BT suddenly "willing" to grant Openreach some independence as naked cynicism combines with fear

Stuart Lauchlan Profile picture for user slauchlan July 24, 2016
BT's Pauline conversion to the notion of some independence for Openreach owes more to naked cynicism and fear of loss of commercial advantage than anything else. Ofcom must act firmly now.


It’s astonishing the difference the sound of a large axe being sharpened in the distance can make. Up until now the basic position taken by BT about its Openreach business has been that it’s essential the two remain joined-at-the-hip.

But after last week’s evisceration of the appalling lack of investment by BT in the UK’s national broadband infrastructure by legislators and with the prospect of telco regulator Ofcom tomorrow calling for the two to be broken up, suddenly BT’s of a mind that giving Openreach partial independence would actually be a good idea after all. It's St Paul on the road to Damascus time!

In a move clearly motivated by fear that its cosy status quo will be broken up, BT management is letting it be known today that it’s happy to be more flexible in its thinking on the subject - up to a point. Fully-spinning off Openreach clearly remains the armageddon option for BT, but an expedient compromise is now acceptable if that's what it takes to hang on to the cushy number it has today.

This morning BT chairman Sir Mike Rake told BBC Radio 4's Today programme that giving Openreach more decision making powers would certainly be something that BT would graciously be willing to consider:

We are absolutely willing to form an Openreach board, that will have an independent chairman and a majority of independent directors. We're willing to give more authority to Openreach in determination of its capital investment program.

Willing is an interesting word, isn't it, with all its implications of patriarchial grace-and-favor? But this new-found largesse is only going to go so far. There’s no way that BT is going to give up on its effective monopoly without a fight, let's be clear about that. To make that point, Rake stated bluntly:

This would be the wrong time to break up BT and distract us from the remaining investment to get superfast and ultrafast broadband right across the country in the next two to three years.

MPs on the Culture, Media and Sports Committee of the House of Commons last week told BT to put its house in order or face a force break-up. Regulator Ofcom is likely to follow suit tomorrow.

Four in five broadband connections in the UK are supplied through the Openreach network, which is accessed by BT’s competitors as well as its own retail arm.

But those competitors complain that the current arrangement with Openreach disadvantages them and provides BT with an unfair commercial lead.

My take

In his interview, it was great to hear Rake say that BT wants to help its rivals more.

No, of course he didn’t. What he said was:

We want to formalise more [Openreach's] ability to listen to ISPs so they’re engaging with them, ensuring that we can also make sure we’re delivering for them as well as for BT Retail.

In other words, we’re going to make some token noises about opening up the market and leveling the competitive landscape, but really all we’re doing in practice is saying we’ll listen a bit more.

It’s like that commitment in the Digital Economy Bill that says that everyone will have the right to request superfast broadband. Having the right to request it is most definitely not the same thing as being guaranteed to get it - as well I know. BT will find a way not to have to deliver it, I have absolute faith in its ability to do that at least.

Seriously, what does BT take us for? This is a shameless, cynical and desperate ploy to try to protect BT’s own commercial interests.

In February, Ofcom fell short of recommending that Openreach should be separated from BT. Until it does make that recommendation, nothing will change - and BT knows it. So, chuck a few crumbs on the table, throw in a bit of flim-flam about wanting to work with rivals for the greater good and hope it all goes away.

For the sake of the UK digital economy, Ofcom must act and add its clout to breaking up a privatised monopoly that undermines Britain’s productivity and competitiveness. In a pre-Brexit climate, that’s more unacceptable than it’s ever been.

The one good thing to come out of Rake’s comments is that they indicate that BT is finally worried that the game’s up.

Good - that's a long-overdue position in which to find itself.  Now Ofcom must follow through while they’re frightened.

Oh, and as for Rake’s mea culpa admission that customer-hating BT’s customer service is “not good enough yet’…..


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