back to article Ex-competition watchdog and TalkTalk adviser calls for Openreach split from BT

Another day, and another person steps forward to add their voice to the chorus of people demanding that BT breaks away from its Openreach division. This time, it's ex-Office of Fair Trading head John Fingleton who has been whinging about BT's powerful position in the broadband market in Blighty. As noted by the Financial …

  1. Cynical Observer
    FAIL

    It's not my fault!

    "Earlier this week, TalkTalk boss Dido Harding griped during a conference call about her company's first-half results that BT was slowing down the ISP's growth with Openreach's "lead time to connections" getting worse, she claimed."

    Nothing to do with security breaches, poor service, etc.

    Sounds like kids complaining that "It's not fair!"

  2. TheManCalledStan
    Meh

    NZ is bad example... Chorus has effectively zero competition and a government who is fully engaged an has a real infrastructure plan for fast broadband.

    VM provides competition to ~50% of the population which according to VM plans will rise to 65-70%... ie. all the best bits of the market... so not really a like for like situation.

    1. John Miles 1

      Not 50%

      Openreach carries all Broadband connections except for VM's approx 4 M - i.e. it carries around 18 M connections, so it is a hugely dominant provider. The other providers ( e.g. TT, Sky, EE, Vodafone etc. ) are all dependent upon a service provided by their dominant competitor.

      The current Broadband situation is rather as if there were several different chains of petrol stations ( e.g. BP, Shell, Texaco etc.) but they all had to use refineries operated by just one company e.g. BP and were dependent upon BP for prices and deliveries. We don't provide petrol that way, so why is it good way to provide broadband?

      1. TheManCalledStan

        Re: Not 50%

        Yes 50%, as in network coverage not connections. I hoped that would have been clear from VM plans to extend coverage to 65-70% (although I wouldn´t out it past them to have a plan for 65-70% connections ;-p)

      2. Anonymous Coward
        Anonymous Coward

        Re: Not 50%

        Only if you consider fixed line broadband the only kind.

        A decent 4G connection is also broadband - lots of people (the majority of new households that are formed) use mobile only connections, they don't have a fixed line.

      3. Anonymous Coward
        Anonymous Coward

        Re: Not 50%

        "The current Broadband situation is rather as if there were several different chains of petrol stations ( e.g. BP, Shell, Texaco etc.) but they all had to use refineries operated by just one company e.g. BP and were dependent upon BP for prices and deliveries. We don't provide petrol that way, so why is it good way to provide broadband?"

        Clearly they're different things.

        It's almost impossible to make a financial case for competing fixed last mile networks of any kind - which is why you have one choice of which water network, electricity network, gas network and sewer network your home is hooked up to. If Openreach were to be separated all that would change is the name over the door, the economics and technology would remain the same.

        1. This post has been deleted by its author

        2. SImon Hobson Silver badge

          Re: Not 50%

          > If Openreach were to be separated all that would change is the name over the door, the economics and technology would remain the same.

          Not quite. The thing that would change would be the part of economics which falls under "competition strategy".

          At present, BTOR sings BT's tune - it's part of BT, and it's run by BT according to priorities set by BT. Yes there are supposed to be chines walls, but given they don't even (AFAIK) report financials completely separately ...

          Thus it is within BT's power to tilt the field a bit in their favour. For example, where a cabinet serves primarily business users they may decide not to fibre enable that cabinet so as to not impact on their far more lucrative other products. Not that that's happened at all to us, or any of our customers, or ... hang on a minute, that's exactly what happened to us and several of our customers where it's taken a lot longer to fibre enable the cab (if it's happened at all) compared to those serving primarily residential areas.

          BT have a looooooong history of dragging their feet on new technology so as not to injure it's cash cows. ISDN was crippled compared to other countries' offerings, ADSL came along rather late and was held back somewhat, and ...

          Mostly to avoid killing their leased lines business.

      4. Dave Moffatt

        Re: Not 50%

        @John Miles 1 That isn't far-off how the fuel markets operate in the UK. Distribution is very regional - a fuel depot will usually only have a couple of companies providing product for the five or six forecourt operators. Kingsbury, near Birmingham, is a fairly typical example; all of the major fuel brands are represented but they all draw fuel from either BP or Valero (Texaco). This situation is pretty commonplace because fuel companies want to avoid the huge infrastructure costs involved in building and operating their own refineries and terminals and would rather use the market to buy and sell to/from their competitors.

    2. Anonymous Coward
      Anonymous Coward

      But the regulator in NZ seems to some pull punches sometimes.

      AC due to employer

      1. Alan Brown Silver badge

        "But the regulator in NZ seems to some pull punches sometimes."

        Yeah, at least a half dozen MoC investigations into anticompetitive practices by the telco shitcanned by ministerial order during the 1990s as soon as Mo became aware of them.

        Not that it's indicative of brown paper envelopes, nosirree. That couldn't possibly happen in Clean Green Corruption Free New Zealand.

  3. IHateWearingATie

    It's an interesting idea, but more tricky than you think

    If Openreach was hived off into a separate company, the regulatory regime would need a significant overhaul. You'd probably get into a kind of similar situation you have with the water industry where the regulator and the company draw up an investment plan together, and work out prices based on an allowable amount of profit. That's fine, but we saw in the water industry that it does have a bit of a tendency to group think on technical solutions and where investment is needed. Tech direction in telecoms is a lot more complex than the water industry, so I'd suggest the risk and impact of this would be greater than we have seen elsewhere.

    I'm not arguing against splitting it off, but just warning that we may end up with a whole set of new problems in the future if the regulatory regime is not really really well thought out. The grass is not always greener.

    1. Alan Brown Silver badge

      Re: It's an interesting idea, but more tricky than you think

      "I'm not arguing against splitting it off, but just warning that we may end up with a whole set of new problems in the future if the regulatory regime is not really really well thought out."

      The advantage this time is that the Kiwis looked at how the UK has messed it up(*) and that means their regulatory framework is a pretty good starting point.

      (*) NZ used to be the poster child for how NOT to privatise your telco and after 25 years of monopoly abuse they knew they had to get it right when rewriting the rules or there would be blood on the streets.

      1. This post has been deleted by its author

  4. Steve Davies 3 Silver badge

    why oh why?

    Would anyone own up to being an advisor to TT given the current feeling towards them?

    Not something I'd want on my CV....

    along with ??? Dixons-CPW and a few others.

    1. Doctor Syntax Silver badge

      Re: why oh why?

      According to the article he's ex-head of the Office of Fair Trading so maybe he's advising them on the fair way to deal with customers who want to leave.

  5. Alan Brown Silver badge

    yes, but.

    "The Kiwis cut loose Telecom New Zealand's infrastructure wing four years ago, according the FT."

    The Kiwis did it because Telecom NZ was actively pushing the BT/Openreach model (Spark/Chorus) and after studying the UK market plus noting the market abuse BT was clearly pulling, they decided it was better off split.

    After lots of doom and gloom and "Chorus will be a liability" claims, it's the telco part which is in serious financial doo-doo as punters abandon it in droves. Chorus is running around selling dark fibre and duct access - not just to those who ask, but also making sales pitches to those who didn't think of asking, including former rivals.

    In a UK model, that would be selling access to Virgin and thereby not having to rip up streets to push that cable TV market penetration upwards.

    Openreach don't sell TV, so they shouldn't care what's on the fibres. The fact that BT do and BT head office control what Openreach sells - and how much it sells as well as how much it costs - means that they do care. Try buying dark fibre outside of a metro area.

  6. Anonymous Coward
    Anonymous Coward

    That person is such a mouth piece for certain factions of the government.

  7. John Brown (no body) Silver badge
    Facepalm

    ex-Office of Fair Trading head John Fingleton

    If he thinks that Openreach being part of BT is not a fair type of trading, might it not have been better if he'd voiced these opinions and maybe started some sort of investigation back when he was in a position to be more than just another voice?

  8. Anonymous Coward
    Anonymous Coward

    Chorus still thinking like a monopoly

    It seems in the split of Telecom NZ into now Chorus (infrastructure) and Spark (retail), Chorus kept the lobbying / angry part of the legal team threatening law suits and generally not being forward thinking. They have multi multi years of being a infrastructure provider ahead and even if they don't pay a dividend for a couple of years, UFB and fiber is not going away anytime soon, so time to get some decent returns for their shareholders in the LONG term.

    Meanwhile Spark have picked up the retail mantle and are running it very well. I'm not a customer of Spark but they are out there in the market trying to be innovative (managed alarm systems and a kiwi version of Netflix anyone?).

    All we can do is smugly watch those Ockers across the ditch (Australians) see their nbn turn to custard again with a FTTN / FTTP / HFC build. Oh pity the poor people who have to live with Telstra and the current communications policy of the coalition.

    1. ThorWarhammer

      Re: Chorus still thinking like a monopoly

      Had a chuckle at this over a coffee

      been with BT almost a decade, never been hacked like TT had one email advising password changes due to an attempted attack/hack maybe 7 years ago...

      Nobodyelse bid for much of the rural broadband or would put in the infrastructure so it came down to openreach I know it is not as clear cut as this but bottom line is they did it.

      We've recently bought and moved from a village just outside of St Andrews into the town of Cupar,

      Old place Strathkinness finally got proper broadband exchange over the summer although not enough yet signed up to be hooked up on certain streets.

      So my point is they want access to new markets (more profitable ones) after somebody else has opened them up (openreach) & don't want to pay a tithe for the privelage, yet they can pay dildo 7mil a year & stressed about share dividends and prices during the hack fallout, the whole point of shareholders and market capitalisation is you go back cap in hand for revenue for infrastructure projects (in this case) to make more money

      Sipping more coffee and chuckling some more......

  9. BFG

    No altruism here

    The calls for Openreach separation from other telcos are nothing to do with improving service to the consumer, but rather competitors trying to protect their own commercial interests by weakening their competitor.

  10. Anonymous Coward
    Anonymous Coward

    So which foreign buyer will it be?

    No sooner will Openreach have its IPO than it will be bought up by a foreign investor.

    My money is on Arqiva, creating a totally different monopoly.

  11. Just another badger

    Wrong target?

    If the collective whinging about OR has any basis in fact doesn't that reflect badly on the regulator as much as BT?

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