MWC 2016: BT CEO Warns Broadband Speed Upgrades Hinge On Ofcom Review

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BT CEO Gavin Patterson makes final defence of Openreach structure and says it is prepared to make fibre, G.Fast investments – if it has regulatory certainty

BT CEO Gavin Patterson has warned plans to boost speeds on copper connections using G.Fast and the wider deployment of fibre to cabinet (FTTC) and fibre to the premise (FTTP) will be threatened if Ofcom chooses to recommend that Openreach be made a fully independent entity.

The communications regulator will publish the findings of its once-in-a-decade review of the UK communications market tomorrow, with the future of Openreach being the most high profile are aof focus.

Sky, TalkTalk and Vodafone among others claim the current structure hands the former state monopoly an unfair advantage, stifles investment and has resulted in Openreach having a poor service record.

Investment plans

BT CEO Gavin Patterson MWC 3

Speaking at Mobile World Congress (MWC) in Barcelona, Patterson made a last defence of BT’s belief that its capital and technology benefits Openreach significantly and that its initial deployment of  FTTC back in 2009 would have been impossible without the current model because of the lengthy investment cycles.

“[Openreach] is very tightly regulated at the moment and in many ways I think it has contributed to the success of the Internet in the UK,” he said.  “The UK is the most Internet-dependent economy in the G20, has the widest coverage and takeup of superfast broadband in Europe and the lowest prices. There’s a lot to celebrate.

“But the question Ofcom is going to ask is ‘is the structure right?’. We believe having Openrech as a unit within BT Group is the right way forward. It ensures you have the right investment, R&D and national service.

“The question you have to ask is would you make the same investment decisions if it was separated? I very much doubt you would.”

“Our goal is to have the best network for customers regardless if they are wholesale or retail. So there is a significant investment we are ready to make now in the next generation of technology. More FTTP, G.Fast, FTTC – that would get to speeds of 500Mbps and 1Gbps across the majority of the UK in the next ten years.

“That’s a big decision – If we get some regulatory certainty as a result of the Ofcom review.”

Infrastructure

BT EventEarlier this week, Sky CEO Jeremy Darroch made a final appeal for Ofcom to separate Openreach, arguing that BT has so far neglected to invest in the 1Gbps FTTP speeds he feels the UK needs and that it is simply not economically viable for a rival to establish a national rival infrastructure. However Patterson said he felt there was enough competition.

“It’s a very competitive market in the UK,” he said. “It’s got more than 500 CPs – some very big ones and a long tail of niche ones. It’s also got a lot of competition in infrastructure. Recently, Virgin Media announced it was increasing its footprint by four million premises. So that creates a lot of competition in infrastructure but also at a downstream level as well for our consumer business and B2B.”

EE and 5G

This year’s MWC is BT’s first since it acquired EE for £12.5 billion. Patterson said the deal would allow it to establish leadership in the fixed and wireless markets in the UK and allow it to be at the forefront of the next generation of mobile networks.

“It’s a transformational deal, there’s no question about that,” he said. “To meet [data] demand, we believe you need the best of both worlds. With a fixed network [you have] the sheer processing power but people want the flexibility of wireless, so that’s why we did it.

“[Mobile has] never gone away completely in terms of the company’s [intellectual property] and R&D per se. We’ve been investing in wireless R&D for a while. We’ve been very much part of the 5G Innovation Centre at the University of Surrey and I expect we’ll be at the forefront of 5G services whenever they are ready to come to the UK in 2020.”

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