Report: BT break-up an option unless investment increases

BT Group is using its control of the UK’s main broadband network, Openreach, to favour its own interests and regulators should consider a break-up unless the company steps up investment and gives rivals better access, a British parliamentary select committee said yesterday.

If BT fails to “offer the reforms and investment assurances necessary to satisfy our concerns, telecommunications regulator Ofcom should move to enforce full separation of Openreach,” the panel said in a report.

Ofcom is expected to issue recommendations for accelerating investment in the country’s broadband grid within days.

Rivals such as Vodafone and Sky have called for the creation of a separate entity in order to give them improved access, saying the current system hampers service quality and broadband speeds.

“BT has exploited its position to make strategic decisions that favour the group’s priorities and interests,” the panel said. It said BT was under-investing in the network by as much as “hundreds of millions of pounds a year.”

BT increased investment in Openreach by 30% from two years ago and will step up spending on the network again this year, it said in a statement.

The company said it is in discussions with Ofcom in an effort to reach a settlement to increase the autonomy of Openreach without a full separation.

“Separating Openreach from BT would lead to less investment, not more, and would fatally undermine the aims of the committee,” BT said.

The company said in May that it would invest £6bn to roll out super-fast fibre and 4G mobile connections by 2020, provided that Ofcom lets it keep control of Openreach.

In preliminary reports on its review of the UK’s network infrastructure, the regulator has stopped short of recommending a break-up.

BT also said it was “disappointed” to be criticised for having invested more than £1bn a year in infrastructure when the UK was emerging from recession and rival companies “invested little”.

* Bloomberg