Lack of investment in Openreach risks 'digital divide', warn MPs

Will Green is news editor of Supply Management
20 July 2016

MPs have criticised BT for not investing enough in its infrastructure subsidiary Openreach.

The Culture, Media and Sport Committee (CMSC) said the investment shortfall could amount to hundreds of millions of pounds a year while the quality of service from Openreach “remains poor”.

In a report the CMSC said lack of transparency in Openreach’s costs and deployment plans had “stifled local competition and thwarted other network providers’ planning”.

The report said on the whole broadband services in the UK were good compared to other European countries but Openreach’s over-reliance on copper wire, and a lack of focus on fibre-to-the-premises (FTTP), “could result in a hard-to-solve digital divide beyond 2020”.

MPs said a target of providing superfast broadband to 95% of homes and businesses by 2017 meant “there will need to be judicious deployments of interim technology solutions to provide improved connectivity to those households and businesses which currently have little or no coverage”.

The committee said it “supports Ofcom's plans for establishing greater separation between Openreach and BT Group” but it added that “if BT fails to offer the reforms and investment assurances necessary to satisfy our concerns, Ofcom should move to enforce full separation of Openreach”.

The report noted that BT has the largest share of the broadband market with 36%, followed by Sky 23%, Virgin Media 19% and TalkTalk 17.5%.

“It is essential that the government and Ofcom ensure that SMEs have access to reliable and affordable broadband and are not discriminated against by providers,” said the report. 

“The government must prioritise delivering superfast broadband to new and existing business parks and fully connect enterprise zones, many of which still do not have superfast connections.

“The present system is not working for many businesses and we are concerned that BT is being perversely incentivised not to invest in FTTP in business parks by its present revenue income from dedicated lease lines.”

BT said it was hitting Ofcom service targets and discussions were taking place about more automony for Openreach, though full separation would “lead to less investment”.

“Openreach investment is 30% higher than it was two years ago and it will grow again this year,” said BT in a statement. “We’re already pumping in hundreds of millions of pounds of extra money and we’ve committed to invest a further six billion pounds over the next three years.”

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