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Sky declares war on BT over alleged Openreach failings

Pay TV giant Sky has called on regulator Ofcom to refer BT to the competition and markets authority (CMA) over claims that BT’s Openreach division, which is in charge of maintaining the fixed line network BT leases to companies like Sky, is failing in its obligations.

While Sky’s claims coincide with the CMA investigation into BT already underway over its acquisition of EE, this call is for a completely new investigation specifically into Openreach, and uses the Ofcom digital communications review as its premise.

In a missive entitled ‘Ofcom’s strategic review of digital communications initial submission by Sky’, the TV company opens with some cursory remarks about the UK market in general before quickly getting to the point. Reflecting that the strategic review a decade ago led to the creation of Openreach, Sky insists there are a number of “problems” that now justify referring BT to the CMA.

These fall into two main categories: The claimed lack of competition when it comes to the provision of ‘superfast broadband’, and the main complaint, which is that “BT’s Openreach division does not deliver 21st century quality of service.” Among the Sky gripes are “…an excessive number of faults, failure to meet targets for repairing faults, long waits to have new lines installed, constantly missing appointments and, when appointments are met, often not completing jobs.

In the press release announcing the submission Sky goes into further detail on its Openreach grievances, which include:

  • More than 90% of new line installations, which require an Openreach engineer to attend, take 10 calendar days or longer. Almost one in ten installations takes longer than 30 days.
  • Openreach changes the agreed installation date for Sky customers on average around 36,000 times a month.
  • Openreach misses over 500 appointments each month to install new lines for Sky customers and fails to complete a further 4,000 jobs per month.
  • Fault rates across Openreach’s network increased by 50% between 2009 and 2012, the last year for which reliable data is publicly available.
  • Openreach’s performance in fixing faults is consistently below the targets set out in agreements with service providers.

As is generally the case when a company publicly pursues an agenda, Sky is being careful to dress its concerns as altruistic. “We are drawing attention to the problems in broadband because they are important to the economy as a whole,” said Mai Fyfield, Sky’s Chief Strategy Officer.

“They affect competition between providers and have a direct impact on consumers and small businesses, resulting in inconvenience, dissatisfaction and loss of productivity. The UK needs to get the basics right in broadband as well as develop the networks and services of the future.”

“We believe that Ofcom should move quickly to ask the CMA to undertake a full competition inquiry. A reference to the CMA would allow these vital issues to be examined with increased speed and thoroughness by a body with the powers to take whatever action should be deemed necessary. Given the rapid changes taking place in the sector, we believe this should happen as soon as possible.”

BT, as you might expect, sees things differently. “The forthcoming Ofcom review is an important piece of work so it is disappointing that Sky are engaging in selective spin rather than constructive dialogue,” said a BT spokesperson.

“They claim that Openreach investment is down yet it is up. They can only substantiate their claim by ignoring the billions of pounds we have pumped into fibre broadband. They also make claims about customer service whilst failing to acknowledge that Openreach has passed all sixty of the service targets it was set by Ofcom.

“We acknowledge there is more to do on customer service but breaking up BT is not the answer. It would lead to huge uncertainty and fundamentally undermine the case for future investment dragging the UK backwards at the very time it needs important investment in its infrastructure.”

The timing of Sky’s move is no coincidence and its stated concerns for consumers seem a tad disingenuous, but that doesn’t mean it’s wrong. Equally it’s easy to imagine a scenario in which a company might drag its feet when coerced into providing a service for a direct competitor. The highly regulated nature of telecoms, especially fixed-line, means intervention is often required and Sky will be hoping to catalyse a new round that moves the goalposts in its favour.

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