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January 25, 2016updated 31 Aug 2016 9:41am

Conservative and Labour MPs unite to demand BT-Openreach split

News: Cross-party group releases report lobbying for a split.

By Alexander Sword

Openreach will be unable to deliver on the broadband requirements of Britain unless it is split from BT, MPs have claimed.

A report signed by a cross-party group of 121 MPs, titled ‘Broadbad‘, claims that the UK’s internet infrastructure is lacking and firmly blames Openreach for this.

It accuses Openreach of "repeatedly fail(ing) to deliver" on its requirements to connect hard-to-reach areas of the UK to superfast services, claiming that Openreach has received £1.7bn in taxpayer subsidies.

The report said Openreach claimed that 2.5 million homes would be connected through fibre-to-the-premises services by 2012 and only managed to reach 0.7 percent of homes by September 2015.

In addition, it claims that 5.7 million people in the UK are not receiving Ofcom’s minimum ‘acceptable’ speed of 10 Mbps.

The report also claims that poor internet is costing the UK up to £11 billion per year, while 42 percent of SMEs have problems with their internet connectivity and 29 percent also report poor service reliability.

However, some claims in the report have been questioned. Figures cited by Telco Torment show that the actual figure for the taxpayer subsidy was around £700mn rather than the £1.7 billion claimed above.

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The cross-party group, called the Broadband Infrastructure Group, is led by Grant Shapps and includes MPs from the Conservative Party, Labour, the Liberal Democrats and UKIP.

"We take any criticism seriously but we think this report and its recommendations are misleading and ill-judged," said a BT spokesperson. "Independent data from Ofcom, the EU and others repeatedly place the UK number one for broadband and superfast broadband when compared to other large EU countries. "90 percent of UK premises can already access a fibre optic broadband connection. That will soon climb to 95% and above."

"We understand the impatience for progress to be even faster, but improving broadband is a major engineering project that involves contending with all manner of physical and geographic challenges.The idea that there would be more broadband investment if BT’s Openreach infrastructure division became independent is wrong-headed. As a smaller, weaker, standalone company, it would struggle to invest as much as it does currently."

"There is clearly growing pressure on Ofcom to act," Paolo Pescatore, Director at CCS Insight. "This latest report follows months of lobbying by rivals to break-up BT. It’s a tough decision to make but Ofcom is duty bound to listen to all parties.

"BT has acknowledged some its shortcomings and is seeking to address these with pledges announced in September by increasing investment and service quality. The major focus of the latest strategic review of the digital communications market is all about how well competition is delivering benefits to consumers and businesses."

Pescatore added that the desired full separation was probably unlikely.

"Furthermore, Ofcom has acknowledged that the current system, whereby BT operates Openreach as a separate unit, has provided choice. The retail broadband market is thriving with aggressive promotional activity to the point that selected ADSL and fibre packages are being given away for free."

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