Break up BT to boost the economy

Ofcom will reveal its plan to overhaul the regulation of Britain’s broadband infrastructure on Thursday amid a wider debate about whether BT’s consumer business should be split from Openreach, the network division that connects broadband lines. The regulator is expected to present a range of options but looks unlikely to remove the threat of a BT break-up at this stage, reports The Times.

Sky, which relies on Openreach to connect its broadband customers, has emphasised that the current market structure threatens Britain’s economy. Writing in The Times today, Mr Darroch says: “We are not building the communications infrastructure that the UK will need to lead in the future. If we don’t make the right decision now, we will find ourselves further behind other markets in the world from Japan to New Zealand.”

BT’s strategy to continue to invest in its copper network rather than fully fibre-optic networks has left the company open to accusations that it is investing its resources in sports rights and acquisitions such as EE. BT argues that it cannot supply fibre to 29 million homes in the UK due to the cost and complexity and that other countries have done so using enormous government subsidies. It also says this approach has given Britain the best broadband speeds of any major European country although it is well behind smaller nations such as Sweden.

Mr Darroch said that such a view was holding Britain back. “Every penny invested in copper now makes it even harder for us to gain leadership in fibre in the future. Copper is the cheaper and easier option, not the right one for the nation,” he said.

BT is one of Sky’s biggest competitors in broadband. The leading shareholder in Sky is 21st Century Fox, whose co-chairman, Rupert Murdoch, also chairs News Corp, owner of The Times.