Broadband News

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.


It's notable that, despite the increase in GEA revenues, total OR revenue is gradually decreasing. Given the regulatory pressure on wholesale pricing (WLR, MPR, Ethernet etc.) and the probably imposition of a dark fibre product, it's difficult to see this trend changing.

OR is a £5bn a year business (about the same as the BBC). It's difficult to see how it could fund more than a modest increase in capital investment, especially if it found itself hit with a high proportion of the pension deficits due to historical employment.

  • TheEulerID
  • over 3 years ago

As I see it, the only way Openreach could increase capital investment, if it were standalone, would be by increasing the investment from Sky and TalkTalk. And, quite possibly, having to offset a reduction in investment from BT Retail.

The question is ... how? I'm missing this detail from anyone's fluffy press releases.

  • WWWombat
  • over 3 years ago

Post a comment

Login Register