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    Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

    This is a discussion on Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach within the Sky news and announcements forums, part of the SkyUser Announcements category; Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach - ISPreview UK Sky ( Sky Broadband ) has used ...

    1. #1
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      Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach - ISPreview UK
      Sky (Sky Broadband) has used the backdrop of Ofcom’s on-going strategic review of the UK’s digital communications market to formally demand that the national telecoms regulator launch a competition review of BTOpenreach, which manages BT’s underlying broadband and phone infrastructure.

      The major Strategic Review was officially launched in March (here) and the last time Ofcom ran one of those, which was around ten years ago, it resulted in the creation of Openreach as part of a “functional separation” from the BT whole.

      A rush of other changes came with Openreach, such as Local Loop Unbundling (LLU) that is often credited with opening the broadband and phone market up through cheaper / better services by giving rival ISPs access to install their own kit inside BT’s infrastructure (telephone exchanges).

      But ten years on and many of BT’s key rivals continue to complain that the operator has too much hold over the telecoms market, particularly the big boys of TalkTalk and Sky Broadband that are broadly dependent upon Openreach’s infrastructure for their own services.

      TalkTalk
      has often complained that the prices for FTTC (VULA) “fibre broadband” are too high, yet Ofcom last year rejected such a complaint (here); although they did later impose a new “margin squeeze” test to balance the concerns (here). TalkTalk also wants to see Openreach being completely separated from BT.

      In that sense it’s little surprise to find that Sky has similarly chosen now as the time to request a formal competition inquiry into Openreach, with Sky complaining that the telecoms giant is “failing” broadband consumers and not investing enough into their underlying infrastructure.

      Some examples given by the media giant include missing 500+ appointments for new Sky installations every month (Internet / phone services) and failing to complete a further 4,000 general jobs in the same time period. Sky also claims that fault rates across Openreach’s network have increased by 50% between 2009 and 2012.

      Mai Fyfield, Sky’s Chief Strategy Officer, said (FT):

      We are drawing attention to the problems in broadband because they are important to the economy as a whole. They affect competition and have a direct impact on consumers and small firms, resulting in dissatisfaction and loss of productivity.”
      On top of that Sky complains that BT has not invested enough into Openreach and they thus want the division to be completely separated from BT, which is something that a spokesperson for BT was quick to say “would lead to huge uncertainty and fundamentally undermine the case for future investment“. BT also described Sky’s complaint as “disappointing” and accused the operator of engaging in “selective spin rather than constructive dialogue.”

      Admittedly it’s a lot easier to moan at Openreach about a lack of investment, assuming you can ignore the £2-3bn commercial and BDUK based roll-out of FTTC/P or other evolutions like G.fast etc., when you’re not tasked with having to make the same commitments yourself (note: we’re not sure exactly how much was ultimately spent on the purely commercial FTTC project).

      Happily Sky and TalkTalk are very slowly rolling out their own FTTH/P network in York, which may eventually expand into two more UK cities, but this is very much an experimental investment and not yet a project of truly national scale. Indeed it’s not clear if either could easily find the money to develop such a network across the UK, particular given future competition from BT’s G.fast and Virgin Media’s cable network in many of the same areas.

      It’s also unclear whether the total separation of Openreach would be the magic pill that so many assume, particularly on the investment and engineering side. Indeed it’s just as possible that the situation may get worse rather than better, which is why it’s so important for Ofcom to carefully weigh all of the possible ramifications before announcing a decision.

      Never the less BT’s huge investment into TV content and now Mobile is certainly putting some additional pressure on the operators rivals, which are in-turn responding with more market consolidation of their own and increasing pressure on Ofcom to help maintain a level playing field.

      But Ofcom’s new CEO, Sharon White, has already hinted that she would prefer a “lighter approach” to regulation and those aren’t the words you’d use when planning for the total separation of Openreach from BT (here). On the other hand the regulator recently proposed to open up BT’s Dark Fibre network to rivals (here), which seems like the opposite of a lighter approach.

      In any case Ofcom’s strategic review is imminently about to conclude its initial evidence gathering phase and then the first proposals for change should surface by the end of 2015. No doubt Sky’s formal complaint will play a part in their approach, but it’s too early to say how much of an impact it might have.


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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Some examples given by the media giant include missing 500+ appointments for new Sky installations every month (Internet / phone services) and failing to complete a further 4,000 general jobs in the same time period. Sky also claims that fault rates across Openreach’s network have increased by 50% between 2009 and 2012.
      I wonder how this compares with BT Equal rights for all ISPs, I don't think so.

      TomD


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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Sky reveals evidence of Openreach service failure and calls for market investigation

      https://corporate.sky.com/media-cent...-investigation
      Sky’s initial submission to Ofcom’s Strategic Review of Digital Communications is available here.

      Sky is calling on industry regulator Ofcom to instigate a full market investigation to examine problems affecting consumers in the UK’s broadband marketplace. The company believes that issues covering both competition and quality of service are sufficient for Ofcom to ask the Competition and Markets Authority (CMA) to conduct an inquiry. The call is made in a formal submission to Ofcom that is published by Sky today.

      In the submission, Sky sets out details of the standard of service delivered to consumers by BT’s Openreach division, which operates and maintains the UK’s national telecoms network. The evidence highlights how a history of under-investment has led to range of service quality problems including an excessive number of network faults, failure to meet targets for repairing faults, long waits to have new lines installed, appointments that are missed and jobs that are not completed.

      Key findings from Sky’s submission include:


      • More than 90% of new line installations, which require an Openreach engineer to attend, take 10 calendar days or longer. Almost one in ten installations takes longer than 30 days.1
      • Openreach changes the agreed installation date for Sky customers on average around 36,000 times a
        month. 1
      • Openreach misses over 5002 appointments each month to install new lines for Sky customers and fails to complete a further 4,000 jobs per month.3
      • Fault rates across Openreach’s network increased by 50% between 2009 and 2012, the last year for which reliable data is publicly available.
      • Openreach’s performance in fixing faults is consistently below the targets set out in agreements with service providers.


      Sky represents around one third of broadband customers relying on access to the network operated by Openreach. If its experience is typical across the market as a whole, the scale of the overall impact on customers is therefore greater in scale by around three times. For example, if the rate of missed Openreach appointments was repeated across the market, and all affected customers lost a day of work, the loss to the UK economy each year would be 18,000 days of work. This is equivalent to 70 years of full-time work.

      The scale of these problems is directly related to the level of investment in the ‘last-mile’ or ‘access’ copper infrastructure that connects individual homes to BT’s network. Alongside the submission, research by independent consultancy Frontier Economics shows years of declining investment in maintaining the copper network. After accounting for the cost of rolling out fibre broadband, Frontier estimates that capital expenditure on other Openreach activities (including maintaining the copper network) fell by around a third over the last decade. Such cuts have the effect of reducing service quality and overall network reliability.

      In addition to problems of quality of service, Sky highlights concerns about future competition in the market for broadband services in the UK. Over the last decade regulation has supported effective competition and new entrants have challenged BT, resulting in increased choice, lower prices and innovation for customers. However, superfast broadband services are regulated differently and these gains may be at risk from a reduction in competition as the UK transitions to services based on the new technology.

      Mai Fyfield, Sky’s Chief Strategy Officer, said: “We are drawing attention to the problems in broadband because they are important to the economy as a whole. They affect competition between providers and have a direct impact on consumers and small businesses, resulting in inconvenience, dissatisfaction and loss of productivity. The UK needs to get the basics right in broadband as well as develop the networks and services of the future.”

      “We believe that Ofcom should move quickly to ask the Competition and Markets Authority (CMA) to undertake a full competition inquiry. A reference to the CMA would allow these vital issues to be examined with increased speed and thoroughness by a body with the powers to take whatever action should be deemed necessary. Given the rapid changes taking place in the sector, we believe this should happen as soon as possible.”

      Sky’s initial submission to Ofcom’s Strategic Review of Digital Communications is available here.

      1 12 months to March 2015
      2 12 months to February 2015
      3 May 2012 to March 2015

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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Quote Originally Posted by Isitme View Post
      I wonder how this compares with BT Equal rights for all ISPs, I don't think so.
      Technically it should be the same level of service for all ISPs. It wouldn't be too difficult for each ISP to produce their stats for the same periods so that Ofcom can compare them.

      If there were a significant discretion that showed any one ISP getting a worse service then that would be an ideal point from which they could launch a massive lawsuit against BT PLC and BTO as they would be in breach of Ofcom rules. I could also spell the end of BT PLC owning Openreach.

      However you look at it, the figures as they are don't have a lot of context. Sure Sky represents around a third of the UK's broadband service, but what does this mean in real numbers?


      • How many installations does Sky see each month?
      • How many faults are reported, investigated or dropped?


      It would be useful to then compare thee figures with what the other ISPs see and see if there is indeed a trend. I doubt if they would all be prepared to make these figures public, but I'd still love to see them.

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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Well, *one newspaper* is on sky's side here!

      Let's speed up spread of broadband by separating Openreach from BT - Telegraph

      By Mai Fyfield

      An independent Openreach would be a new, highly investable, FTSE 100 company that could catalyse the transformation of Britain’s broadband infrastructure.

      Decisions taken over the next few months will shape the future of broadband in Britain.

      Ofcom is carrying out its first fundamental review of the market in 10 years and the outcome will determine the level of investment, competition and take-up of fibre for the next decade and beyond. The consequences for future productivity, as well as for consumers who want fast and reliable broadband, will be profound.

      The review takes place against a noisy backdrop. It is rare that a week goes by without vocal complaints about broadband speeds, delays in connections or the speed and scope of fibre roll-out. As a leading provider of broadband, serving 5m customers, Sky has a strong incentive to help the industry move forward and deliver services fit for the 21st century.

      Inevitably, the task of designing a market structure for broadband is complicated by what has gone before. But we must not allow the legacy of the past to dictate the choices that we make today. With Britain’s digital future at stake, these decisions are simply too important.

      So let’s imagine that policymakers could start with a blank sheet of paper. Does anyone seriously believe that the best possible answer would be to re-invent what we have today?

      The answer must surely be a resounding "no". Who would start by putting Britain’s only national telecoms network under the sole control of the company that is also the biggest broadband service provider? Yet this is the status quo. And it is even proposed that the biggest mobile operator should come under the control of the same business. These are not the foundations on which to build the future of digital communications in this country.

      Concerns about the current structure are far from theoretical. There is ample evidence of significant problems created by BT’s ownership of Openreach, the division that operates the national network. Under-investment by BT has led to unacceptable levels of faults and service problems that continue to impact consumers and businesses.

      How can it be, in this digital era, that for around 90pc of our customers it takes Openreach over 10 working days to activate a broadband line? And while Openreach has increased broadband speeds with fibre to the cabinet, it has little incentive to invest in fibre to the home, leaving Britain at risk of falling behind other nations.

      In the era of copper-based services, Ofcom created complex regulation to deal with the conflict of interest at the heart of a vertically integrated BT.

      But the system no longer works because of the transition to fibre, where ownership of Openreach gives BT a built-in advantage over rivals. When BT switches a customer to fibre, it just hands over a notional fee from one internal division to another. Other providers face a real increase in costs that makes it less attractive to invest in upgrading customers. This poses long-term problems for competition.

      It is time for a thorough examination of the merits of separating the national telecoms network from the rest of BT. This would apply the principle of separation of ownership between infrastructure operators and service providers, which is well established in other sectors like energy and transport. We believe that Ofcom should refer the issue to the Competition and Markets Authority (CMA), which has the power to conduct a full investigation and take any action deemed necessary.

      An independent Openreach would be a new, highly investable, FTSE 100 company that could catalyse the transformation of Britain’s broadband infrastructure. BT constantly emphasises that Openreach is entirely functionally separate with its own assets, employees and accounts. So it is contradictory to argue that the next step of full separation is impracticable.

      However, we have seen recently that BT is intensifying efforts to close down this important debate before the arguments have been heard. Most recently, Joe Garner, chief executive of Openreach, argued in The Telegraph that separation would be bad for Britain.

      The mere fact that the head of Openreach, whose intended role is to serve the market equally, should argue in such partisan terms for the BT corporate interest is a graphic symbol of how the existing set-up is broken. Moreover, BT’s case for the status quo is built on unfounded or exaggerated claims about the benefits of vertical integration and the risks of separation.

      Most frequent is the claim that only BT would have invested £2.5bn in the roll-out of fibre. Yet BT’s own accounts put this figure in perspective. Over the investment period, Openreach generated around £15bn of earnings, while its total capital expenditure remained broadly flat. In practice, fibre roll-out has been funded in part by cutting spending on other critical parts of the network, with service quality and reliability suffering.

      BT speaks of its retail business as an “anchor tenant” for Openreach. The analogy is wrong because it refers to commercial agreements between separate companies, not those that are vertically integrated. Property developers do deals with retailers all the time, but nobody expects Westfield to own Marks & Spencer.

      The idea of Openreach seeking outside investment is unthinkable while it remains part of BT. Although Sky is Openreach’s biggest external customer, they have never brought us a proposal to invest in an infrastructure project. I believe an independent Openreach would be a better partner for the industry as a whole and consumers would see the benefit. While BT makes thinly veiled threats to stop investing in the event of separation, the incentives to innovate would be strong on all sides in a more open and competitive marketplace.

      All of the other attributes that BT highlights – “stability, a nationwide strategy and capital” – could also be maintained or improved if Openreach was independent. So let’s allow debate about market structure to happen. And let’s consider the positive developments that could come with separation: the ability to harness the capacity of multiple service providers; a stronger culture of partnership; improved customer service and reliability; investment in the broadband products of the future; and more effective competition to the benefit of all customers.

      Mai Fyfield is the chief strategy officer at Sky
      Last edited by gymno; 18-09-15 at 03:19 PM. Reason: SEE BELOW
      marjohn56 and seawright like this.

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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Quote Originally Posted by gymno View Post
      Did you get fed up reading before you got to the last line?

      Mai Fyfield is the chief strategy officer at Sky

      TomD


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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      No Tom, not at all!

      By 'somebody' i meant the telegraph newspaper, but just don't posses the vocabulary to express that properly.

      In fact after reading some of the comments below the article, i'm obviously not the only one to think this.

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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      If you read the comments under the article you will find a lot of complaints that the Telegraph does not make it clear until the very end that 'Mai Fyfield is the chief strategy officer at Sky'. It is presented at first as an independent unbiased view, which it is not.

      I agree in principle with the article, some way must be found to ensure that non-BT ISPs are treated fairly and don't have to wait for 2 to 3 weeks for a job to be done. It is evident by the number of complaints on this forum and the other place that users are having to wait too long for a fix or even to have a line activated.

      TomD


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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Quote Originally Posted by Isitme View Post
      If you read the comments under the article you will find a lot of complaints that the Telegraph does not make it clear until the very end that 'Mai Fyfield is the chief strategy officer at Sky'. It is presented at first as an independent unbiased view, which it is not.
      So as a newspaper, perhaps 'on sky's side' then?

      Quote Originally Posted by Isitme View Post
      I agree in principle with the article, some way must be found to ensure that non-BT ISPs are treated fairly and don't have to wait for 2 to 3 weeks for a job to be done. It is evident by the number of complaints on this forum and the other place that users are having to wait too long for a fix or even to have a line activated.
      I agree also & what a brilliantly written article too.
      If only Mai Fyfield proof-read all of sky's correspondence.

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      Re: Sky Demands Ofcom Launch UK Competition Inquiry into BT Openreach

      Some websites are putting it a different way:

      Sky Attacks BT Openreach for Not Spending Enough on Broadband

      LOL. There's a quite funny poll at the bottom of that one.

     

     
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