Chancellor Philip Hammond’s announcement in his first Budget of a £200m investment in full fibre broadband pathfinder projects was widely welcomed as a step in the right direction for improving the UK’s connectivity.
However, just two days later a potentially even more significant announcement was made. BT, the national network carrier, has agreed to the legal separation of its infrastructure arm, Openreach, the part of the organisation responsible for maintaining and upgrading the fibre network.
The news should be welcomed by those who have long viewed the relationship between BT, one of
the UK’s major ISPs, and by far and away the country’s largest infrastructure operation as detrimental to national connectivity interests. The charge has always been than Openreach puts BT profits before connection speeds.
So now Openreach will exist as a separate entity - legally speaking, that is. Because Ofcom, the national regulator, stopped short of recommending a full structural separation of the two organisations. So yes, Openreach will operate with its own board, its own structures, its own governance, but it will also remain a wholly owned subsidiary of BT.
Broadband Commitments
Rivals such as Sky and TalkTalk have always said this does not go far enough. On the issue of improving the nation’s broadband infrastructure, there had been hopes that Ofcom would squeeze extra commitments out of Openreach as part of the deal. That does not seem to be the case.
The situation as it stands is that BT/Openreach has already committed to bringing 1GB Fibre-to-the-Premises (FTTP) broadband to two million premises by 2020 - hardly a full national roll out. It also expects to deliver 300mbps broadband to another 10 million properties in the same timeframe. They don’t appear to have changed with the separation deal.
In the meantime, the £1.7 billion Broadband Delivery UK project launched in 2013 goes on apace. As the major contract holder, Openreach can be expected to continue to lead the charge to deliver ‘superfast’ 24mbps broadband to 97 per cent of the UK population by 2020. It is already widely expected that the target of achieving 95 per cent coverage by the end of this year will slip over into 2018.
So where does this leave the government’s apparent readiness to put its money where its mouth is on FTTP? Some of the language used in announcing the new £200m fund is revealing. The budget talks about “bringing together local public sector customers, to create enough broadband demand to reduce the financial risk of building new full-fibre networks.” In other words, using public money to try to mitigate the risks to profit that have seen BT/Openreach remain cool on a full commitment to full fibre.
