BT must put house in order or face split, says Committee

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19 Jul 2016

In a report published today, Tuesday 19 July 2016, the Culture, Media and Sport Select Committee says BT is “significantly under-investing” in Openreach, its infrastructure subsidiary. Based on a report commissioned from a panel of independent experts, the Committee concluded the shortfall in investment could potentially be hundreds of millions of pounds a year.

The Committee, of which local MP Paul Farrelly is a senior member, says BT has exploited its position to make strategic decisions that “favour the Group’s priorities and interests”—and is likely to have sacrificed shareholder value and customer benefit as a result. Capital investment in Openreach has been broadly flat since 2009 until this year, and quality of service remains poor.

The Committee is demanding that BT invest significantly more in Openreach, and allows Openreach much more autonomy over what it invests, when and where. It supports Ofcom’s plans for establishing greater separation between Openreach and BT Group, but makes clear that if BT fails to “offer the reforms and investment assurances necessary to satisfy our concerns”, Ofcom should move to enforce full separation of Openreach. 

In the Committee’s judgment, Ofcom has not placed enough emphasis in the past on improving Openreach’s quality of service: it says the prospect of stiffer penalties should also encourage BT to voluntarily invest more in infrastructure.

The Committee convened a panel of expert advisers for the inquiry, including nationally recognised specialists in finance, regulation, communications and infrastructure provision, whose expert report is also published today with our own report.

To read the report in full, click here.


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