Sky on Monday petitioned Ofcom for a full market investigation into the performance of Openreach, hitting out at BT’s network arm for under-investment and poor service to customers. But BT accused its rival of cherry picking the data it shared to back up its complaints and insisted that the full separation of Openreach is not the answer.
In a submission on Monday in response to Ofcom’s latest strategic review, Sky called upon the watchdog to ask the Competition and Markets Authority (CMA) to conduct an inquiry into competition and quality of service in the U.K. broadband market.
Should the CMA identify an adverse effect on competition linked with BT’s vertical integration, it would be in a position to bring about structural separation of the U.K. incumbent, Sky pointed out.
The satellite TV and broadband provider shared a laundry list of issues, including the fact that Openreach misses more than 500 appointments to install new lines for Sky customers and fails to complete 4,000 jobs per month; changes installation dates for Sky customers around 36,000 times per month; and recorded a 50% increase in network faults between 2009 and 2012.
"The scale of these problems is directly related to the level of investment in the last-mile or access copper infrastructure that connects individual homes to BT’s network," Sky said, claiming that Openreach capex on activities including maintenance of the copper network has fallen by a third over the past 10 years.
While BT accepted that Openreach still has work to do when it comes to customer service, it was incensed by the comments on investment.
"It is disappointing that Sky are engaging in selective spin rather than constructive dialogue," a spokesperson for the U.K. incumbent said.
"They claim that Openreach in vestment is down yet it is up," the telco said. "They can only substantiate their claim by ignoring the billions of pounds we have pumped into fibre broadband."
BT added that Openreach has passed all 60 of the service targets set for it by Ofcom.
"We acknowledge there is more to do on customer service but breaking up BT is not the answer," the firm said. "It would lead to huge uncertainty and fundamentally undermine the case for future investment dragging the U.K. backwards at the very time it needs important investment in its infrastructure."
Sky and its rivals have been particularly vocal in their desire for structural separation in recent months.
"A separate Openreach would be better, not just for TalkTalk, but for the industry as a whole," said TalkTalk CEO Dido Harding at the telco’s full-year results presentation in May.
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It appears that Openreach "has been starved of investment," Harding said. A separate Openreach would have a greater incentive to drive investment in and take-up of fibre, bring prices down, and foster more innovation, rather than being focused on "increasing the total group share of BT group," she said.
Similarly, when Ofcom announced its new strategic review in March, Sky CEO Jeremy Darroch urged it to "take the opportunity to address Openreach’s conflict of interest as a subsidiary of BT."
Ofcom’s previous strategic review concluded a decade ago and brought about the functional separation of BT’s networks arm. A raft of strong alternative players have emerged since then and calls for a new regulatory model are growing.
