BT makes £1bn Ofcom pledge to avert break-up

Ofcom will reveal the findings of its digital communications review on Thursday, which could recommend that the telecoms company hive off its Openreach division, the national broadband network, to improve internet speeds in the country.

It is expected that Ofcom will not immediately recommend a split but will leave the threat on the table as it thrashes out a deal with BT reports The Times.

Gavin Patterson, the chief executive of BT, said on the sidelines of the Mobile World Congress in Barcelona that he expected the option of the structural separation of BT to remain on the table because Sharon White, the Ofcom chief executive, wants to “keep up the pressure” on the company.

Mr Patterson revealed that, alongside a raft of technical measures, BT has offered to pour more money into the upgrading of the country’s broadband network to “ultra-fast” speeds, over and above the £1 billion figure that last September it said that it would spend before 2020.

He said that the new investment plan had been “more than dangled” in front of Ofcom, suggesting that it was a firm offer. However, that would become invalid if BT were broken up because the company could not invest billions without knowing its structure.

“It puts us in a difficult position with shareholders. We have got no certainty,” Mr Patterson said.

He also called on Ms White and Ofcom to agree a settlement with BT over the Openreach question: “It’s in all our interests to bring this to a conclusion.”

BT’s new plan includes a promise to invest more in fibre-to-premises networks, where fibre-optic cables run to the customer’s home rather than to a street cabinet, with Mr Patterson saying that BT’s plans now had a “much higher” emphasis on such networks.

That could ease concerns that Britain is falling behind other countries because of BT’s reliance on sweating its older copper networks. Jeremy Darroch, the chief executive of Sky, the rival media and broadband group, said this week that investing in copper was like “breeding a faster horse rather than building a car”.

Mr Patterson said that upgrading the whole of Britain to a fully fibre network would cost £20 billion, which the company could not justify given that the payback takes as long as 20 years. Other countries have subsidised fibre infrastructure , but Mr Patterson said it would be “farcical to suggest that the government has that much to invest”.

BT will push ahead with an upgrade of the copper in its cabinets with a technology called and Mr Patterson said that a commercial roll-out was scheduled in the next three months. That will significantly improve the speed of residential broadband, BT says.

Mr Patterson also said that BT hoped to fill in mobile “notspots” in the countryside after its acquisition of EE as part of its contract to supply emergency services with more advanced technology. EE won the deal before BT’s £12.5 billion takeover and will have to upgrade its 4G network in rural areas to serve the police, fire and ambulance services, which would also benefit consumers.

This week one mobile chief executive described a government plan to eradicate mobile “notspots” in underpopulated areas of the countryside as “a total failure”.