MPs accuse BT of under-investment in networks business Openreach

A BT Openreach engineer at work.

A BT Openreach engineer at work. - Credit: Archant

Telecoms giant BT should be forced to split off its Openreach fixed-line network arm unless it addresses significant under-investment and poor service, a report by MPs has recommended.

The Culture, Media and Sport Select Committee has concluded that BT is failing to invest in Openreach to the tune of, potentially, hundreds of millions of pounds a year.

MPs on the committee said they supported Ofcom’s proposals for greater separation between BT and Openreach, but warned the group should be forced into a full split if it fails to “offer the reforms and investment assurances necessary to satisfy our concerns”.

However, BT warned that splitting off Openreach would defeat the committee’s own objectives, resulting in less investment in the network rather than more, although it acknowledged that service levels at Openreach needed to improve.

The report said: “BT Group is exploiting the position of vertical integration to make strategic decisions that favour the group’s priorities and interests, at the expense of its access infrastructure business.”

It said BT was “significantly under-investing” in Openreach, which is responsible for rolling out super-fast broadband across the UK, adding that group “appears to be deliberately investing in higher-risk, higher-return assets such as media properties, and not investing in profitable lower-risk infrastructure and services through Openreach”.

Regulator Ofcom also came under fire in the report, with MPs saying that tougher penalties for poor service would encourage BT to invest more in Openreach.

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A spokesman for BT agreed that service levels needed to improve at Openreach, but said splitting it off would “fatally undermine” the aims of the committee, claiming it would lead to “less investment, not more”.

He said BT’s investment in Openreach was now 30% higher than it was two years ago and would increase further following recent pledges to pump in cash.

“We are in discussions with Ofcom about increasing the autonomy of Openreach and are hopeful that a settlement is possible that will meet the concerns of the committee,” he added.

Rival companies such as Sky, Vodafone and TalkTalk, which pay to use the fixed-line network, have previously complained over poor service and urged BT to replace its ageing network of copper wire.

BT recently said it would look to lessen its reliance on copper wire, with an aim to roll out fibre optics direct to 2m homes and businesses as part of £6bn of network investment over the next three years, and also promised a raft of customer service improvements.