Home | Blog | Where will the BT/Openreach soap opera end? And do we need a separate Openreach for business?

ShareWhere will the BT/Openreach soap opera end? And do we need a separate Openreach for business?

The recent saga concerning the separation of BT and Openreach has set many industry observers speculating about whether it will have any real impact. Only time will tell. But perhaps a further and more important question is whether or not the interests of UK businesses will be well-served in the future when the dust has settled and the storyline has moved on.

Besides competition, there is another good argument for tearing BT and Openreach asunder. It might actually be good for BT in the long run, as it means the company won’t have to fight on as many fronts.

BT is now focusing largely on media and entertainment as much as connectivity. It is easy to see why; while broadband is a necessary catalyst to bring data (and thus digital video and audio) into the home, it is now a volume market. Furthermore, with landlines often being used primarily for broadband and voice services increasingly carried over IP, the days of the old calls and lines cash cow as a revenue and profit generator are numbered. BT is also trying to tie mobile into the mix as well of course, having bought EE.

The company is very much in the quad-play game, offering broadband, voice, TV and mobile. Does it really want the added distraction of running the company that manages and maintains the infrastructure upon which the delivery of these services depends?

‘You bet it does’ rivals will say, as it not only means that BT gets first call on Openreach’s attention when it needs to get things done, but also gives it much greater influence over how, when and where new infrastructure becomes available and who has access to it first. Furthermore, they will argue that, even if owning Openreach does not allow BT to get very far ahead of its competitors, it certainly helps the company to hold them back.

That at least, is the line Sky and Virgin will put forward. They are of course playing exactly the same quad-play game and naturally want the playing field to be absolutely level. BT would counter that it has not used its influence unfairly and that Openreach has been treating BT and other providers evenly.

Whatever the truth of the matter, splitting Openreach off can’t be a bad move for competition or the consumer (let’s just leave BT’s shareholders and workers on the pension scheme out of it for now) and it would at least allow BT to abandon the fight and concentrate on doing a great job for customers instead. With Openreach finally split off legally, the market will at least appear to be fairer and more open.

What’s more worrying perhaps from a UK plc perspective, is the degree to which BT and the other major providers are being sucked into the consumer market. The stakes are very high here which is why these three behemoths are slugging it out for supremacy. The Champions League and Premier League have become global spectacles – and increasingly the media and entertainment business is going global too. It’s not just about the UK market anymore.

But what’s being done for business? While BT, Virgin and Sky fight for control of the prime content that will pull customers into their gravitational field, business services are having to play second-fiddle. Yes, there is investment into fibre and other technologies, but much of it is still being directed towards consumer-dense zones.

Eventually, businesses are going to get fed up waiting and look elsewhere. There are already numerous smaller specialists providing targeted services for businesses. This trend is likely to gather momentum as the big players become increasingly focused on the consumer market. If Openreach does operate in a more independent way, it might help these smaller, more business-focused comms providers.

But if it doesn’t? As many commentators have observed, the current legal separation of Openreach from BT might not be enough; in our view it is not and indeed, separating these two entities entirely might not be enough for the future chances of UK businesses competing on the world stage.

What we may well need in the end is separate and distinct investment in infrastructure for business and consumer networks. The question then is not whether Openreach should be split off from BT – the case for that is clear – but whether Openreach itself needs to be split into different divisions to service the different needs of business and the consumer.

This will become more of an issue if the UK falls further behind other countries in terms of its broadband access speeds. Post-Brexit, being able to compete globally – to have your finger on the pulse and respond quickly to customers wherever they are – will become even more important. Within two or three years, British businesses will be demanding much higher speeds than they can get today. If they are not, something will be badly wrong.

Either way, there is even further potential for contention and disruption in this long-running soap opera. And like all the best shows, the end of one episode only seems to leave us asking even more questions and wondering what might happen next week. We will keep watching with interest.

Have your say!

What are your thoughts on the BT / Openreach legal split – does it go far enough or does Ofcom need to keep the pressure on? Does UK industry need a specialist infrastructure provider to represent their interests, or should Openreach pick up this mantle? Let us know your thoughts and share your experiences with a comment below.

Related articles

Further information


 

Share this article:
Share

Rate our article...

Post a Comment