133,000 new broadband customers at Sky in the last quarter
In the quarter up to the end of September 2015 Sky has shown impressive growth in its broadband customer numbers again adding 133,000 extra customers at a time when the operator is complaining heavily that Openreach is not delivering on performance, so one has to wonder how many more a perfect Openreach would have allowed Sky to add.
The growth at Sky cements the operators position as the number two retail broadband operator in the UK with some 5.73 million broadband customers but of course Sky is much more than this with its traditional Sky TV products and the growth of connected Sky set-top boxes to some 9.6 million accounting for 750 million on demand views. The 750 million views is even more impressive if the complaints about the state of UK broadband are taken into account.
The Ofcom market review is of course concern and it gets an official mention in the investors report and follows on from the day after Virgin Media called for the BT Group to not get any more funding for rural broadband roll-outs.
"Ofcom's Strategic Review of Digital Communications
On 8 October, Sky submitted its response to Ofcom's strategic review of digital communications. In the submission, we outline a series of growing problems in the sector including i) the risk of diminishing competition in the provision of broadband services, ii) the inadequate quality of service delivered by BT's Openreach division - and its significant impact on UK consumers and businesses, and iii) the level and type of investment in the UK's fixed line communications infrastructure, at a time when fibre-to-the-premise networks are being rolled out in other countries around the world. We believe that BT's vertical integration - the combination of the UK's largest retailer of fixed line communications services, with the operator of the UK's only ubiquitous fixed line access network - lies at the heart of these issues. In our submission, we note that the threshold for a reference to the Competition and Markets Authority for a market investigation is clearly met. We believe that Ofcom should consult as soon as possible on making a reference to the CMA, which has examined market structure in sectors such as energy and transport and has wide-ranging powers including requiring separation."Sky on the Ofcom Market Review
The reference to Ofcom referring a decision to the CMA is very important as it is believed Ofcom itself does not have the power to mandate a split of Openreach into its own distinct FTSE 100 company and the CMA process can often be a lengthy and drawn out affair. One interesting point is that even if Openreach becomes its own PLC it will still remain the 'UK's only ubiquitous fixed line access network' the presumption is that Sky will have a greater influence over the product roll-out and the biggest issue is how this will affect the digital divide as FTTH investment (and even the G.fast roll-out under current Openreach plans) are not guaranteed to target 90% of the UK let alone 100% and what period of investment and roll-out would be considered acceptable e.g. 90% FTTH coverage by 2030 with the other 10% remaining on what the existing SEP projects deliver and the final 5% projects.