Vodafone joins calls for BT to be broken up
Vodafone will add its voice to mounting calls for the break-up of BT, as part of wider market reforms ahead of a regulatory review of the UK communications industry.
Ofcom, the telecoms regulator, will on Thursday close a consultation into an overarching review of the sector that will set the regulatory framework for the next 10 years.
The future structure of BT has become a focus because of complaints over its role in providing broadband services to homes and to rivals that rely on its national network to supply their own customers with broadband.
In a submission to Ofcom, Vodafone will argue that BT generated £6.5bn in “excessive profits” in the past 10 years from its Openreach division, which controls the national network.
Vodafone believes that these profits give BT an advantage over rivals which also offer broadband services.
Openreach is regulated to provide access to all groups including BT’s retail business on the same terms.
But Vodafone wants Ofcom to push for BT to be split entirely from Openreach. It argues this would create a standalone infrastructure business that would be incentivised to roll out the best broadband networks for all retail internet providers.
“We want to see a separate Openreach whose business is selling network connectivity and access for all,” said Matthew Braovac, head of regulatory affairs at Vodafone. He added that this would also help give his company access to the national network on better wholesale terms.
Mr Braovac said that access to national fixed-line networks in countries such as Spain was easier and less expensive, leading to innovative products, cheaper cost for consumers and quicker repairs for faulty lines.
BT said the UK was the “most digitally advanced nation in the G20”, in part owing to its “multibillion-pound investment in broadband”. It labelled Vodafone’s claims “misleading” and said it had ambitious plans for the next decade that will take the UK from “a superfast nation to an ultrafast one”.
Sky and TalkTalk will make similar submissions to Ofcom for BT to be separated from its national network, which they argue is needed to increase investment in faster fibre services in the UK for the next generation of online services.
Ofcom has acknowledged that a full separation of BT is among options being considered.
However, Ed Vaizey, the UK’s minister for the digital economy, has come out in support for the existing structure. He highlighted the difficulties in separating Openreach last month in an interview with the Financial Times, and pointed out there were commercial interests behind the calls by BT’s rivals for a break-up of the group.