom to provide certainty and clarity
• Regulatory policies to encourage large scale investment
• Support for consolidation when it benefits competition and brings
  investment
• A better regulatory balance between service quality and price
• A level playing field particularly with regard to Pay TV
• Simplification of current regulations with duplication removed where
  possible

As well as setting out how the broadband market has flourished – in part
thanks to the creation of Openreach – BT’s submission highlights the continuing
problems in the Pay TV market, where Sky’s dominance continues to be unchecked
and where new rules are needed to make switching far easier for customers.

Core aspects from BT press release

Fingers crossed Ofcom will remember the many humble and less vocal customers
of the multitude of broadband providers in the UK and while over 90% of the
market is controlled by just four retailers there is a vibrant long tail of
operators making use of wholesale services from BT Wholesale, TalkTalk
Wholesale, Daisy and others. Additionally the last couple of years has seen a
rise in alternate local loop competition, nothing on the scale of Virgin Media
yet, but there is a glimmer of this happening on a wider scale. If a successful
split of Openreach did occur the local loop monopoly so many complain of would
not disappear it might actually be stronger and the smaller providers could be
squeezed out by the interests of Sky and TalkTalk.