The CEO of Openreach said if the regulator proceeds with its draft regulation for the next five years, it will scrap plans to reach the final 5m homes
The row between BT’s wholesale infrastructure arm, Openreach, and the telecoms regulator Ofcom has escalated. Openreach says it will scrap the final phase of its plan to make fibre broadband available to 30 million UK homes by 2030 if the regulator goes ahead with its draft proposal of the Telecoms Access Review (TAR), which covers the next five years.
The regulator is expected to publish its findings which will form the foundation of its policy in the spring.
Ofcom’s proposal would retain what Openreach sees as unfair restrictions, such as pricing caps, to curb Openreach’s dominant position and encourage competition. According to the Financial Times [subscription required], the CEO of Openreach, Clive Selley, has said he will pause the rollout plan until he fully understands the implications of the new TAR.
Where are we now?
At the moment, Openreach is on track to meet its target increasing the number of homes passed by fibre from 20 million to 25 million next year. Openreach has repeatedly said it would be difficult to meet its 2030 if Ofcom continues to limit what it can charge retail broadband providers like Sky, TalkTalk, BT itself and others, for using its infrastructure. Selley also claims that Openreach is the only viable option for reaching the final 5 million homes.
In August, Openreach said it would struggle to fund passing the last 5 million home with fibre if price restrictions were not lifted in areas where customers already had the choice or two or more networks.Alternative fibre network firms or altnets, aside from BT and Virgin Media O2, have collectively passed about 16 million premises so far.
Higher costs
In September, BT’s CEO Allison Kirkby claimed that UK network operators pay 10 times the amount of costs inflicted by government, compared to its counterparts in other European countries. This could be perceived as lobbying the Chancellor, Rachel Reeves, regarding the imminent Autumn Budget.
Citing BT’s own research, Kirkby said BT pays 10 more than its peers overseas in business rates, energy and other costs associated with regulation and compliance. The Autumn Budget of 2024 increased costs to businesses for employees, for example raising National Insurance levels.
Openreach celebrated reaching its 20 million homes passed milestone in the same month (see picture).
Making up for lost time
Ofcom argues its regulatory framework has resulted in the UK having one of the fastest fibre builds in Europe – but arguably this is more due to Openreach being forced to play catch-up. The UK had a fibre penetration rate of just 1.3% in late 2018, just making it into the FTTH Council Europe’s fibre penetration rankings in 2019 (bottom of 33 European countries) and its inclusion was almost entirely due to altnets’ efforts.
Previously BT was threatened with having Openreach spun out as a separate unit and had been reprimanded by Parliamentary Committees about its lack of investment in infrastructure.
